Daily Archives: February 25, 2009

Kate Mackenzie

Izabella Kaminska of FT Alphaville

Stephen Schork of the Schork report jumps on the United States Oil Fund issue on Wednesday. He too is blaming the size of the ETF for current distortions in front-month Nymex WTI contracts.

He refers specifically to the March/April roll when spreads moved from $3.26 to $8.18 and expired at $1.09. Quite a volatile move. He explains (our emphasis):

As we outlined at the time, this volatility was largely attributable to “the roll” by long-only commodity index funds, particularly the United States Oil Fund ETF (USO). Open interest in the March contract was 363,757 on February 05th. Per the fund’s website, the USO rolled 85,057 contracts the next day. In other words, the USO held sway over the market, i.e. these funds (USO, S&P GSCI et al) are artificially skewing the front of the NYMEX curve; putting downward pressure as they sell a massive percentage of open interest in the spot over the course of a few sessions.

Kate Mackenzie

On Energy Source today:

Carbon markets and the ‘cadre of Yale graduates’

Faltering carbon capture needs more help

China, petropowers and western oil companies

Sibir chief executive suspended

Utilities get into solar

Elsewhere:

USOdeath by a thousand contangos or a self-propelled pyramid?

EPA: Q&A with the former EPA chief on nuclear, jobs, and the new EPA

Peak demand before peak oil? – not likely

Carbon taxes: For and against

Kate Mackenzie

PG&E, a Californian utility, announced a five-year programme to develop up to 500mw of solar, while NRG announced a commitment to develop a similar amount with eSolar, to begin producing electricity ‘as early as 2001′.

Wired points out that these two commitments alone are equivalent to the total solar power generated in the US in 2007. And it comes just a couple of weeks after the Brightsource/Southern Californian Edison announcement of a 1,300mw solar plan, which along with the NRG/eSolar programme uses solar thermal power. PG&E’s uses more traditional photovoltaic power.

It’s not exactly a game-changer for the businesses in question though. NRG’s letter to stockholders notes its $10m investment “does not represent a substantial upfront  commitment of NRG capital”. And, as Wired also notes, PG&E is eligible for a 30% tax credit on solar investments.

Kate Mackenzie

Next in the Sibir saga after its advisors Strand Partners last week discovered that key shareholder Chalva Tchigirinski owed the Aim-listed oil company $325m, not the $115m previously disclosed.

Sibir Energy on Wednesday suspended its chief executive and launched an investigation into property dealings that the London-listed Russian energy group agreed with one of its largest shareholders.

Henry Cameron, chief executive of the group, whose main asset is a half share in the successful Salym oil fields in western Siberia, was replaced by his deputy Stuard Detmer with “immediate effect”, Sibir said.

FT.com story here

Kate Mackenzie

Steve LeVine takes a look at China’s flurry of resource activity on his NewsWeek blog and says it is worse than it appears for big western companies, which are so far failing to see petro-powers, under pressure from lower prices, open up to more western investment.

He argues that two factors have been underplayed in analyses of the China deals: “the depth of discomfort among the petro-powers with Big Oil; and the deep-pocketed willingness of China to step in.

It could mean the supply crunch and consequent high prices that are feared when oil demand returns are even worse, LeVine says.

After China’s loan of $25bn to Transneft and Rosneft, he says, look next to Gazprom to borrow from China. LeVine was former Moscow correspondent for the Wall St Journal and Gazprom’s debt,on top of falling oil prices, makes this speculation worth considering.

Ed Crooks

“If you don’t have a policy on carbon capture and storage, you don’t have a policy on climate change.” That was how one British government official characterised the central importance of CCS technology. If he was right, then the fight against climate change is in trouble.

Kate Mackenzie

An interesting story on FastCompany.com looks at the emerging carbon markets industry, and the “cadre of young, idealistic Yale forestry grads” that are coming down the pipeline. The story looks at how young forestry graduates in general,and those from Yale in particular, are influencing and even shaping the carbon trading environment.

One graduate tells FastCompany that all her peers want to work in carbon forestry – not surprisingly, given their prospects:

In fact, a network of recent Yale forestry grads like Rebelo, many of them with joint MBAs, have been finding careers in the unlikely worlds of hedge funds, private equity, asset management, and corporate consulting. They are exerting tremendous influence over the brand-new market in greenhouse-gas credits, which is projected to reach $1 trillion in the United States alone. The work is prestigious, it’s trendy, and it’s surprisingly well paid. “I’m making five times what I ever thought I’d be making as a tropical forester,” Rebelo says.

Kate Mackenzie

[From about halfway through the speech; full text here]

We are a nation that has seen promise amid peril, and claimed opportunity from ordeal. Now we must be that nation again. That is why, even as it cuts back on the programs we don’t need, the budget I submit will invest in the three areas that are absolutely critical to our economic future: energy, health care, and education.

It begins with energy.

We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea.

Energy news headlines from elsewhere:

- Obama pledges $15/bn year investment into low carbon energy (Platts)

- Obama budget assumes cap and trade revenue by 2012 (Platts)

- Japan’s oil imports drop a third month as recession cuts industrial output (Bloomberg)

- Woodside sells US$1bn in bonds to 50 buyers (Reuters)

- Oil, gas officials say offshore development delayed too long (Platts)

- Gazprom may slash capital spending, paper says (Reuters)

- Sinopec asks 8 plants to ready for fuel export, paper says (Reuters)

Energy news from the FT:

- Hunan Valin buys A$1.2bn stake in Fortescue
Another Chinese investment in Australia

- Carbon trading poised to decline
Value of market to drop to €63bn this year

- Shell warns Nigeria over oil and gas reforms
Says delays deterring new investment

- EDF and Enel in Italian nuclear venture
Another strategic in-road for French industry in Italy

- Scottish & Southern in marine energy deal
Venture to develop wave and tidal energy sites

- Warning over delays to UK ‘clean coal’ scheme
UK energy secretary Miliband to face questions over delay

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