Daily Archives: March 8, 2010

Ed Crooks

The plan for a European ‘super-grid’ being proposed today by 10 companies, including Siemens of Germany and France’s Areva, might sound ridiculously over-ambitious.

Cynics are already noting that most of the members of the group would be direct beneficiaries of the vast amounts that would have to spent building the super-grid.

But this is a project that has already won serious political backing from nine EU member states and Norway, and, at least in its most modest version, looks like a realistic prospect.

Kate Mackenzie

Energy analysts are increasingly pondering the likelihood of sanctions against Iran and what effect this might have on oil markets, given that the country is one of the world’s top crude exporters.

Now that US concerns over Russia opposing sanctions have eased somewhat, the diplomatic focus is on winning support from China for taking a tougher line – and on working out how to make any sanctions effective in hurting Iran’s nuclear development.

As foreign affairs columnist David Ignatius writes in the Washington Post, China is particularly susceptible to oil pressure from Iran, as it imports 540,000 barrels a day from the country. So the US has worked with Saudi Arabia and the UAE to counter this:

The UAE has already boosted its oil exports to China as part of this pressure campaign. Shipments have increased from about 50,000 barrels per day last year to 120,000 now, with a goal by year-end of up to 200,000 barrels. Over the next few years, the UAE is offering to increase that export volume to China to about 500,000 barrels per day, which would nearly equal the current Iranian total.

In addition, as the FT reported last week, efforts to persuade China to support new sanctions on Iran were added to by a delegation from Israel to China.

Sheila McNulty

Bill Ritter, Colorado’s governor; Xcel Energy and a coalition of lawmakers, energy companies and environmentalists have agreed on legislation to cut air pollution, create jobs and increase the use of cleaner energy. The legislation, which still must be approved, calls for Xcel Energy to sharply reduce pollutants by retiring, retrofitting or repowering coal-fired power plants by the end of 2017 and replacing them with facilities fueled by natural gas and other lower- or non-emitting energy sources.

Of course natural gas would be among the fuels up for consideration. It produces about 50 per cent less carbon emissions than coal, which is the most carbon intensive of all fossil fuels and the most widely used to generate electricity in the US.  The Environmental Protection Agency estimates the average US coal plant – the biggest source of electricity in the US – emits 4.6m metric tons of CO 2 each year. That is almost double that of a natural gas-fired plant. There are 600 coal-fired electricity plants in the US.

Kate Mackenzie

On FT Energy Source:

- How financial traders changed oil markets

- Why OMV is cautious on European shale gas

- Does Calera have a scalable carbon capture alternative?

- China tightening? Yeah, right

- The Queensland coal bed methane rush

- Chesapeake‘s dealmaking

- Supergrid and Ivory Coast vs Ghana in Energy headlines

Further reading:

- Buy American: The wind industry’s Achilles heel

- The true cost of shale gas production

- The fake chimes of energy independence

- The third nuclear option

- A very controversial shale oil idea

- The ‘real’ take on methane and warming

- A new trend for European utilities in the US?

- A month of smart grid breakthroughs and concerns

- It isn’t easy being clean

- IEDs, Ahmedi-Nejad and the climate bill

- Why not make climate bills more popular?

Austria’s OMV is among a glut of energy groups pursuing non-conventional gas opportunities in continental Europe.

But Wolfgang Ruttenstorfer, chief executive, is cautious about the potential of shale gas, given the challenges of extracting it.

OMV is examining  deposits in the Vienna Basin, where in the 1980s the company drilled to depths of up to 8000 metres.

“We had difficulties managing that 20-25 years ago. The pressure was too high. Then oil prices came down and the drills became uneconomic,” he told the Financial Times.

Today, new hydraulic fracturing techniques could make this gas viable, but OMV is not counting its chickens.

Kate Mackenzie

Forget Bloom Energy. According to Thomas Friedman’s latest column, the new new thing in clean tech this week will be Calera, a Californian start-up that has developed a way to turn CO2 captured from coal- and gas-fired plants into calcium carbonate, by spraying it with seawater or bubbling it through seawater, according to an 18-month old Scientific American story, which has more on the technology itself.

