Many oil assets are ending up in the hands of private-equity (PE) firms. In the past two years alone these bought $60bn-worth of oil, gas and coal assets, through 500 transactions… Some have been multibillion-dollar deals, with giants such as Blackstone, Carlyle and KKR carving out huge oilfields, coal-fired power plants or gas grids from energy groups, miners and utilities. Many other deals, sealed by smaller rivals, get little publicity. This sits uncomfortably with the credo of many pension funds, universities and other investors in private funds, 1,485 of which, representing $39trn in assets, have pledged to divest fossil fuels. But few seem ready to leave juicy returns on the table.
As demand for oil and gas persists while dwindling investment in production limits supply, prices are rising again, boosting producers’ profits….And discounts imposed on “brown” assets by the stock market, linked to sustainability factors rather than financial… create even more pockets of opportunity…The Economist has looked at 8 PE firms that have closed fossil-fuel deals in 2020-2021 The investors in some of their latest energy-flavored vehicles include 53 pension funds, 23 universities and 32 foundations. Many are from America, such as Teacher Retirement System of Texas, the University of San Francisco and the Pritzker Traubert Foundation, but that is partly because more institutions based there disclose pe commitments. The list also features Britain’s West Yorkshire Pension Fund and China Life. Over time, some investors may decide to opt out of funding their portion of fossil-fuel deals.
But a third, yet more opaque class stands ready to step in: state-owned firms and sovereign funds operating in the shadows. Last month Saudi Aramco, the Kingdom’s national oil company, acquired a 30% stake in a refinery in Poland, and Somoil, an Angolan group, bought offshore oil assets from France’s Total. In 2020 Singapore’s GIC was part of the group that paid $10bn for a stake in an Emirati pipeline.
Excerpts from Who buys the dirty energy assets public companies no longer want?, Economist, Feb. 12, 2022
Some of the world’s largest oil companies have been ordered to pay part of a $7.2 billion tab to retire hundreds of aging wells in the Gulf of Mexico that they used to own, capping a case that legal experts say is aharbinger of future battles over cleanup costs.
A federal judge ruled last month that Fieldwood Energy a privately held company that currently controls the old wells and had sought bankruptcy protection, could pass on hundreds of millions of dollars in environmental liabilities to prior owners and insurers of the wells as part of its reorganization plan. Exxon Mobil, BP, Hess , Royal Dutch Shell and insurance companies had objected to the plan. The dispute, litigated for months in federal bankruptcy court in Houston, centered over who should bear the enormous costs of capping and abandoning wells, primarily in the shallow waters of the Gulf of Mexico where an oil spill could wreak havoc. The companies could still appeal the ruling…
Jason Bordoff, founding director of Columbia University’s Center for Global Energy Policy said that the expenses to decommission oil-and-gas infrastructure world-wide will in the trillions of dollars. “Who bears the costs?” he said. “There will be people who want to pass the buck.”
BP and Shell have pledged to reduce their carbon emissions to zero by 2050. To accomplish that, those companies will have to sell off some oil-and-gas wells to get their related emissions off their books, say energy analysts. But such asset sales present huge risks for big oil companies because many of the buyers are smaller, privately held firms, like Fieldwood, which may not have the financial wherewithal to bear cleanup costs, Ms. Usoro said. This was Fieldwood’s second bankruptcy in two years.
These smaller companies buy the wells for pennies on the dollar and assume the cleanup expenses in the hope that they can reduce the assets’ cost structure and squeeze out the remaining barrels of oil profitably. “I’ve always questioned this business model,” said Ms. Usoro. “Are these guys able to take care of the end of life?”
Excerpts Christopher M. Matthews, Oil Companies Are Ordered to Help Cover $7.2 Billion Cleanup Bill in Gulf of Mexico, WSJ, July 6, 2021
Wearing blue hard hats, white hazmat suits and respirator masks, workers carted away bags of debris on a recent morning from a sprawling and now-defunct oil refinery once operated by Philadelphia Energy Solutions (PES). Other laborers ripped asbestos from the guts of an old boiler house, part of a massive demolition and redevelopment of the plant, which closed in 2019 after a series of explosions at the facility.
