Its unclear what the magnitude of this story will be, though oil markets did spike when this was announced on Friday. No new news on wires in over 12 hours, though Bloomberg is reporting that the 'point of no return' is now 4/24-4/25. Is it possible that this is political cover for emergency maintenance or some such? Is this linked to financial situation re: pensions? Anyone with insight or updates, please comment.

And so the picnic begins.

http://thescotsman.scotsman.com/latestnews/-The-fuel-panic-begins.400142...

I didn't see it quite as busy in this in the city yesterday, but then again there are less petrol stations outside Edinburgh than in the city itself.

Much of the UK's gas supply (st fergus) is controllled at Grangemouth, our analysts are predicting the strike will not be allowed to go ahead on the grounds of security of supply (for gas) rather than any oil/petrol shortage.

I have a hard time believing this strike and associated outage will occur. In recent times the British have been particularly poor at striking compared to our continental friends. Given the ramifications of such action, I'm fairly confident that "something" will be agreed to avert the direct action. However as we move forward over the next few years and the economic and energy situations deteriorate, it's situations like this that are likely to cause the most immediate damage. I'm just hoping it doesn't start this week!

The strike is by the refinery operators. It is not clear if the oil and gas flowing through the refinery to other destinations will be affected.

It is clear that the oil company is talking up the panic as much as possible, talking of scotland being without fuel for a month, and no mention of reserves, imports, or the fact that the refinery only produces 10% of UK fuel.

On the radio (Radio 4) this morning the operator did have to backtrack and talk of 2 to 3 weeks to restart the refinery.

I don't doubt that the refinery is struggling with margins at $117 oil, but UK drivers are even more inelastic in demand than in the US due to the high taxes. We are used to $8 gas, $10 gas won't stop us driving.

I would find it deeply ironic, given that PO is going to make all pensions worthless, if a pensions dispute was to trigger turmoil in the UK . There is no mention on the media of the price of oil at the moment, or the fact that diesel is in increasingly short supply. It is true that a final salary pension scheme is very expensive for an employer in the long run, it is a huge perk, especially as it is the only type of pension likely to survive peak oil. (My dad has had a very comfortable retirement on one). That said, the company is simply cutting the wages of the workers in real terms at a time they are making record headline profits.

Petrol panic looms as protesters threaten blockade, strike closes major refinery and oil hits record high

By PAUL SIMS - More by this author »

Last updated at 09:20am on 21st April 2008

Comments (11)

Fears were growing last night that Britain could lurch towards another fuel crisis.

As forecourt prices hit record levels and oil went above $117 a barrel, campaigners said they were secretly planning a series of blockades in an attempt to bring the country to its knees.

Angered by the Government's planned 2p rise in fuel duty, they pledged to recreate the chaotic scenes which saw tens of thousands of drivers panic-buying in 2000.

The History

The Forties Field, discovered by BP was the first giant field to be brought on production in the UK. This spurred BP to build the Forties pipeline system which fed oil to their refinery in Grangemouth - by Kinneil Terminal on PG's map. So back in the 1970s BP owned the oil field and platform, the pipeline and the refinery.

In 2003, BP sold the Forties Field to Apache Corporation. Production peaked at Forties at 29,000,000 M3 per annum back in 1980 and by 2003 that had fallen to 2,400,000 M3 per annum. About the same time BP sold their refinery at Grangemouth in stages to a company called Ineos. A cynic may think BP were trying to get out of the oil industry - they also invented the slogan Beyond Petroleum.

BP still owns many fields linked to the Forties pipeline such as Andrew, ETAP, Bruce and many more. But the only large chunk of the original infrastructure that they still own is the pipeline that earns a fortune through tariffs.

The Strike

Is over a pensions dispute and I suspect we will see many more disputes of this sort in the years ahead as pension funds fall very far short of the make believe promises made to employees.

Ineos I believe is a quite large private company that seemed to appear from nowhere about 5 years ago. Anyone got more information on them - who owns them and how well capitalised is the outfit. How much debt do they have? Can Ineos survive this dispute?

