FUCK YOU BP

[P_McPoser]

It's great business when in the shadows of record profits your neglect and lack of reinvestment in the industry's infrastructure lead to controlling the supply and the escalation of the price of your product.

BRILLIANT!

Yeah, so brilliant that it cost BP 400kbpd!

[P_McPoser]

I'm working on a project that will produce 200,000BPD of crude... but not till 2010.

Ft. McMurry area?

[cj001f]

Yeah, so brilliant that it cost BP 400kbpd!

Except that loss isn't all BP's.

BP has a 26 percent stake in the Prudhoe Bay field, meaning its own production would be cut by 100,000 barrels a day, or around 2.5 percent of the company’s worldwide production, said spokesman David Nicholas.

Oil up .5% on the news. another $1.50 and BP's even (not counting maintenance, which would have to have been done at some point, and loss of goodwill/fines).

I doubt it was a conspiracy; it is clear BP didn't care much about maintenance (declining production, just millk it). It's also clear that in the face of rising oil prices, with the potential of permanently high oil prices, that deferral isn't terribly costly to them.

[backpack]

At first I thought I had done something to piss off MBS... glad it was just a gas price rant.

[mtbakerskier]

Thats the thing is that they have known for years that the pipeline was corroding. They have also had access to the "pig" for years and government inspectors have been filing reports saying that the pipeline is corroding. They just now- at the height of driving season and two wars in the mideast chose to run the pig and declare that the pipeline is corroding.

They know what they are doing.

Glad I am not the only one that sees it that way.

[HotDiggity]

Yeah, so brilliant that it cost BP 400kbpd!

Yup...400,000 barrels stay in the ground for each day they are shut down and gets pumped after the price jumps.

[SkiingBear]

Had to chime up hear man. They (are supposed to) use a device called a pipeline "pig", during production, to check integrity and perform some corrosion control. http://www.ppsa-online.com/about-pigs.php

Ummm, yeah...I worked for a pigging company for almost 6 years...it's not quite that simple. Not to mention, not all lines are piggable. The line in question was built roughly 30 years ago, and I'm sure they didn't design for it.

[cj001f]

Ummm, yeah...I worked for a pigging company for almost 6 years...it's not quite that simple. Not to mention, not all lines are piggable. The line in question was built roughly 30 years ago, and I'm sure they didn't design for it.

Dude, that's how they found the problems, by pigging the line.
http://www.usatoday.com/money/indust...ine-usat_x.htm
They hadn't for the previous 14 years because the engineers thought their 'model' was sufficent (or more probably, management told the engineers the model was good enough). No, I doubt it's simple. Nor is it cheap.

[Cyber Cop]

Ummm, yeah...I worked for a pigging company for almost 6 years...it's not quite that simple. Not to mention, not all lines are piggable. The line in question was built roughly 30 years ago, and I'm sure they didn't design for it.

I can give you extra bacon if you pig my line. And yeah, it's piggable.

[sfotex]

From my dad, who is an engineer with the BLM-Joint Pipeline Office in Alaska (they approve and inspect all dealings with the pipeline):

As Prudhoe Bay is all on private property we don't get involved except at Pump Station 1 and the main pipeline going south from it. The DOT gets generally gets involved in the pipelines carrying the oil from the processing centers to the pump station; the individual lines in the fields carrying oil from the wells to the processing centers are gathering lines and thus are exempt from DOT regulations. Not sure what the state claims jurisdictional over but its a big kick in the state's budget for sure -

So in reality BP didn't do anything wrong, they'll just pump it dry a little later...

[teledave]

I may have just gotten laid off because of this BP thing. I work in that oil field. I wont know for a few more weeks, but rumors are starting to fly regardless

Man, I feel more for you than i do for all the whiners. Hope you you keep your paycheck coming in.

For everyone else, gas prices suck.

[tetsuma]

I may have just gotten laid off because of this BP thing. I work in that oil field. I wont know for a few more weeks, but rumors are starting to fly regardless

This sucks. You work in production ops? Does this involve both side of the field -- the old BP side and the ARCO side (I think that's West and East, respectively)? Are these the lines going from the gathering stations to the main processesing unit or the line to the first taps pumpstation?

it was reported in the NYTimes that the lines hadn't seen a pig since the early 1990s. Is this really true? North Slope used to have the most organized and well maintained facilities in the US. You could eat off the floor of the main facility.

