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In other oily news...... (pg. 2)
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| occrider |
| quote: | Originally posted by Q5echo
the thing with water and sewage is thay can be easily diverted re-routed through other ancillary pipes. the oil industry will always have their hands tied when engineering pipelines for one reason or another.
of course corrosion, and any symptom that relies on preventative maintenance to keep up with is progressive however the nature of this industry is determined by demand. demand is high. demand has only been getting higher dramatically, safe to say, since this problem started probably years ago if you believe corrosion is progressive. BP saw a problem with the corrosion a few months back when prices were at around $60/bbl and they lost a quarter million barrels pumping close to half a million a day through the pipeline.
BP is probably not ignorant to the fact that oil prices are only going to go in up these months it takes to repair anyway, despite their decision to take 8% offline to prevent what could be a major natural disaster at their hands. BP certainly shouldn't ignorant to the fact that that 8% can and will be easily taken up somewhere else once the initial $2.50 "shock" to the market subsides while repairs are being made. i know i'm not.
...but anything is "plausible" i guess. |
That's not what most analysts seem to indicate:
| quote: |
Oil's aging pipelines
What took BP so long to realize its Alaskan pipelines were corroding? A 'warning' to the rest of the industry.
By Steve Hargreaves, CNNMoney.com staff writer
August 8 2006: 11:08 AM EDT
NEW YORK (CNNMoney.com) -- As BP shuts down its corroding pipelines in Alaska's North Slope, some analysts are wondering why the problem wasn't caught sooner and say that the company's problems foreshadow a larger mess with the world's aging oil infrastructure.
"It was almost guaranteed to happen," said Charles Clusen, director of the Alaska project for the Natural Resources Defense Council. "These companies have not been putting the money into infrastructure up there."
Fadel Gheit, an oil analyst with Oppenheimer & Co., said it is well known that oil companies in general haven't been spending enough on maintaining their pipelines, wells, platforms and other equipment.
"This thing has been in operation for more than 30 years," Gheit said of BP's North Slope field. "Corrosion has to happen. Something has to give. This is going to be a warning to other companies."
The extent of the corrosion in Alaska, and the fact that it went undetected for so long, caught many in the oil industry by surprise.
"When was the last time they checked that particular line?" said Art Smith, chief executive of John S. Herold, a Houston-based energy consulting firm. "It seems that should have been caught sooner."
Scott Dean, a BP spokesman in Alaska, disputed the claim that the company hadn't spent enough maintaining its pipelines.
Dean said the company spent $71 million on corrosion prevention alone in Alaska in 2006, an increase of 15 percent from 2005 and up 80 percent since 2001.
Dean said the line was last checked internally, which is done using a device mounted with sensors known as a smart pig, in 1992. But he also said the smart pig is usually used on pipelines that run below ground and that the Prudhoe Bay pipes, being above ground, were checked often with other diagnostic tools.
"The results were surprising, and disturbing," said Dean.
Dean said the company is replacing all 16 miles of the larger transit pipes in question, which carry oil from holding tanks in the field to the 800-mile long Trans-Alaska pipeline.
He said the corrosion was most likely caused by water or sediment buildups in the bottom of the pipes, which is a common occurrence in older oil fields like Prudhoe Bay, where oil under less geologic pressure due to the age of the field doesn't flow through the pipeline as quickly.
BP hasn't given an estimate on how long it will take to bring production back or how much it will cost, saying it was still studying the vastly complex process.
But industry experts estimated that it could take anywhere from a few weeks to a few months. The costs are even harder to pin down - experts contacted for this report were reluctant to speculate how much BP might have to spend.
BP said Monday it began shutting down it's Prudhoe Bay oil field in the North Slope after tests, ordered by the Department of Transportation following a 5,000-barrel spill in the same field in March - the largest ever in the North Slope -showed parts of the transit pipeline had lost up to 70 percent of their mass due to corrosion.
The action shuts in 400,000 barrels of oil, or 8 percent of U.S. domestic production, at a time when tight supply and surging demand have magnified the effects of geopolitical tensions. Oil prices surged 3 percent Monday and came about a dollar shy of the record trading high of $78.40 set in July and within pennies of the closing record of $77.03.
Gheit said investing in infrastructure is a difficult call for oil companies.
When oil prices are low, they are reluctant to make the expenditures since the return on capital doesn't look so hot. But when prices are high they don't want to take production offline to perform maintenance.
