Oily Warning

Guardian UK
International regulators meet in London today to mull over safety and other issues in the oil and gas industry.

Their forum could not come at a more appropriate time given last week’s BP refinery explosion in Texas and a warning to the same company last weekend from Alaskan safety authorities.
The reason for the 15 deaths at the Texas plant is yet to be established but the blast was a grim reminder of the dangers of the industry and the need for systems to be maintained at tip-top levels.

In recent years there has been a worrying increase in oil exploration and production accidents. Problems in the North Sea have led to rapped knuckles for Shell and others from a British regulator that questions whether enough is being spent to properly maintain ageing platforms. Last year there were a number of significant gas leaks off British shores that forced operators to evacuate staff from facilities on fields like Brae and Cormorant.

These incidents are seen inside the industry as a sure sign that platforms are wearing out. It looks increasingly like oil companies allowed the period of low oil prices after 1985 to cut back capital expenditure in mature areas and concentrate reduced spending on new production plays such as Angola and the Caspian.

But as global crude prices have soared over the last 24 months and record profits have been produced, executives appear to have been sidetracked to please Wall Street and the City.

Billions of pounds have been thrown at investors through share buybacks, while reduced capital expenditure on existing projects has only just started to move slowly ahead again. Oil bosses need to get back to basics – fast.

More at the Guardian UK