Deloitte: Oil, gas industry faces well-organized cyber security threats

Oil and gas companies face cyber security threats, including well-organized efforts by criminal syndicates and terrorist groups. The cybercrime landscape has evolved into highly specialized criminals having sophisticated tools that can routinely evade many security controls, analysts said.

Rich Baich of Deloitte& Touche LLP said the changing threat environment means companies need to evaluate their security strategies, concentrating on espionage and critical infrastructure vulnerabilities.

“This isn’t an issue that is going to be solved by buying some technology,” Baich said.

Speaking during a Dec. 15, 2010, webcast, Baich urged senior executives to build an effective cyber security program. Executives should ask themselves if their company has enough skilled employees or contractors to mitigate advanced, persistent cyber security threats, he said.

Oil and gas companies are at high risk from web-based malware encounters and cyber attacks because they possess valuable, proprietary data on reserves and discoveries. High downtime cost and attack frequency rates necessitate strong cyber-security programs, Deloitte spokesmen said.

A Ponemon Institute last year released a study on annual costs of cyber crime. The study showed energy firms incurred the second-highest cyber-crime costs of surveyed industries. Ponemon polled 45 US firms. Only the defense industry reported cyber crime costs higher than the energy industry.

Both defense and energy reported cyber crime costs of more than $15 billion/year. The energy industry figure includes all types of energy rather than just oil and gas.

ASSE recognizes oil and gas practice specialty

The oil and gas safety community has established its own practice specialty within the American Society of Safety Engineers.

The process took a couple years, starting out with a meeting of four people over dinner. This resulted in the formation of an oil and gas branch that was sponsored by ASSE’s transportation practice specialty.

The oil and gas branch actively recruited members and sustained steady growth despite the distractions of active hurricane seasons that brought Hurricanes Katrina, Rita, Gustave, and Ike to the Gulf of Mexico.

The ASSE Council of Practice Specialties gave its blessing to an oil and gas practice specialty after the oil and gas branch had grown to more than 500 members by Oct. 31, 2008.

In June 2009, the oil and gas practice specialty scheduled an organizational meeting during the ASSE safety conference in San Antonio. Organizers say the practice specialty covers a large, diverse group of businesses including:
--Drilling, exploration, and development
--Gathering
--LNG production, storage, transportation, and distribution
--LPG operations
--Offshore operations
--Oil and gas equipment and services
--Oil and gas pipelines
--Refining and marketing

Some see offshore wind power picking up

UK-based analyst Douglas-Westwood Ltd. said the offshore wind industry is showing growth with record levels of capacity now under construction. The benefits are that wind farms in deep ocean waters would not ruin beachside views, but the drawbacks are the costs. As the offshore oil industry already knows, expenses in general tend to increase in deeper, more distant waters.

In a report entitled “World Offshore Wind Report 2009-13,” Douglas-Westwood said 6.6 Gw of new capacity is expected to be installed globally within 5 years. That compares with 1.5 Gw of capacity now online.

The UK is dominant with 3 Gw of new capacity forecast to be added through 2013. Douglas-Westwood said. Germany is seen as the second biggest player, installing more than 1.5 Gw of capacity during that same period.

“The US has made great progress through the new administration to establishing the necessary mechanisms to allow offshore wind projects to be developed,” Douglas-Westwood said. “Supply chain development must now follow suit, and work is needed in procurement, installation, and logistics.”

So far, the US has no wind farm operating off its coasts. It’s been suggested that wind farms could provide power for offshore oil and gas operations, but time will tell whether that actually materializes on any grand scale, particularly off the US.

MMS outlines its Idle Iron program

It’s hurricane season again. The US Minerals Management Service is completing its review of all hurricane-damaged offshore facilities in the Gulf of Mexico region. A recent tally showed Hurricanes Gustav and Ike destroyed 60 platforms.

In preparation for future tropical storms and hurricanes, MMS is monitoring platforms and offshore structures that have a surface location on expired or terminated leases.

Lars Herbst, MMS regional director of the Gulf of Mexico region, spoke about the MMS Idle Iron program while addressing the Offshore Operators Committee on June 3.

Herbst said MMS enforces regulations calling for the plugging and abandonment of inactive wells and wells considered no longer useful for lease operations. MMS reports 515 such wells.

MMS is meeting with operators to discuss their schedules to complete well abandonment work.

“A schedule needs to be in place and followed,” Herbst said in his presentation. “The delay for platform removal will not be allowed to extend indefinitely.”

Oil industry offers real information

Independent oil and gas producers established a web site called BRIEF, which stands for Bringing Real Information on Energy Forward. The International Association of Drilling Contractors and numerous other independent producers associations are behind this campaign.

IADC says the goal is to have “a rapid-response mechanism" to counter inaccurate information distributed through the general media and by politicians on Capitol Hill in Washington, DC.

Brian Petty, IADC senior vice-president of government affairs, talked about the web site during the 2009 IADC Drilling Onshore Conference on May 21 in Houston.

BRIEF is an informative site with links to various reports as well as a daily summary of editorials regarding energy-related legislation. It’s worth a visit. I’ve added it to my favorites list.

“EnergyInDepth separates fact from fiction about our nation’s natural gas and oil industry—especially on emerging policy issues such as the environment and taxes,” IADC said in a news release.

IADC notes that US oil and natural gas producers account for the federal treasury’s second largest revenue source with personal and corporate taxes being number one.

BRIEF’s url is www.energyindepth.org.