Bonga Platform Closes After Nigeria's Worst Spill in a Decade

From Bloomberg Business News

21 December 2011

By Eduard Gismatullin and Elisha Bala-Gbogbo

Dec. 21 (Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest oil company, shut its 200,000 barrel-a-day Bonga field off Nigeria after a leak during a tanker loading caused what may be the country’s worst offshore spill in more than a decade.

An export line from the field’s floating production, storage and offloading vessel was probably the cause of the leak, estimated at below 40,000 barrels of crude, Shell said in a statement today. The oil flow has been halted, it said.

“We’re aware of the incident and we’re working hard with Shell to contain the spill,” Idris Musa at the National Oil Spill Detection and Response Agency said today from the capital.

The leak is expected to be the worst since a January 1998 Exxon Mobil Corp. spill dumped an estimated 40,000 barrels into the sea from its Idoho platform, with slicks reported as far west as Lagos. Shell, the largest foreign oil producer in Nigeria, has been criticized by some local people and foreign groups for spills of crude from its onshore fields.

The Anglo-Dutch company, operating in Nigeria since 1937, says most spills occur because of pipeline sabotage and oil theft and it has set up a website to disclose data on leaks.

“Spill response procedures have been initiated and emergency control and spill risk procedures are up and running,” Tony Okonedo, a Shell spokesman, said by phone from Lagos, the commercial capital. Shell is sorry for the leak, Mutiu Sunmonu, its Nigerian chairman, said in the statement.

Shares Advance

Bonga, Nigeria’s first deepwater discovery, produces almost 10 percent of the country’s crude 120 kilometers (75 miles) off the coast. Shell planned to export five cargoes of 1 million barrels each of Bonga crude every month from December to February, loading programs obtained by Bloomberg News show.

Shell pared an advance of as much as 1.4 percent in London trading to close the day up 0.4 percent at 2,288 pence. Shell’s American depositary receipts climbed 0.4 percent to $71.79 at the close in in New York.

“They averted a potentially much more serious situation, they figured it out very quickly,” Fadel Gheit, an analyst at Oppenheimer & Co. in New York, said in a telephone interview today. “I think the market is recognizing the responsiveness of the company.”

Gheit, who has an “outperform” rating on Shell’s American depositary receipts and owns some, said he’s glad “sanity prevailed” on the stock market. While the amount of oil spilled is substantial, he said, this isn’t a “runaway field” like what BP Plc dealt with in the Gulf of Mexico last year.

Yesterday Shell said a Gulf of Mexico drilling operation will stop for weeks after spilling 319 barrels of drilling fluid.

--With assistance from Sherry Su in London and Edward Klump in Houston. Editors: Tony Barrett, Charles Siler
To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Elisha Bala-Gbogbo in Abuja at ebalagbogbo@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Chevron Assumes Responsibility For Oil Spill. (What Spill?)

The article below from the Dow Jones Newswires  caught my attention this morning. I have actually been following this story for a couple of days now and realized I haven't seen this anywhere in the mainstream media. Why not? Granted this isn't the same as the horrific Deepwater Horizon spill in the Gulf of Mexico, however it is a spill nonetheless. Chevron is taking responsibility for it which is commendable. BP took responsibility for Deepwater Horizon, but they are vilified still today. (This is despite the fact several other companies have been found  to share the blame - which we don't hear about either.)

RIO DE JANEIRO (Dow Jones)–The Brazilian unit of major U.S. oil company Chevron Corp. (CVX) takes “full responsibility” for a leaking well bore that left a sheen of crude staining the Atlantic Ocean, a company official said Sunday.
“Any oil on the surface of the ocean is unacceptable to Chevron,” said George Buck, president of Chevron Brasil.
Chevron has plugged the appraisal well that was the primary source of the leaking crude, which traveled to the surface through a hole in the well bore after the rock wall of the well failed, Buck said.
Brazil’s National Petroleum Agency, or ANP, estimated the leak at between 200 and 330 barrels of crude per day, which was “in the ballpark,” Buck said. Another government estimate put the total volume of the spill at 5,000 to 8,000 barrels. Buck said that estimate was also “in the ballpark, perhaps high.”
Chevron has not used any chemical dispersants on the oil slick on the ocean’s surface, using only mechanical dispersion and collection, Buck said. He denied that Chevron was using sand on the sheen.
-By Jeff Fick, Dow Jones Newswires

Does anybody have any theories on why this environmental disaster isn't being covered? I would love to hear any input or theories.