But Smith at John S. Herold, who's also a board member of the pipeline company Plains All American, said capital projects in the oil industry are so expensive and the time it takes to complete them so long that companies can't rely on day-to-day or year-to-year oil prices in making investment decisions.
"The industry doesn't have the ability to maximize profits at the expense of infrastructure," he said. "Operations always come first, economics come in second."
The Department of Transportation, which is responsible for regulating pipelines, also seemed satisfied with the industry's investments in that part of its infrastructure.
A DOT spokeswoman pointed to the number of accidents involving pipelines, noting they've been on the decline, falling from 210 in 1986 to 136 last year.
"The systems have to be safe," she said. 'We all rely on them and we all use them."
http://money.cnn.com/2006/08/08/new...dex.htm?cnn=yes
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So in the struggle to maximize profits in a period of record profits they don't have the ability to make the proper infrastructure investments? So when the hell is the right time to do so ... when they're losing money? At the most it's willful neglect at the very least it's poor regulation by the federal government. |
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| MisterOpus1 |
And let's just say that their environmental record isn't that rosy either:
| quote: | U.S. environmental regulators are conducting a criminal investigation into BP PLC’s management of pipelines in Alaska’s North Slope, according to people familiar with the matter, adding to mounting regulatory scrutiny of the British energy titan’s U.S. operations.
These people said the investigation, which has been under way for several months by officials at the Environmental Protection Agency, was expanded to include an early March spill of an estimated 134,000 to 267,000 gallons of crude from a BP-operated pipeline at Prudhoe Bay. Alaska state conservation officials say the pipeline ruptured from internal corrosion, causing what is considered the largest oil spill ever in the energy-rich North Slope.
http://online.wsj.com/article/SB114...e_whats_news_us |
Nor is their worker safety record all that shiny either:
| quote: | | The North Slope allegations come as U.S. investigators continue to pore over details of an explosion last year at the company’s Texas City plant, which killed 15 and triggered a $21.3 million fine from workplace-safety regulators. The Labor Department referred the case to the Justice Department for possible criminal charges. |
Furthermore, it's becoming quite evident that there's a pattern of negligence by BP. Occ's article has this quote from a board member of a pipeline company:
| quote: | | "The industry doesn't have the ability to maximize profits at the expense of infrastructure," he said. "Operations always come first, economics come in second." |
BP's record clearly demonstrates otherwise. Here's a story about how whistleblowers revealed leaks in the pipes:
http://news.morningstar.com/news/DJ...LINE000801.html
Well as a consequence to the whistleblowers, these ******s finally had to shut down 12 Prudhoe Bay oil wells:
http://www.northern.org/artman/uplo...0803__rev__.pdf
You can find more on BP's record in Alaska here:
http://www.northern.org/artman/uplo...0803__rev__.pdf
http://www.finebergresearch.com/pdf/Neport060315Rev.pdf
So I think it's prudent to point out that this neglegence is not merely a blip on the radar with BP, and when you have whisteblowers pointing out obvious problems of maintenance to the public, you've got serious issues. But more to the point - this clearly demonstrates that indeed profits come first while operations are seemingly a distant second with BP. |
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| Shakka |
| quote: | Originally posted by occrider
So in the struggle to maximize profits in a period of record profits they don't have the ability to make the proper infrastructure investments? So when the hell is the right time to do so ... when they're losing money? At the most it's willful neglect at the very least it's poor regulation by the federal government. |
Ha. And certainly a valid point. Perhaps most surprising was just how widespread the corrosion was. But just to be sure we're not jumping overboard on the conspiracy bandwagon here, from the AP article I posted | quote: | | Tests found losses in wall thickness of between 70% and 81%. Repair or replacement is required if there is more than an 80% loss. |
I'm not going to argue that they shouldn't have tested the pipes sooner, but if they had and the loss in wall thickness was at around 70%, would they have done anything about it given that replacement is only required if the loss is more than 80%? I think the shocker is that so much of the pipeline needs to be replaced all at once. They are definitely fortunate that they caught it when they did, though!
