Kashagan Debacle: Not enough engineers, too many idiots
When John Stubbs was assigned to the Kashagan project, he was confronted by an over-budget hopelessly out-of-control shambles and advised Shell senior management that he did not want the job. He was bluntly told by Shell EP boss Malcolm Brinded, to take it, or leave the company. Stubbs, an engineer and project manager highly regarded by his colleagues, chose to depart. Brinded was eventually fired.
By John Donovan
There is a hilarious video circulating on the Internet revealing how an engineer feels when he’s surrounded by idiots.
It seems that something like this has happened in Kashagan…
It appears now what the problem is: they have used the wrong steel or welding procedures or both on the pipelines. And as a result they have to re-lay all these pipes at an astronomical cost. Not even counting the cost of deferred production. And loss in reputation (or whatever was left of that).
This is similar to problems NAM, Statoil and various other companies had around the turn of the century with so called ‘weldable’ 13Cr steel. Only it wasn’t weldable. But this 13CR steel was cheaper than higher alloys so there was an economic incentive to use it. All signed off by the experts guaranteeing it would work.
I can just see it: some fast talking director on the Kashagan project suggested to cut costs by using more standard materials and techniques. None of this fancy stuff. The only engineer in the room was most likely quickly shouted out of business by the hangers on. The rest is history…
And some history it is.
The engineering challenges, including laying pipelines, were recognized and discussed as long ago as 2007 in a Wall Street Journal article, which included in its headline a nickname now indelibly associated with the troubled project: ‘CASH ALL GONE’
Shell has a particularly embarrassing past history with the project.
In 2007, Reuters reported that John Stubbs, “A Royal Dutch Shell Plc executive working on Kashagan, a project under pressure from the Kazakh government for being overbudget and behind schedule, has quit, company sources told an unofficial company Web site.” (This website)
When John Stubbs was assigned to the Kashagan project, he was confronted by an over-budget hopelessly out-of-control shambles and advised Shell senior management that he did not want the job. He was bluntly told by Shell EP boss Malcolm Brinded, to take it, or leave the company. Stubbs, an engineer and project manager highly regarded by his colleagues, chose to depart. Brinded was eventually fired.
It was because of such delays that Shell’s fellow partners in the project consortium had earlier completely lost patience with Shell and ENI was chosen as the new field operator, with Shell remaining responsible for production operations.
Some might say the equally incompetent ENI was handed a poisoned chalice bearing in mind what Reuters has recently described as the “huge engineering challenges.“
It appears that there have been insufficient engineers/experts and too many egotistic management idiots.
In the meantime, Kashagan is added to the growing list of Shell white elephant projects, which includes the Alaskan debacle.
Royal Dutch Shell, ExxonMobil and Eni are members of the project consortium.
ARTICLE ENDS
I am most grateful for the invaluable input from a very knowledgable Shell engineer when drafting this article.
Comment posted on Shell Blog by “Relieved” on 2014/04/07 at 17:19
I find the problems at Kashagan to be absolutely unforgivable given all of Shell’s experience with sour service equipment at the Thomasville field in Mississippi, USA. Shell USA virtually set the standards for sour service equipment, not only for production well equipment, but also for the processing facilities that removed the H2S from gas and oil and converted it into elemental sulfur. What happened at Kashagan was absolutely preventable and should never have happened. However, it would appear Shell has ‘downsized’ its technical expertise right out of the company.
Tagged: John Donovan · Kashagan · Malcolm Brinded · Royal Dutch Shell PlcKuwait suspects corruption in $800 million Royal Dutch Shell contract
Seems to me that the Kuwait government is being very diplomatic and the word “corruption” should be substituted for “irregularities.” In my experience, despite pledges to the contrary in its sham ethical code, Shell senior management is content to turn a blind eye to corruption. Lets face it, the entire Royal Dutch Shell Group was built on illegal activity, including oil price fixing.
By John Donovan
A question of possible “irregularities” seem to have arisen in relation to an $800 million service contract awarded to Shell by the state owned Kuwait Oil Company.
Extracts from a report filed by the Kuwait News Agency:
Minister of Oil Ali Al-Omair underlined that the government will not condone or cover up any irregularities in petroleum sector deals and it will take all necessary action to protect public funds. Since its signature in February 2010, the five-year contract with Shell was the subject of much debate in Kuwait. The former parliament had formed a special committee to probe procedures leading to the awarding of the enhanced technical services agreement to Shell. The contract was awarded to Shell to help Kuwait develop its newly-discovered non-associated natural gas fields in the north of the country, after initial production hurdles.
Seems to me that the Kuwait government is being very diplomatic and the word “corruption” should be substituted for“irregularities.”
In my experience, despite pledges to the contrary in its sham ethical code, Shell senior management is content to turn a blind eye to corruption. Lets face it, the entire Royal Dutch Shell Group was built on illegal activity, including oil price fixing.
The TRUTH will set you FREE.
