Daily Archives: March 11, 2009

Kate Mackenzie

On Energy Source today

More lacklustre non-Opec data

Plan to make US businesses report emissions

Opec round-up and a nice Opec failure/success chart

Canada gets a little help from its friends

Oil majors get last laugh


Utilities: S&P’s ominous language to leveraged utilities (SeekingAlpha)

Carbon emissions: By country – a neat graphic and data set showing the US is no longer biggest (Guardian)

Peak oil: The 2005 peak bites the dust with latest IEA figures (R-squared)

Other: OMG! Pickens to march on DC! (not IRL) (Platts)

Biofuels: A sober look at biofuels from algae - the capital, labour and energy costs of photobioreactors (Biodiesel)

Climate Change: Deniers are flat earthers, says Stern (Guardian)

Kate Mackenzie

Even with oil prices well below the $60 a barrel or so that is needed to make new oil sands developments economical and companies pulling back on investments accordingly, Canada is not giving up hope. The Financial Post notes that the cause is getting lobbying help in the US, mostly from oil majors themselves, many of whom invest in oil sands projects and energy security advocates:

From the recently formed Center for North American Energy Security (CNAES), headed by former Republican Congressman Tom Corcoran, to the American Petroleum Institute (API), some of the world’s major oil companies and some big guns in Washington’s lobby community, including former U. S. ambassadors to Canada such as Gordon Giffin, are taking up the oil sands cause.

Sheila McNulty

Just last year, the world’s biggest international oil companies were having a tough time accessing new resources in oil-rich countries. The prices of oil and natural gas were high, and the oil-rich countries felt they had learned enough over the years to manage their own oil and gas resources and hire the smaller oil services companies to plug in gaps where needed. The majors, it seemed, were were losing their foothold. But with lower crude prices taking a toll, they believe the balance is shifting back in their favour.

Dave O’Reilly, Chevron’s chief executive, told analysts yesterday that such countries are back looking for investments from the majors. They need the technological and project management expertise of the majors to keep costs down, maintain production and fund their economies. “This is a time they need companies like ours more than ever,” Mr O’Reilly said.

ExxonMobil agrees. Rex Tillerson, Exxon’s chief executive, told analysts at his annual analyst meeting last week that the Russians, for one, did not see the plunge in prices coming. Since then Russia has of course reached out to China for a large loan, and as Carola wrote last week, there are signs that other oil-producing countries, particularly Iraq, are also more willing to make terms more favourable for international oil companies in exchange for their investment and expertise.

Kate Mackenzie

  • WTI surged above $47 yesterday on expectations that an Opec production cut would tighten supplies, but is now back in the $45 – $46 range on poorer demand forecasts and a growing belief that Opec will not cut its production.
  • Oil trader and author of the excellent book ‘Oil 101′ Morgan Downey put together this chart, noting that: “OPEC’s cuts have succeeded in changing market direction in the short term (5 business days) only 36% of the time and medium term (90 calendar days) only 27% of the time.”
  • Morgan Downey

    Source: Morgan Downey

    Kate Mackenzie

    The US Environmental Protection Agency is proposing a system for companies to report their greenhouse gas emissions. To head off some of the inevitable opposition from businesses, it would only apply to those companies emitting 25,000 metric tonnes or more per year, which the EPA says is about that of just over 4,500 passenger cars.

    The regulation could make the planned US carbon emission trading system more effective, Janet Pearce at the Pew Center for Climate Change told Bloomberg. She said limited information about existing emissions in Europe led to too many permits being given away to companies for free, and a crash in the price of allowances in 2006.

    Kate Mackenzie

    Yesterday saw a lot of talk about demand. Then the IEA’s monthly Short Term Energy Outlook added to the picture with yet another cut to its forecasts for 2008. But today we are looking again at supply, both Opec and non-Opec. IEA data released yesterday was not exactly sparkling. Gregor writes:

    Average crude oil production for 2008 now averages 73.791 Mb/day. This compares with the 2007 average of 73.006 Mb/day, the 2006 average of 73.461 Mb/day, and the 2005 average of 73.737 Mb/day. Use whatever word you find most apt: Plateau. Treadmill. Peak.

    James Fontanella-Khan

    Energy news from elsewhere:

    - Economy to slow US nuclear power growth (Reuters)

    - China cuts oil exploration investment on price slump (Bloomberg)

    - Australia’s Nexus says talks on asset sales ongoing (Reuters)

    - Petrobras has oil-trading loss of 964m reais (Bloomberg)

    - Shell to raise investment in biofuel firm Codexis (WSJ)

    - Energy department said to err on coal project (NYT)

    James Fontanella-Khan

    Energy news from the FT:

    - Eon to divest as recession stifles demand
    Shares in Germany’s largest energy group tumble

    - Power generators suffer shock to the system
    Trouble is brewing as companies cut on electricity consumption

    - Oil-rich nations ‘seek majors’ expertise’
    Russia, Venezuela to seek help, says Chevron’s chief

    - Lex: Dow Chemical/Rohm and Haas
    Two groups agree takeover

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