Both stories make the point that making cement is a very CO2-intensive process, so Calera’s technology could potentially not just capture CO2 in a relatively simple way, but also reduce the CO2 generated in cement production.

Exciting stuff. Calera is one of several clean-tech companies that well-known venture capitalist Vinod Khosla has backed, and, Friedman says, is Khosla’s “favorite baby right now”.

By Izabella Kaminska

Here’s an oxymoron.

The world worries that rampant Chinese demand for commodities is pushing prices higher.

Except, according to Reuters, China’s deputy central bank governor, Su Ning, worries that global commodity prices will push Chinese prices higher, not domestic sources.

Kate Mackenzie

Shell and PetroChina’s A$3.3bn bid for Australian coal bed methane (or coal seam gas, as it’s called there) producer Arrow is the latest in an ongoing rush for unconventional gas in the north-eastern state of Queensland.

Although CBM production began there more than 20 years ago, it ramped up considerably in the past five years, sparking a race that’s already been exemplified by the battle for small local producer Pure Energy, which was eventually bought by BG which, incidentally, beat a rival bid from Shell for the company one year ago. BG had earlier snapped up one of the biggest producers, Queensland Gas Company.

The latest bid might come as welcome news to those wondering whether the explosion of CBM projects in the state of Queensland will move towards consolidation.

Sheila McNulty

Chesapeake Energy, the US’ second biggest natural gas producer, has sold $10.8bn in gas holdings in the past 18 months, raising questions about whether it is best to invest in the producer itself, or the big Europeans with which is doing deals.

The latest sale came in January, when Total of France agreed to pay $2.25bn for 25 per cent of Chesapeake’s assets in the Texas Barnett Shale, the largest producing natural gas field in the US. Other deals were with BP of the UK and StatoilHydro, the Norwegian energy company, on top of one with Plains Exploration & Production of the US. Analysts like the dealmaking. In the words of Jeffrey Robertson, analyst at Barclays Capital:

We believe the joint venture underscores the value of Chesapeake’s franchise position in four of the major gas shale plays. They have allowed Chesapeake to recover significant value while retaining substantial reserve and production upside in the plays.

Kate Mackenzie

Energy groups to launch plan for European ‘super-grid’ (FT)

Essar group eyes $3bn London energy listing (FT)

Europe the new frontier in shale gas rush (FT)

Met Office analysis reveals ‘clear fingerprints’ of man-made climate change (Guardian)

Chesapeake in deal-making frenzy (FT)

Glencore pledge to sell $1bn in assets (FT)

Australia set for lead shale gas export role (FT)

Keeping with the African faith – Tullow/Adrian Heavey interview (FT)

BP’s Hayward given 41% pay increase (FT)

Shell, PetroChina make $3bn bid for Australian coal producer Arrow (Bloomberg)

Ivory Coast claiming part of oil-rich offshore Ghana: Minister (AFP)

Nigeria’s oil production tops 2.5m b/d (Xinhua)

UK energy investment at risk, report warns (FT)

Red tape strangling UK home generation dreams (The Times)

Millions of low-energy lightbulbs wasted (Guardian)

West Virginia Senator Byrd won’t back GHG regulation ‘timeout’ (Argus)

Small oil explorers eye big role in North Sea (FT)

Houston energy executive missing (NOLA.com)

Chinese subsidies add to arbitrage potential (Argus)

US, Britain threaten to withhold money from World Bank coal project (Reuters)

Japan’s power demand may rise on plug-in cars, electric houses (Bloomberg)

CNOOC, Total submit Uganda oil proposals – source (Dow Jones)

Japan opens wallet for Mexico oil, gas project (Dow Jones)

Chinese National Nuclear mulls overseas expansion (Bloomberg)

Sage grouse should get species protection, US says (Bloomberg)

Biffa’s landfill power unit for sale at £350m (FT)

German GHG emissions falls by 8% (Argus)

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