On Friday, the Financial Times of London devoted a piece to how the oil industry (Royal Dutch/Shell, in particular) prepares for disaster. -- "Peter Velez, Shell's global security and emergency response manager, emphasizes the importance of planning," Thomas Catan of the Financial Times (UK) writes. "'We look at all these events and we carefully analyze them, carefully plan for them,' says Mr. Velez." -- The military is often a key part of the plan. -- "Often the companies employ former members of the security services who can liaise with former colleagues in an attack," Catan writes; the oil industry is a place where the civilian/military distinction is often hazy. -- "Civilians" can even find themselves calling in military airstrikes: "While protecting a Colombian pipeline operated by Occidental in 1998, employees working for AirScan mistakenly called in a military air strike on a village, killing 18 civilians," Catan notes without comment. -- "'Most of these oil companies retain their own security divisions which are quite sophisticated these days, including ex-military and ex-police people,' says Richard Rangeley of Global Strategies Group, a security company operating in places such as Iraq and Afghanistan." -- From the point of view of governments, things look very similar: Michael T. Klare wrote recently, "By the end of 2003 . . . the Bush administration's energy policy had become thoroughly integrated into the nation's security strategy. As Energy Secretary Abraham phrased it in 2002, 'Energy security is . . . national security'" (Blood and Oil: The Dangers and Consequences of America's Growing Dependency on Imported Petroleum [Metropolitan Books, 2004], p. 73)....
Energy & Mining
THE OIL INDUSTRY: CALMLY KEEPING THE WHEELS OF INDUSTRY OILED
By Thomas Catan
Financial Times (UK)
June 24, 2005
http://news.ft.com/cms/s/59e39cb4-e3f3-11d9-a754-00000e2511c8.html (subscribers only)
For many companies preparing for a disaster can seem a hypothetical exercise. Not for oil companies.
They have operated in dangerous and unpredictable parts of the world almost since inception and their operations are subject to severe and unexpected interruptions.
Business continuity is as much a part of their everyday business as insurance or accounting, so other companies should be able to learn from their experience.
Guerrillas regularly blow up pipelines in Colombia yet oil continues to flow uninterrupted a surprising proportion of the time. Insurgents or terrorists attack their installations in the Middle East. Criminal gangs try to kidnap their executives for ransom. And thieves in Nigeria tap their pipelines for profit.
But perhaps the most formidable enemy faced by international oil companies is not human at all. Those operating in the Gulf of Mexico were hit by no less than four big hurricanes last year culminating with Hurricane Ivan, estimated to have wrought more than $13bn in damage in the U.S. alone.
Royal Dutch/Shell maintains a hurricane plan it updates annually. It has a specialized unit within its incident command team that swings into action whenever a hurricane warning appears.
In the worst case scenario, they evacuate all personnel from offshore installations using helicopters in four days. They aim to have all personnel onshore 12 hours before a hurricane strikes. They also lock down the installation to prevent an explosion and reduce damage.
Shell emergency co-ordinators emphasize the safety of their personnel and installations are of paramount importance when drafting and executing plans. Minimizing the downtime is important but secondary, they say.
Peter Velez, Shell's global security and emergency response manager, emphasizes the importance of planning.
"We look at all these events and we carefully analyze them, carefully plan for them," says Mr. Velez. "We document our plans, we practice, and we drill them. We improve when we see things we can improve on."
Shell's team includes a range of people to deal with incidents, including PR people to handle the media. "We don't just practice the operational side by ourselves," says Mr. Velez.
"We have people on the safety side, on the media side, logistics, planning, environmental, etc. Those are all members of our team."
Energy companies also have to deal with interruptions caused by people but are reluctant to talk about their plans for security reasons.
For those type of incidents, energy companies often rely far more on military and security services of their host countries. Key energy installations -- such as offshore rigs and liquefied natural gas terminals -- are seen as having strategic value and could make attractive terrorist targets. So the military in places such as the U.K. conduct drills to protect installations.
Often the companies employ former members of the security services who can liaise with former colleagues in an attack.
"Most of these oil companies retain their own security divisions which are quite sophisticated these days, including ex-military and ex-police people," says Richard Rangeley of Global Strategies Group, a security company operating in places such as Iraq and Afghanistan.
In highly strategic places such as Saudi Arabia, the U.S. military is involved in planning for contingencies such as an invasion or terrorist attack. Needless to say, those plans are secret and in any case, energy companies are not always directly involved.
A more common problem is attacks by guerrillas, insurgents, or bandits on pipelines in places such as Colombia and Iraq. The pipelines are extremely long and vulnerable. The loss of oil is expensive for the company and, if not cleaned up quickly, an environmental disaster.
"Most place where you look at in terms of pipeline attacks, most companies will employ a rapid reaction force to fix it," says Tamara Makarenko, a security expert at Global Strategies.
Companies such as AirScan offer aerial surveillance of pipelines and other installations in Iraq and Colombia.
Other companies are marketing satellite surveillance system capable of pinpointing attacks on pipelines.
But outside contractors can carry risks for energy companies. While protecting a Colombian pipeline operated by Occidental in 1998, employees working for AirScan mistakenly called in a military air strike on a village, killing 18 civilians.
BP was also embarrassed in the late 1990s by a flurry of allegations surrounding its hiring of the security company Defence Systems Limited to protect its Colombian pipelines from Marxist rebels.
Still, those incidents are relatively few and far between, and many security companies pride themselves on defending their customers' reputations.
Oil companies remain some of the biggest clients for security companies and, because they have to go to ever riskier areas in search of resources, are likely to remain so for some time.
Another strategy is to pay local communities to help protect the pipelines, giving them a stake in their security. But some companies feel queasy about this system, worrying that it can amount to little more than protection money and encourage problems later.