April 26, 2024

Total Discloses Origins of North Sea Gas Leak

LONDON — Total, the French oil company, has disclosed the findings of its investigation into the causes of a natural gas leak at a well in the North Sea, which has shut down production on the company’s flagship Elgin-Franklin field for almost a year.

At the time of the leak, in March 2012, gas from the Elgin-Franklin complex accounted for about 7 percent of British production. The British Treasury has said the shutdown at the field lowered tax receipts and stunted economic growth.

Patrice de Viviès, the company’s senior vice president for exploration and production for Northern Europe, said Thursday that the leak was a result of corrosion caused by a reaction between grease on the threads of the well casing and bromine in the fluid used in the well, which produced stress cracks that led to a rupture.

In addition, a gas layer called Hod, which was about 1,000 meters, or 3,300 feet, above the Fulmar gas formation that was being tapped by the well, unexpectedly started producing gas, possibly because it was affected by the production from the lower layer. Mr. de Viviès called this set of circumstances unique.

“It is impossible to forecast this type of incident,” he said.

Mr. de Viviès said he did not expect penalties from the British authorities. A spokesman for the British Health and Safety Executive said the matter remained under investigation.

The comments were a reminder of how dangerous oil and gas production can be even when a company operates in a way that, by all appearances, should be safe. The well was originally installed in 2000, he said.

Total had to evacuate 238 workers from the Elgin platform — about 240 kilometers, or 150 miles, from Aberdeen, Scotland — when the leak was discovered. The platform serves a complex of fields, and there was a danger that the gas could catch fire, leading to a catastrophic incident. The well, known as G4, was plugged about two months later. The episode caused no injuries.

At the time of the shutdown, Elgin-Franklin was producing the equivalent of 140,000 barrels of oil a day in gas and liquids, making it a very large field.

Mr. de Viviès said that Total had submitted plans late last year for restarting the field and that it expected the British authorities to accept these within days. The company then plans to resume operations at the field gradually, starting with four wells, compared with 14 at the time of the leak. He said he expected production by year-end to be about 70,000 barrels a day, or half of what it was at the time of the leak.

By 2016, the company’s drilling program is expected to increase production above 140,000 barrels a day, he said.

He added that Total had learned lessons about working in fields where gas is subject to high pressure and high temperatures, and that it would operate more conservatively in the future. He also said that Total would share its findings with other companies to avoid a repeat of this type of incident.

He said the company did not blame the supplier of the well pipes, Vallourec, a company based in Boulogne-Billancourt, France.

Total is expanding its British production while other large oil companies have been selling assets to smaller companies. Its chief executive, Christophe de Margerie, has said that the company is considering becoming involved in shale gas development in Britain, “which we think has potential,” he said.

Article source: http://www.nytimes.com/2013/02/16/business/global/total-reveals-cause-of-north-sea-natural-gas-leak.html?partner=rss&emc=rss

Refining Margins Help Profit at Exxon Mobil

DALLAS (AP) — Exxon Mobil Corp. said Friday that fourth-quarter earnings rose 6 percent to $9.95 billion with help from higher refining profit margins.

The oil giant barely missed a record for full-year earnings. It earned $44.88 billion in 2012, about $340 million shy of its 2008 mark of $45.22 billion, an all-time high for a publicly traded company.

Exxon still makes most of its money by producing oil and gas, but that end of the business was less profitable than a year ago because of lower prices and production. The company made up the difference in the refining business.

The nation’s biggest oil company said Friday that net income equaled $2.20 per share, compared with $9.4 billion, or $1.97 per share, a year earlier. But revenue fell 5 percent to $115.17 billion, a drop of $6.44 billion.

Analysts surveyed by FactSet expected profit of $1.99 per share on revenue of $115.22 billion.

Profit from exploration and production of oil and gas fell 12 percent but still totaled $7.76 billion, more than three-fourths of Exxon’s income for the quarter. Production fell 5 percent, oil prices dipped, and the company took in less money from asset sales.

Exxon produces most of its oil outside the United States. Profit from overseas production tumbled by nearly one-fifth, but Exxon partly offset that by boosting its profit from U.S. production by more than one-third.

Outside of exploration and production, most of Exxon’s other profit comes from refining and selling petroleum products such as gasoline, diesel and jet fuel. That business did very well in the fourth quarter, earning $1.8 billion, an increase of more than $1.3 billion from a year earlier, mainly due to higher refining margins.

Other oil refiners have also reported better margins this earnings season as they switched from foreign crude to cheaper U.S. oil. On Friday, benchmark U.S. crude oil was trading at about $97 per barrel, $19 less than the same amount of Brent crude, the measuring stick for international sources of oil.

