Here’s Why Shell Drilling Proposition In Arctic Is Facing Opposition

Here’s Why Shell Drilling Proposition In Arctic Is Facing Opposition

Mar 24th, 2015

by John Donovan. 

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By: MICHEAL KAUFMAN
Published: Mar 23, 2015 at 10:54 am EST

According to the Guardian, Royal Dutch Shell plc (ADR) (NYSE:RDS.A) will most probably get an approval by the US government to drill in the Arctic. An approval last month was given by the Bureau of Ocean Energy Management (BEOM).

A formal statement is expected to come from the US interior Secretary Sally Jewel. The decision might spark opposition from environmentalist groups that are not in favor of Shell operating in the Chukchi and Beaufort seas of Alaska.

Earlier, the US federal court had allowed Shell to operate in Alaska, but the environmentalists believed that drilling in the Arctic would have adverse environmental effects. Hence, after a lot of persistence, the US Interior department was forced to revise its decision-making process, assessing the viability of drilling in the Arctic.

The BOEM after reconsidering the process approved Shell’s drilling plan in the Arctic. What was the most surprising was that the decision came ahead despite the BOEM disclosing that a chance for one or larger oil spills to occur would be 75%. This was revealed by the BOEM in its Environmental Impact Statement.

As reported by the Guardian, Professor Robert Bea, one of the faculty members at the University of California, has expressed his concerns over the approval by BOEM for Shell to operate in the Arctic. Crude oil price since the last six months has fallen over 50%. Hence, energy companies are exploring different ways to save on costs and maintain liquidity.

Mr. Bea believes that these cost cutting strategies could make it difficult for energy companies to comply with safety standards and could increase the probability of a spill occurring.

In a statement reported by Guardians, Mr. Bea said: “We should all be concerned about tradeoffs between production and protection…With the significant reduction in the price for oil; there are equally significant pressures to reduce costs so that acceptable profitability can be maintained.”

Mr. Bea has worked as a consultant for BP and Shell. He initially was brought in by Shell in 2004 to review the risks that came up with drilling in the Arctic. The conclusion drawn by Mr. Bea was operating in the Gulf had many risks involved and disapproved Shell’s plans to drill in the region.

An environmental group Greenpeace has expressed similar concerns as Mr. Bea. One of the campaigners of Greenpeace claimed that the contractors of these energy firms do not have good track records, and with crude oil price around $50 per barrel and high emphasis on cutting costs, the risk seems to be very high.

He further claimed that the move goes against the need to curb global warming. Regarding the issue as reported by the Guardian, he said: “if we want to avoid catastrophic climate change we can’t even burn all the fossil fuels we already have; we definitely don’t need to trash what’s left of the melting Arctic looking for more.”

He asked the Obama administration to show some responsibility by not allowing the energy companies to operate in the Gulf. He exclaimed that if President Obama agreed to this, it would seriously undermine the credibility of his leadership.

CEO Ben van Beurden according to the Guardian in a financial results conference indicated that the company is more than ready to go ahead with the Arctic project drilling this year. Shell spokesman indicated that the company has set high standards when it comes to maintaining adequate safety.

Shell since a very long time has been working on the Arctic project, but has seen many obstacles in terms of legal challenges. Though the company remains optimistic on its drilling proposition, it is likely to face a lot of opposition from the major environmentalist groups. Shell would have to take the risks head on, and would have to adopt a business model that complies with safety standards.

SOURCE

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Posted in: Alaska, Arctic, Beaufort Sea, Bidness Etc, Chukchi Sea, Environment,Greenpeace, Litigation, Oil, Oil Spill, Pollution, Royal Dutch Shell Plc, United States.
Tagged: Alaska · Arctic Ocean · Beaufort Sea · Chukchi Sea · Oil · Royal Dutch Shell Plc

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Why The Oil Price Could Fall Even Further

Why The Oil Price Could Fall Even Further

Mar 24th, 2015 

by John Donovan. 

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From an article by Prabhat Sakya published 24 March 2015 by The Motley Fool under the headline:

BP plc And Royal Dutch Shell plc: Why The Oil Price Could Fall Even Further

The oil price has fallen dramatically since last summer. This has meant difficult times for the oil producers, including companies such as BP and Royal Dutch Shell.

…people have been buying more fuel-efficient cars, and there has been huge investment in technologies such as hybrid, electric and fuel cell vehicles.