Coast Guard, partner agencies continue preparations for international offshore drilling

From a US Coast Guard Press Release:
Date: November 18, 2011

Contact: Public Affairs Office
(305) 415-6683


MIAMI — The U.S. Coast Guard continues to work closely with federal, state and local agencies as well as maritime industry officials to update contingency plans to ensure readiness to respond to any potential oil spills in international waters that could potentially impact U.S. waters and coastline.
At the local-level, Coast Guard Sectors Jacksonville, Miami, Key West and St. Petersburg are updating their respective Area Contingency Plan, which will have specific response guidance pertaining to, the near and on-shore response efforts to be conducted along all of the State of Florida coastline that is within the 7th Coast Guard District’s area of responsibility.
On a broader scale, the Coast Guard is overseeing work on an Offshore Drill Response Plan and Regional Contingency Plan that focuses on response operations; strategies and tactics that will be employed out at sea to combat a spill and other response operations.
"Our primary focus for the past several months has been updating our contingency plans, ensuring they are ready to be activated in the event an incident was to occur that posed a substantial risk to our marine environment, and ensuring that lessons learned from the Deepwater Horizon oil spill are incorporated into our plans," said Capt. John Slaughter, chief of planning, readiness, and response for the 7th Coast Guard District.
Another important focus has been ongoing interagency engagement. More than 80 Coast Guard representatives and officials from South Florida coastal counties, Departments of Commerce, Defense, National Oceanic and Atmospheric Administration, Bureau of Safety and Environmental Enforcement, Department of Treasury, Environmental Protection Agency, the State of Florida Department of Environmental Management and Department of Environmental Protection, and maritime industry held a table top exercise Thursday utilizing response plans to address a fictitious international spill off the coast of Florida. The exercise allowed participants to discuss sensitive environmental areas, planning strategies, likely issues and response coordination principles that responders would face, as well as gather additional information to use in future planning.
"Our engagement with these preparedness efforts has been and continues to be far reaching and therefore includes a host of federal, state, and local and private entities," added Slaughter.
The exercise is one of the many actions to ensure readiness and mutual cooperation among the U.S. response community. As the designated federal on scene coordinator for any coastal spill, the Coast Guard's objective is to ensure the response community has the opportunity to review plans, identify needed updates and be ready for proposed offshore drilling outside U.S. waters.
“Protecting the marine environment from accidental oil and chemical spills is a key mission of the U.S. Coast Guard," said Rear Adm. Bill Baumgartner, commander of the 7th Coast Guard District. "These efforts are ongoing and the U.S. Coast Guard will continue to maximize information sharing, preparation, and training with all involved to ensure sound strategies and liaisons are built to prepare for and respond to any potential environmental threat to U.S. waters.”

Shipping Company Pleads Guilty to Pollution Charges

(11/7/2011)

