Daily Archives: June 24, 2009

Kate Mackenzie

The US Congressional Budget Office’s new analysis of the cost of the measures proposed in the Waxman-Markey legislation had many supporters of the new rules hoping it would settle the debate on the financial burden of the proposals – or at least, damp down claims that it would cost thousands of dollars per year to most households.

Dissent has come out in just a few days, however: the American Petroleum Institute has written to congress members saying that the CBO’s analysis suggests gasoline will cost 77c more, at today’s prices, by 2020.

Them’s scary numbers. But where do they come from?

Sheila McNulty

The US may be the world’s biggest generator of wind energy, but offshore it is nowhere near the head of the pack. Indeed, Ken Salazar, US Secretary of the Interior, notes that other nations have been using offshore wind energy for more than a decade.

It was not until the Obama Administration made renewables a priority that the likelihood of offshore wind in the US began to take shape.

By Izabella Kaminska

The epic flows of the last few months into the United States Natural Gas Fund ETF may be very counter-intuitive as far as predicting an upturn in the price of natural gas.

That, at least, is the message from Goldman Sachs on Wednesday, which sees natural gas prices remaining weak throughout the coming weeks.

Kate Mackenzie

On Energy Source:

Iraq: Enthusiasm doesn’t guarantee a good party

Counting the cost of Waxman-Markey

Big oil maintains its focus on… oil

Sinopec pursues Addax, despite the political risk

Markets: Oil dips as petrol reserves swell

UK nuclear subsidies: so that’s a no, then

The next dotcom

Microsoft enters the power meter software fray with Hohm

Where there’s muck there’s brass

EU to Opec: $70 oil is OK

Shell’s gas discovery in Norway: the ‘huge’ find in context

Waxman-Markey is set for a crucial House of Representatives vote on Friday (AP/LA Times) after Peterson relents (TNR). But coal use will keep rising under the act (BNet).

Charles McElwee reads China’s state of the environment report so you don’t have to (China Environmental Law)

How green is a nudist vacation? (New York Times)

Tyndall Centre scientist warns UK climate change policies are dangerously optimistic (Guardian)

Saudi Aramco’s appetite for jackups (Rigzone)

Should Mexico stop exporting oil? (Gregor/SeekingAlpha)

Kate Mackenzie

Microsoft is the latest tech heavyweight to enter the world of energy with its free monitoring software Hohm.

ReadWriteWeb notes it is similar to Google’s Power Meter in that it will hook into data from smart meters, allowing households to monitor and reduce or smooth out energy use.

Update: Microsoft have contacted us and ReadWriteWeb to say the above comment is not correct – utilities can allow their customers to make use of the software even without smart meters in place, by making their existing customer usage data available via Hohm, even if it is not collected in real-time.

Ultimately it could be used by utilities to manage their own peaks by switching off appliances remotely during peak times, in exchange for offering some sort of saving on energy bills. Google has already picked up a handful of utility partners and Microsoft so far has four, according to ReadWriteWeb: Puget Sound Energy, Sacramento Municipal Utility District, Seattle City Light, and Xcel Energy.

This comment about the business model from CNet caught our eye:

Initially, the company plans to sell contextual ads to make some revenue. Down the road, however, Microsoft anticipates that it can become a sort of information broker between customers and utilities looking for ways to improve the efficiency of their customers.

Until utilities bring their smart grids and smart meters online, Hohm offers a reckoner of individuals’ energy use – they can fill in a 200-question survey if desired.

Related links:

Hohm: Microsoft gets into the energy business (ReadWriteWeb, 23/06/09)
Microsoft dials Hohm to cute energy use (CNet, 23/06/09)
PowerMeter: Everyone loves a good Google theory (FT Energy Source, 11/02/09)

Depending on the goodwill of politicians is nail-biting stuff when your core business evokes memories of Windscale, Three Mile Island and Chernobyl.

But Britain’s nuclear energy industry stands or falls on government policy, and RWE, Eon and EDF, the main companies lined up to invest in new nuclear power stations, have been on at the government for years to provide guarantees of “stability”.

In practice, that has meant avoiding policy reversals and help getting new nuclear projects through the planning process. But any way of underpinning revenues – please don’t call it a subsidy – would also be welcome.

