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BP Faces New Oil Spill Claim

BP Plc is facing a new lawsuit by state pension funds in Ohio and New York that claim the oil giant misled investors about its commitment to safety before the Deepwater Horizon oil spill.

The funds filed the class-action suit in the U.S. District Court in the southern district of Texas Monday seeking compensation for the investments lost after the April 20 disaster in the Gulf of Mexico.

The case claims that BP misled investors to believe that it had a lower risk profile.

“The truth about BP and its lack of commitment to and implementation of safety processes to avoid preventable incidents began to emerge,” said attorneys for the Ohio and New York state pension funds, as quoted by Bloomberg. “Investors were deceived as to BP’s true risk profile in deep sea drilling.”

BP has been slammed with hundreds of claims related to the drilling rig explosion that set off the largest offshore oil spill in U.S. history.

Investors say that BP falsely claimed a commitment to safety measures and maintenance.

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Chevron Rejects $8 Billion Fine

Chevron will appeal an Ecuador court ruling that ordered the U.S. oil giant to pay $8 billion damages for allegedly causing widespread environmental devastation in the Amazon jungle.

The company on Monday rejected the disputed lawsuit’s ruling as “illegitimate,” Reuters reports.

While Chevron did not give any hints as to the sum demanded by the Lago Agrio court, defense attorney Pablo Fajardo said it totaled about $8 billion, the British news organization said.

The claim originally asked for $27 billion.

Chevron said it plans to appeal. “The Ecuadorean court’s judgment is illegitimate and unenforceable,” the oil company said in a statement Monday.

The case claims that Texaco, which was acquired by Chevron a decade ago, fouled the Amazon jungle in the 1970s and 1980s due to faulty drilling practices.

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EPA to Review Alaska’s Bristol Bay Mine

The U.S. Environmental Protection Agency announced Monday that it will conduct a study of Alaska’s Bristol Bay watershed to assess the potential impact of development projects on the area’s commercial sockeye salmon fishery.

The agency said it decided to perform the scientific review after being petitioned by the Bristol Bay Native Corp. and nine Alaska native tribes, which voiced concerns over the Pebble Mine development project.

The proposed gold, copper, and molybdenum mine would be located between two of the region’s major salmon spawning streams and just west of the state’s largest lake.

“By 2006 estimates, the open pit mine would be two miles wide and produce up to 2.5 billion tons of acid-generating waste rock and discharged chemicals,” the Bristol Bay Native Corp. said in requesting the study, according to

Opponents of the prospect also say the mine would have a footprint covering 15 square miles, and that its accompanying network of roads and power lines  would effectively transform the landscape and locals’ way of life, AP reports.

John Shively, chief executive of Pebble Limited Partnership, called the review premature, saying the proposal is still in the planning stages. Gov. Sean Parnell also said he thought it would be better to wait for the permit applications, AP reports.

Republican Alaska Rep. Don Young slammed the EPA’s decision on Monday, saying the agency is “blatantly circumventing” the state’s permit process.

“Gathering data and getting public input now, before development occurs, just makes sense,” said EPA Regional Administrator Dennis McLerran. “Doing this we can be assured that our future decisions are grounded in the best science and information and in touch with the needs of these communities.”

Posted in Minerals & Mining0 Comments

BP Reports First Annual Loss in 2 Decades

BP notched a $4.9 billion loss Tuesday in the wake of the Gulf of Mexico oil spill, marking the company’s first annual shortfall in almost two decades.

The energy giant also announced Tuesday that it is resuming dividends for the first time since the April 20th disaster and outlined plans to diminish its dealings in the U.S.

BP reported a charge of $40.9 billion for the full year to cover the cost of the oil spill triggered by the Macondo well blowout. That estimate is up from the previous pricetag of $40 billion.

“2010 will rightly be remembered for the tragic accident and oil spill in the Gulf of Mexico and it is clear that as a result BP is a company in transition,” chief executive Bob Dudley said, according to AFP.

“I am determined that we will emerge from this episode as a company that is safer, stronger, more sustainable, more trusted and also more valuable.”

The company, which suspended dividends after the spill, will resume payment at 7 cents per share – about half the amount in the fourth quarter of 2009, reports.

“We believe now is the right time to resume payment of a dividend to our shareholders,” said Chairman Carl-Henric Svanberg, according to

“We have chosen a prudent level that reflects the company’s strong underlying financial and operating performance but also recognizes the need to fully meet our obligations in the Gulf of Mexico and to maintain financial flexibility.”

In addition, BP announced plans to shift focus away from business in the U.S. The company plans to sell two major U.S. refineries, including the Texas City plant where 15 workers died in a 2005 explosion, effectively halving its refining business in the country.

