Shell's bid to build two new pipelines in Canada rejected

CALGARY, Alta. - In a rare move, Alberta's energy regulator has rejected Shell Canada's application for two new pipelines at the company's Waterton field site in southwestern Alberta.

But the Energy Resources Conservation Board ruled on March 9 that Shell Canada will be allowed to drill a new sour gas well in the area and add a fuel-gas compressor.

The board added that given the way that the company has operated its existing infrastructure in the area 20 kilometers west of Pincher Creek, it has not demonstrated that it has followed its own procedures.

In a hearing last fall that led to this decision, Shell acknowledged a sour gas leak in November 2007 eroded the trust of residents near the small community of Beaver Mines.

Several residents in the area were evacuated as a result of the release, and others were required to seek shelter in their homes.

On March 9, the board said it agrees "that the operational procedures and pipeline technologies proposed by Shell may work for corrosion mitigation."

However, "these considerations have been outweighed by examples of its poor operating practices, such as improperly secured open excavations, odor complaints, pipeline and associated equipment failures, spills, poor reclamation efforts and weed growth at Shell's facilities."

The board noted Shell's proposed project has received a number of objections from landowners, recreational users and others stating concerns about public safety, the environment and the company's operational history.

Obama extends ban on deepwater well drilling to six months

WASHINGTON - Escalating his administration's response to the disastrous Gulf oil spill, President Obama on May 27 announced a new six-month moratorium on deepwater oil drilling permits while a presidential commission investigates the Deepwater Horizon accident.
Obama on May 22 appointed a presidential commission to conduct a wide-ranging, six-month investigation of the causes of the ongoing oil spill in the U.S. Gulf. He traveled to the Gulf Coast on May 28, his second visit to Louisiana since the accident.
BP PLC’s latest effort to cap the blowout, an attempt begun on May 26 to plug the mile-deep well with heavy drilling mud, a tactic never before tried at such depths, was still under way as Obama left Louisiana on May 28.
The “top kill” maneuver's success would prove enormously welcome to the Gulf region if successful, and also to the White House, Congress, federal agencies and other institutions that share responsibility for oversight, regulation and what went wrong.
As Obama left the state, no announcement was forthcoming from BP regarding the success of the “top kill” attempt. An announcement on the success or failure was not expected until at least the morning of May 30.
Under the new ban, controversial lease sales off the coast of Alaska will be delayed pending the results of the new commission's investigation, and lease sales planned in the Western Gulf and off the coast of Virginia will be canceled, an aide to the president said on May 27.
Shell Oil was poised to begin exploratory drilling this summer on Arctic leases as far as 140 miles offshore.
Those steps, along with new oversight and safety standards also to be announced, are the results of a 30-day safety review of offshore drilling already conducted by Interior Secretary Ken Salazar at Obama's direction. Salazar briefed Obama on that inquiry’s conclusions on May 26 in the Oval Office.
The new announcements could be an early sign of a fundamental shift in the administration's policies on offshore drilling, which Obama promoted and hoped to expand prior to the April 20 explosion and ultimate destruction of the Deepwater Horizon drilling rig. The accident killed 11 people and unleashed a gusher of crude that has begun to wash up on land and cripple seabirds.
While the new regulatory oversight steps are being taken before the exact causes of the accident have been determined, congressional investigators have released details suggesting BP ignored warning signs of instability in the exploratory well they were attempting to cap when the explosion occurred.
At the Capitol on May 27, lawmakers grilled various officials at five separate congressional hearings. Topics included the Gulf spill's environmental damage, the administration's response and the impact of the catastrophe on small businesses.
On May 26, Salazar told the House Natural Resources Committee that lax oversight of oil companies dates to the administration of Republican President George W. Bush.
"Essentially whatever it is they wanted is what they got," Salazar said.
GOP Rep. Doug Lamborn of Colorado asked when Obama's team would stop blaming problems on an administration that left office 16 months ago. Salazar replied that the federal Minerals Management Service, while heavily criticized lately, is still not "the candy store of the industry, which you and others were a part of."

Shell extends force majeure on Nigerian oil exports

PORT HARCOURT - Royal Dutch Shell on June 17 extended force majeure on its Nigerian Forcados oil shipments for the rest of June and all of July, a spokesman said.
Shell's joint venture with state-run Nigerian National Petroleum Corp. (NNPC) imposed the force majeure, which frees the company from contractual obligations, in March following an attack on its trans-Escravos pipeline.
"The joint venture declared force majeure on Forcados offtake program for the remainder of June and for July effective 1800 hours June 16," a Shell spokesman said. The company said investigations were ongoing and that it was taking steps to repair the damaged Forcados pipeline and resume production.

National strike averted as Shell, union workers agree to settlement

HOUSTON - About 30,000 unionized workers at U.S. refineries, chemical plants and pipelines reached a deal with industry on a new basic contract on Feb. 3, averting a nationwide strike.
The United Steelworkers Union and Shell Oil Co. - representing U.S. refiners - agreed to a terms of a basic contract that sets minimum wages, benefits and working conditions at 86 energy facilities.
The current contract was temporarily extended past its Feb. 1 expiration so negotiations could continue. The union represents workers at 64 percent of U.S. refineries.
U.S. gasoline futures rose last week on fears that a strike could shutter refineries and tighten up fuel supplies, which are currently plentiful amid weak profit margins for refiners.
Hourly workers represented by the Steelworkers will get a three percent per year pay increase for each of the three years of the contract and pay 20 percent of their healthcare costs, according to sources familiar with the agreement.
The average national wage for U.S. refinery workers is $30.06 an hour.
While a nationwide strike has been averted, local negotiations still might lead to work stoppages at individual plants as workers and managers finish talks over site-specific contracts during the next several weeks.
"The current contracts remain in force until the respective local unions conclude bargaining and ratify their new contracts," said Stan Mays, a spokesman for Shell, which led the talks on behalf of U.S. refiners.

Shell shutdown of crude line to California refinery leads to accusations

BAKERSFIELD, Calif. - Soon after its parent company filed for bankruptcy protection Dec. 22, Big West closed its refinery in Bakersfield for what was to be 10 days of routine maintenance, but it has yet to come back on line. Some say Shell Oil is trying to use its leverage to put the plant it sold to Big West in 2005 out of business. Concern about the facility's fate has been growing since Big West's parent, Flying J Inc. of Ogden, Utah, filed for Ch. 11 bankruptcy protection on Dec. 22. The company shut down the Bakersfield refinery soon afterward for what it said would be 10 days of routine maintenance. On Jan. 8, Kevin Cable, committee chairman for the United Steelworkers, singled out Shell as one of the main obstacles to the reopening of the plant. In a memo to refinery workers, he said Shell was demanding onerous payment terms from Big West to resume crude deliveries and that it had closed pipelines to the facility, preventing shipments from other suppliers.
Tim Kollatschny, a supply manager for Shell, confirmed that Shell had closed a single pipeline to the Bakersfield refinery and suspended crude deliveries while it negotiated with Big West. But he denied that Shell was seeking unreasonable terms or that it had the power to shut down the facility. Kollatschny said Big West had other means to get the crude it needed and that Shell supplied "less than 20 percent" of the 50,000 to 60,000 barrels of crude processed there daily. 1/12/09 To read the full story, subscribe now to Energy Pipeline News.