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Banned
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Attention !!! The "free market" is not maximizing US petroleum output or refined products output. It is so glaring a problem, in addition to the documentation I have already posted, that crude oil rich North Dakota is mulling over building a state owned oil refinery to relieve yearly diesel fuel shortages...they cannot persuade private enterprise to build a second refinery in their state, and NATIONALLY...BP-Amoco's screw ups, neglect, deception, and criminality these past few years are shocking....they result in a loss of at least 5 percent of total domestic petroleum output, higher prices in the US, and a US trade deficit $1 billion higher per month than it had to be.
This all comes during what free market theory tells us is a time where high price incentives should influence the private sector to minimize these problems, but they have not:
Quote:
http://www.reuters.com/article/bonds...80123?rpc=401&
By Janet McGurty
<h2>North Dakota legislators mull state oil refinery</h2>
Wed Jan 23, 2008 1:21pm EST
NEW YORK, Jan 23 (Reuters) - North Dakota legislators are studying building the country's only state-run oil refinery to steady fuel prices and boost demand for locally produced crude.
Sandwiched between Minnesota and Montana along the Canadian border, the snowy farming state is the No. 8 U.S. oil producer thanks to advances which have enabled companies to extract crude oil from the giant Bakken Shale formation.
A group of Democratic North Dakota legislators is now looking into a state-run plant to refine oil from the deposit, where companies such as Marathon Oil Corp (MRO.N: Quote, Profile, Research) produce about 130,000 barrels per day of light, sweet oil.
"In 2006, when we started to hit this formation, we had 30,000 barrels per day which had nowhere to go. Both the refinery and the pipelines were full," said Shirley Meyer, a member of the state's house of representatives, adding a study resolution was introduced during the house's last session.
North Dakota currently has just one refinery, Tesoro Petroleum Corp's (TSO.N: Quote, Profile, Research) 58,000 barrel-per-day plant in Mandan, which uses less than half the state's oil output and falls short of meeting the state's roughly 70,000 bpd of fuel demand.
Options to ship the North Dakota crude out of state have been limited by space constraints along the Enbridge pipeline, which has forced producers to discount the selling price for the state's oil.
"That is one of the reasons we formed this committee," said Meyer, adding that refinery could be built as a public-private partnership or be fully-state vested like North Dakota's state-owned bank and mill.
The refinery could also help alleviate occasional shortages of No. 1 diesel, a crucial fuel to farmers in the agricultural state but which buyers had trouble finding in early January. <a href="http://www.reuters.com/article/bondsNews/idUSN2364316120080123?rpc=401&&pageNumber=2&virtualBrandChannel=0">continued....</a>
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Quote:
http://www.kfyrtv.com/News_Stories.asp?news=11259
Diesel Fuel Shortage Hurting Farmers | Video
Breanna Borries
10/2/2007
It`s harvest time for some crops, but a lack of diesel fuel to power the trucks and equipment is slowing down some farmers.
Wholesale transporters are having to drive a little further for diesel this harvest season.
That`s because refineries in neighboring states are not up to full capacity. There is enough oil and gasoline, but due to expansion projects, flodding and other problems, diesel production is lower than usual.
And since it`s harvest season, the demand is high.
Farstad oil truckers are having to go as far as Sioux Falls and Twin Cities, and it`s especially difficult for area growers because of the longer waiting periods and more costs all around.
A spokesman for the North Dakota Petroleum Marketers says that the public shouldn`t worry about limited supplies at the pump.
They will notice, like the farmers, that the price has gone up. Predictions are that prices will drop again when the harvest wraps up and winter hits.
North Dakota Agriculture Commissioner Roger Johnson says the eastern part of the state is being hit the hardest because it`s at the end of the pipelines....
http://www.bismarcktribune.com/artic...ate/143112.txt
Hearing discusses fuel concerns
Nov 21, 2007 - 04:03:46 CST
By JAMES MacPHERSON
Associated Press Write
....Mike Rud, president of the North Dakota Petroleum Marketers Association, said fuel dealers have said the tight supplies are as bad as the oil embargo of the 1970s.
"We can't keep taking the crumbs on the end of the pipeline," Rud said.
Rud said as many as eight refineries experienced outages this year, most of which were planned.
Antitrust laws forbid companies to share information on planned refinery shutdowns, but Rud said an independent liaison could be assigned to ensure the shutdowns don't happen at the same time.
