Hill+Knowlton Strategies

Today energy major Total plugged the well at its Elgin platform the North Sea that has been leaking gas since March 25th this year. This is a great result and now will make the process of plugging the well more straight forward. The plans to drill a relief well, which have been run simultaneouslywith the Top Kill attempt, were well progressed, but estimates suggested this would take six months to complete. No doubt customers, officials at DECC and operators of nearby platforms will be relieved, a estimate suggested that up to 6% of the UK’s summer gas needs would be affected by the leak. Now that the leak has been stopped, hopefully production can be brought back online safely in the coming weeks. 

I expect too that those concerned about the environmental impact of the Elgin spill will also be relieved that the leak has been stopped. There will of course have been consequences for the local ecosystem as a result of the leak, but these have proven to be far less apparent than the impact of oil spills. It is this aspect of the spill that I wanted to focus on with this post.

Of course I am not overlooking the impact of this spill, but as this case has shown gas is not as visibly noxious as oil and the results of a spill are not as easy to convey visually, which impacts media interest. I remember Greenpeace had attempted to convey the impact with some high impact infra red images of the leak, but even these images didn’t get much traction. Had the leak caught fire then in terms of reputation this leak would have been far more catastrophic.

I think this chart neatly shows this in action (the horizontal axis is time and the vertical axis is number of posts). It’s small, but you can clearly see how interest has tailed off since the initial news of the leak and early speculation about the impact of the spill. The red line shows how this played out in mainstream media and the grey line shows Twitter posts. It is interesting that in contrast to the Macondo spill in the Gulf of Mexico, media interest has been far more muted and less persistent. Of course there are other differences including BP’s record in the US, the company statements that exacerbated media interest, the apparently different perspectives between BP and the White House etc, but one difference is telling and that is the visual impact of oiled birds and beaches versus the more intangible evidence of a gas leak at Elgin. 

It lead me to wonder a question to which I don’t know the answer, but would be fascinated to know and that is whether the risk profile and therefore cost of offshore gas developments factors in this lower reputational risk. I expect the differences in terms of risk are probably imperceptible, but from a reputational perspective this leak appears to have been far easier to manage for Total than Macondo was for BP.

Yesterday I met leading energy blogger Nick Grealy over a coffee to discuss all matters energy as well as the shale gas phenomenon. Nick writes a blog called appropriately, ‘No Hot Air’. Interestingly, Nick has blogged about shale gas, perhaps more than anyone else – certainly in the UK at least. According to Nick, shale gas is an energy source where the ‘reality outstrips the hype’. It’s clear that shale gas companies in the States as well as the global energy majors are investing vast amounts in Europe in what they perceive as a game changer as well as what Nick terms a ‘bridge fuel’ for future. Hugely interesting.

On another note, this week Masdar (Abu Dhabi Future Energy Company) launched Shams 1, a huge solar power project. Shams 1, which is being set up together with Total and Abengoa Solar, will be the world’s largest, concentrated solar power plant and the first of its kind in the Middle East.

Shams 1 will contribute towards Abu Dhabi’s 2030 vision and also to the ambitious target of achieving 7 per cent of its power generation capacity from renewables by the year 2020. I spent time working with Masdar on the World Future Energy Summit back in January and have seen their vision from close up. It’s great to see the progress being made in the emirate.