Daily Archives: June 23, 2009

Kate Mackenzie

The Congressional Budget Office’s new analysis of the cost of the Waxman-Markey bill has been widely welcomed by those who support the proposal, who are hoping it will damp down claims that it would cost thousands of dollars per year to most households.

In short, it estimates a net cost of $175 a year per household in 2020; the wealthiest two quintiles $245 and $340 per year, and the poorest quintile could even see a net saving from the the measures in the act.

However, estimating the effect of such a complex piece of legislation isn’t easy, and are several caveats: the study did not excluded several elements of the regime that are difficult to predict, such as how costs to government would be distributed and how subsidies for carbon capture and storage might be allocated.

Carola Hoyos

There is clearly much enthusiasm about Iraq’s impending oil contract bidding round. After all, it marks the first time since nationalisation that international oil companies will be able to return to Iraq’s massive oil reserves. For Iraq, boosting the production of its oil – or at least making sure it does not decline – is the single most important thing the country can do to ensure its financial future. And so far, Iraq’s national oil company has shown that it can’t do it by itself.

But the bid opening ceremony in Baghdad on Monday and Tuesday is far from a guaranteed celebration.

On the Iraqi side, Hussain Shahristani – the oil minister, the architect of the bidding round and the host of the party – today got a grilling from party-pooper parliamentarians who believe – or at least, believe it is politically expedient to say – that handing off the development of Iraq’s most precious resources to foreigners automatically means the country and its people are getting a raw deal.

Fiona Harvey

If you were looking for any further clues that the burgeoning green tech industry might be a little bit like the dotcom boom, look no further.

Remember First Tuesday, where dotcommers would gather hopefully to fascinate willing bankers and captivate venture capitalists?

Here’s a new version for the new generation of green collar workers, and hopeful green entrepreneurs: Green Monday.

It’s billed as “a mixture of news, insight, analysis and networking with keynote speakers taking centre stage followed by a number of round table discussions on pre-assigned topics”. The organisers say the “high profile gathering” is attended by about 200 people a month. All of them are people working in and leading climate change response, corporate environmental sustainability and related green business.

Speakers at forthcoming events include Mark Elborne, chief exec of GE UK and Ireland; Mark Shorrock, founder of Low Carbon Investors; and Martin Stead, brand director of EDF Energy.

EDF is also a sponsor, showing its faith in the green shoots.

Oh , and the organisers are using the rather strange strapline “supporting 2 degrees collaborative solutions“. No, we didn’t know what that meant either, but we suspect it might mean “talking about stuff”.

Go forth and network, green collar people.

Kate Mackenzie

Some interesting lines out of the EU-Opec meeting in Vienna today, although the annual meeting is usually a relatively staid affair. The EU’s energy commissioner, Andris Piebalgs, says $70 oil is tolerable for the fragile world economy. He’s possibly the first western official to name a price:

From Reuters:

For the fragile world economy, $80 could be alarming, but
representing the European Union, Energy Commissioner Andris
Piebalgs said a price approaching $70 was not damaging.
“What we also discussed in our meeting is that $70 per
barrel, the current price, definitely does not impede the
recovery of the economy,” he said.
“We really believe the current situation has some good
stability. If it continues it will be a chance for (economic)
recovery and also guarantee that upstream investments will

Meanwhile, the EU said more regulation was needed to curb oil speculators:

“The 2008 bubble could be repeated if adequate regulatory
reforms, including greater transparency, (are) not made as part
of an overall reshaping of the global financial sector,” the
European Union said in a statement issued following the talks in
Vienna. It said the meeting had agreed the role of speculation in
financial markets “had not been resolved.”

Related links:

Roubini warns of oil double-whammy (FT Energy Source, 22/06/09)
Brown’s fear of high oil prices (FT Energy Source, 22/06/09)
Rising crude and inflationary expectations (FT Energy Source, 16/06/09)
What Monty Python can tell us about commodities
(FT Energy Source, 15/06/09)

Ed Crooks

Royal Dutch Shell has caused some excitement with reports of a “huge” gas discovery off the coast of Norway.

The truth is, the field may be pretty big, but even if the most optimistic estimates are right, it will not come close to the top of the list of the world’s biggest gas fields.

The Norwegian Petroleum Directorate estimated the Gro (pronounced “grew”) field could hold 10bn-100bn cubic metres of gas. As the NPD said itself, “the size of the discovery is currently very uncertain.” Shell, which shares the field with StatoilHydro of Norway and GDF Suez of France, says there is a lot more appraisal and evaluation work to be done.

Commercialising the discovery will not be easy, either: it is 360km offshore, in 1,376 metres of water.

