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Tapis, World’s Most Expensive Oil, May Keep Gains Against Brent

Christian Schmollinger, Bloomberg
Malaysia’s Tapis, the most expensive crude oil benchmark in the world, may widen its premium to Brent and West Texas Intermediate because of demand for low-sulfur grades to produce diesel and gasoline in Asia.

Tapis has averaged $5.76 a barrel more than Brent this year, compared with $3.54 in all of 2006. The spread may stay near that level through next year, Commonwealth Bank of Australia analysts Tobin Gorey and David Moore said in a June 14 report.

Demand for Tapis and other low-sulfur, or sweet grades, has increased as countries including Indonesia, Thailand and Vietnam lowered the amount of the pollutant allowed in motor fuels. Tapis is produced off the east coast of Peninsular Malaysia by Exxon Mobil Corp. and Malaysia’s state oil company, Petroliam Nasional Bhd.

“Until the refining capacity catches up with the products demanded, that puts a premium on the easier-to-refine grades of crude,” Gorey said in a telephone interview today. “This will be with us easily until 2008.”
(26 June 2007)
Contributor David Bell writes:
Its good to see discussion in the wider press of the pricing of Tapis and its role in the Asia Pacific as the Benchmark crude.

World’s first coal-to-oil mass converter due to start operation this year

China Peoples Daily
Towering above the sweeping grasslands of Erdos, in north China’s Inner Mongolia Autonomous Region, two 60-meter-high cylindrical structures stand out against the skyline.

The structures — reactors for liquefying coal — are part of a project to mass produce desperately needed fuel oils from China’s rich coal resources. More than 10,000 workers from across China are constructing the massive project, the first industrial facility in Ejin Horo Banner.

“The project is in its final stage of construction and will start production late in the year,” said Wang Yulong, deputy manager in charge of the coal liquefying arm of the Liquefied Coal Oil Company of Shenhua Group Corporation Limited, the country’s top coal producer.

Coal liquefaction is a process that converts coal from a solid state into liquid fuels, usually to provide substitutes for petroleum products. Coal liquefaction processes were first developed in the early years of the 20th century but progress was hindered by the relatively low price and wide availability of crude oil and natural gas.

The facility in Erdos will produce mostly diesel oil, plus liquefied petroleum gas (LPG), naphtha (a volatile, flammable liquid hydrocarbon mixture), and hydroxybenzene.

On completion, it will be the largest facility in the world producing liquids from coal using a technology known as direct gasification. …

“The efficiency of conventional coal use is very low, but the profits from coal-oils can be much higher,” said an expert surnamed Wu. “This takes away the need to process grain such as maize into ethanol.” ..
(22 Jun 2007)

South Korea says finds gas hydrate offshore

SEOUL – South Korea has found gas hydrates in the East Sea for the first time, and aims to begin production by 2015 to meet the country’s growing energy needs, Seoul’s energy ministry said on Sunday.

The findings are encouraging for energy-poor South Korea, which aims to cut its dependency on foreign fuel sources to the single digits by the 2010s.
The hydrates found in the East Sea consist of 99 percent methane, the ministry said.
Gas hydrates are solid ice-like crystals formed from a mixture of methane and water and exist under specific temperature and pressure conditions. Formations exist under hundreds of metres of water, and closer to the surface in permafrost areas of the Arctic.

South Korea’s energy ministry said it will invest 43.4 billion won ($46.78 million) this year for overall research and development of the area and plans to start drilling in September of this year.
Countries that have found gas hydrate reserves include the United States, Japan, India and China.
(24 Jun 2007)

Shell shelves oil-shale

Nancy Lofholm, Denver Post
The front-runner energy company in the effort to unlock oil shale in northwest Colorado has slowed down its research by withdrawing an application for a state mining permit.

Shell spokeswoman Jill Davis said the withdrawal of a permit on one of its three oil-shale research and demonstration leases was done for economic reasons: Costs for building an underground wall of frozen water to contain melted shale have “significantly escalated.” ..

Shell is one of three companies awarded federal leases in Colorado to test new methods of extracting oil from shale rock by heating the rock underground rather than by mining it and cooking it above ground.

Shell’s method involves heating shale over a period of years and encircling it in a wall of frozen water to prevent groundwater contamination.

Shell has been researching heating methods on its property in the Piceance Basin for several years and is now in the process of freezing a test wall. Research on that wall will continue. Davis said the freeze-wall test should be completed by 2009 or 2010.
(16 Jun 2007)

Argentina maintains natural gas supply cuts to industry

Reuters via The China Post
Argentina’s three largest natural gas distributors maintained supply cuts to industry and service stations for a second day on Saturday due to a spike in demand from homes in cold weather.

President Nestor Kirchner’s government has asked the distributors — covering half the country’s population — to ration supplies to factories to guarantee normal service to homes as temperatures dropped to freezing during the southern hemisphere’s late autumn. ..

Dozens of taxi drivers protested on Friday in downtown Buenos Aires because they couldn’t get compressed natural gas from service stations.
Industrial demand was expected to be low on Monday, a national holiday in Argentina. Steelmakers, electricity generators and other big natural gas consumers in both Argentina and Chile generally switch to diesel, coal and fuel oil when they can’t get natural gas.
(18 June 2007)
Cold snap also causing load shedding inAustralia. -LJ

GAO: Plans for Addressing Most Buried Transuranic Wastes Are Not Final and Preliminary Cost Estimates Will Likely Increase
Government Accountability Office

Cleanup agreements with federal and state agencies require DOE to investigate and clean up the five major DOE sites where transuranic and other hazardous wastes were buried. While DOE has long considered pre-1970s buried wastes permanently disposed, in 1989, the sites where most of these wastes are buried were listed as “Superfund” sites subject to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). CERCLA requires that DOE determine the nature and extent of contamination at each waste site and determine what cleanup action, if any, is needed to protect human health and the environment. All five disposal sites are scheduled to have cleanup completed by 2025.

DOE is addressing the transuranic wastes buried at two sites, but it is still investigating cleanup options at the other three locations. At Oak Ridge and Savannah River, DOE is leaving the transuranic wastes in place under an earthen cap designed to prevent the wastes from migrating and taking steps to prevent animal and human access to the sites. In contrast, DOE is still investigating cleanup options at the Idaho National Laboratory, the Hanford Site, and the Los Alamos National Laboratory–where about 90 percent of DOE’s transuranic wastes are buried. DOE has begun to remove a small amount of waste at the Idaho and Hanford sites, but how much buried transuranic wastes eventually will be removed or treated in place at these sites is currently undetermined.

DOE’s preliminary estimate of the cost to address the five waste sites where transuranic wastes are buried is about $1.6 billion in 2006 dollars, but the estimate is likely to increase for several reasons. For example, the estimates reflect the costs of leaving most waste under earthen barriers-typically the least expensive approach. If DOE is required to retrieve substantial portions of these wastes, costs would increase dramatically. In addition, the estimates exclude unknown costs, such as the cost of disposing wastes off-site, if necessary. For example, DOE’s lifecycle cost estimate to remove transuranic wastes buried near the Columbia River at the Hanford site could triple once options and costs for disposal are fully evaluated. As DOE further evaluates the risks, benefits, and costs of cleanup options, its policies require it to improve the reliability of cost estimates. Thus, GAO is not making recommendations at this time.
(June 2007)