Daily Archives: September 18, 2009

Kate Mackenzie

On FT Energy Source this week:

- The West African offshore oil rush

- Investment bank analyst goes all peak oil on us

- BP: Basically Passes on non-US wind

- Do as we say, not as we do, says the World Bank on clean energy

- Enjoy those carbon credit scandals while they last

- How things have changed for oil demand forecasts

- That Finnish nuclear reactor IS going ahead, after all

- Goldman keeps up the bullish sentiment on oil prices

- Natural gas has a price surge

- Should US majors be doing more in shale gas?

- Opec’s Copenhagen soliloquy

Carola Hoyos

The Russians are at it again. They have invited Opec to a gathering in Moscow that the oil cartel has absolutely no interest in attending. There is good reason for that. While Opec has been cutting its production to boost oil prices – a painful and tricky policy that has largely been successful – Russia has been lowering tarrifs and urging its companies to pump all they can. That means Russia has taken over from Saudi Arabia as the largest oil producer, though the kingdom’s capacity of 12.5m b/d far outstrips that of its rival.

Sergei Shmatko, Russia’s energy minister, insists he promised Opec nothing.

Menawhile, Ali Naimi, Saudi Arabia’s oil minister, has taken Russia’s oil production in his stride, recently quipping: “All people are doing is depleting their resource base fast. Time takes care of all these things. We are happy and content.”

Kate Mackenzie

On FT Energy Source:

Not your average peak oil theory

How those recent oil and gas discoveries stack up

Is the US becoming the bad guy of climate change talks again?

US natural gas industry makes its case

Finland’s nuclear reactor is still being built, despite problems

Someone’s smarter than the average natgas bear

Further reading:

Solar power is coming of age (WSJ Environmental Capital)

CNPC’s experience in Iraq shows the importance of winning hearts and minds, as well as contracts (The National)

Copenhagen Q&A with Michael Levi of Brookings’ Institution ahead of next week’s UN meeting (Brookings)

Low nat gas prices won’t stop Chesapeake and others drilling Marcellus Shale (State Journal)

China’s plan to rule the sun (Forbes)

Volt needs $5 or $6 a gallon to become ‘generalised’, says GM’s Lutz (CNet)

Will the end of the recession mean fewer land rigs in North America? (Platts/The Barrel)

California may pull plug on big energy-guzzling TVs (LA Times)

Scotland unveils world’s first ‘carbon budget’ (Guardian)

Kate Mackenzie

Views about whether the recent flurry of oil discoveries make a difference to future oil supply depend very much on how big those fields are thought to be.

In the FT today, Bob MacKnight at PFC Energy says the new discoveries will shallow the decline rather than move the peak, whereas Wood Mackenzie’s Ann-Louise Hittle suggests the new front between Ghana and Sierra Leone could perhaps move the goalposts.

But this all depends on just how good the new Venus well turns out to be – and whether it does indeed herald more discoveries on the scale of Ghana’s Jubilee field along the intervening coast.

Per the table above, it all looks rather promising. But remember, companies and other supply forecasters tend to factor in discoveries that are yet-to-be-made; so these new resources have plenty of demand just waiting for them:

Kate Mackenzie

Under the Bush Administration, the United States was long the pariah of international climate change efforts.

But climate change negotiators, looking towards the big Copenhagen meeting in December, have welcomed the Obama Administration’s willingness to tackle climate change. The new president’s stance on the subject  at the G8 talks and the Major Economies Forum meeting in July was cause for optimism for various world leaders and climate officials.

The US Congress, however, isn’t necessarily going to match up to these high hopes, and as December draws near, other countries are showing signs of impatience.  

Kate Mackenzie

Mainstream financial analyst types tend to shy away from talking about peak oil – even when they are talking up a looming supply crunch, this is usually attributed to the short- to mid-term under-investment problem. So a presentation by Iain Reid, a senior oil analyst at Macquarie Bank, stirred much excitement when some details were published this week.

Under a slide titled ‘Not your average peak oil theory’, he writes that there is no shortage of oil reserves, but problems of access, technology and risk. Meanwhile, there are three mini-trends: resource nationalism; new oil supplies being technologically challenging; and much of the easy oil in politically difficult regions.

Here’s the most alarming graph:


Sheila McNulty

They said they would do it, and now they have: the natural gas industry, desperate to get top billing in the Obama Administration’s attempt to clean up America, has made its first concerted effort to boost its political profile.

It missed an opportunity with the Waxman-Markey bill in the House – natural gas only comes up just twice in the more than 1,000 pages of the bill.

The industry wants more than that.

By Izabella Kaminska

Analysts agree, natural gas fundamentals are still bearish. Despite that, Nymex Henry Hub futures went — dare we say — a little crazy this week in terms of volatility. After a massive run-up mid week, the contract closed 8 per cent lower on Thursday.

Here’s a chart from Stephen Schork’s Thursday Schork Report reflecting the extent of the volatility:

Natgas volatility - Schork Report

Of course, a lot of it can be explained by the roll of the United States Natural Gas Fund this week, with traders positioning themselves on the curve to take advantage of the fund– not always successfully as it turns out, since the fund manoeuvred itself into a host of different contracts to be a little less predictable. As Petromatrix’s Olivier Jakob noted on Thursday the fund appeared to be shedding Natgas swaps on ICE, rather than futures on Nymex, for example.

Low-carbon industries come of age
Revenue beats aero and defence sectors (FT)

Global Insight: Heat rises on climate change
High hopes put Obama put in a bind (FT)

Oil strikes not enough to quench demand
Analysts question whether supply crunch can be averted (FT)

Firm brings choppers, spy cameras to oil data game
High-tech detective work used for getting inventory data (Reuters)

Total sheds US legacy operations as it seeks new frontiers
Winds down hydrocarbon business, looks to shale (Dow Jones Newswires)

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