Plans call for the nearly 1,400-acre site to be transformed into a new commercial hub with warehousing and offices. All it will take is a decade, hundreds of millions of dollars, and confronting 150 years’ worth of industrial pollution, including buried rail cars and a poisonous stew of waste fuels poured onto the ground. A U.S. refinery cleanup of this size and scope has no known precedent, remediation experts said. It’s a glimpse of what lies ahead if the United States hopes to wean itself off fossil fuels and clean up the toxic legacy of oil, gas and coal.
President Joe Biden wants to bring the United States to net-zero greenhouse gas emissions by 2050 to fight climate change through a shift to clean-energy technologies, while reducing pollution in low-income and minority neighborhoods near industrial facilities. It’s a transition fraught with challenges. Among the biggest is what to do with the detritus left behind. The old PES plant is just one of approximately 135 oil refineries nationwide, to say nothing of the country’s countless gas stations, pipelines, storage hubs, drill pads and other graying energy infrastructure.
In Philadelphia, a private-sector company is taking the lead. Hilco Redevelopment Partners, a real estate firm that specializes in renovating old industrial properties, bought the PES refinery out of bankruptcy for $225.5 million in June…The full extent of the pollution won’t be understood for years. Also uncertain is the ability of the refinery’s previous owners to pay their share of the cleanup. The facility has had multiple owners over its lifetime and responsibility has been divided between them through business agreements and legal settlements. Oil refining at the Philadelphia site began in 1870, 100 years before the creation of the U.S. Environmental Protection Agency (EPA). Gasoline, once a worthless byproduct of heating oil, was routinely dumped by the refinery into the soil, according to historians and researchers. Leaks and accidents spewed more toxins. The June 2019 blasts alone released 676,000 pounds of hydrocarbons, PES said at the time. The Philadelphia site is not unique. About half of America’s 450,000 polluted former industrial and commercial sites are contaminated with petroleum, according to the EPA.
Cleanup in Philadelphia will be painstaking. After asbestos abatement comes the demolition and removal of 3,000 tanks and vessels, along with more than 100 buildings and other infrastructure, the company said. Then comes the ground itself. Hilco’s Perez said dirt quality varies widely on the site and will have to be handled differently depending on contamination levels. Clearing toxins like lead must be done with chemical rinses or other technologies…The site also has polluted groundwater and giant benzene pools lurking underneath, according to environmental reports Sunoco filed over the years with the federal and state governments.
Excerpts from Laila Kearney, 150 years of spills: Philadelphia refinery cleanup highlights toxic legacy of fossil fuels, Reuters, Feb. 16, 2021
The federal agency overseeing oil and gas operations in the Gulf of Mexico after hurricane Katrina reported that more than 400 pipelines and 100 drilling platforms were damaged. The U.S. Coast Guard, the first responder for oil spills, received 540 separate reports of spills into Louisiana waters. Officials estimated that, taken together, those leaks released the same amount of oil that the highly publicized 1989 Exxon Valdez disaster spilled into Alaska’s Prince William Sound — about 10.8 million gallons…
While hurricanes gain speed due to the effects of climate change, the push for oil leasing in the Gulf of Mexico shows no sign of slowing down. In 2014, the Obama administration opened up 40 million new acres in the Gulf for oil and gas development. Four years later, the Trump administration announced plans to open up most of the rest, in what would be the largest expansion of offshore oil and gas drilling in U.S. history. Many of these 76 million acres are to be offered at reduced royalty rates to encourage additional near-shore drilling in Louisiana waters…
“In the Gulf, storms are predicted to be less frequent but more intense when they do come,” said Sunshine Van Bael, an ecologist at Tulane University who evaluated damage to marsh ecosystems from the BP oil spill. “One thing that storms do is, if oil has been buried underneath the marsh because it wasn’t rehabilitated, a storm could come along and whip that back up to the surface. So, the aftereffects of the oil spills might be greater [with climate change] since the storms are predicted to be more intense.”…
In 2009, a class-action lawsuit against Murphy Oil Corp. ended in a settlement requiring the company to pay $330 million to 6,200 claimants, including owners of about 1,800 homes in St. Bernard Parish. The damage occurred when one of Murphy’s storage tanks floated off its foundation during Katrina and dumped over a million gallons of crude oil into a square-mile segment of Meraux and Chalmette….