"A little coordination is all we are asking for," Rud said.
Energy officials told Dorgan that increased refinery capacity likely would ease the supply pinch in North Dakota.
Tesoro Corp.'s refinery at Mandan is the state's sole oil refinery. Officials there have said about 75 percent of the refinery's production is shipped to Minnesota.
Dorgan called the fuel shortage a cruel irony.
"We produce six times more energy than we use and we can't get it," he said.....
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Oil sells for $120 per bbl and natural gas provides 1,000 BTU per CFU. In the US, we are paying
250,000 times $120 ($30 million) and 200,000 times $11.54 ($2,308,000).... an addtional $32.3 million
per day, or nearly$1 billion per month, added to the US trade deficit for three full years, because BP-Amoco couldn't get this done...not only does this delay aggravate the trade deficit and help to devalue the US dollar, the missing petroleum and nat. gas supply contributes to higher costs to drive vehicles, heat homes, and generate power in the US. I read last week that 48 percent of California's power generation is fueled by natural gas:
Quote:
http://www.theglobeandmail.com/servl...Story/Business
Now, after a period of slumping prices, natural gas is hot again. Prices have climbed nearly 50 per
cent in the past year, closing on the New York Mercantile Exchange at $11.54 (U.S.) per million
British thermal units on Friday. A year ago, natural gas prices were below $8 per million BTU...
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Quote:
http://www.rigzone.com/news/article.asp?a_id=24067
<img src="http://www.tandtbisso.com/Thunder%20Horse1.jpg" height=700 width=850>
BP CEO: Thunder Horse 2005 Start 'Unlikely'
Benoit Faucon Tuesday, July 26, 2005
.......The world's largest semi-submersible platform, Thunder Horse tilted two weeks ago after the
hurricane passed through the Gulf of Mexico. The U.K. oil major has since righted the structure.
The company said it couldn't say at this stage if there is damage to the platform or what caused it to
tilt.
Thunder Horse is expected to be a significant contributor to North American output when it begins
producing. The platform originally was supposed to hit first oil in late 2005.
Thunder Horse is designed to process up to about 250,000 barrels a day of oil and about 200 million
cubic feet a day of gas.
BP is the operator and 75% shareholder of the platform, while ExxonMobil Corp. (XOM) owns the
remaining 25%.
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Quote:
http://www.redorbit.com/news/science...orm/index.html
Troubles Run Deep on Gulf Oil Platform
Posted on: Monday, 28 May 2007, 09:00 CDT
....The workers were surprised to learn that the platform, evacuated before Dennis hit, had not taken
on water from a leak through its hull. Rather, an incorrectly plumbed, 6-inch length of pipe had
allowed water to flow freely among several ballast tanks. That began a chain of events that caused the
platform to tip into the drink.
Now BP is attempting to do what no oil company has done before: essentially rebuild the entire
architecture of an oil field on the sea floor some 6,000 feet beneath the waves.
At $250 million, the job is costlier, and riskier, than putting the equipment on the gulf floor in the
first place. On the frontier of oil exploration, the margin between riches and disaster can be as
small as a 6-inch piece of pipe. Yet for BP, rebuilding the platform is critically important because
the company desperately needs the oil flowing as reserves in formerly rich fields such as Prudhoe Bay
in Alaska dwindle. ....
....For BP, the troubles at Thunder Horse have turned the oil platform into a dual symbol. Like Janus,
the two-faced Roman god that glimpses both the past and the future, Thunder Horse stands as a reminder
of BP's mistake-prone recent track record. Looking forward, though, it holds out the prospect of a
lucrative, rewarding future.
The Thunder Horse mishap followed by nearly four months BP's worst-ever accident on U.S. soil, a
refinery explosion in Texas City, Texas, that killed 15 people. Then, last spring, BP spilled 200,000
barrels of oil onto the Arctic tundra, the first of several pipe leaks that ultimately led BP to
temporarily shut down half of North America's largest oil field. ....
....BP's replacement ratio had a modern-day peak of 191 percent in 2001, meaning BP added almost twice
as much in reserves as it sold. But that number dropped below full replacement in 2004 and 2005 before
climbing above the break-even line again last year, to 113 percent.
By 2006, BP held leases on 650 tracts in Gulf of Mexico water deeper than 1,250 feet. After 15 years
of effort, BP was vying with longtime deep-water player Chevron to become the largest leaseholder in
the deep gulf.
