Sun 3 Sep 2006
Burning Questions - Problems for BP
Posted by Dan Welch under Peakist , Environment , production disruptionBP is keen to accentuate its eco-friendly ambitions. But critics doubt how seriously the company is committed to cleaning up its act, writes Peter Huck in The Guardian
Over the last decade, BP, the world’s second largest oil company, has burnished its green credentials. In 1996, the company withdrew from the Global Climate Coalition, the global warming “deniers” backed by the oil industry. In 2000, it rebranded itself as an energy company, Beyond Petroleum, stressing its commitment to environmentalism. And last year the company said it would spend $8bn (£4.2bn) on solar, wind and hydrogen energy over 10 years. “No one should be able to use the environment without restoring it,” the company’s group chief executive officer, Lord (John) Browne, solemnly told Vanity Fair in May.
But does BP have a dark side? Earlier this month, the company sent shock waves through world markets when it halted production at Prudhoe Bay, America’s biggest oilfield on Alaska’s North Slope. The field closed after BP found severe corrosion inside 16 miles of “transit lines”, which help feed crude from 2,200 oil wells into the Trans-Alaska Pipeline. Production has since resumed in Prudhoe Bay’s western section.The problem surfaced when BP inspected feeder pipes following a 270,000-gallon spill - Prudhoe Bay’s worst - in March. Whereas BP had run external tests on pipes, the insides had not been “pigged” (measured by a smart electronic device, named with the acronym for “pipeline inspection gauge”, or because it makes a squealing noise as it scrapes through pipes) since 1992 as there was no legal requirement to do so.
“We’re very disappointed with what we’ve learned about our inspection programme,” said Scott Dean, a BP spokesman. “We thought we had a good programme. Based on what we’ve learned, it was just not good enough.”
Some pipes were 80% corroded. Normally, Dean said, chemicals were injected into lines to tackle corrosion. The monitoring budget for this year was $71m, up 80% since 2001.
But Prudhoe Bay, opened in 1977 and exploited by BP in a joint venture with Exxon Mobil and Conoco-Phillips, is an old field. Production has steadily declined since the late 1980s. “Oil becomes more viscous,” said Dean. “It contains more sand and sediment.” Sludge had built up inside feeder lines, preventing chemicals from reaching the corrosion.
So why hadn’t eco-friendly BP anticipated this problem and pigged the lines? To the company’s critics, it is part of a disturbing pattern that they claim gives the lie to BP’s green credentials. Last month, the company closed 57 wells at Prudhoe Bay after whistleblowers alleged they were leaking. Subsequently, BP agreed 57 wells “exhibited problems with surface casing”, and said 37 remain “shut in” as they “did not meet the company’s operating criteria”.
Toxic gases
In April, another BP line ruptured on the North Slope. The same month the company was fined $2.4m for safety problems at a facility in Ohio. In March 2005, following a refinery explosion that killed 15 workers and injured 170 in Texas, BP was fined $21.4m. A few days earlier, the company agreed to an $81m settlement following charges it had released toxic gases from a refinery in California.
“It’s the tip of an iceberg,” says Melanie Duchin, a Greenpeace energy specialist, of the latest shutdown. “What other ugly surprises are out there?” Duchin says BP invests about 5.7% of its annual capital spending in alternative energy. “In the end, they’re committed to oil and gas.”
So are BP’s eco concerns genuine? It depends on your perspective. “You can’t be a green oil company - it’s like being a healthy tobacco company,” says Duchin. “Oil is dirty. There are direct impacts to the environment in terms of spills, leaks and toxic messes. When you burn the stuff, it causes global warming.”
There are some 400 spills at Prudhoe Bay and on the Trans-Alaska Pipeline each year. And climate change is alarmingly obvious in the Arctic - three to five times the global average, as tundra melts and sea ice thins, drowning polar bears.
None the less, BP did acknowledge global warming when other oil companies assiduously denied its existence. It also pulled out of Arctic Power, the lobby group that wants to drill in the Arctic National Wildlife Refuge. Confronted by a PR disaster when the pipe corrosion scandal surfaced, the company has stressed its commitment to alternatives. These include a project to provide clean energy to 250,000 California homes by separating hydrogen from natural gas.
Natural gas is a central plank of BP’s Beyond Petroleum vision, the next stage in a “journey of many steps”, from oil to alternatives. Along with Exxon and Conoco, BP wants to build a $20bn pipeline to ship gas from Prudhoe Bay to the Lower 48. But environmentalists complain that the gas releases carbon emissions, fuelling climate change.
Greenpeace wants BP to close its field at Prudhoe Bay. “That’s a radical position,” says Duchin. “But we need to take this debate beyond oil.” This would send a signal that BP was accelerating its “journey” towards alternative energies. Could this happen? Maybe. Dean admits Prudhoe Bay’s age brings “additional maintenance problems”, but is adamant that BP intends to stay, and pace its natural gas ambitions.
Still, BP agrees Prudhoe Bay is a “historic field” and is focusing on oil and gas deposits in Russia, the Caspian Sea, Angola, Trinidad, Indonesia and the Gulf of Mexico. “We’re realists,” says Dean. “We’ll continue to use hydrocarbons like natural gas.” BP will embrace the “era of zero carbon emissions”, by “keeping pace” with demand for alternatives.