To date, more than $19 million has been paid out from the federal Oil Spill Liability Trust Fund to reimburse at least two oil companies for costs they incurred cleaning up oil they spilled during Katrina…
“We don’t normally penalize [companies] for act of God events,” Greg Langley of the Department of Environmental Quality said. “We just get right to remediation.”
Excerpts from Joan Meiners, How Oil Companies Avoided Environmental Accountability After 10.8 Million Gallons Spill, ProPublica, Dec. 27, 2019
A salty substance called “brine,” is a naturally occurring waste product that gushes out of America’s oil-and-gas wells to the tune of nearly 1 trillion gallons a year, enough to flood Manhattan, almost shin-high, every single day. At most wells, far more brine is produced than oil or gas, as much as 10 times more. Brine collects in tanks, and workers pick it up and haul it off to treatment plants or injection wells, where it’s disposed of by being shot back into the earth…
The Earth’s crust is in fact peppered with radioactive elements that concentrate deep underground in oil-and-gas-bearing layers. This radioactivity is often pulled to the surface when oil and gas is extracted — carried largely in the brine…
Radium, typically the most abundant radionuclide in brine, is often measured in picocuries per liter of substance and is so dangerous it’s subject to tight restrictions even at hazardous-waste sites. The most common isotopes are radium-226 and radium-228, and the Nuclear Regulatory Commission requires industrial discharges to remain below 60 for each. Some brine samples registered combined radium levels above 3,500, and one was more than 8,500. “It’s ridiculous that those who haul brine are not being told what’s in their trucks,” says John Stolz, Duquesne’s environmental-center director. “And this stuff is on every corner — it is in neighborhoods. Truckers don’t know they’re being exposed to radioactive waste, nor are they being provided with protective clothing.
“Breathing in this stuff and ingesting it are the worst types of exposure,” Stolz continues. “You are irradiating your tissues from the inside out.” The radioactive particles fired off by radium can be blocked by the skin, but radium readily attaches to dust, making it easy to accidentally inhale or ingest. Once inside the body, its insidious effects accumulate with each exposure. It is known as a “bone seeker” because it can be incorporated into the skeleton and cause bone cancers called sarcomas. It also decays into a series of other radioactive elements, called “daughters.” The first one for radium-226 is radon, a radioactive gas and the second-leading cause of lung cancer in the U.S. Radon has also been linked to chronic lymphocytic leukemia.
Oil fields across the country — from the Bakken in North Dakota to the Permian in Texas — have been found to produce brine that is highly radioactive. “All oil-field workers,” says Fairlie, “are radiation workers.” But they don’t necessarily know it.
The advent of the fracking boom in the early 2000s expanded the danger, saddling the industry with an even larger tidal wave of waste to dispose of, and creating new exposure risks as drilling moved into people’s backyards. “In the old days, wells weren’t really close to population centers. Now, there is no separation,” says City University of New York public-health expert Elizabeth Geltman. In the eastern U.S. “we are seeing astronomically more wells going up,” she says, “and we can drill closer to populations because regulations allow it.” As of 2016, fracking accounted for more than two-thirds of all new U.S. wells, according to the Energy Information Administration. There are about 1 million active oil-and-gas wells, across 33 states, with some of the biggest growth happening in the most radioactive formation — the Marcellus. …
There is little public awareness of this enormous waste stream, the disposal of which could present dangers at every step — from being transported along America’s highways in unmarked trucks; handled by workers who are often misinformed and underprotected; leaked into waterways; and stored in dumps that are not equipped to contain the toxicity. Brine has even been used in commercial products sold at hardware stores and is spread on local roads as a de-icer…
But a set of recent legal cases argues a direct connection to occupational exposure can be made… Pipe cleaners, welders, roughnecks, roustabouts, derrickmen, and truck drivers hauling dirty pipes and sludge all were exposed to radioactivity without their knowledge and suffered a litany of lethal cancers. An analysis program developed by the Centers for Disease Control and Prevention determined with up to 99 percent certainty that the cancers came from exposure to radioactivity on the job, including inhaling dust and radioactivity accumulated on the workplace floor, known as “groundshine.”