A host of productive exploratory wells followed. Going by names like Atlantis, Neptune, Mad Dog and
Holstein, they are among the gulf's richest finds.
One, at first called Crazy Horse, got a name change after descendants of the Native American warrior
protested. Today it's called Thunder Horse.
The $250 million pipe
At a cost of $1 billion to build, and physically imposing with a top deck that rises 15 stories above
the water's surface, the Thunder Horse platform appears to be invulnerable to the forces of nature and
a wonder of technology. After all, more than 18 major parts on the platform have Serial No. 001 --
meaning they were invented just for this job.
It turns out Thunder Horse is vulnerable to both the power of nature and the shortcomings of modern
technology.
The platform was designed to handle hurricanes as strong as Dennis. But the evacuation for the
hurricane, combined with just the slightest shifting in Dennis' strong winds, set in motion an
unlikely chain of events that caused the platform to tilt. That, in turn, has led to the delay that is
costing BP billions in lost revenue -- and serving for the industry as an example of what can go wrong
at the outer limits of technology.
The platform rests on four hollow, airtight legs that are as wide across as a two-bedroom apartment.
Normally, the legs give the platform buoyancy, and horizontal connecting sections add stability.
After workers evacuated in advance of Hurricane Dennis, though, the misplumbed pipe allowed water to
cascade through ballast and bilge tanks. The force of the flow forced open valves that in turn allowed
the water to gather in the two port-side legs of the platform.
As Thunder Horse's top deck tilted toward the water, ballast pipes that normally pump water out began
taking water in.
The support legs filled with water, and all manner of calamity set in. Some 30 car-size pumps and
motors were ruined. A corroding process started that ran through the platform's 25 miles of electric
cable and wiring like oil being sucked up by a wick.
"There's the $250 million pipe," said Sammy McDaniel, BP's head of Gulf of Mexico operations, a wry
smile on his thin face as he showed a visitor the cleaned-up inside of one of Thunder Horse's large,
hollow legs.
Neither McDaniel nor Bond had set foot on Thunder Horse before the mishap. On the first helicopter
flight in, they agreed to work together, with McDaniel focusing mainly on the platform's operations
and Bond zeroing in on the bottom of the ocean.
"We knew this one was going to be a bear," McDaniel said.
In the weeks after the landing party first boarded Thunder Horse, three days after the storm, the
platform became a hive of frantic activity. With 150 workers living on a ship anchored nearby, working
with lamps on their hard hats until electricity could be restored, McDaniel and Bond led a frantic
cleanup and restart effort.
Work stopped only for hurricanes. After the devastating successive storms, Katrina and Rita, came
through, the workers stayed off the platforms while trying to help their colleagues piece their lives
back together.
BP's corporate brass told the public that it believed Thunder Horse could restart by late August 2006.
Privately, Bond and McDaniel thought they could get the platform back in operation before the end of
2005. Rushing to meet the deadline, workers piled up nearly 4 million man-hours on the cleanup alone.
With start-up approaching, the recovery team in May of 2006 used water to pressure-test the subsea
system of pumps, wellheads, piping and gathering centers that sprawl over an oil field on the ocean
floor that covers an area nearly as wide across as the North Side of Chicago.
Then the unthinkable happened: The system leaked.
"We were this close," said McDaniel, holding a thumb and forefinger close together. "Then, 'Damn! What
went wrong?'"
Sleuthing at 6,000 feet ......
....Cause of the cracks
Perhaps it was just one bad weld, but McDaniel and Bond had to determine if there were any more. They
directed the submarine to another manifold and found a second ruptured weld. Inspection of other welds
in the subsea equipment turned up even more cracks.
Thunder Horse's oil reservoir is nearly 5 miles below the water's surface. At that depth, oil will
gush from the drill pipes at a temperature of 275 degrees Fahrenheit, under a metal-crunching 17,400
pounds per square inch of pressure.
Those conditions can stress even the mixture of high-strength steel and alloy that make up the
half-inch welds on the manifolds and pipes of the Thunder Horse oil fields. But the equipment had gone
through severe tests -- at 125 percent of the worst stresses that the Thunder Horse field might exert.
....
....Now the hunt was on for a new spot of knowledge: What caused the problem?
Lang flew in a team of experts in subsea oil production, welding and metallurgy from around the world
to Houston to determine the cause of the weld failures.
