Daily Archives: November 5, 2009

Sheila McNulty

ExxonMobil does not make investments lightly – and it’s been reluctant to acquire new resources for years now. So to see it winning the right to develop Iraq’s giant West Qurna oil field means there must be a lot of potential there. Exxon can afford to pay for a field worth having.

Exxon beat out ConocoPhillips and Lukoil for the project, in the third such deal this year – but the first to be led by a US company. It marks the first time a US-led consortium of companies will re-enter Iraq’s oil industry in more than 30 years. Exxon must believe the administration is ready to do business with. Patrick McGinn, Exxon spokesman, made that clear that the company had “agreed with the Ministry of OIl on the principles of the rehabilitation and development of the West Qurna field”.

Kate Mackenzie

Will Americans for Prosperity, which is campaigning against climate change legislation, succeed where the American Petroleum Institute failed?

AFP (or the Americans for Prosperity Foundation, to which it is closely affiliated) has been waging a high profile battle against both of the climate change bills proposed in US Congress this year. Last week they targeted Republican Senator Lindsay Graham of South Carolina for co-authoring an editorial supporting the Boxer-Kerry bill. That bill would target a 20 per cent reduction on CO2 emissions from 2005 levels by 2020.

Kate Mackenzie

On FT Energy Source:

Natural gas’ environmental hopes dashed?

Geoengineering, for the lullz

The ‘dowlar’ oil correlation

Markets: Crude falls on inventories data

IEA forecasts, Total and Enel in Spot news

Further reading:

Exxon following China into Iraq (AP)

Kerry, Graham and Lieberman combine for bipartisan climate change bill push (Politico)

Utilities band together to support clean energy legislation (Environmental Capital/WSJ)

More on shale gas sceptic Art Berman and the cancelled column - (Houston Chronicle)

Should we start swapping coal for gas? (National Journal)

Never believe the oil forecasters (Reuters)

Economists concur on threat of warming (NY Times)

Another big oil/algae deal (CNet)

Kate Mackenzie

While we’re on new words for oil markets, here is a new term for one of the big challenges around geoengineering, from Matthew E. Kahn at Environmental and Urban Economics: the lulling hypothesis:

Child proof safety caps on medicine lull people into not hiding medicine from kids and kids break into the pills. Diabetic medicines for fighting high blood sugar lull diabetics into thinking they can eat lots of sweets. Will geoengineering have the same effect? Do expectations of future technology fixes diminish our desire to “go low carbon” today?

Geoengineering has been gaining a lot of attention this year. In fact. since White House science advisor John Holdren suggested in April that the US adminstration might consider it, we’ve seen not only arguments from the usual contrarian suspects (step forward, Freakonomics and Bjorn Lomborg), but also the launch of some of the first serious studies into whether the geoengineering could be safe and effective. (One early report, however, doesn’t look good).

Kate Mackenzie

Olivier Jakob at Petromatrix introduced a new term on Monday: the dowlar.

It’s a reference to the correlation between oil prices and – you guessed it – the Dow and the dollar. It’s a cute term to sum up two of the key non-fundamental factors that are affecting oil prices, in the absence of much data showing a genuine improvement in demand.

Looking at Monday’s markets, for example, Petromatrix noted that the release of ISM manufacturing data triggered a bounce in the Dow, and then in crude oil futures. But none of this, Jakob wrote, gave much hope on oil market fundamentals:

However, in the real world of oil nothing has really changed apart maybe from ICE Gasoil moving into a deeper contango. Yes, the ISM manufacturing index is better than expected, GDP is growing and yes some factories that had been idled have been turned back on; but rail freight in the US is still down -14.8% from a year ago and down -17.3% from 2007 (week ending Oct24). The problem remains that the Distillates being produced around the world is going into the tanks of floating vessels rather than the tanks of 18 wheelers.

US crude oil prices slipped below the $80 a barrel level, surrendering gains made in Wednesday session following the latest US inventories data.

Nymex December West Texas Intermediate lost 58 cents at $79.82 a barrel, while ICE December Brent slipped 64 cents to $78.25 a barrel.

US crude stocks fell 4m barrels last week, confounding the consensus market forecast for an increase of 1.4m barrels.

Kate Mackenzie

Natural gas advocates (and producers) might want to be careful what they wish for.  The IEA is canvassing the likelihood of a natural gas glut, which could have implications for energy security around the world — and also for gas producers.

Huge new sources of shale gas that have now become economic to recover in the US have led many to argue that natural gas can kill two birds with one stone: solve the dependence on foreign oil, and reduce CO2 emissions.  Natural gas prices may be low today, compounded by recession, shale and new sources coming online — but the longer-term future has seemed bright for this relatively clean-burning fossil fuel.

However the IEA suggests that a scenario in which strong greenhouse gas policies are implemented would actually have the opposite effect, dampening natural gas demand in the not-too-distant future.

Forecast of gas glut challenges Russian grip
IEA projections challenge industry assumption of shortages (FT)

Green policies expected to hit gas demand
US would become largely self-sufficient (FT)

Total profits hit by falling oil price
But says production is back on track (FT)

Royal Dutch Shell aims to ‘quickly’ restore Nigerian production
Ceasefire by militants opens window to restart plant (Bloomberg)

Enel to raise a further €4bn in bonds
Comes only weeks after mammoth refinancing (FT)

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