“Almost all materials of interest and use to the petroleum industry contain measurable quantities of radionuclides,” states a never-publicly released 1982 report by the American Petroleum Institute, the industry’s principal trade group, passed to Rolling Stone by a former state regulator. Rolling Stone discovered a handful of other industry reports and articles that raised concerns about liability for workers’ health. A 1950 document from Shell Oil warned of a potential connection between radioactive substances and cancer of the “bone and bone marrow.” In a 1991 paper, scientists with Chevron said, “Issues such as risk to workers or the general public…must be addressed.”
“There is no one federal agency that specifically regulates the radioactivity brought to the surface by oil-and-gas development,” an EPA representative says. In fact, thanks to a single exemption the industry received from the EPA in 1980, the streams of waste generated at oil-and-gas wells — all of which could be radioactive and hazardous to humans — are not required to be handled as hazardous waste. In 1988, the EPA assessed the exemption — called the Bentsen and Bevill amendments, part of the Resource Conservation and Recovery Act — and claimed that “potential risk to human health and the environment were small,” even though the agency found concerning levels of lead, arsenic, barium, and uranium, and admitted that it did not assess many of the major potential risks. Instead, the report focused on the financial and regulatory burdens, determining that formally labeling the “billions of barrels of waste” as hazardous would “cause a severe economic impact on the industry.”…
There is a perception that because the radioactivity is naturally occurring it’s less harmful (the industry and regulators almost exclusively call oil-and-gas waste NORM — naturally occurring radioactive material, or TENORM for the “technologically enhanced” concentrations of radioactivity that accumulate in equipment like pipes and trucks.”…
In Pennsylvania, regulators revealed in 2012 that for at least six years one hauling company had been dumping brine into abandoned mine shafts. In 2014, Benedict Lupo, owner of a Youngstown, Ohio, company that hauled fracking waste, was sentenced to 28 months in prison for directing his employees to dump tens of thousands of gallons of brine into a storm drain that emptied into a creek that feeds into the Mahoning River. While large bodies of water like lakes and rivers can dilute radium, Penn State researchers have shown that in streams and creeks, radium can build up in sediment to levels that are hundreds of times more radioactive than the limit for topsoil at Superfund sites. Texas-based researcher Zac Hildenbrand has shown that brine also contains volatile organics such as the carcinogen benzene, heavy metals, and toxic levels of salt, while fracked brine contains a host of additional hazardous chemicals. “It is one of the most complex mixtures on the planet,” he says…
“There is nothing to remediate it with,” says Avner Vengosh, a Duke University geochemist. “The high radioactivity in the soil at some of these sites will stay forever.” Radium-226 has a half-life of 1,600 years. The level of uptake into agricultural crops grown in contaminated soil is unknown because it hasn’t been adequately studied.
“Not much research has been done on this,” says Bill Burgos, an environmental engineer at Penn State who co-authored a bombshell 2018 paper in Environmental Science & Technology that examined the health effects of applying oil-field brine to roads. Regulators defend the practice by pointing out that only brine from conventional wells is spread on roads, as opposed to fracked wells. But conventional-well brine can be every bit as radioactive, and Burgos’ paper found it contained not just radium, but cadmium, benzene, and arsenic, all known human carcinogens, along with lead, which can cause kidney and brain damage.
Brine as dust suppressant
Ohio, because of its geology, favorable regulations, and nearness to drilling hot spots in the Marcellus, has become a preferred location for injection wells. Pennsylvania has about a dozen wells; West Virginia has just over 50. Ohio has 225. About 95 percent of brine was disposed of through injection as of 2014. Government scientists have increasingly linked the practice to earthquakes, and the public has become more and more suspicious of the sites. Still, the relentless waste stream means new permits are issued all the time, and the industry is also hauling brine to treatment plants that attempt to remove the toxic and radioactive elements so the liquid can be used to frack new wells.
Excerpts from America’s Radioactive Secret, Rolling Stone Magazine, Jan. 21, 2020
Giant oil firms have spent more than four decades pumping billions of pounds worth of oil from the seabed. But now decommissioned rigs in the North Sea are at the centre of an environmental storm with an oil giant under intense pressure to rethink plans to leave some of the platforms in the sea.