Meanwhile, he directed others to touch base with the manufacturers of every component built into the
sea-floor manifolds. He asked for testing of the anti-corrosion materials and insulation that
enshrouded the subsea pipes. He wanted no clue missed.
"Ultimately you say, 'What if I'm wrong about what caused this? We put our equipment back on the
seabed, and it fails?' " Lang said. "You can't risk that."
Lang also wanted other oil companies to be aware of the dangers. Learning that Shell Oil Co. was due
to submerge manifolds at depths similar to Thunder Horse in the fourth quarter of last year, he made
certain Shell was notified of the possible risks.
Even as the investigation started, though, pressure mounted onboard Thunder Horse.
<h3>BP had commissioned the Balder, one of only two ships in the world capable of lifting the
manifolds and other heavy equipment from the sea floor, to visit the platform in December. After that,
the Balder wouldn't be available again for almost a year.</h3>
<img src="http://hmc.heerema.com/Portals/3/Docs/Corp/Multimedia/Fleet/Balder/Balder_1_sm.jpg">
<h5>Photo of the Balder</h5>
By late September 2006, the manifold investigation team delivered its verdict. The welds, indeed, were
the problem thanks to an unforeseen chemical reaction.
While the manifolds sat idle for a year after the platform tilted, the crushing pressure at the bottom
of the sea forced hydrogen atoms into the mix of steel and high-strength alloy that made up the welds.
The hydrogen caused the metal to become brittle, and when water was forced through the piping during
the restart testing, the welds failed.
Drilling toward Mardi Gras
In the meantime, Bond hadn't been waiting for a verdict. He knew he only had until the end of 2006 to
have all the sea-floor equipment ready to be lifted. That meant sealing wellheads, cutting pipes and
planning logistics. It also meant working around the schedules of the 280 people onboard Thunder
Horse, some of whom continued drilling new holes even as the rest of the sea-floor operation stood
idle.
Drilling, after all, is what Thunder Horse was built to do. ....
......The rebuilding process
Today, Thunder Horse's crews have removed about three-quarters of the equipment that once nestled on
the seabed. They are putting new insulation and anti-corrosion coatings on some, replacing other
pieces entirely.
The most delicate operation -- pulling the pipe up from the seabed without bending it -- is necessary,
Bond said, because it's the only way he can reassemble the equipment that's needed on the oil field.
The deep-sea robots can cut the pipes at the point they connect to the equipment 6,000 feet below the
surface. But robots can't weld.
So Bond must oversee an operation that pulls up the freed pipe and brings it within reach of the
Thunder Horse deck. There workers can weld it back to the huge, heavy pieces of equipment. Then BP
workers must carefully lower the joined pieces back down, all without causing any new problems.
No one says it will be easy. But everyone onboard says it must happen on time. They will need the
Balder for some of work, and demand for that ship is so high that it only comes by every 18 months or
so.
"We've just been going full speed for a long time, and there's no letting up," said McDaniel, the
operations chief.
"What we want to do is prove to ourselves and the world that we're ready," he said. "We just need to
get all this stuff under us, and begin operation."
Leading a reporter on a tour of the complex onboard systems that separate oil, water and gas, McDaniel
pointed to a pipe from the platform that plunges deep into the ocean. By the time Thunder Horse goes
into production, the pipe will connect to Mardi Gras -- a $1 billion pipeline BP is building that one
day will carry half of all the oil pumped from the deep-water gulf."This is the top end of the Mardi
Gras pipeline," McDaniel said. "When the oil leaves here, it's gone."
For BP, and for gas-hungry consumers across the U.S., it can't happen soon enough.
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<h3>This is the company that converted the ocean construction ship, "Balder" that "saved" the Thunder Horse drilling/production platform:</h3>
http://hmc.heerema.com/tabid/1492/Default.aspx
Since mazimizing US domestic petroleum production is a matter of US national security, it seems kind of ridiculous that 5 percent of US total petroleum production, the amount that Thunder Horse will produce, could have been delayed at least a year. because there were only two ships capable, in 2006 in the world, of the specialty lifting that BP required at it's well site in the Gulf of Mexico. Our government invests in 12 aircraft carrier groups, why not assign such a critical bottleneck as the design and building of these specialty ships to a NASA modeled program, or purchase this ship builder outright, if future new petroleum development will be in deep near US shores, water?