So supply has been steadily increasing, and demand has been falling, and the world now has too much oil. Oil prices have begun a downtrend; and I don’t think that this fall will just last a few months, before bouncing back.

You see, commodity markets are not just about supply and demand. They are about momentum. That’s why I think this new era of low oil prices could last another decade. All those wells that have been drilled won’t suddenly run dry, and production won’t suddenly end.

This is the oil industry’s ‘new normal’

This is why I think that the oil price could fall even further over the next few years. And I think companies like BP and Shell realise this.

They are now adjusting to the new reality of low commodity prices.

FULL ARTICLE

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Posted in: Alternative Energy, Alternative Fuels, BP, Oil Company Profits, Oil Prices,Royal Dutch Shell Plc.
Tagged: BP · Oil Prices · Royal Dutch Shell Plc · The Motley Fool

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Money Talks

Money Talks

Mar 24th, 2015 

by John Donovan. 

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By Seattle Times editorial board published 23 March 2015 under the headline:

Terminal 5 Shell lease is not the right arena to debate climate change

SOON, two huge oil rigs will be parked at the Port of Seattle, preparing for a summer sailing to the Alaskan Arctic and for exploratory drilling.

The Port’s decision in February to lease Terminal 5 to Foss Maritime, which will service the Royal Dutch Shell rigs, was appropriate because facilitating the maritime economy is what the Port does.

Environmental activists are arguing — loudly — that the Port should scuttle that lease as part of a proxy war over climate change. A coalition of groups have sued and on Friday learned their lawsuit will go forward.

And Seattle Mayor Ed Murray, with backing of the Seattle City Council, has ordered a belated review of city-issued permits for the Terminal 5 lease, apparently with similar intentions.

Climate change is a real threat. But blocking those rigs at Terminal 5 wouldn’t stop Arctic drilling nor alter the course of climate change. Instead, undoing the Port lease would be a symbolic victory at the expense of the region’s vital maritime economy.

If the lease were killed, Shell would likely divert operations to another Pacific port. Prince Rupert in British Columbia or Dutch Harbor in Alaska could step in.

Environmentalists suggest that diverting those operations elsewhere could somehow change the fundamental economics of Arctic drilling. That ignores the $5 billion already invested in Arctic drilling efforts by Shell, as well as new regulations proposed by the Obama administration last monththat would allow oil exploration in the Beaufort and Chukchi seas, with stringent environmental protections.

While the focus has been on unsightly rigs to be parked on the waterfront, Seattle’s attention should also be on the estimated 500 to 700 jobs that will be supported by the lease.

“The City of Seattle needs to decide if it wants to be a global player or to chase away family-wage jobs,” said Paul Stevens, chief executive of Foss Maritime, which holds the Terminal 5 lease to service the Shell rigs.

The lease will also help the Port of Seattle in the pitched battle for future maritime traffic. The two-year lease will generate about $13 million, which could expedite the Port’s plan to renovate Terminal 5 to accommodate behemoth next-generation cargo ships.

In other words, the Shell rigs are short-term parkers.

Efforts to block this new business — including the lawsuit filed in King County Superior Court by a coalition of environmental groups — focus on the Port’s internal processes, which authorized staff to negotiate the comparably small contract.

Those are micro-aggressions against a mega-problem.

The real fight should be over the oil leases themselves, which are issued by the U.S. Interior Department, led by Seattleite Sally Jewell, and for a new national energy policy that better addresses humankind’s role in changing our planet.

Seattle has been the gateway to Alaska since the city was founded. That vital economic link should not be broken for the symbolism of diverting a few oil rigs to another port.

Editorial board members are editorial page editor Kate Riley, Frank A. Blethen, Ryan Blethen, Mark Higgins, Jonathan Martin, Thanh Tan, Blanca Torres, William K. Blethen (emeritus) and Robert C. Blethen (emeritus).

SOURCE

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Posted in: Alaska, Arctic, Beaufort Sea, Business Principles, Chukchi Sea, Climate Change, Environment, Litigation, Oil, Oil Spill, Pollution, Royal Dutch Shell Plc, Shell,United States.
Tagged: Alaska · Arctic Ocean · Beaufort Sea · Chukchi Sea · Oil · Royal Dutch Shell Plc

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Shell Gives Conditions for More Investments in Nigeria

Shell Gives Conditions for More Investments in Nigeria

Mar 24th, 2015 

by John Donovan. 