Good luck, and hope they can stagger production up soon.
-David

[tetsuma]

Dude, that's how they found the problems, by pigging the line.
http://www.usatoday.com/money/indust...ine-usat_x.htm
They hadn't for the previous 14 years because the engineers thought their 'model' was sufficent (or more probably, management told the engineers the model was good enough). No, I doubt it's simple. Nor is it cheap.

those lines were definitely pigged trough the early 1990s. And with a lower oil/water ratio -- assuming these lines are before the main processing unit -- and lower volume altogether, you've got more chance for corrosion. Not inspecting those lines since '92 was likely a saving money move; not an engineer, but doubt it was a good move. Curiously, 1992 is also about the same time the Prudhoe Unit went into its permanent 10% decline.


Penny wise, pound foolish. Oil prices sucked in 1991, they made cheaper choices and now they're loosing $75 per bbl oil. Let's hope shutting that thing in doesn't negatively impact the ultimate recoverable reserves.

In lieu of 400,000 bbls/day of crude supply appearing on the West Coast, the only realy solution is an abrupt drop in demand. that means, DRIVE LESS - it's cheaper than exploration!

[Alkasquawlik]

No, supply and demand. Surprise, the oil companies make record profits when demand skyrockets, market price follows, and production prices stay relatively low. Shocking. What a conspiracy.

Yeah, in a free-market pure capitalist society. The market behaviours of the oil-industry suggest that the oil/refinery businesses in America are not operatining in a free-market fashion.

For instance

In most businesses, there is no upside to having a plant or a store shut down: you lose sales, your stock goes bad, and your customers leave. In refining, though, you can sometimes make more money by selling less gas, or vice versa. Far from needing to add capacity, refiners can flourish even when they subtract it. When Hurricanes Katrina and Rita hit the Gulf Coast, for instance, Marathon Oil had to shut down two of its refineries, including Garyville. But the price spike that followed was so big that Marathon made twice as much from its refining operations in the third quarter of 2005 as it had a year earlier. There has never been evidence of refineries’ deliberately taking themselves offline, but it’s not unthinkable. During the California electricity crisis of 2001, after all, energy producers like Williams Energy found that it made economic sense to withhold power from the California market—to turn down sales—because doing so sent prices way up.

and....

...And if Washington wants a scapegoat it might take a look at itself. By not vetting mergers more carefully, government regulators allowed many refiners to achieve “market power” (the ability to influence the market price of what they sell), and other regulators enhanced that power by mandating gasoline standards without considering competition. High gas prices usually provoke one of two explanations: either they’re evidence of a conspiracy or they’re just the result of the free market at work. The good news is that there’s no conspiracy. The bad news is that there’s also no free market.

Crude oil in the last year went up 17% yet gasoline prices in California went up 48%. These corporations are making an ass load of money and the oligopolies that run the oil/refinery markets are not going to change anything until Washington does and/or ten years and 100's of billions are gone from our pockets and we're riding 100cc scooters to work.

[P_McPoser]

Yeah, in a free-market pure capitalist society. The market behaviours of the oil-industry suggest that the oil/refinery businesses in America are not operatining in a free-market fashion.

Agreed. I even posted something similar. No large markets exist without certain players having market power. At the base it is still supply and demand, and only compounded by "market power" muscle flexing.

[Andy_B]

My work shoe's and planner well stay at my desk. I'm going to be riding to work until the snow falls. 20 miles each way. I have access to company pool cars for "official" business.

In the long run, my legs and lungs will be ready for skiing and cx season.

[P_McPoser]

Yup...400,000 barrels stay in the ground for each day they are shut down and gets pumped after the price jumps.

Each day that oil is in the ground is deferred production. It not as simple as "we'll get it later." There are costs involved in re-hiring or finding skilled labor (if the current workforce is laid off), costs in re-starting pumping operations, costs in re-permitting, social costs in the local area (i.e. people not wanting to work for BP, or communities no longer accepting BP's presence in their area...Don't know if BP considers Social License to Operate in their business model, but most large companies have some component of this).

Lastly, a dollar of cash flow today is worth more than a dollar of cash flow a year from now, but with the current rate of crude oil price increases, that might not make a difference in this case.

