Daily Archives: June 14, 2010

Sheila McNulty

When the chief executives of the world’s major oil companies go before a Congressional subcommittee on Tuesday, they will attempt to differentiate themselves from BP publicly for the first time. According to someone who has seen the planned remarks by the chiefs, they will say that by adhering to best practices, companies can avoid accidents like the one gushing oil into the Gulf.

It is a risky position to take, for while the industry’s deepwater record is good – the companies speak of the successful drilling of the vast majority of about 14,000 deepwater wells drilled in oceans worldwide – accidents do happen. Take a look at this weekend’s oil spill from a Chevron pipeline in Utah. Although it was caught relatively quickly, the pipeline leaked into a community park in a residential area and then migrated into a drainage creek. Chevron has yet to say how much oil flowed out. But damage was done.

(Click to enlarge).

That’s the corporate structure of BP, according to Citigroup, who supposedly went to the trouble of flow-charting the oil firm in response to client enquiries.

Understandably, given the recent rhetoric from President Obama, they want to know whether BP could firewall its US business.

And the answer to that question is that it would be very difficult, if not impossible.

Kate Mackenzie

Slate reported last week that the US corn ethanol industry is promoting itself as an alternative to deepwater oil as the Gulf of Mexico spill continues — pointing out its energy security advantages, running advertisements stating “No beaches have been closed due to ethanol spills”, and the like.

The heavily-subsidised sector has had a difficult few years and as the story reports, some ethanol refining capacity is still sitting idle, although this is partly because demand for gasoline (with which is it blended) is also down after the recession.

However ethanol, already criticised for being too carbon-intensive and accused of pushing out food crops, has been the subject of several new negative reports in the past few weeks.

Kate Mackenzie

As the new BP Statistical Review shows, coal, which last year’s report pointed out was the fastest-growing source of energy, was the only major source of fossil fuel energy that didn’t fall last year. It remained flat, while oil and natural gas consumption fell; total primary energy consumption was down 1.1 per cent.

Coal is highly polluting, but also reasonably a cheap and geographically distributed source of energy. Analyst/economist/blogger Gregor MacDonald has written a lot about the world’s increasing use of coal in recent years.

We’ve put together a chart showing that coal – as a proportion of primary energy consumption — is reaching levels not seen for several decades. Since 1971, to be precise:

In fact, as Gregor points out, oil’s share is falling:

Kate Mackenzie

Two weeks of international talks in Bonn ended on something of a sour note when Saudi Arabia and two other Gulf fossil-fuel producers blocked a proposal for an updated report on the effect of a 1.5 degree increase in climate.

Agreements to date – such as they are – have focused on limiting warming to 2 degrees, but small low-lying island states fear that will be insufficient to prevent their nations becoming uninhabitable.

AFP reports:

AOSIS, supported by the European Union (EU), Australia and New Zealand, called for a technical report on the cost of reaching the 1.5 C target and the consequences of breaching it.

But it was thwarted by Saudi Arabia, with support from Kuwait and Qatar, under the UN’s consensus rule, the sources said.

Saudi Arabia and other major oil producers argue that ratcheting up action on carbon emissions will hurt their revenues as fossil-fuel consumers switch to cleaner energy.

AFP reports that the conflict, unsurprisingly, soured the mood at Bonn. So much so that someone stole and elaborately defaced Saudi Arabia’s sign.

Kate Mackenzie

- Arctic drilling faces a freeze

- Will Anadarko donate its Macondo oil revenues?

- A privately-managed disaster

- BP feels the ire of a Machiavelli

- Climate scientists receiving more threats

- Businesses collapse, waiting for compensation

Kate Mackenzie

- US wants BP compensation set aside - FT

- BP ready to suspend dividend payouts – FT

- Oil groups to distance themselves from BP - FT

- BP seeks truce on oil spill - FT

- Obama plans first Oval Office speech to put more pressure on BP - NY Times

- BP chases moving target - FT

- Drilling rule hits Alaska pipeline - WSJ

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