“2011 will be a year of recovery and consolidation as we implement the changes we have identified to reduce operational risk and meet our commitments arising from the spill,” said BP Chief Executive Bob Dudley. “But it will also be a year in which we have the opportunity to reset the company, adjusting the shape of our business, and focus on growing value for shareholders.”

Meanwhile, BP is working to team up with Russian state oil company Rosneft for a joint oil exploration venture in the Arctic.

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ExxonMobil and Rosneft Strike $1B Oil Deal

ExxonMobil and Russian state oil company Rosneft have entered into an agreement regarding oil drilling in the Black Sea.

According to the deal signed in Davos, Switzerland on Jan. 27, the U.S.-based ExxonMobil – the largest privately-owned oil company in the world – will invest $1 billion in Rosneft for a joint-operated oil exploration and production venture in the Tuapse Trough.

The agreement between Russia’s Deputy Prime Minister Igor Sechin and Rex Tillerson, chief executive of Exxon, came at the World Economic Forum just days after Rosneft announced an agreement with BP regarding an Arctic project.

Located in the Black Sea basin, the Tuapse Trough is an 11,200-square-kilometers deepwater offshore region.

“Cooperation with ExxonMobil once again underscores our commitment to the principles of transparency and vision of the Russian energy industry as a part of an integrated global marketplace,” said Sechin, as reported by the oil industry news website

“ExxonMobil technologies will effectively complement Rosneft’s experience and resources. Development of this area will become the springboard for full-scale Black Sea basin development, and this challenge will require coordinated efforts of many nations and companies in the region.”

EurActiv reports that the offshore venture will be split 50/50 at the exploration stage, and 66/33 in favor of Rosneft at the development stage.

The agreement makes Exxon the second major U.S. oil company to invest $1 billion in the Black Sea, where no major oil reserves have been discovered in the past century. Chevron financed a $1 billion exploration and development of the Val Shatskogo project in the same region, EurActiv reports.

Posted in Drilling for Oil, Oil & Petroleum0 Comments

Oil Spill Dispersants Yield Mixed Results

Chemicals used in the Gulf of Mexico to stem the flow of oil were only partially effective, according to an in-depth study.

Marine chemists at Woods Hole Oceanographic Institution said the dispersants were successful in keeping some of the crude from the blown BP oil well from reaching the surface, where it could do the most damage. However, chemicals did not break up the oil as quickly as scientists had expected.

The chemicals seemed to remain in the deep waters longer than anticipated, marine chemist Elizabeth Kujawinski said in the study. This raises troubling questions about long-term environmental exposure.

The study was published in the journal Environmental Science & Technology.

Posted in Drilling for Oil, Oil & Petroleum0 Comments

EPA Revokes Water Permit for W. Va. Mountaintop Mine

The U.S. Environmental Protection Agency revoked a permit for one of the country’s largest mountaintop removal coal mines on Thursday.

Arch Coal’s Spruce No. 1 mine in Logan County was previously granted a Clean Water permit under the Bush administration in 2007, but its construction has been delayed by lawsuits. Environmentalists and local residents say the operation would hurt streams and local communities, while Arch says the mine is necessary for West Virginia’s economy.

The federal government nine months ago moved to rescind the permit for the 2,3000-acre project, which would bury seven miles of streams, devastate wildlife and endanger human health with hazardous pollutants.

“The proposed Spruce No. 1 Mine would use destructive and unsustainable mining practices that jeopardize the health of Appalachian communities and clean water on which they depend,” said Peter S. Silva, the EPA’s assistant administrator for water, according to the New York Times. “Coal and coal mining are part of our nation’s energy future, and E.P.A. has worked with companies to design mining operations that adequately protect our nation’s waters. We have a responsibility under the law to protect water quality and safeguard the people who rely on clean water.”

The decision has already been met with defiance by the St. Louis-based coal company, which plans to challenge the veto in court.

“We remain shocked and dismayed at E.P.A.’s continued onslaught with respect to this validly issued permit,” said spokeswoman Kim Link, according to the Times. “Absent court intervention, E.P.A.’s final determination to veto the Spruce permit blocks an additional $250 million investment and 250 well-paying American jobs.”

“Furthermore, we believe this decision will have a chilling effect on future U.S. investment,” she added, “because every business possessing or requiring a permit under Section 404 of the Clean Water Act will fear similar overreaching by the E.P.A. It’s a risk many businesses cannot afford to take.”

This is only the 13th time the agency has revoked a water permit issued by the U.S. Army Corps of Engineers.

