Calif. Regulators Unveil Solar Power Plan

Terence Chea, Associated Press via Yahoo
SAN FRANCISCO – State energy regulators on Tuesday unveiled one of the nation’s most ambitious programs to expand the market for solar power, proposing to offer more than $3 billion in consumer rebates over the next decade.

Environmentalists said the California Solar Initiative would help reduce the cost of solar energy, create jobs and reduce emissions of greenhouse gases blamed for global warming. “With rising energy prices and continued air pollution, this is exactly the kind of landmark initiative California needs,” said Bernadette Del Chiaro, clean energy advocate for Environment California. “From this, we’re going to see cleaner air, affordable solar energy and California regaining its world leadership in solar power.”

The plan aims to install panels to produce 3,000 megawatts of solar energy on 1 million homes, businesses and public buildings over 11 years. The five-member Public Utilities Commission was expected to vote on it next month after a 30-day public comment period. …
(13 December 2005)

ConocoPhillips set to buy gas producer for US$35.6b

Shanghai Daily
CONOCOPHILLIPS agreed to buy US natural gas producer Burlington Resources Inc for US$35.6 billion in cash and stock in the industry’s biggest takeover since 2001.

Chairman James Mulva is using acquisitions to catch up with Chevron Corp, the No. 2 US oil company, as oil and gas fields become harder to find and more expensive to tap. ConocoPhillips pumped more from reserves last year than it replaced through exploration, as surging demand drove prices to records. …

Soaring energy prices are spurring acquisitions, according to Kurt Wulff, an analyst with McDep Associates in Needham, Massachusetts. US natural gas climbed to a record last week and crude oil reached an all-time high of US$70.85 a barrel on August 30. ConocoPhillips is buying Burlington “out of optimism about the price of natural gas,” said Wulff. US energy companies have agreed this year to spend more than US$197 billion on acquisitions. That’s double what they spent in 2004 and the most since 1999, when US$202 billion in mergers were announced. The previous biggest oil and gas industry transaction was Chevron’s US$45.8 billion acquisition of Texaco Inc in October 2001. …

ConocoPhillips has used acquisitions to add to reserves as its drilling failed to keep pace with declining output from existing fields. Burlington has relied more on exploration. Half the crude oil ConocoPhillips produces is from older fields in Alaska and Norway that yield less each year. Burlington’s reserve replacement ratio excluding acquisitions, a measure of drilling success, rose to 119 percent last year, according to company filings. ConocoPhillips’ exploration replaced only 65 percent of what the company pumped.
(13 December 2005)
Robert Marcin slams the deal on because, “Chevron purchased Unocal for $10 per barrel of oil equivalent vs. Burlington’s price of $18. I’d say that the 80% difference matters. In fact, I’d say to Jim Mulva, Conoco’s CEO, that at $10 per barrel of oil equivalent, buy two Burlingtons! “. Maybe Conoco has a feeling on the price of oil? -LJ

Shell spending to rise as costs soar

Tom Bergin, Reuters
Royal Dutch Shell will increase planned investments 27 percent to around $19 billion (11 billion pounds) next year as costs soar and the group tries to turn round its industry-lagging record for finding new oil.

“Despite the increase there is nothing to suggest that the group will be able to increase its growth prospects, which should depress returns,” Peter Hitchens, oil analyst at Teather & Greenwood, said. It was unclear to what extent the rise in spending plans was due to higher-than-expected costs and what portion was due to the accelerated development of new and existing projects.

Shell is grappling with massive cost overruns on a number of large projects including the Sakhalin-2 project off Russia’s east coast, where costs have doubled to $20 billion, and the Bonga oil field offshore Nigeria, where some analysts believe the initial $2.7 billion budget will also double. The company has blamed the cost overruns on rises in the price of commodities such as steel, oil field services inflation, which some industry executives put at 10 percent per year, and overly ambitious targets set by previous management.

The Hague-based firm aims to raise production to 3.8-4.0 million boepd by 2009 and 4.5-5.0 million boepd by 2014, compared with current production of around 3.5 million boepd, Voser said. Some analysts are concerned that much of this growth will come from sources such as gas-to-liquids and tar sands projects, which have traditionally not offered as high returns as finding and pumping oil. …
Last year it replaced only half the oil and gas it pumped with new finds, the worst record among the “Supermajors”, as the premier league of listed oil firms are known.
(13 December 2005)

Shell Lacks Oil Sources, Merrill Says

Martin Boer, De Telegraaf via Bloomberg
Royal Dutch Shell Plc isn’t succeeding in finding enough new sources of oil, according to Robin Batchelor, a fund manager at Merrill Lynch & Co., De Telegraaf newspaper reported.
Batchelor, who heads the $3.7 billion World Energy Fund, sold all of his shares in Shell last year after the company overstated its oil reserves, the newspaper said. Batchelor said he isn’t planning on buying Shell stock “anytime soon,” the paper reported. Calls to Batchelor at his office today weren’t immediately returned.

“State geological surveys, academia and industry have identified that globally there are still hundreds of billions of barrels of conventional oil and gas to be found,” Bernadette Cunnane, a spokeswoman for Shell in London, said today. Exploration “remains a cost effective and worthwhile ways of adding resource volumes,” she said.
(10 December 2005)

Venezuela, Iran Sign Deal to Explore Orinoco Oil Reserves

Xinhau via Rigzone
Venezuela’s state-owned oil company Petroleos de Venezuela SA (PDVSA) signed a deal earlier this week with Iran’s state company Petropars to explore the heavy oil deposits in Ayacucho Block 7, a 540 square km block in Venezuela’s Orinoco River basin.

The study will form the basis of a future joint venture to extract crude. The Venezuelan government would have a 51 percent stake in any new joint venture that emerges from the study, the PDVSA said.

The Orinoco region has reserves of heavy oil and bitumen, tarry substances which can be used to make synthetic oil. Four heavy-crude upgrading projects in the area currently produce as much as 600,000 barrels a day of synthetic oil. The project is part of a larger plan to document Venezuela’s proven oil reserves, to vastly increase the value of oil to the nation. Venezuela’s proven oil reserves are around 81 billion barrels, but the government believes that some 235 billion barrels of deposits are lying, undocumented, in the Orinoco belt. …

Venezuelan President Hugo Chavez believes that Venezuela has the world’s largest oil reserves, but that the bulk of it has not been proven. Saudi Arabia has now the largest proven oil reserve with 262 billion barrels.
(8 December 2005)