Archive | Oil & Petroleum

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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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, msnbc.com reports.

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

“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 Rigzone.com.

“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.

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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.

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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.

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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.

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Oil Still Devastates La. Marshes, Tour Finds

Officials say oil from the Deepwater Horizon disaster still heavily pollutes the marshes along Louisiana’s coastlines.

State and parish officials gave the press a boat tour of the oil-fouled swamps of Barataria Bay, calling for a stronger cleanup effort from BP and the Obama administration.

Plaquemines Parish President Billy Nungesser called the state of the marshes “the biggest cover-up in the history of America,” The Associated Press reported Friday.

Robert Barham, the secretary of Louisiana’s Department of Wildlife and Fisheries and an outspoken critic of the cleanup effort, also participated in the tour.

AP writer Harry Weber reported that oil is pooling in some areas and boom barriers are often absent or overwhelmed by oil.

“Clearly there is oil here in the marsh but we are working as a team to find a best way to clean it up,” said Coast Guard Lt. Cmdr. Dan Lauer, who accompanied the press and officials on the tour.

The rapidly eroding marshes along the coast play a key role in protecting Louisiana from hurricanes.

The oil also endangers vulnerable reeds and grasses that feed microscopic marine life, with consequences that will reverberate up the food chain.

The BP oil spill, set off by a blowout on a Macondo rig on Apr. 20, leaked an estimated 200 million gallons of oil into the Gulf of Mexico.

Posted in Aquatic Life, Drilling for Oil, Ecosystems, Oceans & Coastlines, Oil & Petroleum, Rivers, Lakes & Wetlands, Well Drilling0 Comments

Bacteria Ate Methane from Gulf Oil Spill

Bacteria consumed methane gas from the Deepwater Horizon oil spill in the Gulf of Mexico in four months, a report said Thursday.

Methane constituted 20 percent of the crude oil that erupted from the Macondo oil well in worst marine spill in the history of the petroleum industry.

A report published Thursday in the journal Science said a sudden bloom of bacteria ingested the methane completely by early September.

“They did a good job on it and that was much earlier than expected,” said John Kessler, a chemical oceanographer at Texas A&M University, according to AP.

University of California Santa Barbara geochemistry professor David Valentine, one of the study’s lead authors, said the discovery proves that the bacteria play a vital role in preventing heat-trapping greenhouse gases on the ocean’s floor from entering the earth’s atmosphere.

“They do serve an important function, and as we see here under certain conditions these bacteria can be very effective at preventing the methane from reaching the atmosphere,” Valentine told AFP.

Valentine added that previous research showed that other types of bacteria also ingested the ethane and propane released by the explosion.

The researchers also said bacteria consumed some of the crude oil itself, but it is not yet clear how much.

Posted in Global Warming, Oceans & Coastlines, Oil & Petroleum, Toxic Substances, Water Pollution0 Comments

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