Daily Archives: March 12, 2010

Kate Mackenzie

Image of the week:

Offshore wind turbine construction plant in Zeebrugge, Belgium:

Jerome a Paris

Photos by Jerome a Paris, in The Oil Drum and part of his Wind power series.

Quotes of the week:

“If alternatives overpromise and underdeliver we will see the creation of green bubbles.”

- Saudi Aramco’s chief executive Khalid al-Falih at CERA Week.

“Please write about what we are doing for the environment.”

- Saudi Aramco’s Mohammed al Abdulkarim at a press conference about the Manifa oil development project, in a sensitive marine coastal system.

Number of the week:

$3.5bn

The amount developed countries will give to the developing world to protect forests as a defense against climate change. This was agreed in a Paris meeting on Thursday and is $1bn more than the commitment made in Copenhagen – considered one of the successes of that meeting.

Sheila McNulty

The main headline out of Exxon’s analyst presentation yesterday was that it continues to make billions of dollars and is spending them even as others pull back in the economic downturn. That Exxon is going to shell out another $28bn this year in capital spending is significant, but not particularly surprising.

So, what else to take away? There were a few things.

For one, Rex Tillerson, Exxon’s chief executive, answered the question about why the company did not do more acquiring when the economy was at its worst. He noted that even though things seemed bad, many companies had cash from the boom years and were not ready to accept the valuations Exxon would have put on assets.

Kate Mackenzie

A Gallup poll is the latest to suggest that interest in mitigating climate change is on the wane. But what is the cause?

From Reuters:

A growing number of Americans, nearly half the country, think global warming worries are exaggerated and more people doubt that scientific warnings of severe environmental fallout will ever occur, according to a new Gallup poll.

The story also mentions an international Nielsen/Oxford University study in December that suggested economic concerns were pushing out those about climate.

However analysing attitudes to climate change, and the reasons behind those attitudes, is complex.

Kate Mackenzie

On FT Energy Source:

- IEA on narrowing contango: it’s fundamentals

- Where the European shale gas plays are

- More on the European shale gas rush

- Hydro-fracking and earthquakes? Uh-oh…

- Russia, Saudi Arabia – and the Indian oil trajectory

- OECD crude demand - settling, or still being destroyed?

- Energy efficiency a focus at CERA Week

- ExxonMobil continues to spend through the downturn

- Oil traders going OTC, and G20 climate funding in Energy headlines

Further reading:

- ‘Passing on the costs’ of carbon

- Opec may face Iraq challenge sooner than expected

- China’s energy investments in central Asia

- A new unit for (saved) energy

- Carbon sequestration sites, compared

- Gas is becoming more like coal

- Electric vehicles, utilities and keeping up with the Joneses

- Competing for energy security

- Reconsidering EU energy policy

Kate Mackenzie

Gregor MacDonald put together a great chart earlier this week:

Now there are quite a few interesting observations to make here, as Gregor writes, about developed demand peaking, Brazilian bioethanol and more. But what struck us most was that the chart is total, not per capita consumption – so that would be for an Indian population of 1.139bn, Brazilian of 191.9m and Californian of 36m.

Kate Mackenzie

Interest in the narrowing contango and its possible causes have been growing in the past few weeks, and the IEA on Friday looked at the subject – and the question of whether tighter prompt markets or “less alarmist views on the future” are responsible.

The answer they say, is likely both – going on to point to several fundamentals that could reasonably be driving both ends of the market – of which small signs of an OECD demand floor was just one.

From the report:

Kate Mackenzie

The IEA’s monthly oil report out on Friday makes for familiar reading: non-OECD demand slightly stronger, partly offset by OECD demand being slightly weaker – resulting in a small upgrade in overall demand forecasts:

Global oil demand has been revised up by 70 kb/d for both 2009 and 2010 on higher‐than‐expected non‐OECD data, which largely offset persistently weak OECD readings. Demand is now estimated at 85.0 mb/d in 2009 (‐1.4% or ‐1.2 mb/d year‐on‐year), and is expected to rise to 86.6 mb/d in 2010 (+1.8% or +1.6 mb/d versus 2009).

That’s a downward revision of 120,000 barrels per day in 2010 for OECD countries, which are expected to see their fifth yearly decline in 2010.

However there were some other interesting comments on the OECD. There are signs of ‘a nascent petrochemical-led economic recovery’, the IEA writes, due to strong naphtha deliveries. But the signs are mixed, and some evidence of demand destruction was cited.

Kate Mackenzie

Interest in Europe’s unconventional gas potential is ramping up very quickly indeed.

Poland has so far been the focus of most European shale gas interest. But security of gas supply is a big concern for many countries in Europe, not least of which is the UK, where energy security more broad has become the subject of numerous alarming reports of late.

Igas for example, which is listed on London’s junior stock exchange AIM, has leased 300,000 acres of shale land in the UK where it plans to begin producing coal bed methane next year.

And it’s not the only UK unconventional play; there at least two companies who are ‘thought to be investigating’ the Lower Jurassic potential of the Weald Basin of Southern England, according to IHS’ Ken Chew. The Cheshire Basin in the country’s north-west is also drawing attention.

Sheila McNulty

It seems ironic that the world’s energy companies are proponents of energy efficiency. After all, the use of energy is what drives their profits. Yet the industry has long known that the less energy it uses itself, the more money it can save, which benefits the bottom line. This was one of the themes explored at this week’s IHS CERA energy conference in Houston.

CERA and the World Economic Forum issued a report at the conference on how the need to address climate change and the expected surge in energy demand from the developing world have moved energy efficiency to the top of the agenda for government and business. However the report also found that, in contrast to the energy industry, in the wider world energy efficiency is not always understood and is in need of a rebranding to match up with the reality of its potential.

Kate Mackenzie

E&P Magazine has published several terrific charts on European shale gas, including this one showing which companies are operating where (click through for full size):

IHS/E&P

Source: IHS/E&P

The charts are linked to this rather comprehensive overview of  European shale plays by IHS’ Ken Chew.

Related links:

Foot on the gas (FT)

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