March 2009 Archives

ExxonMobil said in a recent statement that the Valdez accident (it does not refer to it as the Exxon Valdez accident) "was the lowest point in the company's 125 year history."

The 11 million gallon crude spill on March 24, 1989 from the supertanker Exxon Valdez into Prince William Sound cost Exxon (now ExxonMobil) about $4 billion in clean up costs; settlements with the state and federal government; compensation to Alaskans and businesses injured by the spill; and damages to thousands of residents who sued the company. Had the industry made similar investments in prevention and response prior to the spill, perhaps its impact would have been far less devastating.

The Exxon Valdez oil spill into Alaska's Prince William Sound twenty years ago was a product of complacency, government and industry negligence, and human failure.

"The State of Alaska, the federal government, the oil industry - they had all become complacent," said Valdez tour boat operator Stan Stephens. "Things had been going pretty well and nobody wanted to spend money if there were no problems."

Central Gulf of Mexico Lease Sale 208 in New Orleans this week was dealt an undeserved bad rap this week from Wall Street, which seemed disappointed in its mere $703 million in total high bids compared to the staggering all-time record $3.67 billion in last year's Central Sale.

Readers of The Barrel may have noticed the box to the right with Platts' "Tweets" from its new service. We believe that the new Platts' Twitter service can help keep you abreast of various news events over the course of the day.

The three latest Tweets will be posted on this page. But if you want to see more, please check it out here.

Over the objections of victims, a federal judge late last week agreed with criminal prosecutors that a $50 million fine levied on BP in its plea bargain over the fatal disaster in 2005 at its Texas City, Texas, refinery was the amount that fit the bill.

Judge Lee Rosenthal's decision in US District Court for the Southern District of Texas capped a March 12 hearing that was short and tidy compared to past episodes in the case that involved understandable emotions and extensive debates over several issues brought up by the opposition. The judge gave everyone in her Houston courtroom a chance to speak one last time, but there was little left to say after what she characterized as "an extraordinary amount of work" by the various sides. In an odd twist, the plea bargain had pitted the prosecution and the prosecuted against victims of the March 23, 2005, accident that killed 15 contractors and injured scores of other people.

On December 1, Platts assessed LLS at around $49.90/b. Today, we assessed it at about $50.17. On the same day, we assessed dated North Sea light at around $46.45/b. Today, it was assessed at around $45.36/b, a move, but hardly a big one for 3 1/2 months. Pretty dull market, huh?

When the new Kuwaiti minister arrived in Vienna to take part in his first ever OPEC meeting late last week, some of the assembled journalists followed him into the hotel's revolving door. It was a bit cartoonish as the ladies and
gentlemen of the press jammed themselves into the tiny space with Sheikh Ahmed al-Sabah and got stuck there for a few minutes.

The other day, we wrote about an upcoming webinar to be held by the Chicago Mercantile Exchange and its NYMEX division, defending the role of WTI as a benchmark.

Be wary of politicians who presume to know the public's mind on global warming -- it's a tricky business and something of a moving target.

A Gallup poll based on telephone interviews March 5-8 with 1,012 adults - standing in for the rest of us - found an increasing number of Americans believe that the threat posed by global warming is exaggerated by the mainstream media. "This represents the highest level of public skepticism about mainstream reporting on global warming seen in more than a decade of Gallup polling in the subject," the company said.

As long ago as 1997 market commentators said the importance of the North Sea to world oil markets outweighed its contribution to world oil supply. Boosted volume in the benchmark complex has kept that relevance strong but, with the grade that started it all hitting a new output low, it seems Dated Brent/BFOE might soon be due another change.

It is currently estimated that over 65% of the world's daily physical oil is priced off Dated Brent/BFOE, giving this production complex of 1.5 million b/d production a huge responsibility.

For a while last week, it appeared that Interior Secretary Ken Salazar was considering delaying an upcoming oil and gas lease sale in the Gulf of Mexico, a delay that "may threaten not just future leasing in this area of the Gulf but our entire OCS program," about a dozen Republican congressmen wrote Salazar Thursday. Sale 208, scheduled for March 18, "cannot and should not be delayed," they said.

However, Salazar has no intention of delaying the sale. "In fact, I intend to be personally in New Orleans to participate in the auction itself," he told reporters Friday.

The Chicago Mercantile Exchange (now the owner of the NYMEX petroleum contracts) seems suddenly very concerned about the questions surrounding its light sweet crude contract. The latest evidence? A webinar set for next Thursday, March 12, to discuss what is facing the crude contract: "...some market pundits have responded by questioning the WTI market and delivery mechanism." (Note: a report on the event can be found here. )

By the way, that quote comes from CME itself in its announcement about the webinar. It's certainly confronting the issue head on.

The current downturn will give the industry a chance now to put its money where its mouth has been on the subject of maintaining personnel. Nearly forgotten in the turmoil has been the whining mantra of the last four years, when leaders scolded themselves unmercifully about how their hire-and-fire mentality through the last major cycle created what's known now as the "lost generation" of the 1980s and translated into the "brain drain" of this decade. Despite signs that the industry is moving more cautiously now than it did in the 1980s on the job retention front, it is clear this recession still may force harder layoff decisions before the year is done.

The infamous Section 526 of US energy legislation, which prompted concerns last year from Canadian officials that it would bar US government agencies from purchasing fuel refined from oil sands crude, does not appear to be worth talking about, at least for the time being.

"It certainly has not been an issue raised with me over the course of the two days of meetings that I had here," Jim Prentice, Canadian environment minister, told a press conference at the Canadian embassy yesterday.