Emissions

Sheila McNulty

Jim Mulva, chief executive of ConocoPhillips, has been in a hurry to establish his legacy. In the beginning, it was going to be as the head of one of the world’s biggest international oil and gas companies. And he got there, boosting Conoco into 5th place, in terms of production.

But then the economic downturn hit, and the weaknesses in his grow-through-acquisition strategy were exposed. It was no longer enough to be big, and Conoco was forced to slash capital spending, lay off staff and sell billions of dollars in assets.

After the dot.com crash and the credit crunch, investors are being warned of the potential consequences of a ‘carbon bubble’.

Stock markets are sitting on vast reserves of fossil fuels that cannot be burnt if the world is to stick to climate change targets, according to research issued by the Carbon Tracker initiative.

Developing countries invested more in renewable energy than their developed counterparts for the first time last year, according to a report commissioned by the UN Environment Programme (UNEP).

Sheila McNulty

Alaska’s decision to host the largest oil and gas lease sale of any US state this year is good news for the oil and gas industry, which has been pressing for more access. And while the resulting exploration and production certainly will be good for the overall economy – creating jobs and boosting activity – it is a pity that it is not against a backdrop of better news on the environmental front.

By this I mean concerted steps by the US government to reduce the use of oil as part of a larger effort to curtail carbon emissions. This issue has long disappeared from the political radar, despite being a key platform on which President Barack Obama was elected.

Sheila McNulty

The issue of hydraulic fracturing, or fracking, has taken on a life of its own. But with so much misinformation, it is hard for the general public to know whether it is a good thing or a bad thing. The truth is – as with any polarising issue – somewhere in the middle. New York appears to have accepted that and decided to move forward to permit fracking in all but the most sensitive areas of the state.

But even as New York is poised to lift its moratorium on fracking, New Jersey’s legislature has moved to impose one. What this illustrates is just how divisive this issue has become.

Let us look at some of the pros: Hydraulic fracturing in a series of stages, combined with horizontal drilling, has given the US oil and gas industry a new lease of life. After years of declining production, the technology has enabled the country to grow not only natural gas but oil production. And with a country that consumes so much energy and has yet to make any serious attempt to scale back its usage, this can only be a good thing. It means more domestic supply to meet demand, which translates into less money leaving the country for imports and heightened energy security. And more drilling, of course, means more jobs and more economic activity.

Now here are the cons: if drillers are irresponsible about how they use the technology – and with far more than 1,000 operators drilling and producing across the country there will always be some who are – it hurts everyone. The damage to the environment and people could be very real. One only needs to think of Macondo, BP’s well at the centre of last year’s accident in the Gulf of Mexico.

As the EPA investigates the environmental risks associated with fracking, the industry must ensure it has no Macondos. By proving the industry can safely and responsibly develop the US’ domestic resources, companies eventually win over the public, and politicians, who are so afraid of the technology they are banning it outright.

But the industry cannot do this if it is not permitted to frack at all. Take New Jersey, which has just  passed a ban on fracking this week. While New Jersey is not a major gas producer – and does not seem to have the geology ever to be – this is, nonetheless, a symbolic gesture that might well ensure that what it does have is never developed.  That leaves the burden to other states, such as Texas, to continue producing the gas used by those in New Jersey.

While this is not fair, the industry will say it would rather deal with states individually than have a restrictive federal law passed down that might, in the end, restrict the use of fracking in industry-friendly places such as Texas.

Certainly there are risks of that happening, but it seems to make the most sense for the US to approach this issue on the federal level. If a fair, science-based investigation can be conducted, and the industry be given an opportunity to defend itself against the charges of environmentalists, perhaps a workable solution can be found - one that permits fracking to continue across the country with the necessary safeguards to prevent a disastrous onshore event, such as Macondo was to the offshore industry.

That way states like New York – which was among the first of a string of places to put a temporary ban on fracking - and New Jersey will not scare off the public and politicians in other states from permitting something that might well be done safely  – and limit imports and grow energy security as much as possible. For a country that consumes so much energy and cannot seem to get its arms around a comprehensive plan to reduce carbon emissions with a real committment to renewables and energy efficiency, this seems the best course to take.

BP, EU emissions, India

In this week’s podcast: BP looks to settle potential claims over the Gulf spill; global airlines prepare to be included in EU emission targets; and we talk to Sangram Nayaka, organiser of the Energy Investment Summit in Dehli about India’s energy policy – nuclear vs renewables?

Presented by Sylvia Pfeifer with Pilita Clark and Vincent Boland in the studio in London, and Andrew Charlton from Aviation Advocacy in Geneva.

Produced by LJ Filotrani

Sheila McNulty

The technological advances in the oil and gas patch just keep coming. While everyone has been scrambling to catch up with the shale gas revolution, the industry has been working on another potentially significant breakthrough in gas. This one is in producing gas that has long been stranded offshore in areas too far or too small to warrant a pipeline to shore.

Royal Dutch Shell recently announced it would be the first producer to invest in a multibillion dollar project to capture this gas. The project will be a floating liquified natural gas terminal – known as a FLNG terminal in the industry – that makes it economic to get at such gas fields. No pipelines need to be built. Shell just produces the gas until it runs out and then moves along to the next field.

A ban on traditional wood burning stoves and stopping leaks from long distance gas pipelines are among measures that could help slow global temperature rises in coming years, a group of leading atmospheric scientists has found.

Such measures would curb so-called black carbon, a major component of soot, and ground level ozone, a big part of urban smog, says a new study coordinated by the United Nations Environment Programme and World Meteorological Organisation.

Sheila McNulty

Oil sands fieldControversy about importing fuel from Canada’s vast oil sands has been swirling for some time. It is an issue environmentalists seized on with great hope when President Barack Obama came into office, given his pledges to work to reduce the country’s carbon footprint and the fact that oil from tar sands, as environmentalists refer to it, has a higher carbon intensity than that from traditional crude.

But the weakness in the US economy, high unemployment and rising petrol prices have combined to give the oil industry the edge. Indeed, even back in 2009, the Obama administration approved a pipeline to carry oil-sands fuel from Canada into the US, saying its action was designed to send “a positive economic signal in a difficult economic period”. The Keystone pipeline also was approved.

Kiran Stacey

Energy meterWith two private equity groups having pulled out of the bidding, Toshiba is closing in on a $2bn deal to buy Landis+Gyr, the world’s largest smart-meter maker by revenues.

The battle for the company shows how big an opportunity companies and governments view demand-side management. L+G already has orders to provide 62,000 meters to Finland’s Oulu Energy; and more than 10,000 to six provinces in China, which will create the world’s largest smart grid.

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