Daily Archives: September 16, 2009

Ed Crooks

BP’s retreat ‘back to petroleum’ continues today with the news that it has sold its Indian wind business for about $95m. The buyer is Green Infra Limited, an independent electricity generator backed by IDFC Private Equity.

The news is no surprise: BP has long made it clear that it is focusing its wind business on the US, because that is where it has the best chance of being profitable. US tax credits and the ready availability of land for wind farms help make America the most attractive country in the world for investment in renewables.

All the same, the business being sold is relatively sizeable, with 100 megawatts of capacity. BP’s remaining portfolio, all of it in the US, is 1,000MW. BP says projects now in an advanced state of development could add a further 1,000MW to that figure, and it has the potential for developments producing 20,000MW.

Realising that potential can be a slow process, however. The Titan wind farm planned by BP and Clipper in South Dakota could have a capacity of 5,050MW. Phase 1, now under construction, will offer just 25MW.

It is hard to see the move as anything other than a sign that BP is more committed than ever to focusing on the oil and gas business it knows best.

Related links:

BP’s jatropha venture: In case you were wondering (FT Energy Source, 17/07/09)

Kate Mackenzie

On FT Energy Source:

Opec’s Copenhagen soliloquy

The West African oil frontier numbers game

Will there be a shortage of carbon offsets if US climate bill is passed?

The World Bank’s double-bind on climate change

Oil demand forecast revisions, illustrated

Markets: Crude down on inventory worries

Further reading:

Oil company Trafigura to compensate Côte d’Ivoireans over pollution (Guardian)

Doctors in climate change health warning (AFP)

Total warns of looming supply crunch (Rigzone)

Methane mining could trigger deadly gas cloud (New Scientist)

Renault’s car-razy electric concept car, Twizy Z.E. (Autoblog)

Schwarzenneger orders more renewable energy – his way (LA Times)

Climate change could cost one fifth of GDP in 2030 (Cop15)

Britain to make the world’s biggest turbine blades (DECC press release)

Siren song: the lure of offshore wind (WSJ Environmental Capital)

Kate Mackenzie

The World Bank’s Development Report 2010 says that wealthy countries must help the developing world shift to a low-carbon development path. Both technical and financial assistance should be provided, the organisation says.

The World Bank’s president, Robert Zoellick, says that climate change will affect developing countries worst, even though it’s “a crisis not of their making”. This, he says, makes an equitable agreement at Copenhagen more vital. These are strong words on what is turning out to be the most sensitive negotiating points ahead of the meeting.

The report itself is adamant that in addition to providing support to the developing world, developed countries have to do their bit to reduce their own emissions, too.

Carola Hoyos

Opec has made clear its views on climate change in a blog posted today on the Copenhagen summit website.

The blog was written by Abdalla Salem El-Badri, the group’s secretary-general, and is the most comprehensive opinion piece the group’s biggest oil producers have come up with.

Opec has two main points. One, that developing countries should not have to bear the main burden of mitigating climate change. Indeed , the group very much sees itself as a champion of developing countries, and despite its oil wealth, generally feels it fits into that club far better than the other. But there is another good reason developing countries are important to Opec.

Kate Mackenzie

Confused by those regularly-revised oil demand forecasts from the IEA, EIA, and Opec?

JBC Energy has produced a nifty chart showing how much more pessimistic forecasts became for the whole of 2009 over the past year – and how the upward revisions in the past couple of months, all things considered, are pretty small beer. The IEA’s forecast, meanwhile, went lower than anyone else’s:

JBC Energy

Source: JBC Energy

It’s also interesting to note that everyone was still forecasting 2009 oil consumption would increase until December 2008 and that it was the EIA and Opec who first turned bearish.

Related links:

Is predicting oil demand a mug’s game in 2009? (FT Energy Source, 10/09/09)

Kate Mackenzie

Source: Tullow

(Updated) So does finding oil off the coast of Sierra Leone mean there are oil reserves all the way along the coast to Ghana?

Anadarko and Tullow are certainly hoping so.

Anadarko is expected to announce soon that it has found oil at its Venus field, located in Sierra Leone’s waters. This might increase the odds of an entire stretch of oil reserves similar to the Jubilee field off Ghana’s coast, which is thought to hold up to 2bn barrels of oil.

According to Peter Hitchens, oil analyst at Panmure Gordon, Tullow, which has a stake in Venus, believes such a find would increase the probability significantly:

When we met the exploration director 10 days ago, he suggested that success at the Venus prospect would dramatically improve the chance of success of other prospects from the current 5%, to 25%.

Anadarko also thinks Venus will improve the chances for the 30 prospects it holds along the West African coast. This is what an unidentified Anadarko official told analysts, according to an (unverified) transcript on SeekingAlpha, on what a find at Venus might mean for the entire area:

I think, the success anywhere along here is going to help with the 30 leads and prospects we have got identified. Of course, Jubilee de-risked a lot of it that proved up the petroleum system, that proved up the reservoir and the quality and the depositional systems that we’ve been identifying up and down this margin. We are at the other end of what we see as the play at Sierra Leone and any encouragement there is going to really de-risk and help out everything in between.

Crude oil prices dipped ahead of the latest US inventories data, with Nymex October West Texas Intermediate down 27 cents at $70.66 a barrel. ICE October Brent lost 36 cents at $69.50.

US crude stocks were expected to have fallen 2.4m barrels last week, according to a poll of analysts by Reuters, while petrol inventories were expected to rise 600,000 barrels and distillate stocks (including heating oil) to have increased 1.3m barrels.

Nymex October RBOB unleaded gasoline fell 1.6 cents to $1.7737 a gallon while Nymex October heating oil lost just under 2 cents at $1.7620 a gallon.

Dollar weakness boosted base metals, with copper up 0.6 per cent to $6,315 a tonne and aluminium up 0.8 per cent at $1,882 a tonne.

Read the full commodities report

Kate Mackenzie

The answer is yes, according to the National Commission on Energy Policy: but it’s not the end of the world.

Many of the cost estimates of the proposed Waxman-Markey cap and trade scheme in the US assume that quite a lot of the international carbon offset credits allowed by the legislation – up to 1.5bn tonnes worth per year – will be used. In fact as the EPA estimated, without those offsets, the costs of the scheme would be almost double. (That report, by the way, put the cost at a relatively modest $98 to $140 a year.)

But NCEP, a bipartisan group that advises on policy, says there won’t be enough international offsets to reach that level, particularly in the early years of a US cap and trade scheme. Worldwide carbon offsets created under the UN’s Carbon Development Mechanism, they point out, only add up to 300m tonnes of carbon a year now – and scaling up massively to meet US demand is not going to happen quickly.

James Fontanella-Khan

China and India warned over emissions
Climate envoy says they run risk of protectionist measures in US Congress (FT)

Anadarko venture discovers new oil frontier
Stretches 1,100km along the coast from Ghana to Sierra Leone (FT)

France signals power market reform
Paris pledged to open its electricity market to greater competition (FT)

Opec raises 2009-10 oil demand forecasts
Cartel expects the world economy will rebound (Bloomberg)

Democrats draw battle lines on energy use
John Kerry to submit a bill to tackle global warming (FT)

Apollo buys Parallel Petroleum in $483m deal
Company will become part of an entity with over $38bn in assets (Bloomberg)

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