Gas

Sheila McNulty

The amount of private equity moving into the US oil and gas sector has risen dramatically over the past year, drawn by a long-term bet on rising commodity prices and heightened demand for energy infrastructure. This is according to PwC, the consultancy, which put out a report on US energy sector deals on Tuesday.

Overall, there were eight private equity-backed transactions in the first quarter of this year, representing $4.8bn, or 9 per cent of total deal value, compared to just one during the same period last year, worth $767m, the report said.

Chart showing overall value of PE-backed oil and gas deals

Figures from PwC

Sheila McNulty

While the lack of a coherent national energy policy is nothing new for the US, Standard & Poor’s ratings service says in a new report that Washington’s current inability to definitively establish long-lasting energy policies and regulations distinguishes today’s situation from earlier eras. I quote:

Making resource decisions and committing a utility’s balance sheet to support those decisions has never been more complicated or littered with more potential pitfalls, and diminishing credit quality is a result.

Clear policy direction and consistent application by all branches of government of the various policies, ideally with maximum flexibility and abundant time for implementation, would benefit utility bondholders by promoting credit stability.

Kiran Stacey

A fisherman sails on the Ice Fjord of Ilulissat, Greenland Wikileaks has an impeccable sense of timing. As Hilary Clinton meets counterparts from Arctic nations in Greenland to talk about oil, the whistle blowing website publishes a raft of cables showing just how much international tension the country’s natural resources have provoked.

The cables make for fascinating reading, and tell a tale of US perceptions of Russian paranoia and aggression in the territory. They claim:

Energy use in non-OECD Asia, led by China and India, is growing faster than anywhere else in the world – it will more than double between 1990 and 2035,  according to a report by the US Energy Information Administration published in April.

But how will India deal with escalating demand? A separate report by Bernstein Research, a US asset management company, suggests it will struggle to do so, as price-capping measures stifle private investment in natural gas.

India’s imports of natural gas are set to grow by 139 per cent in the next five years from 1.4m cubic metres per hour in 2010 to 3.4m cubic metres per hour by 2015, according to J P Morgan. The bank says Indian production will grow by 90 per cent over the same period, leaving the country with a natural gas shortage.

The Financial Times this week hosts guests writers and industry leaders who will debate the future of global energy after nuclear disaster in Japan and turmoil in the Middle East.

DAY ONE:

How shale gas will transform the markets

Lasting changes are unlikely to flow from political conflicts in north Africa or the nuclear sector in Japan. It is geology and technology that could transform global energy, says Nick Butler, who chairs the King’s Policy Institute at King’s College London.

DAY TWO:

We must electrify the transport sector

Washington needs to promote investment and energy diversity to ensure the US can be weaned off its dependency on oil, writes Frederick Smith, president and chief executive of FedEx Corporation

 

FT RESOURCES:

Energy Source – the FT blog that gives an insight into the financial, economic and policy aspects of energy and the environment;

Powering America – interactive graphic on the future of US energy;

Oil in-depth – news and analysis as a consensus emerges that countries need to do everything to stabilise oil prices following the dramatic market volatility of 2008;

Unconventional oil and gas ‘hot areas’ – an interactive graphic on alternative sources of oil energy.

 

 

Kiran Stacey

North Sea oil rigOil and gas operators in the North Sea have ramped up their lobbying efforts to persuade the government to reverse, or at least dilute, its tax hike on those companies to pay for the cut in fuel duty.

Early on Wednesday Oil & Gas UK, the industry’s lobby group, produced figures showing confidence among producers in the area had slumped.

On a scale from 1 to 100, with 50 being neutral, overall confidence dropped 12 points to 51. For E&P companies, the fall was particularly pronounced, with a 25 points drop to 46, the lowest ever for the sector. Confidence among major producers, meanwhile, was 21 points lower at 39.

The next three decades will be vital for the US energy sector. Decreasing reliance on fossil fuels, limiting emissions that cause global warming and lessening dependence of imported oil are all at the top of the Obama administration energy agenda. This graphic explores the various energy sources in the US, the leading companies and the most powerful policy makers.

 

Kiran Stacey

How much shale gas is there outside the US? It sounds like an impossibly large question, but it is one the US Energy Information Administration has attempted to answer in a new report, carried out by Advanced Resources International.

Their findings are impressive. There is a huge amount of recoverable shale gas out there, says the report – so much that it would add 40 per cent to total global gas supplies. Unsurprisingly the report is already being seized on by gas lobbyists as evidence that shale will change the energy world.

Sheila McNulty

ConocoPhillips’ shrink-to-grow strategy is doing more than benefitting the company and its shareholders. It turns out the architect of the programme, Jim Mulva, Conoco’s chief executive (pictured), got a 25 per cent increase in total compensation to $17.9m in 2010.

While it is difficult for an outsider to put a dollar amount on Mr Mulva’s value, the turnround he has staged since the economic downturn exposed weaknesses in his acquisition spree is worth noting.

In early 2009, the US’ third biggest oil and gas company by production and market capitalisation, disclosed a 2008 fourth-quarter net loss of $31.8bn; a $34bn writedown; 1,300 in job losses; and a $2.8bn cut in capital spending.

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