At Exxon’s U.S. Gulf Coast refineries, “We have more than tripled the processing of (cheaper) North American crude over the last couple of years,” the company’s vice president of investor relations, David Rosenthal, told analysts on a conference call. He declined to give precise figures or percentages.

Irving, Texas-based Exxon Mobil said it spent $5 billion during the quarter buying back its own shares and plans to spend another $5 billion on buybacks in the first three months of 2013.

Exxon shares fell 10 cents to $89.88 in morning trading. They gained 4 percent in January.

Chevron Corp., the No. 2 U.S. oil company, reported that fourth-quarter net income rose 41 percent to $7.23 billion. That result was helped by a gain of $1.4 billion related to an exchange of assets in Australia.

Article source: http://www.nytimes.com/aponline/2013/02/01/business/ap-us-earns-exxon-mobil.html?partner=rss&emc=rss

At Algerian Oil and Gas Fields, New Fears and Precautions

But at least the remote production sites were considered safe — until now.

Protected by crack Algerian security forces, foreign companies have operated for more than a decade in what they thought was a security cocoon, even as the instability of the Arab Spring blossomed all around them. But that image has evaporated, like a fleeting desert mirage.

Taking no chances, the companies evacuated scores of employees from Algeria on Thursday after the attack and hostage-taking at one of those camps, the remote In Amenas natural gas field. Only a handful of companies acknowledged that they were removing personnel, but local oil executives said foreign oil service companies were in the process of quietly removing several hundred workers until they were confident that the security situation was stable.

Statoil, the Norwegian oil company that partnered with BP in the In Amenas field that was attacked by militants, said it would remove 40 nonessential employees working at three gas facilities by Thursday night. BP said it was evacuating an undisclosed number of administrative workers, and Spain’s Compañía Española de Petróleos announced that it was removing its field workers from two Algerian facilities in the desert.

“An event like this really shakes the foundations of the investment climate,” said Badr Jafar, president of Crescent Petroleum, a regional oil company based in the United Arab Emirates, “just when the Arab world is trying to recover some confidence for oil and gas investments.”

Up until this week’s attack, oil and gas production facilities had escaped major harm in the turmoil that has swept North Africa and the Middle East over the last two years. There have been attacks on oil pipelines in Egypt and Yemen and protests at export terminals in Libya, but oil and gas fields far from populated areas have been virtually untouched.

Algeria, in particular, was seen as one of the more secure countries for oil workers in North Africa. There were no notable attacks on oil facilities during a savage war between the government and Islamic militants in the 1990s, and oil facilities were thought to be well defended.

That image may be changing. A recent video posted on the Internet by an Algerian rebel group linked to Al Qaeda showed what it said was a bomb attack on a bus transporting Algerian oil workers. The Salafist Group for Preaching and Combat claimed responsibility for the Dec. 10 attack.

Foreign oil executives said it was too soon to say that security had broken down in the Algerian oil and gas fields, but said they were concerned. Security experts said they worried that the initial attack on the facility had been planned well before the French operation in neighboring Mali.

“We are taking precautionary measures to remove some staff we can remove without interrupting essential operations,” said David Nicholas, a BP spokesman, who did not specify the number of administrative and other nonessential staff to be removed.

BP has fewer than 60 expatriate employees in Algeria, largely in Algiers and at In Amenas. “We have no intention of interrupting our operations,” Mr. Nicholas said. Bard Glad Pedersen, a Statoil spokesman, also refused to say how many of its employees remained in the country.

Most of the major oil companies working in Algeria, including Anadarko, Royal Dutch Shell, Conoco Phillips and the Italian oil giant ENI, would not comment on security measures, or whether they planned to remove personnel. But regional oil executives said the attack had shocked the industry. “Anyone who has been complacent has finally gotten a wake-up call,” said Sadad al-Husseini, former executive vice president for exploration and development at Saudi Aramco.

Algeria is a critical source of oil and natural gas for Europe and Asia, but has become less important to the United States in recent years because of a surge in domestic oil and gas production. Foreign companies are relatively minor players in the country, with the state company Sonatrach dominating most investments. “I don’t expect any impact because most operations are handled and managed by Sonatrach,” said Chakib Khelil, a former Algerian energy minister. “I think the army is well equipped, well trained and should be able to face up to this.”

Article source: http://www.nytimes.com/2013/01/18/world/africa/at-algerian-oil-and-gas-fields-new-fears-and-precautions.html?partner=rss&emc=rss