Shell Finds Second Oil Leak in Flow Line at Rig Off the Coast of Scotland; BP Pipeline Leaks Oily Mixture onto Alaskan Tundra

Shell's Reputation Hit by North Sea Oil Spill

August 16, 2011

AP — Royal Dutch Shell struggled to contain the worst North Sea oil spill in a decade as well as damage to its credibility Tuesday as a second leak was found in an oil line the company had said was "under control."

Although the amount of oil involved in the Shell spill off the coast of Scotland is an order of magnitude smaller than BP's 2010 Gulf of Mexico disaster — around 1,300 barrels so far compared to an estimated 4.9 million in the Gulf — the spill undercuts Shell's earlier suggestions that it is a safer company than BP.

The Gannet Alpha oil rig, 112 miles (180 kilometers) east of the Scottish city of Aberdeen, is operated by Shell and co-owned by Shell and Esso, a subsidiary of the U.S. oil firm Exxon Mobil. Shell first told U.K. authorities about a leak in a flow line at the rig on Wednesday.

Shell shut down the main leak by closing the well and isolating the reservoir, said Glen Cayley, technical director of Shell's European exploration and production activities. However, he acknowledged that a second, smaller leak at the rig has proved more elusive to control.

"It has proved difficult to find the exact source of the leak because we are dealing with a complex subsea infrastructure and the leak seems to be coming from an awkward place surrounded by marine growth," he said late Tuesday.

"We face a number of technical challenges to ensure that there is no further release of hydrocarbons to the sea, so we are working on this methodically and carefully."

He said the secondary spill is now pumping less than one barrel — or 42 gallons — into the cold water each day.

Saket Vemprala, an oil and gas analyst for Business Monitor International, said while any spill is problematic, the North Sea spill is much smaller than the Deepwater Horizon spill.

"The numbers are simply not comparable," he said.

While the BP leak was from the well's head, the Shell leak is from a flow line, so the company knows what to expect, he said.

"There is a finite amount of oil in the flow," Vemprala said.

Still, the shallow-water disaster is an embarrassment for Shell as the company seeks its first license for exploratory drilling off the coast of Alaska. Shell CEO Peter Voser has previously claimed the BP blowout could never have happened to Shell, due to Shell's different well design.

"The risk management practices of some companies in the Gulf of Mexico do lag behind the standards set by other companies," Voser told analysts on a conference call in February. "We at Shell have been applying the best of the North Sea standards to our worldwide operations for many years."

Kenneth E. Arnold, a member of the U.S. National Academy of Engineering who served as an adviser to the U.S. Department of Interior during its probes into the Deepwater Horizon explosion, said the suggestion that any company is not vulnerable to a catastrophe is dubious.

"What we can measure are things that happen frequently enough that there is a trendline," he said, citing injuries, time lost to accidents, minor spills and incidents where a company failed to comply with government rules. "Predicting major disasters — that's something we struggle with."

On the eve of the Gulf disaster, BP had been tipped by some industry insiders as a potential winner of a safety award for its Gulf operations.

Arnold said he would classify a 1,300-barrel spill as "significant" but not catastrophic.

Shell said Tuesday the oil spill sheen has been growing and now covers 6,400 acres (26 square kilometers). Both Shell and the British government predict the oil will disperse naturally and not reach shore.

Cayley, in a statement, said the company "deeply regrets" the spill. He said the first leak was stopped Thursday but now "the oil found a second pathway to the sea."

Shell said it believes the oil is now leaking from a relief valve close to the original leak, and once it is certain of the source, it will stop the spill.

The British government agrees that the leak is small compared with the BP disaster but says it is still substantial for the U.K.'s continental shelf. It has promised to investigate the spill, which is four times the amount leaked by all British rigs into the North Sea in 2009.

Vicky Wyatt of Greenpeace criticized Shell for delaying information about the spill.

"The news that there's now a second leak from the Shell platform will only heighten concerns over how this episode is being handled," she said. "While oil has been flowing, timely information has not."

Shell told U.K. government agencies of the spill on Wednesday, but did not make the news public until Friday. On Saturday it declared that the leak had been contained.

Cayley said Shell was working with environmental groups and government agencies like Marine Scotland on the spill.

"We understand the concerns of environmental organizations like the Royal Society for the Protection of Birds about the ongoing danger any amount of oil can cause to wildlife, and we have been in regular contact with them since Friday," he said.

The last major spill in the North Sea was in 1993, when the oil tanker MV Braer ran aground in the Shetland Islands, spilling around 620,000 barrels of crude into the sea.

BP Pipeline Leaks Oily Mixture onto Alaskan Tundra

July 18, 2011

Reuters - BP reported yet another pipeline leak at its Alaskan oilfields, frustrating the oil giant's attempts to rebuild its reputation after the Gulf of Mexico oil spill.

BP said on Monday that a pipeline at its 30,000 barrel per day Lisburne field, which is currently closed for maintenance, ruptured during testing and spilled a mixture of methanol and oily water onto the tundra.

The London-based company has a long history of oil spills at its Alaskan pipelines - accidents which have hurt its public image in the U.S., where around 40 percent of its assets are based.

The Alaska Department of Environmental Conservation said the spill occurred on Saturday and amounted to 2,100 to 4,200 gallons.

A BP spokesman said the cleanup was under way and the company would determine the cause "in due course."

Lisburne, which is managed as part of the Greater Prudhoe Bay Unit, has produced no oil since June 18, according to Alaska Oil and Gas Conservation Commission records, suggesting maintenance work requiring a prolonged shutdown. The spokesman said the field had been undergoing "its annual maintenance."

BP's blown out Macondo well caused the worst offshore oil spill in U.S. history, spewing almost 5 million barrels of oil into the Gulf and putting BP's future in the U.S. at risk.

Previous problems including leaks from corroded pipelines in Alaska and the fatal Texas City refinery blast in 2005 had already earned the company a poor reputation for safety, something analysts say it needs to address if it is to continue to grow in North America.

BP shares were down 1.089 percent at 454 pence at 0919 GMT.

Production from the entire Lisburne field remains shut off while the spill is addressed, Alaska officials said.

Immediate efforts are focused on containment and cleanup, said Tom DeRuyter, state on-scene coordinator for the Department of Environmental Conservation. The methanol-produced water mix has spread into wet tundra as well as onto a gravel pad, bringing risks to slow-growing vegetation, DeRuyter said.

"You have actively growing plants and they're very susceptible to the contaminants," he said.

The pipeline will also have to be dug up to allow for an investigation into why it failed, he said.

Resumption of normal operations at that part of the field may require a relatively long wait, DeRuyter said.

"I think they're looking at trying to get that pad back up before freeze-up," he said.