FRom BP'a website, May 18, 2007:
Quote:
http://web.archive.org/web/200705182...egoryId=900451
9&contentId=7009088
.... BP’s huge Thunder Horse platform deserves a high profile.
Thunder Horse is one of the key discoveries upon which the company will grow its future Gulf of Mexico
production. Designed to process 250,000 barrels of oil per day and 200 million cubic feet per day of
natural gas, Thunder Horse will be the largest producer in the Gulf. The field will be supported by a
network of 25 subsea wells.
World class field
Located 150 miles southeast of New Orleans, the Thunder Horse field is one of the most technologically
complex, in part because of the challenging deepwater environment....
....First production
First oil at the world’s largest floating platform has been rescheduled to the second half of 2008.
The cause of the delay is the need to repair and replace components in the subsea system following a
failure during pre-commissioning checks. The equipment had passed all the normal industry standard
tests and regulatory requirements. But when we conducted more prolonged and rigorous testing, as an
additional safety precaution, a failure occurred on a weld in one of the subsea manifolds.
The subsea equipment had remained in a cold state, with cathodic protection, on the sea bed for some
time following the listing of the platform after its evacuation during the 2005 hurricane season.
Following a thorough investigation, we concluded that these unusual circumstances led to hydrogen
embrittlement of the equipment so that it could not perform its intended high pressure, high
temperature service. We will now retrieve and replace all the subsea components we believe could be at
risk, before starting production in the second half of 2008....
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From BP's current website: MORE DELAYS.....
Quote:
http://www.bp.com/genericarticle.do?...tentId=7009088
.... First production
First oil at the world’s largest floating platform has been rescheduled to the end of 2008. The cause
of the delay is the need to repair and replace components in the subsea system following a failure
during pre-commissioning checks. The equipment had passed all the normal industry standard tests and
regulatory requirements. But when we conducted more prolonged and rigorous testing, as an additional
safety precaution, a failure occurred on a weld in one of the subsea manifolds.
The subsea equipment had remained in a cold state, with cathodic protection, on the sea bed for some
time following the listing of the platform after its evacuation during the 2005 hurricane season.
Following a thorough investigation, we concluded that these unusual circumstances led to hydrogen
embrittlement of the equipment so that it could not perform its intended high pressure, high
temperature service. We will now retrieve and replace all the subsea components we believe could be at
risk, before starting production by the end of 2008......
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Quote:
Financial Times
August 30, 2006
BP faces two US probes over trading
By Rebecca Bream
Published: August 30 2006 03:00 |
Last updated: August 30 2006 03:00
BP has revealed that it now faces two investigations into its trading activities in the US, adding to
its troubles following the forced shutdown of its Prudhoe Bay field in Alaska.
The oil major yesterday confirmed media reports that it was being probed over its trading of crude oil
and gasoline.
The crude oil inquiry is led by the US Commodity Futures Trading Commission (CFTC), which regulates
futures markets, while the US Department of Justice is looking into some of BP's gasoline trades.
BP said: "There are two investigations and we are fully co-operating [with the authorities]."
It is understood that the CFTC has sent subpoenas to BP and other energy traders in its investigation
of crude oil over-the-counter trades from in 2003 and 2004.
The Department of Justice's separate gasoline investigation has been going on for more than a year,
said people close to BP, and is focused on one day's trading on the New York Mercantile Exchange in
2002.
This is not the first time BP's trading activities have been the subject of investigation by the US
authorities.
In June, BP was accused by the CFTC of attempting to manipulate the market for propane, a gas used by
many households in the US.
BP has denied the propane-related allegations.
In 2003, BP agreed to pay $2.5m (£1.3m) to settle the allegations of improper crude oil trading on
Nymex, although it did not admit to or deny any wrong-doing.
The oil major is already being investigated by several other bodies in the US.
These include grand juries probing a fatal explosion at BP's Texas City refinery in March 2005 and a
serious oil spill at Prudhoe Bay, one of the biggest oil fields in the US, in March this year.
Prudhoe Bay is also only operating at half its normal output after BP admitted earlier this month that
its pipelines there were badly corroded and risked leaking more oil.....
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Quote:
http://www.ft.com/cms/s/0/5ec3df8a-3...nclick_check=1
BP faces claims of tampering with data on Alaskan pipeline
By Sheila McNulty in Houston
Published: August 21 2006 03:00 | Last updated: August 21 2006 03:00
US environmental investigators are examining allegations by employees that BP manipulated inspection
data to avoid replacing pipelines at Prudhoe Bay, its 30-year-old Alaskan field, the Financial Times
has learned. BP denies the allegations.