Fuel supplies

I think this is likely the least of our worries. I gather the UK has ample stocks so it is really a distribution problem. Aberdeen receives fuel via coastal tanker - so hopefully that can simply pick up stocks from else where.

Oil and gas production

One thing I'm not sure about is the knock on effect of shutting Grangemouth upon oil and gas production throughout the Forties gathering system. Grangemouth processes about 200,000 bpd and a lot of that is liquids from gas and gas condensate fields. If all this has to shut down because there is nowhere for the liquids to go then we will be in big trouble with gas supplies already stretched.

Things are looking better on the Crude side:

The Grangemouth refinery processes around 20% of the crude from the Forties system, said the spokesman, with the remainder going into storage for export by tanker. In the event of a refinery shutdown, "all the crude could go to export for a while," said the spokesman, although there is a physical limit to the amount of oil that can be stored at the export terminal.

But not so on the Gas side:

Scotland's St Fergus gas terminal, which supplies around a third of the U.K.'s gas, feeds some hydrocarbon liquids extracted from the natural gas into the Forties pipeline system. Royal Dutch Shell PLC (RDSB), one of the operators of the St Fergus terminal, was not immediately available to comment on the impact of a Forties shutdown on gas flows at St Fergus.

"I believe that if the associated, liquid heavy gas can't be used at Grangemouth as feedstock, then they can't produce the natural gas (at St Fergus)," said a London-based gas trader.

From the BBC article

But he said the UK held 70 days of fuel in reserve which would be sufficient to cover the month that Ineos expected Grangemouth to be out of action.

How much of that 70 day supply is taken up by the minimum operating levels?

I am probably being naive here, so any explanation would be appreciated - why would the shutting of an oil refinery in Scotland affect world crude oil prices? This is cited as a factor in this BBC article on yet another record price for crude - http://news.bbc.co.uk/1/hi/business/7358870.stm

" range of factors including the uncertain situation at Grangemouth - one of the largest refineries in the UK - and attacks by militants on pipelines in Nigeria spurred prices on."

Disruption in Nigeria would reasonably affect crude prices but closure of a refinery? If anything could this not be a potential depressing effect on crude oil price?

This seems consistent with the typical mainstream media reporting of oil prices, which continually ignore supply side factors (i.e. peaking of supply) and punt the view that this is all down to the weak dollar. It almost smacks of a cover story.

bloomberg offers some info :

he plant's chemicals facility was halted over the weekend and the first of several crude-distillation units were taken offline yesterday

Humber U.K. Refinery Is Partially Shut

I'm amazed by this secrecy about after all normal maintainance of refineries in the whole of Europe.

Always fun to laugh at the Daily Mail -- though I'm sometimes dismayed by North American posters quoting from it as if it should be taken seriously as a NEWS paper, rather than a popular perception-management apparat for that section of the British public who think of themselves as a cut above the average red-top-reading prole, but too no-nonsense in their attitudes to like the hoity-toity, arty-farty broadsheets.

The flood of comments from the punters shows, may I suggest, the degree to which they have been mislead and kept in the dark by their 'news' media of choice, so that they can actually take seriously the nonsense that they feed back to the very media which are deceitfully injecting it -- unnoticed -- into their minds in the first place.

However deluded, these are fellow-humans who are going to suffer from their unpreparedness, and their unfamiliarity with the real story of what's happening, comprehensively concealed from them by the Permanent Bullsith Blizzard put out be such as the Mail hacks.

Any TODers who don't already know it might like to visit Medialens fairly regularly, especially the Message Board and the Forum, for useful insights which mesh very well with the high level of insight displayed by the TOD communities. Medialens, as it says, "correct[s] for the distorted vision of the corporate media....." Useful synergising for the TODs.

Refinery strike talks break down

A strike which could close down Scotland's only oil refinery will go ahead after talks between the Unite union and plant bosses broke down.

A union spokesman said: "Unite's negotiators were disappointed with the company's refusal to withdraw controversial pensions plans and therefore the two-day strike will go ahead.

Ineos chief executive Tom Crotty said: "We have done everything we can to help resolve this dispute.

"The plain fact is that the union seems hell bent on pursuing a strike that will cause chaos and disruption for the people of Scotland and across the UK."

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