Daily Archives: March 20, 2009

Kate Mackenzie

So much for psychological barriers.

With focus increasingly on the broader economic picture and how this will affect demand, crude’s rise above $50 has raised little excitement among analysts. Recent falls to the low $30s were seen as partly a function of storage problems at Cushing. Tightening supply from Opec and less deliberate reductions from non-Opec producers is of interest.

But all of this secondary to the bigger macro economic picture. Some analysts have pointed to signs of demand stabilising; but growth forecasts are still meagre.

Fiona Harvey

The US Solar Energy Industries Association reported on Friday that 2008 was a year of record growth, with total capacity rising 17 per cent to 8,775 MW.

It also said that there were 6GW of concentrated solar power plants in the pipeline – enough to power 1.5m households.

But the real question is whether such rates of growth will keep up? The first half of last year was good for all sectors of the renewable energy market. Then, in the second half, growth fell off sharply in most cases.

European utilities are confronting fears that penny-pinching, debt-ridden customers may stop paying their bills when the recession really starts to bite.

RWE, Germany’s second biggest utility, said this month that an increase in household bad debt was partly to blame for a 26 per cent decline in annual operating earnings to €534m at Npower, its UK unit.

It warned that the UK recession is “causing bad debt to rise across all customer segments”, contributing to its expectations of a “significantly” lower operating result this year.

Kate Mackenzie

The Council on Foreign Relations spoke to six experts on the economic cost of a carbon cap and trade system. Two were strongly opposed and three supportive of the measures. It canvasses the issues quite well, but most interesting to us was that two people warned of the risk of a US cap and trade system sparking protectionist measures.

Kate Mackenzie

On Energy Source today:

More bad news in oil services

Opec’s interest in emissions reduction

What does $50 oil mean for renewables and unconventional oil?

Elsewhere:

The critical issue of nuclear safety: how it should be addressed as interest in nuclear power rises (Economist)

UK credit and oil: at least a year of price rises are needed before free-market producers invest to increase production (Gregor)

Obama opens spigot on electric car grants – a total of $2.4bn available for battery development, motors and infrastructure (CNet)

Building my own solar panel – bring your welding expertise (OLiNo)

Pelamis wave project struggling to keep afloat – Babcock & Brown’s collapse means its majority stake in Portuguese wave energy project is up for sale (Guardian)

The other Kordokovsky case – a $33.4 billion legal battle against Russia being staged by Yukos’ divested owners (Steve LeVine/BusinessWeek)

Energy regulator backs new wind power lines – provides rationale for Democratic legislation giving more power to overrule state and local objections (WSJ)

Iran talks up Total’s role in South Pars - oil minister reiterates agreements with Total after reports that NIOC is unhappy (UpstreamOnline)

Ed Crooks

Shares in Lamprell, the Dubai-based company that builds and refurbishes drilling rigs, have plunged this morning after the company warned that profits for the year would be “significantly below current market expectations”.

It is the latest piece of bad news to hit the oil services sector, which has seen a crop of profit warnings and job cuts.

Kate Mackenzie

You might think an event hosted by an oil producers’ cartel is not the most obvious place to talk about sustainable energy, but with growing interest among world governments in reducing carbon emissions, they would be mad to ignore it.

Opec yesterday held a session on sustainable energy at its Vienna seminar, where it made some favourable remarks on carbon capture and storage (CCS), but implored developed nations to take the lead in reducing greenhouse gases and not let the burden fall on producing nations.

So how to reconcile the group’s natural interest in promoting fossil fuels with carbon reduction?

Kate Mackenzie

Low oil prices have been hurting investment in both oil production and renewable energy – will any of this change if oil stays above $50 a barrel?

It’s not an entirely hypothetical question – the Fed’s announcement on Wednesday gave oil prices an extra push but they had already been creeping higher on signs of supply tightness.

The FT compiled price point data in December based on data from Cera, IHS Herold, the IEA, Wood Mackenzie, and our own calculations. Here are a few of the points of interest:

Under $40 it’s only conventional oil, including Brazilian and other deepwater offshore oil, that becomes economic, though Venezuela’s Orinoco belt oil may also make the cut.

Between $40 and $50 Brazilian cane ethanol starts to make the grade. Existing oil sands projects in Canada will be cash-positive at this level, before taxes at least

Energy news from elsewhere:

- Carbon-market backers split over Obama climate plan (Bloomberg)

- China’s CNPC suspends talks with Chevron over oil-field stake (WSJ)

- US interior secretary Salazar says no ‘war’ on energy companies (Platts)

- Morgan Stanley says oil prices ‘will remain depressed’ through 2009 (Bloomberg)

- China Oilfield Services aims to boost revenue abroad (Bloomberg)

- Kuwait cancels $14bn refinery orders for Korean builders (Bloomberg)

- Indian Oil and Shell eye 50% of Reliance’s pumps business, Economic Times reports (Reuters)

Energy news from the FT:

- Brussels intensifies pressure on Eni to divest three pipelines
Italian energy company formally charged with hoarding capacity

- ‘Moment of truth’ for European gas pipeline
Plan for pipeline bypassing Russia hangs in balance

- EU’s drive for biodiesel runs out of gas
Europe blames cheap US imports for toll on fledgling industry

- Arbitrage holds key to success with commodities trading
Hedge fund manager Paul Touradji is long and short oil

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