Anyways, it's a stretch to assume that this was done as a "value added" opportunity. There are far better ways than this to take advantage of "market power."

[DougW]

Ft. McMurry area?

yes that's right

[DougW]

Dude, that's how they found the problems, by pigging the line.
http://www.usatoday.com/money/indust...ine-usat_x.htm
They hadn't for the previous 14 years because the engineers thought their 'model' was sufficent (or more probably, management told the engineers the model was good enough). No, I doubt it's simple. Nor is it cheap.

You can pig a line that is not designed to be pigged. But it may be time consuming. When you pig you are out of production. Also a pig scrappes the line - cleans out the stuff on the sides of the line. An intelligent pig checks the line for thickness. Nothing in that article says they used an intelligent pig to determine wall thickness though they may have. Scrapping out the crud may or amy not effect the rate of corrosion, but probably would.

[HotDiggity]

Each day that oil is in the ground is deferred production. It not as simple as "we'll get it later." There are costs involved in re-hiring or finding skilled labor (if the current workforce is laid off), costs in re-starting pumping operations, costs in re-permitting, social costs in the local area (i.e. people not wanting to work for BP, or communities no longer accepting BP's presence in their area...Don't know if BP considers Social License to Operate in their business model, but most large companies have some component of this).

Lastly, a dollar of cash flow today is worth more than a dollar of cash flow a year from now, but with the current rate of crude oil price increases, that might not make a difference in this case.

Anyways, it's a stretch to assume that this was done as a "value added" opportunity. There are far better ways than this to take advantage of "market power."

It's definitely a stretch. I'll be the first to admit that. I just have an inherently tough time letting a company that had profits of $19+ billion last year off the hook for not doing the preventive maintenance that would have kept the operation going, the oil flowing to market, the local people employed, and me out of this discussion. Even more maddening is that this occurred after a 200,000 gallon spill in March. Flags were raised then:

http://www.nytimes.com/2006/03/20/na...rssnyt&emc=rss

Was anything done to prevent another problem?

I've never been to AK, but we're entrusting these corporations with the well-being of a national treasure, and they are being paid handsomely for their efforts. It may be unrealistic, but it would be nice if they upheld their end of the bargain and made an effort to protect the lands they operate on.

[Mountain Junkie]

social costs in the local area

BWAAHHAAAAA!!!

[Buzzworthy]

Hasnt anyone heard of preventive maintance in this country?

Our company has and oue of our largest resellers has too:

My Company

Cathodic Protection on pipelines

But hell, they can only last so long. I doubt when they built it that they said, "hmmm, let's build this to break down at a moment in history when our country is in the Middle East fighting a war and oil prices are very high, thus pissing off a ton of people on gas prices, yeah, let's build it like that guys!"

I do agree this is a crappy situation and it really sucks that people may lose their jobs with what happened/is happening, as I read first hand in an earlier post.

[P_McPoser]

BWAAHHAAAAA!!!

It's unfortunate that the current crop of scandelous companies has forever imprinted this in your head. Many companies (including those in the Natural Resource Industries) spend millions of dollars a year maintaining programs with the goal of retaining a "social license to operate." Its bad business sense not to. Look in your town for the largest employer, I bet they do a hell of a lot more for the area than just provide jobs, no? I bet they contribute to social programs, fund childrens sports, donate to librarys, hospitals, and schools, provide scholarships and grants, etc. etc.

How the Big Oil companies' track record is on stuff like this, I don't know. But I bet there are some nice, new school buildings and shit like that near Prudhoe........

[HotDiggity]

It's unfortunate that the current crop of scandelous companies has forever imprinted this in your head. Many companies (including those in the Natural Resource Industries) spend millions of dollars a year maintaining programs with the goal of retaining a "social license to operate." Its bad business sense not to. Look in your town for the largest employer, I bet they do a hell of a lot more for the area than just provide jobs, no? I bet they contribute to social programs, fund childrens sports, donate to librarys, hospitals, and schools, provide scholarships and grants, etc. etc.

How the Big Oil companies' track record is on stuff like this, I don't know. But I bet there are some nice, new school buildings and shit like that near Prudhoe........

Bribes do make the world go 'round.

[davey]

Ft. McMurry area?

I think he said hes in alaska, so much different area.