The following is the text of a press release issued by the U.S. Attorney for the District of Oregon: (PORTLAND, Ore.)– U.S. Attorney S. Amanda Marshall and Oregon Attorney General John Kroger jointly announced that the owner and operator of a Cyprus-based ship pleaded guilty today to felony oil pollution charges. A.E. Nomikos Shipping Inv. Ltd. and Lounia Shipping Co. Ltd. pleaded guilty to one count each of violating the Act to Prevent Pollution from Ships, and knowingly making false statements to the U.S. Coast Guard. As part of the plea agreement, the companies agreed to pay a $750,000 fine. Half of the fine – $375,000 – will go to the Oregon Governor’s Fund for the Environment, which is dedicated to local environmental cleanup and restoration efforts focused on preserving and protecting Oregon’s rivers, watersheds, and fish and wildlife. Nomikos was the operator and technical manager of the Arion SB, a bulk carrier that operated under the flag of Cyprus. Nomikos provided management services pursuant to a contract with Lounia, the registered owner of the Arion SB. Nomikos is headquartered in Piraeus, Greece. Lounia is headquartered in Cyprus. Representatives of the companies entered guilty pleas before U.S. District Judge Michael H. Simon today, after which Judge Simon imposed sentence. In addition to the $750,000 fine, Judge Simon sentenced both defendants to three years probation, during which both defendants will be required to fund and implement an Environmental Compliance Plan. An investigation revealed that between at least June 2011 and October 16, 2011, Nomikos and Lounia, acting through their agents and employees, directed subordinate engine room crew to run the Arion SB’s Oil Water Separator improperly. Specifically, the Chief Engineer instructed the Second Engineer to pipe fresh, clean water directly into the Oil Content Meter for the purpose of blinding the Arion SB’s Oil Content Meter, so that it would not function properly to prevent the overboard discharge of oil-contaminated waste in excess of 15 ppm. The Chief Engineer failed to include any entries in the Arion SB’s Oil Record Book relating to the crew’s improper use of fresh water to manipulate the vessel’s Oil Content Meter, and also included inaccurate entries in the Oil Record Book regarding the crew’s use of the vessel’s Waste Oil Incinerator. “The sentences imposed today should send a clear message that the United States will hold vessels responsible for dumping oil in our oceans and for lying to the United States Coast Guard. We are pleased that the court allocated $375,000 of the fine to be used here in Oregon to benefit our environment,” said U.S. Attorney S. Amanda Marshall. “The Oregon Department of Justice is deeply committed to holding polluters accountable when they break the law,” said Attorney General John Kroger. This case came to light after the United States Coast Guard boarded the Arion SB, on or about October 16, 2011, to conduct a Port State Control Safety Exam for the vessel. “This case demonstrates our commitment to ensuring that vessels calling on U.S. ports fully comply with U.S. laws and international treaties,” stated Rear Admiral Keith A. Taylor, Commander, Thirteenth Coast Guard District. The case was jointly investigated and prosecuted by federal and state authorities. The case was investigated by the U.S. Coast Guard, U.S. Coast Guard Investigative Service, and Environmental Protection Agency Criminal Investigation Division. Assistant U.S. Attorney Stacie F. Beckerman and Special Assistant U.S. Attorney Patrick Flanagan of the Oregon Department of Justice’s Environmental Crimes Unit prosecuted the case.

What If Deepwater Horizon Oil Spill Happened In Cuban Waters?

WASHINGTON (Dow Jones)–Several U.S. companies are asking the Obama administration for permission to respond to potential oil spills in Cuban waters, a top offshore drilling regulator said Wednesday, hoping to overcome embargo restrictions that currently limit their ability to do so.

The companies’ requests coincide with a growing concern among oil-industry experts who say the U.S. embargo on Cuba could cripple the ability of spill-containment companies to respond to potential spills that start in Cuban waters but then move to U.S. shores.

Speaking at a congressional hearing Wednesday, Bureau of Safety and Environmental Enforcement Director Michael Bromwich said several companies have asked the U.S. Commerce Department for licenses that would allow them to use subsea well containment systems and other types of equipment to respond to spills in Cuban waters.

Bromwich said he had “a high level of confidence” the Commerce Department would approve the licenses, in large part because it had already issued separate approvals for oil-spill containment systems and cleanup items. U.S. government agencies “are very much on alert, looking for the licenses [applications] as they come in and my understanding is that they’re giving them very rapid attention and they’re approving them as promptly as they can.”