Btw, Occ--you've been missed as of late (same to old man Opus). Whatcha been up to? |
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| MisterOpus1 |
| quote: | Originally posted by Shakka
Ha. And certainly a valid point. Perhaps most surprising was just how widespread the corrosion was. But just to be sure we're not jumping overboard on the conspiracy bandwagon here, from the AP article I posted
I'm not going to argue that they shouldn't have tested the pipes sooner, but if they had and the loss in wall thickness was at around 70%, would they have done anything about it given that replacement is only required if the loss is more than 80%? I think the shocker is that so much of the pipeline needs to be replaced all at once. They are definitely fortunate that they caught it when they did, though! |
Does 80% loss seem like a pretty high bar to anyone else? What regulations are those that sets such a high bar? Christ, that's 4/5 of your damn pipeline! Wouldn't it be prudent to require mandatory repairs at a bar set at, say, 40%? Damn I'd even go for 50%, but 80% seems ridiculous! |
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| Shakka |
| quote: | Originally posted by MisterOpus1
Does 80% loss seem like a pretty high bar to anyone else? What regulations are those that sets such a high bar? Christ, that's 4/5 of your damn pipeline! Wouldn't it be prudent to require mandatory repairs at a bar set at, say, 40%? Damn I'd even go for 50%, but 80% seems ridiculous! |
Certainly, but businesses operate under the regulations that were set up for them to operate under. If the book says 80%, it's hard to justify spending prematurely given that a dollar today is worth more than a dollar tomorrow. But yea, 80% sounds like a pretty ed up pipe to me. But I don't have a degree in phsyics or pipeline engineering.
Maybe it's apt to compare it to treadwear on a tire. That little "time to replace" treadwear indicator gets my attention when the tires are nearly bald and probably already in need of replacement. I just spent $600 getting the wife 4 shiny new Michellins. |
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| Q5echo |
| quote: | Originally posted by MisterOpus1
Does 80% loss seem like a pretty high bar to anyone else? What regulations are those that sets such a high bar? Christ, that's 4/5 of your damn pipeline! Wouldn't it be prudent to require mandatory repairs at a bar set at, say, 40%? Damn I'd even go for 50%, but 80% seems ridiculous! |
i'm just speculating here using my own logic, but lets say that 36" feeder pipe had an original wall thickness of 7/8". that leaves over an 1/8th or 5/32"? left. in a pipe with relatively low pressures, say under 15psi, i can understand their tolerence. |
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| LiquidX |
BP is known for their low maintenaince. On anything.
Heard that they announced that the pipeline wont be ready till January 2007. On other news, gas didnt seem to go up today. |
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| Q5echo |
| quote: | "It was almost guaranteed to happen," said Charles Clusen, director of the Alaska project for the Natural Resources Defense Council. "These companies have not been putting the money into infrastructure up there."
Fadel Gheit, an oil analyst with Oppenheimer & Co., said it is well known that oil companies in general haven't been spending enough on maintaining their pipelines, wells, platforms and other equipment. |
i think it's also safe to say an oil company is never gonna satisfy that guy..
that guy prolly chomps at the bit waiting for an oil disaster to justify his seat on a council and when BP tries to avoid one based on their own standards and research he's still gonna have a problem with it.
the next time he safely flies an airplane out of the frozen tundra up there i'm sure then he'll be extra critical about preventive maintenance. |
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| Shakka |
lol--the irony.
Whatever the case it's still funny because BP has the most commercials on TV of any oil company I know of that speaks to the question of "what are we doing to be more environmentally friendly?". Seriously--I sit at a deak all day with two TV sets right next to me. Every time I turn around I see these two goofy looking teen wastoid/granola kid and his friend rambling on about being better to the environment. (it's a BP commercial. They have had many other similar commercials on over the last several years. I mean, since they merged with Amoco, their logo itself is meant to connote an enviormentally friendly image. A sunflower! They even have this man section of their website devoted to the issue.:cool:
They even have this man section of their website devoted to the issue.
Imposters!! |
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| Q5echo |
from Washington Times.
| quote: | Big Oil reinvests big profits to tap costlier reserves
By Patrice Hill
THE WASHINGTON TIMES
August 8, 2006
Big Oil's record profits attract attention and outrage, but an independent study has found that oil companies do exactly what economic textbooks say they should do with all that money: They invest it in oil exploration and development efforts that eventually should relieve pressure on prices.
The top 20 U.S. and Canadian oil companies actually invested 50 percent more than they earned in the past 10 years in efforts to produce more oil, but adverse geopolitical developments conspired to give them fewer opportunities to expand production while fading oil fields in the U.S. and elsewhere forced them to spend substantially more just to maintain current production, according to the study by the Ernst & Young accounting firm.
