Giant Kazakh oilfield Kashagan, which was brought to a halt by leaks shortly after start-up last year, is grappling with a bureaucratic “nightmare” on top of its engineering troubles as it strives for commercial production in 2014.
The scale and complexity of the world’s most expensive standalone oil project led its seven partners away from the traditional single operator command-and-control model, where one of the larger companies takes charge while the others provide support and share the risks, costs and rewards.
November 24 brought along with it, a series of bad news for Royal Dutch Shell plc. (ADR) (NYSE:RDS.A), in the shape of two fines that were imposed on the oil giant. The local Scottish court imposed a £22,500 or $33,960 fine on the company for its involvement in a major oil spill in the North Sea in 2011. Nearly 200 tons of oil seeped into the North Sea due to a leak in its subsea pipeline from the Ganna Alpha.
A drifting barge has forced BP Plc and ConocoPhillips to shut oil fields in the North Sea and evacuate workers from production platforms.
BP fully shut production and will evacuate all workers from the Valhall field in Norway’s section of the North Sea, spokesman Jan Erik Geirmo said by phone Thursday. Conoco has closed the Eldfisk and Embla fields and moved 145 people from Eldfisk, 95 of them to the shore, spokesman Stig Kvendseth said by e-mail.
Royal Dutch Shell Plc will sell almost all of its production assets in Canada’s oilsands in a US$7.25 billion deal that cuts debt and reduces involvement in one of the most environmentally damaging forms of fossil-fuel extraction.
Oil engineering consultant Steve earns 550,000 Australian dollars (US$560,000) a year and is seeing new graduates signed up for six-figure salaries.
These pay rates, along with other rising costs the oil industry cannot control, are sharpening its focus on mass production methods, clever supply deals and investment in innovation.
“For oil and gas executives, the need for operational excellence has never been greater,” says industry consultants Bain & Co in a March 1 study on costs.