Yet reacting to demand is different from leading the market. BP’s website stresses its search for “sustainable supplies of oil and gas for decades to come”, even as it acknowledges “precautionary action is necessary” to curb global warming. It is a tricky dilemma. How to reconcile oil and gas extraction with green stewardship?
The pipeline scandal only highlights BP’s problem in balancing its eco-image with a thumping $7.3bn second-quarter profit. Unless the company accelerates its journey towards zero emissions, it will remain haunted by its dark side.
Wednesday August 23, 2006
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September 3rd, 2006 at 3:29 pm
Alcatraz on the Gulf
BP exploits migrant workers in the Emirates, by Mafiwasta
In the United Arab Emirates, unrestrained capitalism operates without the tiresome inconveniences of democratic institutions and media intrusion. Not surprisingly the world’s multinationals have flocked to its shores, lured by low set-up costs, tax-breaks and flimsy, unenforceable labour laws - what the CBI would no doubt call a ‘business-friendly environment’.
http://www.carbonweb.org/showitem.asp?article=177&parent=175
September 4th, 2006 at 1:04 pm
Friends of the Earth Press Release
Shell vs. BP: Who is performing worst on climate change?
On the day that Shell has announced its 2006 second quarter results, Friends of the Earth has calculated that the company is putting an even smaller proportion of its investments into renewables than the tiny amount being invested by its arch-rival BP. But the assessment is very crude and the environmental organisation has today called on the Government to force companies to use common standards and indicators when reporting on their social and environmental performance.
Shell and BP announce their financial results within two days of each other every quarter. Because financial reports are produced to common and mandatory reporting standards, investors and the media are able to compare the performance of the “two sisters” across a range of financial measures. However the lack of common reporting standards on environmental performance makes non-financial comparisons very difficult.
Friends of the Earth believes that the most important comparison to make on environmental issues is what proportion of each companies investments are being put into clear, green renewable energy rather than into finding yet more fossil fuel to burn, contributing to yet more dangerous climate change. The calculation also helps test how much each company’s investments match their green claims and advertising.
Neither BP nor Shell provides enough information in their quarterly results to answer who is investing most (in proportionate terms) in the fuels of the future. Last year’s full accounts (published earlier this year) provide the most up to date information to make the comparison.
Over the last year, BP has put massive effort into green branding with full page newspaper and regular TV adverts appearing almost every week suggesting that the company is well into the process of becoming “Beyond Petroleum”. But the 2005 accounts indicate that the company is investing just $800m [1] a year into its “Alternative Energy” division, representing just 5.7 percent of its 2005 total capital investment of $14,149m. In comparison, 72 percent of BP’s new capital investment ($10,237m) in 2005 was spent looking for yet more oil and gas.
Green claims also tend to dominate Shell’s corporate advertising again giving the impression that the company is well on the way to becoming clean and green. But its 2005 report indicate that Shell is investing an average of just $200m a year in renewables representing just 1.1 percent of its 2005 total capital investment of $17,436m. In contrast, 69 percent ($12,046m) of Shell’s new capital investment in 2005 was spent looking for yet more oil and gas [2].
These figures indicate that, for both companies investments in renewables represent a tiny proportion of their total investments and both companies have a very long way to go before their investments in green energy come close to reflecting the impression they are giving to customers of already being clean and green.
Friends of the Earth believes that the Government has a real opportunity to address these misleading claims and to enable a meaningful comparison between BP and Shell by strengthening its Companies Bill when it returns to the House of Commons in the autumn. At the moment, the Bill will require all quoted companies (i.e. the PLCs) to make an annual report on the impact of their business on people and the environmental. But the Bill does not provide any common standards or indicators for how companies should do this.
Friends of the Earth is calling on the Government to ensure the Companies Bill includes a common reporting standard and enables Key Performance Indicators to be put in place on a number of key issues, such as climate change and energy efficiency.
Craig Bennett, Head of Corporate Accountability Campaign at Friends of the Earth said:
“If the proportion of BP and Shell’s investments in renewables came even close to the proportion of their advertising budget they spend bragging about them, the world would be a very different place and we would be well on the way to addressing dangerous climate change. But the reality is that both of these companies are making massive green claims while carrying on with unsustainable business as usual.
Every quarter investors compare how well these two companies are doing on financial matters. But it is high time we had a robust way of comparing how they are doing with their environmental performance and, in particular, climate change. If the Government is even vaguely serious about addressing this most serious of issues, they should force all large companies to report to a common auditable standard on environmental matters. Then we might just be able to separate out green rhetoric from reality”.
Notes
[1] BP says it is investing $8 billion in its “Alternative Energy” division over the next 10 year, representing an average of $800m p.a. This division includes some gas-fired power generation, so it does not count represent an investment in entirely carbon-free renewables.
[2] Shell says it is investing $1 billion in renewables over the next 5 years, representing an average of $200m p.a. It is unclear from information available whether this is purely in non-carbon energy (such as solar and wind) or whether it also includes some gas-fired power.