The Weekender
Highlights from FT Energy Source this week:
- Antarctic ice melt supports global warming
- The real Falkland Islands question
- No end in sight for developed-versus-developing climate tensions
- Why the price of oil services is set to rise
- EPA makes a start on regulating carbon
- Just a little on Bloom Energy
- China not at all keen on Hummers
The Source: Nigeria and Shell; Shale oil; Marine energy
On FT Energy Source:
- Transferring the shale gas boom to oil
- About those tensions in the difficult Shell-Nigeria relationship
- Nuclear renaissance needs more than loan guarantees
- A temporary reprieve for the non-Opec production peak
- A small but important win for marine energy
- CFTC talks about OTC and stored oil, but is anyone else listening?
- CRU’s ‘trick’ and ‘hide the decline’ rebuttal
- Centrica, Statoil and Nigeria, and more in Energy headlines
Further reading:
- Washington snowstorms and climate politics
- ‘Why I don’t expect a lithium ion battery glut’
- Biofuels breakthrough
- Total’s unrefined retreat from Dunkirk
- That coup was in Niger, not Nigeria
- IPCC science is ok, but the organisation is not
- A structural shift for nat gas?
- World’s biggest solar-powered boat
Nuclear renaissance will take more than loan guarantees
Source: CIGI
When the Obama Administration unveiled its proposed $54bn in loan guarantees to encourage the construction of 10 new nuclear reactors and revive the US’ nuclear industry, it underlined the barrier high construction costs have been to the sector. At a cost of about $5bn a reactor, there have been few companies willing to back such projects.
Particularly with the economic downturn reducing power demand, the credit crisis making it that much harder to get financial assistance, and the drop in competing fuel prices of natural gas.
But there is another barrier. And that is the public. Even as the zero carbon emissions of nuclear have gained a following, fears of accidents and what to do with the waste persist. These concerns were demonstrated this week when the Vermont Senate on Wednesday voted to close an Entergy Corp nuclear power plant when its licence expires in 2012, citing the almost 40-year age of the facility, which has suffered the collapse of a cooling toward, a burst pipe and three leaks.
CRU explains ‘trick’ and ‘hide the decline’
The University of East Anglia on Thursday night published its 3,500-word submission to the UK’s Parliamentary Select Committee on Science and Technology, on the climate change furore which erupted late last year when emails were stolen from its servers.
The paper goes into all the accusations arising from the emails, and is worth reading (the submission and appendix have been published in Word format).
“Marriage,” said George Bernard Shaw, “is an alliance entered into by a man who can’t sleep with the window shut, and a woman who can’t sleep with the window open.”
So it often seems with Nigeria and Royal Dutch Shell, whose relationship began in earnest in the swamps around the mouths of the River Niger in 1956.
After Shell struck the first commercially viable oil in Nigeria, the country went on to become a profit bonanza for the Anglo-Dutch group. Nigeria has risen to be sub-Saharan Africa’s biggest energy producer, generating 80 per cent of government revenue from petroleum.
Yet so fraught is the union that rumours of imminent divorce follow it almost as closely as they do Premier League footballers.
This week, the tensions boiled over into an ugly public spat at an oil conference in Abuja, Nigeria’s sweltering capital.
In the regulators’ spotlight: Arbitrage, OTC derivatives, and … stored oil?
Beginning Thursday, the IEA is holding a two-day meeting in Tokyo with regulators, researchers and banks from around the world to discuss oil price formation and market volatility.
Day two is still wrapping up and press weren’t allowed on the first day; plus, the meeting is held under Chatham House rules – so the coverage was limited. However Scott O’Malia, one of five CFTC commissioners, in a speech prepared for the meeting took aim at oil withheld from the market, including in floating storage, reports Reuters:
The CFTC commissioner said publishing data on oil in-transit would increase knowledge of what is being stored at sea or withheld from the market.
O’Malia also questioned whether certain traders who buy oil only to put it directly into storage are trying to “extract money from consumers and producers.”
He also believes OTC reforms, already approved by the US House of Representatives, will likely be passed this year. But, O’Malia added:
“It is critical that this legislation doesn’t open new opportunities for regulatory arbitrage,” O’Malia said, noting the need for consistent rules across the global OTC market, which is estimated at $600 trillion.
Energy headlines
University rebuts ‘climategate’ accusations (FT)
Nigeria orders Statoil to set aside oil proceeds (FT)
Centrica says UK gas alternatives are vital; Centrica warns over regulatory uncertainty (FT)
Gazprom in contract shake-up (FT)
Nuclear renaissance struggles to fire up (FT)
Walmart to set emissions goals for suppliers (FT)
Mitsubishi in £100m wind turbine drive (FT)
RWE sees slower utility sales (FT)
Repsol suffers from slump in oil prices (FT)
EU industry CO2 output fell 11% in 2009 (Reuters)
Opec output reaches 14-month high on Saudi gain (Bloomberg)
AGL shelves $A1bn in wind investments over policy uncertainty (Reuters)
Deere considers sale of $1bn of wind assets (Reuters)
Climate change, population prompt calls for British land use change (FT)
Profile: Adrian Heaney of Tullow Oil (FT)
China passes US as top Saudi oil importer (AFP)
Norway falls short on oil reserves replacement (Argus)
Natural gas deserves special status, US groups say (Argus)
Shell slows Colorado oil shale plans (UpstreamOnline)
Interest grows in transferring shale gas success to oil
The big boom in the US’ onshore shale gas play has led to an oversupply of natural gas, putting downward pressure on prices. A number of drilling programs have, therefore, been scaled back to wait until prices rise. And this has left equipment and expertise available at cheap rates for entrepreneurs to take on.
In the meantime, they are tinkering with transferring the shale gas boom into a shale oil boomlet.
Marine energy scores manufacturer interest
The big renewable news in the UK today is Mitsubishi’s decision to build a £100m offshore wind turbine R&D facility.
Much smaller, though just as interesting, is news that Siemens is among the second-round investors in Marine Current Turbines.
It’s unusual to see a big manufacturer like Siemens putting money (albeit a small amount – the total funds raised in this round were £8.5m) in a fairly nascent renewable technology.
MCT operates the only commercial marine energy installation that is not a tidal barrage.
The UK is something of a hub for marine energy and a few utilities, such as Scottish & Southern, have invested in marine start-ups or collaborated on projects. Other investors in MCT include EDF Energy and Carbon Trust.
A temporary reprieve for non-Opec oil peak
Non-Opec oil supply, depending who you ask, has either already peaked or is on the verge of doing so. But Merrill Lynch Banc of America’s Francisco Blanch and colleagues point out that last year saw some surprising growth from the non-Opec world:
Source: ML-BAS
That’s not enough to turn around the general story of non-Opec decline, however.
Energy Source is no longer updated but it remains open as an archive.
Insight into the financial, economic and policy aspects of energy and the environment.
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