At the upper end of the estimated range, Gro would be a good-sized field: the biggest found in Norway since Ormen Lange in 1997. However, Ormen Lange is four times the size of that top estimate, at 400bcm.

Even at 100bcm, Gro would add only about 3 per cent to Norway’s proved gas reserves. It could provide the whole of the UK’s gas demand for just a single year. In barrels of oil equivalent, that would be about 600m barrels, and Shell’s share, 50 per cent, would be less than 3 per cent of its reserves of 11.9bn boe at the end of last year. It is worth having, but Shell needs to keep finding more Gros.

For comparison, South Iolotan in Turkmenistan could be more 100 times the size of Gro. Now that’s a huge gas field.

Kate Mackenzie

On FT Energy Source:

The recovery bites back

BP’s jatropha interest continues to wane

Welcome to Libya, or Verenex: A case study of dealing with NOCs

Counting on increased Chinese solar subisides

Attracting investors with environmental risk disclosure

Another gas glut? Big LNG projects gather pace in Asia

How much do we care about gasoline prices right now?


We wouldn’t have guessed Exxon was involved in developing electric car batteries, either (R-Squared)

What you need to know about US cash for clunkers legislation (earth2tech)

Abu Dhabi’s renewable energy company Masdar strikes its third NOC contract – this one with Bahrain (The National)

Iraq’s giant Nassiriyah oil field begins pumping (The National)

Australian climate change legislation even further from making Copenhagen deadline (ABC)

US energy department begins handing out money for efficient car design: Ford, Nissan and Tesla expected to make first round (New York Times)

Italians turn to micro-generation to avoid high tarrifs (WSJ)

Using all that heat from big computers to warm buildings (MIT Technology Review)

Kate Mackenzie

BP looks to be moving further away from its involvement in the biodiesel crop jatropha. Its joint venture into jatropha planting with D1 Oils, a UK company which has interests in a quarter of the world’s jatropha crops, is set to be diminished as the two companies failed to find new investors in the project.

The move will not come as a huge surprise to anyone who has followed BP’s recent moves in renewables. The two companies agreed to rein in the expansion plans of the D1-BP Fuel Crops planting joint venture earlier this year, and D1 sought an outside investor in the project. But today D1 told markets there was “an insufficient level of interest from potential investors”.

Carola Hoyos

If ever there was a case study of the tribulations inherent in dealing with a national oil company run by a meddling government, Verenex’s experience with the National Oil Company of Libya (Noc) is it.

In a recent statement Verenex threatened arbitration, name-dropped the Canadian government as its ally and ‘vigorously denied’ allegations thrown at it by Libya.

The trouble began when CNPC, the Chinese state-owned oil company, decided to buy Verenex, a small Canadian oil company whose raisons d’etre are its oil exploration assets in Libya’s Ghadames basin.

Kate Mackenzie

A Hong Kong-based company has made a $3.4bn acquisition of what is believed to be China’s biggest supplier of polysilicon for solar panels, and the key figure involved in the deal is counting on more government incentives for solar.

China has earmarked 350m RMB for green projects in its stimulus package, but details on exactly how much will go on truly green projects are difficult to pin down. China’s support for solar has so far been fairly limited; subsidies introduced in March only covered rooftop installations, and reports earlier this month of Chinese government introducing feed-in tariffs apparently only concerned one 10MW plant.

Kate Mackenzie

Doubts about a global economic recovery have pushed oil down, along with just about everything else.

As numerous commentators have pointed out, news from Iran and of more attacks on facilities in Nigeria failed to stop a slide in oil prices in the past week.

Stephen Schork points to the wider spread between natural gas and crude oil as being in part due to the influence on oil of exogenous factors – “(geopolitics, dollar value and politically savvy euphemisms, i.e. “green shoots”). He asks whether the oil rally has run its course:

Over the last week we have received a number a queries regarding the impact of the ongoing civil unrest in Iran to crude oil prices. Our response has been… it has yet to matter. Spot August WTI is off 8% from recent highs, despite the headlines from Iran. Is this a case of good news/bad action? It certainly smells that way. That is to say, the bullish trend in crude oil has failed to perpetuate despite the introduction of bullish headlines from Iran… or Nigeria for that matter. Crude oil’s rapid rise has stalled. This is not how a “bull market” responds to evidence of an incipient revolution and the violent suppression of that revolution inside a country that sits atop 1 out of 10 barrels of the world’s proven reserve of oil.

Perhaps those fears of inflated oil prices affecting a recovery were a little premature?

Related links:

Markets: Oil below $70 despite Iranian upheaval and attacks in Nigeria (FT Energy Source, 22/06/09)
Risk aversion worries rattle world markets (FT, 22/06/09)

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