Shareholder raps Shell's 'corroded' gas pipes

Royal Dutch Shell has come under fire over corroded gas pipes, just days after BP was forced to shut down production at an oilfield in Alaska due to severe pipeline corrosion.

A shareholder group has lambasted Shell for letting gas pipes corrode in Ireland. Canon Christopher Hall, a Shell shareholder and spokesman for the Ecumenical Council for Corporate Responsibility (ECCR), said he had alerted Shell in May to the corroded pipeline sections which await installation to bring gas ashore from the Corrib field. They have been stored for years in the open air in a quarry at Killybegs, Co Donegal.

Canon Hall said: "If the pipes are showing corrosion even before they are installed, one wonders what might happen later."

However, Andy Pyle, the managing director of Shell Ireland, shrugged off the concerns yesterday, saying: "If you store pipes you obviously get some surface rusting - that is quite normal. We would obviously clean up the pipes before installation."

The laying of the pipeline to transport high-pressure gas from the Corrib field has been on hold after protests from several local landowners who did not want the pipeline built across their land. Shell said it was consulting them to modify the route and hopes to be able to build the onshore part of the pipeline in 2008, while the (larger) offshore bit could be laid next year. The pipeline would supply 60 per cent of Ireland's needs - the country currently imports 85 per cent of its gas supplies.

In May, Canon Hall highlighted his concerns in a letter to Mr Pyle, who wrote back admitting that the pipes had to be stored for longer than anticipated in Killybegs due to delays on the Corrib project. He said the pipes needed some reconditioning to have rust, dust and debris removed and to be prepared for the laying of the pipeline. Some of that work is now under way.

Mr Pyle wrote: "The observed corrosion of this high-quality steel is superficial, as demonstrated by regular ultrasonic inspection, and the condition of the pipe remains well within the design limits."

Canon Hall said at the annual meeting of the Anglo-Dutch company in the Hague in May: "Members of the board and shareholders would be up in arms themselves if what is done by our company in other lands were to be done in their own backyards." He said the corroded pipe issue formed part of wider concerns the ECCR had about Shell's record in countries such as Nigeria where the company has been fined for environmental damage to the Niger Delta from its oil exploration. He deplored the group's failure to consult shareholders on upcoming projects.

Meanwhile, BP is facing a growing political backlash in the US after documents emerged that appeared to show the company was warned about the pipeline corrosion problem that has crippled output at the Prudhoe Bay oilfield in Alaska.