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From the NYT 12-30-03
Aging Oil Rigs Raise Safety
Issues
North Sea Fields Producing Longer
Since then, new technology, innovative methods and a bit of luck have extended many of the fields' productive lives by years or decades. "Instead of the North Sea being on its deathbed, it is at a healthy middle age," said Tom Botts, chief executive for European exploration and production at Royal Dutch/Shell. Indeed, the North Sea is expected to produce some five million barrels of oil a day in 2010, only about 20 percent less than it does today, according to Cambridge Energy Research Associates, a consulting firm; one-third of that comes from Britain's part of the sea. As is often true with mature fields, though, the big companies that developed them have started to move on. To maximize profits and free capital for fresh development elsewhere, they are cutting back on workers and investment in the North Sea, and selling some less productive properties to smaller companies that make a specialty of squeezing oil from them. To keep the oil pumping, the rigs, pipelines and other equipment must be kept in service much longer than originally planned, and that is raising concerns about maintenance and safety on the oldest of the North Sea rigs. These concerns came to a head in September when two Shell workers were killed on a platform in the Brent field. An official with an offshore oil workers' union, Jake Molloy, said the two workers were repairing a temporarily patched pipe inside one leg of the platform when a series of valves failed, filling the confined area with toxic gas. Regulators are still investigating the accident, and neither they nor the company would discuss it while the inquiry is in progress. But speaking in general about the North Sea, government officials said they were aware of the increasing risks. "While there's no evidence that companies have been deliberately negligent in cutting costs, we can't pretend we're not concerned as the North Sea rigs get older and change hands," said Taf Powell, head of the offshore division for Britain's Health and Safety Executive, a government agency that oversees worker safety. "It is very expensive operating people offshore; consequently, companies feel that that is a legitimate target when they are downsizing. But there comes a point where that downsizing becomes unsafe, and we're teetering on that threshold." The number of workers on Britain's offshore platforms and rigs has fallen 35 percent, to 18,900 in February from 29,500 in 1992, according to figures from the Department of Trade and Industry. On shore in Scotland, the industry employs some 85,000 people, mainly in Aberdeen and the surrounding Grampian Highlands. While the head count is not rising, "there's a lot more oil in the North Sea than people believed, and there will be a lot more employment coming out of oil" than had once been forecast, said John Reynolds, the lord provost of Aberdeen, whose post is equivalent to mayor. Speaking about the North Sea generally, Mr. Botts of Shell said, "The challenge has been to be more cost-effective, but it can't translate into poor safety." Since the September accident, the company has said it will share the lessons it learned with its entire operation. People who heard the briefings said Shell told its 2,500 North Sea workers that the kind of temporary patch job that had been done on the pipe was inadequate. The company said it would be inappropriate to discuss details of the briefings before the investigation was complete. The second- and third-tier companies that are moving into the North Sea are willing to drill for quantities of oil that are too small to matter to a major oil company like Shell, and use new methods to eke out a bit more oil from fading wells. But oil industry experts say that they may be deterred from investing in the North Sea if more serious accidents occur. "The philosophy of the majors in recent years has been to run the rigs for cash, and repair things as they've failed, rather than perform routine maintenance," said David Hobbs, director for exploration and production strategies at Cambridge Energy Research Associates. "In the first few years after that philosophical change, you get a profit boost, as not everything fails immediately. But after a while that catches up with you." Many workers on the North Sea rigs have been there from the industry's start; the average age of offshore workers in the North Sea is 50. Last year, BP eliminated 1,100 North Sea-related jobs both on- and offshore, or about 20 percent of its payroll. About 500 of those employees were transferred to new jobs with an operator who bought some BP assets. Then in January, the company sold the Forties field, the single-largest North Sea discovery, to Apache, a Houston-based specialist company, for about $630 million. BP said that its cost-cutting had never been done to the detriment of safety. "In a mature province, woe betide the guy who takes his eye off costs," said David Blackwood, director and unit leader of BP's North Sea business. "Across the North Sea, we've been driving more efficiency into operations. We're not taking away activities that are essential." Mr. Blackwood said improved planning had allowed the company to trim man hours. Still, soon after Apache finished buying the Forties field, it shut one rig down for 28 days of repairs, 30 percent longer than originally scheduled. "We were well aware that we were going to have to fix some things up when we got out there," said John A. Crum, Apache's executive vice president for Eurasia and new ventures. "Would I have liked it to be in better condition? Sure." He said the company added about 10 more offshore employees to the work force it took on from BP. Canadian Natural Resources had a similar experience with Ninian, a North Sea field with fixed platforms originally built for Chevron. The field had changed hands several times before Canadian Natural Resources took it over in August 2002, and all the platforms and a pipeline that serves them needed work. Martin Cole, managing director for international operations at the company, said the equipment was "pretty much in the condition that we would have expected after 25 years." The company wanted to continue production at Ninian for another 15 to 20 years, so an overhaul was called for, Mr. Cole said, adding that he did not think the rigs had been neglected: "I don't think any operator would cut back on routine maintenance at the expense of safety." Full article: http://www.nytimes.com/2003/12/30/business/worldbusiness/30oil.html?pagewanted=print&position=
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Reads like a classic doesn't it? Or perhaps
the miracle of Channukah played out in the North Sea rather than Galilee,
with Brent crude, instead of olive, oil.
Talk about the falling rate of profit, and the
costs of the upkeep of capital.....
Anyway, for those of you worried that oil is about
to run out... it isn't. And supplies of natural gas aren't running out
either... It's all about profit.
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BERDEEN, Scotland - Three decades ago, when the
offshore oil fields that make Britain a net exporter of energy were being
developed, most experts thought the fields would be running dry sometime around
now. The industry planned accordingly, building platforms and rigs meant to last
25 to 30 years in the gale-force winds and towering waves of the North Sea. 