At the same time, in a separate move, Alaska's attorney-general, David Marquez, has issued subpoenas
to BP, as operator and an owner of the field, and its co-owners, "to preserve all documents that may
be relevant to corrosion at Prudhoe Bay", to conduct an investigation.
The parallel investigations into BP's credibility as operator of North America's largest oil field are
yet another blow to the company, which already is under heightened regulatory scrutiny in the US after
major lapses at its Alaskan and Texas operations within the past two years.
Lord Browne, BP's chief executive, might yet be drawn into the growing controversy over whether BP
mismanaged parts of its US operations.....
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Quote:
Seattle firm softened warnings about BP's pipeline monitoring
By Steve Miletich and Hal Bernton
Seattle Times staff reporters
Resources
Coffman documents
http://www.pogo.org/p/environment/AlaskanPipeline.html
BP corrosion Web site
http://usresponse.bp.com/go/site/1249/
BP workers use propane torches to burn off oil from an Aug. 6 leak in an oil-transit pipeline at the
Prudhoe Bay oil field on Alaska's North Slope.
Warnings by a Seattle-based engineering firm about problems with BP's monitoring of its Alaska oil
pipelines were significantly toned down after the company complained that the report was "extremely
negative," according to documents now under review by a federal grand jury.
The draft report by Coffman Engineers, published in November 2001, raised concerns about the way BP
was tracking and reporting Prudhoe Bay pipeline corrosion, which this year resulted in oil spills and
forced a partial shutdown of those fields.
But the final Coffman document, in its summary, had a strikingly different tone: It praised BP for a
"comprehensive program of monitoring and inspections" and "steadily improving" trends in internal
pipeline corrosion.
Coffman's 2001 draft report, as well as BP's critique, were made public Friday on the Project on
Government Oversight Web site by Charles Hamel, a former oil broker who is a watchdog of Alaska's oil
industry.
Both final and draft documents have been submitted to a federal grand jury in Anchorage, which is
investigating the circumstances leading to a March oil spill of more than 200,000 gallons of oil from
a west Prudhoe field pipe known as a transit line that carries processed crude to the start of the
trans-Alaska pipeline.....
.....Hamel, in a letter sent Aug. 22 to the federal Office of Pipeline Safety, accused BP of
"whitewashing" away criticism.
The 2001 Coffman report questioned whether BP was making enough use of remote-operated devices that
check for corrosion and other wear. The report described the so-called "smart pigs" as "the only
inspection technique capable of looking at the whole internal and external corrosion picture."
Most of the Coffman comments about "pigging" were eliminated from the final report, published early in
2002.
In the aftermath of last March's spill, BP acknowledged that the transit lines in western Prudhoe Bay
had gone without a smart-pig inspection since 1998, and it has been scrambling to make those
inspections......
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Quote:
http://www.redorbit.com/news/busines...age/index.html
Company Confronts a Tarnished Image
Posted on: Tuesday, 8 August 2006, 09:00 CDT
By David Ivanovich, Houston Chronicle
Aug. 8--WASHINGTON -- The forced shutdown of Alaska's huge Prudhoe Bay oil field because of a corroded
pipeline is but the latest in a series of grave operational blunders that have ravaged BP's
reputation.
This same company has been struggling to move beyond the searing images of last year's deadly Texas
City explosion, to calm investors' worries about the massive Thunder Horse platform found listing
after Hurricane Dennis and to overcome the embarrassment of having a former company trader admit he
tried to corner the propane market.
Now, with more than 400,000 barrels of crude from the nation's largest oil field shut in indefinitely,
BP may get to explain to American motorists why prices at the pump are soaring again.
"They cannot afford another black eye," said Oppenheimer & Co. analyst Fadel Gheit. "They have had
their share of mishaps and disasters."
BP America Chairman Bob Malone tried to defuse some of the anticipated outrage, noting in a statement:
"Our priorities moving forward are to assure the safety and integrity of our operating infrastructure,
minimize impact on the environment, continue the cooperative working relationship with the relevant
agencies and restore production as soon as it is safely -- and I reinforce safely -- possible."
But some observers were amazed that BP could have endangered production from the critical field by
allowing the pipeline to deteriorate so badly.