Several hundred oil drilling platforms in the waters off Scotland are due to be decommissioned over the next three decades as they approach the end of their operational lifetime. Due to the cost and difficulty of dismantling the structures – each of which can be as tall as the Eiffel Tower – Shell proposed removing only the topside of its four Brent platforms, leaving the huge concrete legs in place.
A natural gas platform in Norway. Almost all of the 600KT structure will be submerged.
That resulted in the controversial suggestion that oil mixed with sediment in 42 out of 64 concrete storage cells – each up to 66 feet in diameter and 200 feet high, around the height of the Scott Monument in Edinburgh – should remain on the seabed. These could remain for up to 500 years after the platforms have been decommissioned.
Chevron oil platform
The plans have raised alarm in some quarters over the impact of leaks from the estimated 11,000 tonnes of raw oil and toxins remaining in the base of the four Brent installations – Alpha, Bravo, Charlie and Delta, all put up in the East Shetland basin in the 1970s. It has emerged that a report of an expert evaluation group commissioned by the Dutch government has provided a critical analysis of the position and recommends a clean-up be carried out as agreed more than 20 years ago in international treaties. See Brent Decommissioning Derogation: An evaluation. The special treaty known as Ospar, which was adopted in 1992, states that rigs, including their contents and pipelines, must be removed from the sea after decommissioning.
The experts said that removing all contaminated materials “presents the most certain solution”. They say staying true to Ospar “not only avoids passing on potential problems to future generations” but also prevents “large amounts of negative public attention as was the case in the decommissioning of Brent Spar in the 1990s”. When Shell proposed sinking the Spar oil storage buoy in 1995, it prompted protests by Greenpeace, petrol boycotts in Germany and a falling share price. The company was eventually forced to back down and find a more environmentally friendly plan.
In October 2019, Greenpeace activists from the Netherlands, Germany and Denmark boarded two oil platforms in Shell’s Brent field in a protest against the plans. They scaled Brent Bravo and hung banners saying “Shell, clean up your mess!” and “Stop Ocean Pollution”.
The 2019 report revealed that an earlier independent review group(that took place in 2017)said that a “leave in place” solution with appropriate navigational markers and safety zones gave “a risk in relation to shipping impact that Shell regarded as acceptable”. The report added: “However, although the estimated probabilities of a collision may be low on a per annum basis, the consequences could be catastrophic and result in major injury and loss of life or serious marine pollution.”
Excerpts from North Sea oil decommissioning: pressure grows on Shell to back down, the Herald, Oct. 20, 2019
The Mobil Foundation sought to use its tax-exempt grants to shape American laws and regulations on issues ranging from the climate crisis to toxic chemicals – with the explicit goal of benefiting Mobil, documents obtained by the Guardian newspaper show. Recipients of Mobil Foundation grants included Ivy League universities, branches of the National Academies and well-known civic organizations and environmental researchers. Benefits for Mobil included – in the foundation’s words – funding “a counterpoint to so-called ‘public interest’ groups”, helping Mobil obtain “early access” to scientific research, and offering the oil giant’s executives a forum to “challenge the US Environmental Protection Agency (EPA) behind-the-scenes”….
A third page reveals Mobil Foundation’s efforts to expand its audience inside environmental circles via a grant for the Environmental Law Institute, a half-century-old organization offering environmental law research and education to lawyers and judges. “Institute publications are widely read in the environmental community and are helpful in communicating industry’s concerns to such organizations,” the entry says. “Mobil Foundation grants will enhance environmental organizations’ views of Mobil, enable us to reach through ELI activities many groups that we do not communicate with, and enable Mobil to participate in their dialogue groups.”
The documents also show Mobil Foundation closely examining the work of individual researchers at dozens of colleges and universities as they made their funding decisions, listing ways that foundation grants would help shape research interests to benefit Mobil, help the company recruit future employees, or help combat environmental and safety regulations that Mobil considered costly. “It should be a wake-up call for university leaders, because what it says is that fossil fuel funding is not free,” said Geoffrey Supran, a postdoctoral researcher at Harvard and MIT. “When you take it, you pay with your university’s social license,” Supran said. “You pay by helping facilitate these companies’ political and public relations tactics.”