"Reinvestment is under way, and it's strong," said Charles Swanson, an energy analyst at the firm, but "average costs to find and develop oil and gas reserves have tripled since 1997, while total reserve-replacement costs have more than doubled."
The study found that the top companies -- including Exxon Mobil, ConocoPhillips and Chevron, among others -- took in a mind-numbing $5 trillion in revenue from sales of oil and related products between 1995 and 2005. After subtracting the cost of equipment, leases, labor and other operating expenses, the companies posted whopping profits of $336 billion.]
Over the same time span, however, the companies spent even more than they earned -- $550 billion -- on oil exploration and development. Some of them went deeply into debt to finance new ventures, especially during times of lean profits.
Despite the massive sums of money oil companies spent trying to find more oil for the world's fuel-thirsty consumers, returns on investment over the past 10 years declined sharply because most existing oil fields in the West are in decline and the most promising new discoveries are not available for development, Ernst & Young found.
Nevertheless, the study found that oil companies continued to invest steadily, even during busts like 1998, when the price of premium crude plummeted to $10 a barrel, as well as during boom times like today, when prices are topping $77.
"Investments are long-term and fraught with geopolitical, regulatory, environmental and general economic risks," said Mr. Swanson of Ernst & Young. In the U.S., promising oil fields in Alaska and offshore are not open for development, while the vast petroleum reserves in Canada's Athabasca oil sands require huge amounts of energy and money to bring to market.
"Most of the new reserves are outside of North America, and much of the global reserve base is off-limits to Western oil and gas companies," said Mr. Swanson. Moreover, oil-rich countries such as Venezuela and Russia are exacting onerous licensing terms and costly royalty payments from Western companies seeking access.
Getting permission to drill for oil is only the beginning when it comes to delivering gasoline to the pump.
"Once a discovery is made and years are invested in preparation, planning and navigating the regulatory maze, companies often find themselves faced with a shortage of drilling rigs, equipment and people to operate them," Mr. Swanson said.
The Ernst & Young study, which was not done on behalf of any client firms, confirms what the oil companies have been saying about the high cost and difficulty of exploiting the world's remaining petroleum reserves. Other analyses, such as one by Cambridge Energy Research Associates, also have tracked the soaring costs for drilling equipment and skilled workers
Big Oil reinvests big profits to tap costlier reserves
Cambridge found that the average cost of finding, developing and producing oil worldwide has jumped 35 percent to $9.13 a barrel since 2002. The highest-cost oil to produce, such as Canada's oil sands, now costs $25 a barrel to deliver to consumers compared to $14.50 in 2002, Cambridge found, attributing the sharply higher costs to exploding demand for oil, as well as a tight market for drilling equipment and workers.
Petroleum Industry Research Foundation Inc. said high demand for workers drove up average wage gains for oil-industry employees to 10 percent last year, more than double the national average, while price increases for oil and gas machinery accelerated to 11 percent this year from 3 percent in 2004.
After Hurricanes Katrina and Rita devastated rigs in the Gulf of Mexico last fall, the price of replacing deep-water drilling equipment doubled, the group said.
A shortage of petroleum engineers has prevented some companies from expanding production. Worker shortages developed in recent years after drastic job cuts during industry downsizings in the early part of the decade. Moreover, most of the engineers available are baby boomers, with an average age of 49, and are heading toward retirement, said Jeff Johnson, chief executive of Cano Petroleum, an independent oil producer in Fort Worth, Texas.
"There's an urgent need to find a new generation of U.S. petroleum engineers to replace this present one" if the United States is to continue exploiting its dwindling oil fields, he said. "Very few people know there are hundreds of mature oil fields here in the U.S. containing ample amounts of oil and natural gas that was never recovered due to technological limitations" -- a lack of equipment and skilled workers. |
just some perspective for this dicussion |
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| DJ Shibby |
| quote: | Originally posted by Shakka
So now Dubya is to blame for a leaky pipeline in Alaska that had to be shut down? You never cease to amaze me.
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It's amazing that you came to this counter-conclusion...............................................................................................................................................................................
You're a tool. You lose the game of life. Defend your shallow opinions to the death, whatever they may be.. it's all you've got, puppet. |
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| Shakka |
| quote: | Originally posted by DJ Shibby
It's amazing that you came to this counter-conclusion...............................................................................................................................................................................
You're a tool. You lose the game of life. Defend your shallow opinions to the death, whatever they may be.. it's all you've got, puppet. |
Are you talking? |
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