The administration’s efforts are not without controversy. The chairman of the House Energy and Mineral Resources Subcommittee, Rep. Doug Lamborn (R., Colo.), said Wednesday that he is concerned “this administration will weaken the U.S. embargo on Cuba.”

Earlier in the week, the head of the House Foreign Affairs Committee sent a letter to President Barack Obama asking him to do more to prevent Cuba’s oil-drilling plans. “This scheme endangers U.S. security and environmental interests, and will enrich the Cuban regime,” Rep. Ileana Ros-Lehtinen (R., Fla.), a Cuban-born American, said.

Many environmental and oil-industry experts have taken a different approach and have urged the administration to give broad flexibility to U.S. companies that are equipped to respond to spills.

They contend Cuba will pursue oil exploration, regardless of whether the U.S. disapproves, so the U.S. should simply prepare for possible accidents.

Cuba’s offshore drilling plans get under way in coming months when Spanish company Repsol YPF SA (REPYY, REP.MC) starts to conduct exploratory drilling off the country’s northern coast. Repsol is transporting a Chinese-built rig to be used for the exploration work.

Repsol has voluntarily agreed to allow U.S. officials to inspect the rig before it enters Cuban waters. The company has also agreed to comply with U.S. drilling standards.

-By Tennille Tracy, Dow Jones Newswires

British Petroleum is Back!

By Ryan Tracy And Angel Gonzalez, The Wall Street Journal

WASHINGTON—BP PLC on Wednesday got permission to drill its first well in the Gulf of Mexico since the company’s massive oil spill there last year.

The decision was expected after the U.S. Interior Department approved the company’s broader plan for four exploratory wells in the Gulf late last week. It represents another milestone in the U.K. oil company’s efforts to return to the good graces of federal regulators since it lost control of a deep-water well after a blowout in April 2010. The incident killed 11 workers and caused the largest offshore oil spill in U.S. history.

The Interior Department said the company had met new safety requirements put in place since the spill and had adhered to voluntary standards that went beyond the agency’s requirements.

The approval comes a day after the U.K. oil company reported quarterly earnings of $5.3 billion, surpassing analyst expectations and boosting hopes that the company was emerging with renewed strength from one of the darkest—and costliest—periods of its history. The company had to shed billions of dollars in assets in order to pay for spill costs, while facing the wrath of U.S. legislators, environmental activists and the public.

“We have now reached a definite turning point,” Chief Executive Bob Dudley said in a statement Tuesday. “Our operations are regaining momentum and we are facing the future with great confidence.”

BP said Wednesday’s permit came “after several months of hard work developing and implementing our new drilling standards and sharing those standards with industry partners and regulators.”

The well is located about 246 miles south of Lafayette, La., and is part of BP’s Kaskida prospect. It will be drilled in 6,034 feet of water.

To demonstrate it could contain a blowout at the new well, BP contracted with the Marine Well Containment Co., an industry consortium formed after last year’s spill. The company maintains a “capping stack” that can be scrambled to the scene of a spill and is designed to contain an out-of-control well in deep water.

Environmental groups have questioned whether the new containment system can fulfill those claims, but federal regulators have endorsed it.

“This permit was approved only after thorough well design, blowout preventer, and containment capability reviews,” Michael Bromwich, director of the Interior Department’s Bureau of Safety and Environmental Enforcement, said Wednesday.

BP, one of the largest leaseholders in the U.S. Gulf and until the spill one of the most successful wildcatters there, can now join the flock of big oil and gas companies returning to the oil-rich area. On Tuesday, Hess Corp. said it was moving forward with the $2.3 billion development of the Tubular Bells deep-water oil and gas project in the Gulf—the helm of which it took over from BP in the wake of the Deepwater Horizon spill.

The Interior Department said it has approved permits for 46 deep-water wells since February, when a company first demonstrated it could contain a deep-water spill.
(c) 2011 Dow Jones & Company, Inc