Statoil Reports Refinery Accidents

Operational mistakes and a lack of maintenance led to near-fatal accidents at Norway's Troll field and at the Mongstad refinery, operator Statoil said.

A number of incidents at Statoil's offshore and onshore installations last year prompted several investigations by the company and authorities. In November, unions and Norway's safety watchdog warned that cost-cutting in the industry due to low oil prices could affect safety.

The latest two investigations by Statoil looked into an incident on Oct. 15 involving the loss of control on the Songa Endurance drilling rig of a well in the North Sea Troll field, and a hydrogen leak that occurred on Oct. 25 at the Mongstad oil refinery.

"This is among the most serious well-control incidents we've had," Statoil's head of technology, projects and drilling, Margareth Oevrum, told a news conference, in reference to the accident at Troll.

The well control incident led to a gas leak that pushed seawater more than 30 meters up the derrick, before the well was closed by the blowout preventer (BOP) about one minute later. A derrick supports the drilling apparatus on an oil rig.

A gas leak due to a break in a corroded pipe socket at the Mongstad refinery led to the facility's shutdown and evacuation.

The link between the incidents at the drilling rig and the refinery was a lack of understanding of the risks, not efficiency improvements or cost cutting, a Statoil spokesman said.

"Maintenance is decided by technical conditions, not economic considerations," he said.

Norway's biggest union of oil workers, Industri Energi, said cost-cutting was to be blamed, however, because it had resulted in laying off skilled workers and a fall in competence.

"This is not just about two isolated incidents, but it shows how cuts and reduction in competence and resources impacts health, environment and safety in all areas," the union's secretary, Haakon Aasen Bjerkeliveien, said in a statement.

Nobody was injured but Statoil said both accidents could have led to the loss of life if the safety equipment had failed or if the gas had been ignited.

"If the gas had caught fire, this incident could have caused fatalities," the head of Statoil's Marketing, Midstream & Processing unit Jens Oekland said, referring to the event at the Mongstad refinery.

Two people were in the vicinity when high-pressure hydrogen-rich gas was released.

Statoil said its investigation showed maintenance at Mongstad was wrongly prioritized due to lack of understanding of the risk and it would step up maintenance in the next two years.

"In this case, our risk management was inadequate. We made the wrong priorities," Oekland said.

Statoil also said it would not use the downhole valves, which were unintentionally opened during the well control accident at Troll, as barriers against the reservoir.

Norway's Labor Minister has appointed an independent commission to investigate the link between cost-cutting efforts and industry accidents.

In December, Statoil released reports on two other accidents, one of which injured five people, including two students on work placement, but the company said it had not found evidence linking those events to its cost cuts.

Shell's Exploration Boss to Step Down

Royal Dutch Shell's head of exploration Ceri Powell will step down next month, capping seven years in the role marked by sharp cutbacks in the company's search for new oil and gas reserves amid the industry's deep downturn since mid-2014.

Powell, a geologist who joined Shell in 1990 and a vocal supporter for strengthening female involvement in the sector, will depart on February 13 and become managing director of Brunei Shell Petroleum the following month, according to a Shell spokeswoman.

Her departure is part of a broad reshuffle of senior positions following the completion of Shell's $54 billion acquisition of BG Group in February 2016.

Those include the appointment of Jessica Uhl as chief financial officer, who will replace Simon Henry in March as well as the appointment of Gerard Paulides, who oversaw the BG merger, as head of investor relations.

Powell will be replaced by current upstream strategy vice president Marc Gerrits, who started his career in Shell in 1986 as an exploration geologist in Australia.

In an interview with Reuters last month, Powell described Shell's shift away from complex and costly exploration projects in "frontier" areas such as Alaska to areas closer to the company's existing production such as Malaysia and Brunei.

Last year, Shell angered investors when it wrote down $7 billion after failing to find any oil or gas in the Chukchi Sea off Alaska's northwest coast.

This followed years of complex work and a rig accident that drew heavy criticism from environmental activists.

Following the sharp drop in oil prices since mid-2014, Shell slashed its exploration budget to less than $2 billion a year from around $5 billion.

Halliburton N America Revenue Growth May Beat Rig Count Rise

Halliburton Co, the world's No. 2 oilfield services provider, said its revenue growth this year would meet or outpace the increase in the number of drilling rigs in North America.

However, Halliburton's revenue growth in North America in the latest quarter lagged the increase in rig count, sending the company's shares down as much as 4.5 percent to $53.93.

"They are really kind of throwing some cold water on North America pricing picking up in the first half of the year," Barclays analyst David Anderson said.

The company's fourth-quarter revenue from North America increased 9 percent compared with the previous quarter, while the average U.S. rig count jumped 23 percent in the same period.

"We expected a little more in terms of revenue growth just given what the rig count did," Edward Jones analyst Rob Desai said.

The reason for the difference was Halliburton's decision to forgo unprofitable contracts, Chief Executive Dave Lesar said on a post-earnings call.

That helped the company post its first quarterly operating profit in North America in a year and report an adjusted profit that topped analysts' expectations.

Rising oil prices are prompting producers to put more rigs back to work in low-cost shale fields in North America.

"Animal spirits have broken free and they are running," Lesar said. "Customers are excited again and our conversations have changed from being only about cost control to how we can meet their incremental demand."

To meet that demand, Lesar said Halliburton would start reviving hydraulic fracturing equipment it had idled when oil prices were slumping.

However, Halliburton expects the reactivation costs to weigh on margins in the near term.

Oil producers are more focused on North American shale fields than on expensive deepwater drilling and mature oilfields in international markets.

Halliburton said there would not be an "inflection" in international markets until the latter half of 2017, echoing larger rival Schlumberger NV.

"It is important to remember that our world is still a tale of two cycles," Lesar said. "The North America market appears to have rounded the corner, but the international downward cycle is still playing out."

Net loss attributable to Halliburton rose more than fivefold to $149 million in the latest quarter. Its adjusted profit of 4 cents per share was double analysts' average estimate, according to Thomson Reuters I/B/E/S.

Revenue fell 20.9 percent to $4.02 billion, slightly shy of analysts' estimate of $4.09 billion.

 

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