Just five months ago, nearly 270,000 gallons of oil spilled from a corroded pipeline in the same oil
field, a mishap that sparked an investigation and prompted regulators to order inspections of other
lines.
"It takes two leaks before they figure out that corrosion is a significant issue," said David Pursell,
executive vice president at Pickering Energy Partners in Houston. "One time is not enough?"
While BP is the operator of Prudhoe, fellow giants Exxon Mobil Corp. and ConocoPhillips are partners
in the project.
"If I am Rex Tillerson, I'm not sure I want BP to be a partner again, certainly not as an operating
partner," Pursell said of Exxon Mobil's chief executive.
Already, the ranking Democrat on the House Energy and Commerce Committee is calling for congressional
hearings into the pipeline troubles.
"It is appalling that BP let this critical pipeline deteriorate to the point that a major production
shutdown was necessary," Rep. John Dingell, D-Mich., said. "BP must take all steps necessary to repair
or replace problem pipelines quickly, so the American consumer does not pay for BP's laxity."
BP has had its share of troubles in Alaska's oil fields. Four years ago, gas escaped from a previously
shut-in well being restarted, sparking an explosion and fire that seriously injured an oil-field
worker, the Alaska Oil and Gas Commission found.
In July, BP closed 12 natural gas wells in Alaska after whistle-blowers alleged some 50 BP wells might
be leaking.
BP's latest crisis comes a year and a half after the March 2005 explosion at the company's refinery in
Texas City, a blast that killed 15 and injured scores.
Workers there had inadvertently overflowed a vent stack with hydrocarbons during the startup of a
process unit.
Last September, the Occupational Safety and Health Administration fined BP a record $21.4 million for
more than 300 alleged violations.
BP agreed to pay the fine as part of a settlement. But OSHA levied a second, $2.4 million fine against
the company in April for alleged safety violations at a refinery in Ohio. Edwin Foulke Jr., OSHA
assistant secretary, said that BP had "failed to learn from the lessons of Texas City to assure their
workers' safety and health."
BP has appealed that decision but remains on the agency's "Enhanced Enforcement Program" for repeat
violators of safety rules.
The U.S. Chemical Safety and Hazard Investigation Board, which has made a preliminary assessment, has
said that, while worker error likely played a role in the 2005 blast, the process unit had a history
of problems and was not working properly on the day of startup.
Later in 2005, Hurricane Dennis blew through the Gulf of Mexico, roughing up the Thunder Horse
platform
Since that time, BP has been trying to make the necessary repairs. But company officials revealed last
month that tests had discovered leaks in the platform's subsea pipeline joints.
That meant BP would not be able to begin producing oil and gas from either Thunder Horse or the nearby
Atlantis platform before next year.
In June, the federal Commodity Futures Trading Commission accused BP's Houston-based traders and
supervisors of conspiring to corner the propane market and sparking a sharp rise in the price of the
heating fuel.
Regulators contend the traders tried to manipulate the price of propane that flows from storage fields
in Mont Belvieu, in Chambers County, via pipeline to Ohio, Pennsylvania and New York.
One of the traders has pleaded guilty to conspiring to manipulate a commodity price.
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<h3>Bottomline.... we could cut spending on defense and national secuirty and use the savings to identify bottlenecks to achieving addtional domestic petroleum production, and launch a "Moon landing" or "Manhattan Project" styled government led effort to double domestic petroleum output. We're only producing 40 percent now of the amount we are consuming. Simply bringing the BP-Amoco 3 years delayed, Thunder Horse project online and developing the proven deposits bordering ANWR could increase US output by 25 percent, from 40 percent currently, to 50 percent of total US consumption. The rest is there. I covered the bottleneck caused by the lack of deepwater construction crane ships in this post, and I documented in a previous post, that the city of Long Beach, Ca wants to drill 60 new oil wells on city owned land this year, but the equipment and expertise are not currently available.</h3> Let us drop the "allegiance to the free market" sentiment. I don't see you protesting the Fed bailing out the investment banks, so what is your protest here, about? I''ve documented how Shell, Chevron, and BP-Amoco have done the opposite, in this era of high prices, of investing in domestic oil production and refining, or acting lawfully and credibly. Each time you pay at the pump, ask yourselves why you close your minds to the points presented on this thread!
Last edited by host; 05-12-2008 at 06:57 PM..
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