In some cases, the foundation described how volunteer-staffed not-for-profits had saved Mobil money by doing work that would have otherwise been performed by Mobil’s paid staff, like cleaning birds coated in oil following a Mobil spill. In 1987, the International Bird Rescue Research Center’s “rapid response and assistance to Mobil’s West Coast pipeline at a spill in Lebec, CA not only defused a potential public relations problem”, Mobil Foundation said, “but saved substantial costs by not requiring our department to fly cross country to respond”.d of trustees at the Woods Hole Oceanographic Institution (recipient of listed donations totalling over $200,000 from Mobil) and a part of UN efforts to study climate change.
Wise ultimately co-authored two UN Intergovernmental Panel on Climate Change reports, serving as a lead author on one. One report chapter Wise co-authored prominently recommended, among other things, burning natural gas (an ExxonMobil product) instead of coal as a way to combat climate change.
Excerpts from How Mobil pushed its oil agenda through ‘charitable giving’, Guardian, June 12, 2019
Scotoil Services Ltd, a company which disposes of radioactive waste from the North Sea oil industry, inadvertently pumped dangerous particles into Aberdeen Harbour over several months. The pollution included materials such as lead-210, radium-226 and radium-228, which both glow blue in the dark, and polonium-210, which was used to poison the former Russian spy, Alexander Litvinenko. An investigation by the Scottish Environment Protection Agency (Sepa) found one “gross” breach and several “major” breaches of the firm’s operating conditions.
However, the public was never told about the leak, which continued unchecked from November 2011 until April 2012, and it also appears that the Scottish Government was not informed either. While Scotoil had installed equipment to remove solid material from their liquid effluent, in April 2012, they informed Sepa that a final filter they were using had potentially failed Sepa said in a statement.
Scotoil has long been at the centre of concerns about radioactive particles washing up on the southern end of Aberdeen Beach, known as Foot Dee. Drilling for oil and gas causes Naturally-Occurring Radioactive Material (NORM) to build up on offshore equipment – an estimated 50 to 100 tonnes each year from the North Sea alone. For years, Scotoil and other operators could allow small particles of NORM to be discharged into the sea with the water they used to clean the drills and other pieces of essential kit.
However, tighter restrictions brought in from October 2011 mean that all particles must now be screened out and sent to secure landfill sites in sealed drums, along with the bulk of the solid waste. Following a Freedom of Information request by this newspaper, it emerged that Sepa became aware of the potential Scotoil leak in April, 2012. The company contacted Sepa to report “that particles of NORM have been discharged in their liquid effluent to the marine environment… Scotoil’s view is that the filters failed allowing the solid material into the environment”.
Excerpt from, Ben Borland, Scots kept in the dark over radiation leak into harbour at Aberdeen, Scottish Express, Apr. 26, 2014
Ecuador’s parliament on Thursday (Oct. 3, 2012) authorized drilling of the nation’s largest oil fields in part of the Amazon rainforest after the failure of President Rafael Correa’s plan to have rich nations pay to avoid its exploitation. The socialist leader launched the initiative in 2007 to protect the Yasuni jungle area, which boasts some of the planet’s most diverse wildlife, but scrapped it after attracting only a small fraction of the $3.6 billion sought.
The government-dominated National Assembly authorized drilling in blocks 43 and 31, but attached conditions to minimize the impact on both the environment and local tribes. Though Correa says the estimated $22 billion earnings potential will be used to combat poverty in the South American nation, there have been protests from indigenous groups and green campaigners. About 680,000 people have signed a petition calling for a referendum. “We want them to respect our territory,” Alicia Cauilla, a representative of the Waorani people who live around the Yasuni area, said in an appeal to the assembly. “Let us live how we want.” Correa has played down the potential impact of oil drilling in the area, saying it would affect only 0.01 percent of the entire Yasuni basin…
Oil output in OPEC’s smallest member has stagnated since 2010 when the government asked oil investors to sign less-profitable service contracts or leave the country. Since then, oil companies have not invested in exploration. State oil company Petroamazonas will be in charge of extraction in blocks 43 and 31, which are estimated to hold 800 million barrels of crude and projected to yield 225,000 barrels per day eventually. Ecuador currently produces 540,000 bpd
Excerpt, By Alexandra Valencia, Ecuador congress approves Yasuni basin oil drilling in Amazon, Reuters, Oct. 4, 2013
Law-In-Action 