Posted in Coal, Groundwater, Springs & Aquifers, Pollution & Toxins0 Comments

Panel Calls for Oil Spill Safety Regulations and Agency

A presidential panel investigating BP’s massive oil spill in the Gulf of Mexico is calling for an overhaul of industry practices and the appointment of a new watchdog group in hopes of avoiding a repeat of the disaster.

The White House commission concluded its extensive six-month probe with a final report Tuesday, saying that the government needs to expand its regulatory system and instate an independent drilling safety oversight agency.

“None of the major aspects of offshore drilling safety — not the regulatory oversight, not the industry safety standards, not the spill response practices — kept pace with the push into deepwater,” said commission co-chair Bill Reilly, according to AFP.

“In effect, our nation was entirely unprepared for an inevitable disaster,” he said.

An April 20th explosion on the BP-operated Deepwater Horizon oil rig left 4.9 million barrels of crude spewing uncontrollably into the Gulf of Mexico. 11 rig workers died in the explosion, and the spill devastated marine wildlife, local tourism, and the commercial fishing and shrimping industries before the well was capped three months later.

Many of the seven-member panel’s recommendations will need to go through the Senate, where they are sure to face opposition from Republicans.

Both Republicans and oil companies have condemned the prospect of additional regulations, saying that they impede offshore exploration and end up costing Americans at the pump.

Interior Secretary Ken Salazar said that following the spill the Interior Department implemented many of the reforms suggested by the panel, but that it “will use the commission’s report and the findings of other investigations to inform future actions to strengthen oversight.”

The panel is also pushing for a self-regulating agency to enforce protocol and oversee offshore drilling safety.

Although it did not call for a moratorium on drilling in the Arctic, the commission warned that the Interior should ensure that companies take precautionary measures in case a spill occurs there.

The panel does not have the power to enforce its recommendations, but the 400-page report could sway court proceedings and energy policy.

While the offshore drilling moratorium imposed by the government after the spill was lifted in October, no permits for exploratory drilling have been issued.

Posted in Drilling for Oil, Environmental Disasters, Oil & Petroleum0 Comments

Trans Alaskan Pipeline Shuts Down After Spill

The Trans Alaskan Pipeline (TAPS), which accounts for 12 percent of U.S. oil production, was shut down Saturday due to a minor oil leak.

Pipeline operator Alyeska plans to bypass the leaking section of the 800-mile line by installing a stand-in expanse of pipe.

The U.S. Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration said Alyeska would not need its approval to repair and restart the pipeline.

TAPS was shut down after a small amount of oil seeped into the basement of a booster pump station. About 750 gallons had been collected from the spill as of Tuesday morning.

The incident edged up worldwide oil prices Tuesday, with benchmark light crude for February delivery gaining 2 percent to $91.03 per barrel in the U.S.

Officials expect a quick restart time, especially since they don’t need DOT’s regulatory approval.

Alyeska Pipeline Service Co. spokeswoman Katie Pesznecker told The Associated Press that there is a device known as a cleaning pig inside the pipeline.

She said that ice and wax is building in the line while it’s shut down. The pipeline operator is concerned that during a permanent restart when the oil begins moving again, the cleaning pig will push the ice and wax into the equipment and damage it.

Alyeska hopes to temporarily restart the flow of oil to keep the pipe warm and move the pig to an area where it could be sidelined and captured.

Posted in Drilling for Oil, Oil & Petroleum0 Comments

Gas Prices: Crude Oil Tops $90

Gas prices edged up at the pump Tuesday as crude oil costs surged on the New York Mercantile Exchange, passing $90 a barrel.

Benchmark oil for February delivery rose $1.80, or more than 3 percent, to $91.05 a barrel in midday training on fears about the closed Trans Alaskan Pipeline.

The 800-mile line, which supplies oil to the lower 48 states and contributes 9 to 11 percent of the country’s daily oil resources, was shut down to repair a leak.

Meanwhile, a presidential panel investigating the Deepwater Horizon oil spill recommended that the oil industry and government take on additional precautions to prevent another environmental catastrophe. The group advised increasing the liability limit for damages associated with offshore drilling, increasing budgets and training for offshore drilling, and putting more focus on the opinions of federal scientists regarding drilling.

The report caused traders to speculate that the government will impose new restrictions on drilling in the Gulf of Mexico.

Heating oil prices rose 3.29 cents overnight to $2.589 per gallon. Reformulated blendstock gasoline gained 0.5 cents to $2.4593 per gallon. Henry Hub natural gas prices shed 4.7 cents to $4.352 per million British thermal units.

At the pump, the national average for a gallon of unleaded gasoline edged up from Monday’s $3.088 per gallon to $3.089.

Posted in Natural Gas, Oil & Petroleum0 Comments

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