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An article by Ejiofor Alike published 24 March 2015 by ThisDayLive.com

Shell Gives Conditions for More Investments in Nigeria

Shell Petroleum Development Company (SPDC) has given conditions for it to invest in Nigeria, saying that though it has divested assets, it is also ready to invest more than it has divested if the operating environment is right.

Speaking at a special panel session of the recently concluded Nigeria Oil and Gas (NOG) conference in Abuja, the new Managing Director of SPDC and Country Chair of Shell Companies in Nigeria, Mr. Osagie Osunbor said his company was committed to long-term presence in Nigeria.

Osunbor said even though his company had divested, it is ready to invest more than it divested if the conditions were right.

He however, stated that for his company to invest more, the issues of security, funding and fiscal stability have to be addressed.

“I think as a country what we have to be very mindful about is that we don’t completely focus on how we share the cake but focus on how we make the cake bigger. That for me is the key element of the whole fiscal stability side of the discussions. Elisabeth (Managing Director of Total Upstream Companies in Nigeria) made the point about the licenses and expiry of licenses. Many of these investments are in terms of billions, often money put forward by the private partners upfront. If the basic issue of the tenure of the licenses is not resolved, you can speak the whole day, nobody can commit the shareholders’ funds in these licenses,” he said.

Osunbor said the oil and gas industry has to be much more effective at making that point to the government about the need to provide this level of assurance for people to invest in the country.

He further stated that Nigeria’s operating environment is very uncertain, with multiple bodies implementing conflicting regulations.

“I am convinced that given the long term presence we all have in this country, at whatever level, whether in the United States, The Hague; in Paris and in China, everyone thinks of a long term presence in Nigeria and there is no better way to assure long term presence in this place as assuring that you have local capacity; if you don’t have local capacity, after a while, you withers,” Osunbor added.

He also noted that Nigerian independent companies can bring a lot on the table as they do things differently from the International Oil Companies (IOCs).

SOURCE

RELATED

Nigeria: Shell Lists Challenges Undermining Transformation Success (Vanguard)

By Clara Nwachukwu, Michael Eboh and Grace Udofia

Abuja — As robust as Federal Government’s current transformations in the energy sector may appear, the Shell Group has identified a number of challenges undermining the success of the reforms.

These are security, crude theft and pipeline vandalism, as well as funding, fiscal stability and predictability, lease predictability and a host of others.

Shell said that these factors are not only increasing the industry’s operating costs, but also stalling further investments for greater economic benefits.

The Vice President, Nigeria and Gabon, Shell Upstream International, Mr. Markus Droll, identified the challenges while speaking on, “The Journey Towards Transformation,” at the just concluded Nigeria Oil and Gas Conference, NOG 2015, last week in Abuja.

He said: “We still need better security for workers in the oil and gas industry. As I speak, a considerable part of our operations are under strict security limitations. We still need a more effective counter-strategy against oil theft and sabotage. While we have directed even more resources to try to counter this menace, it has become a bigger problem compared to a year ago. The methods employed are even more brazen than ever.

“We still need better funding for capital projects and to clear pending payments on expenditure. We are very concerned about what impact the much lower oil price will have on 2015 funding. We still need more predictability around leases; if we increase certainty around leases, then investment becomes easier to attract.

“And we still need fiscal stability and predictability. This remains key in ensuring investors of all sizes can commit confidently, government revenues can be forecast reliably, and a capable service industry is maintained with a steady work load. As it stands, investors in Nigeria face very tough fiscal conditions.”

Optimism about the future

Droll disclosed that Nigeria’s enormous oil and gas resources is one of the major reasons the Shell Group remains optimistic about the country’s economic future, saying that its optimism and continued investments in the country is being fuelled by current reforms in the petroleum industry as well as the re-prioritising of energy issue across the economic value chain.

Apart from the nation’s growing gas sector, he noted that with the way issues were now being handled, “Nigeria will continue to develop, diversify and grow its economy.”

Already, he said that current investments by Shell Companies in Nigeria are expected to generate up to $5million annually for the next 10 years under the SPDC Joint Venture.

As a result, he said the companies, through various investment projects are now being positioned to support the country more through to its next level of development not only as an oil and gas producer, but also as an emerging market.

SOURCE

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Posted in: Africa, Corruption, Environment, Human Rights, Nigeria, Oil, Oil Prices, Oil Spill, Pollution, Royal Dutch Shell Plc.
Tagged: Niger Delta · Nigeria · Oil · Oil Prices · Royal Dutch Shell Plc

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