Is Chevron Getting Into Trouble?

Transitions Online (TOL) and neweurasia, February 23rd, 2007Tengiz, Kazakhstan’s biggest onshore oil field, is known to produce sulphur-rich crude. ChevronTexaco, exploring, developing and producing at Tengiz since the early 1990s, has had different ideas how to get rid of this unwanted by-product. Until today, these attempts have not yielded any noticeable success, though. In 2001, St. Petersburg Times correspondent Christopher Pala reported:

There are 4.5 million tons of sulfur at Tengiz spread out on football-field-sized cakes that are 7.5 meters thick. And every day another 4,500 tons of liquid sulfur comes up with the oil and is sprayed with agricultural watering equipment out onto the yellow slabs, solidifying rapidly into a luminous, porous material that gives off hardly any odor at all….

“According to our data, this sulphur negatively affects the environment,” said Turaly Onerbayev, regional representative of the natural resources and environmental protection ministry.

The sheer size of the amassed sulphur deposits became an environmental hazard, and several people had to get relocated several miles away from wind corridors. The Guardian ran a story on this in 2002:

Even before the imposition of the fine, it was clear that about 3,000 people were having to be moved 50 miles away because of pollution - and they blame sulphur dust for their illnesses.

TCO [Tengizchevoil] denies the charge and says the sulphur is safe, but has decided to get rid of it. Until recently it had virtually no outlet for it; in landlocked Kazakhstan the only route out for large volumes of sulphur has been by rail, but TCO has used every available slot for transporting oil.

Now, however, TCO has linked up with the Russian oil pipelines, so most of its output no longer needs to go by rail. But there is a second problem: a worldwide sulphur glut. Some 40m tonnes of sulphur a year is used by industry, mostly in the form of sulphuric acid, but there is still an excess. From a peak of £100 a tonne in 1988, sulphur prices have dropped to £20 a tonne this year. To unload an additional six million tonnes on the market would mean the price would drop to near zero.

But TCO has to do something. It has put in a £30m plant to process the sulphur into flakes for the Chinese fertiliser market and granules for the western market. The flakes are already being exported by rail to China and the granules will be heading west to Black Sea ports for European and American markets.

At most TCO expects to be selling 3,000 tonnes a week next year [2003], but even that vast quantity means the sulphur mountain will still be growing at 1,000 tonnes a week. (Full Story)

…There is not a lot Chevron can do. The world market price for sulphur is relatively weak and would of course not survive a massive injection of the Tengiz deposits without plunging. The further reprocessing of the sulphur to chemical fertiliser has been attempted, but also here prices are volatile and of course very supply-elastic.

The bottom line is that Chevron would have to invest millions of dollars to get rid of the stuff - without earning a single dime….Chevron has one month to come up with an action plan on how to get rid of the now almost 10 million tonnes of sulphur that have piled up….(Full Story and Photo)

This entry was posted on February 26, 2007 at 11:28 pm and is filed under Fines & Penalties, Emission Incidents & Issues, World Sulphur Glut, Sulphur Logistics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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