Kate Mackenzie

Neil Dennis writes:

Oil prices fell on Wednesday after data from the US showed an unexpected rise in petrol reservoir volumes.

The data published on Tuesday by the American Petroleum Institute, showed volumes in the nation’s petrol reservoirs swelled by 3.7m barrels – more than the expected rise of 1.3m barrels.

Figures published later in the session by the US government’s Energy Information Administration were expected to confirm the API numbers.

“The API figures are not a favorable precursor for the EIA numbers when these get released later on Wednesday, and that is why prices are off this morning,” said Edward Meir at MF Global.

By late morning, Nymex crude was down 50 cents at $68.74 a barrel, while Brent was off 43 cents at $68.37 a barrel.

Traders noted, however, that with a decision on US monetary policy looming later, the current bearish tone could lift if the dollar is hit by the Federal Reserve’s announcement.

“On Tuesday, the greenback fell by its greatest amount in six weeks against the euro on expectations that the Fed will keep rates close to zero for the rest of this year,” Mr Meir added.

Read the full commodities report

Kate Mackenzie

Sinopec has come through with the rumoured offer for Addax, a London- and Toronto-listed small oil company that has operations in Kurdistan and Africa.

June 24 (Reuters) – China’s Sinopec Group agreed to buy
Addax Petroleum Corp <AXC.TO> for about C$8.27 billion ($7.24
billion) in a bid to gain access to the Swiss oil and gas
explorer’s high potential oil blocks in West Africa and the Taq
Taq field in Iraq.
The offer of C$52.80 per share from Sinopec International
Petroleum Exploration and Production Corp, which was in a race
with Korea National Oil Co (KNOC) for the bid, is about 16
percent higher than Addax’s Tuesday closing price.

The board of Addax has recommended the offer to its shareholders.

Clearly China has decided to take the risk of getting offside with the Iraqi government by expanding its operations in semi-autonomous Kurdistan, where Addax has a large stake in Taq Taq. Agreements signed with the Kurdistan Regional Authority however are a source of contention with the central Iraqi administration.

Korean National Oil Company, which was also considering a bid for Addax, has seen its activities in Kurdistan create a hurdle to striking deals elsewhere in Iraq. Iraq has the world’s third-largest oil reserves and Sinopec is expected to be among dozens of companies bidding to operate in Iraqi fields at an auction scheduled for next week. 

Sinopec has a couple of reasons to feel a little more confident. Iraqi oil minister Hussein Shahristani, who takes a strong line on Kurdistan, is under pressure from his own government. And the risk of doing business in Iraq has long been a limiting factor on foreign investment in the country’s rich oil reserves. China, of course, has been more willing to invest in large foreign resources, and is less bothered by security concerns than other international oil companies.

Related links:

Iraq: Enthusiasm doesn’t guarantee a good party (FT Energy Source, 23/06/09)
South Korea group considers Addax tie-up (FT, 08/06/09)
Bid decision for Addax chief (FT, 15/06/09)
Shell eyes Chinese links in Iraq (FT, 14/04/09)

Sheila McNulty

The US government may be intent upon building a new energy economy, handing out the first ever federal leases for offshore wind energy development, promising stimulus funds to the sector and so on. But Big Oil has continued marching to its own drummer.

Two big announcements by ExxonMobil, the world’s biggest oil company, and Chevron, the world’s third biggest, bring home the fact that conventional oil and natural gas are still the key commodities of the energy sector.

Exxon said it had just completed building new field processing capacity at its Piceance Project on the western slope of the Rocky Mountains. It can handle up to 200m cubic feet per day of natural gas. Exxon has been producing natural gas at the site for 50 years and now produces about 100m cubic feet per day, so its plans to expand that are clear.

By Neil Hume

Forget Deutsche Borse, London Stock Exchage, NYSE or Nasdaq, the action in the exchange world is in emissions trading at the moment.

As a bid battle rage for EcoSecurities, the  Intercontinental Exchange has just picked up a 4.8 per cent holding in Climate Exchange, the dominant carbon trading exchange in Europe.

There a couple of reasons for the burst of fresh interest. First, business is booming. Climate Exchange has just recorded a 203% increase in contracts traded during May.

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