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Energy industries - May 11

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As Gazprom Goes, So Goes Russia

Andrew E. Kramer, New York Times
... Gazprom and the government have long had a close relationship, but the revolving door between them is spinning especially fast this year: Mr. Medvedev, 42, replaces Mr. Putin as president; Mr. Putin becomes prime minister, replacing Viktor A. Zubkov; and Mr. Zubkov is expected to take Mr. Medvedev’s place as Gazprom’s chairman at a general shareholders meeting in June.

Mr. Medvedev and Mr. Putin “are as close to a dream team as Gazprom could ever hope for,” said Jonathan P. Stern, a British energy analyst and author of “The Future of Russian Gas and Gazprom.”

It’s hard to overemphasize Gazprom’s role in the Russian economy. It’s a sprawling company that raked in $91 billion last year; it employs 432,000 people, pays taxes equal to 20 percent of the Russian budget and has subsidiaries in industries as disparate as farming and aviation.

The company is a major supplier of natural gas to Europe, and it is becoming an important source of gas to fast-growing Asian markets like China and South Korea.
(11 May 2008)


Is ExxonMobil's future running dry?

Jim Jubak, MSN
The petroleum giant is shying from risky exploration and spending money on buying back stock. Over the long haul, those moves could lead the company to go private or disappear.
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Are we witnessing the death of ExxonMobil?

Strange question to ask with oil above $120 a barrel and ExxonMobil reporting $11 billion in first-quarter profits?

Not if you understand that ExxonMobil's management has bet the company. If that bet is wrong, over the next 15 years or so, investors will get to watch the gradual disappearance of ExxonMobil.

In one scenario, the company disappears as a public company, going private by 2018 after buying up all its public stock. In another, the company simply liquidates as it distributes its cash to shareholders until there's nothing left.

Far-fetched? Not at all. The warning signs were pasted all over the company's May 1 earnings report.

... What's going on here? If any oil company in the world should be able to find more oil and natural gas, it's ExxonMobil, with its immense reserves of both engineering skills and cash resources.

Well, part of the problem is one that ExxonMobil shares with every other Western oil company: access to new places to drill. In the 1970s, Western oil companies controlled about 70% of all the world's proven and probable reserves. The rest belonged to the national oil companies of oil-producing countries.

Today, though, the positions of the Western and national oil companies are reversed. Now the national oil companies control about 80% of the world's proven and probable reserves, and they're keeping the most promising geologies for themselves.
(9 May 2008)


Mines engineers in pivotal position, Yergin tells grads

Janet Forgrieve, Rocky Mountain News
Energy at nexus of future, author says
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... Souta and the other graduates listened raptly during the ceremony as keynote speaker and honorary Ph.D. recipient Daniel Yergin told them about the great need for their skills at a time when the world energy situation is facing a crisis and more than half the qualified engineers in the field are slated to retire within the next decade.

"There's no question it's a time of high anxiety when it comes to energy," Yergin said. "A week ago when I was working on this speech, oil was $110 a barrel; now it's $126."

... On a proposed "tax holiday" for consumers and the factors driving up oil prices:

I think the calculation is it would save the average consumer $26.50. I think that what has driven this last wave of a surge in prices has been the fall of the dollar, the weakness in the U.S. economy, and a tremendous influx of investors into the energy markets, so I don't see what a tax holiday does. If you figure it out, it would really be a mini- mini-mini-rebate.
(9 May 2008)


Nuclear Fuel Recycling: More Trouble Than It's Worth

Frank N. von Hippel, Scientific American
Plans are afoot to reuse spent reactor fuel in the U.S. But the advantages of the scheme pale in comparison with its dangers
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Key Concepts

  • Spent nuclear fuel contains plutonium, which can be extracted and used in new fuel.

  • To reduce the amount of long-lived radioactive waste, the U.S. Department of Energy has proposed reprocessing spent fuel in this way and then “burning” the plutonium in special reactors.
  • But reprocessing is very expensive. Also, spent fuel emits lethal radiation, whereas separated plutonium can be handled easily. So reprocessing invites the possibility that terrorists might steal plutonium and construct an atom bomb.
  • The author argues against reprocessing and for storing the waste in casks until an underground repository is ready.

-----
Although a dozen years have elapsed since any new nuclear power reactor has come online in the U.S., there are now stirrings of a nuclear renaissance. The incentives are certainly in place: the costs of natural gas and oil have skyrocketed; the public increasingly objects to the greenhouse gas emissions from burning fossil fuels; and the federal government has offered up to $8 billion in subsidies and insurance against delays in licensing (with new laws to streamline the process) and $18.5 billion in loan guarantees. What more could the moribund nuclear power industry possibly want?

Just one thing: a place to ship its used reactor fuel. Indeed, the lack of a disposal site remains a dark cloud hanging over the entire enterprise. ....
(April 2008)
Recommended by Energy Bulletin contributor Julian Darley.


Coal is King: Demand worldwide has prices skyrocketing

Joshua Ball, Medical Leader
ILLIAMSON, W.Va. - With coal prices spiking - and the demand for coal surging in overseas markets - local coal companies are experiencing tremendous growth.

And coal - taken from the mountains of eastern Kentucky and southern West Virginia - is fueling economies worldwide.

The National Mining Association says the value of coal exports grew by 19 percent last year to $4.1 billion. That margin is expected to grow this year.

Employment ads line newspapers across the region. Companies in eastern Kentucky have formed a partnership agreement with Big Sandy Community and Technical College to form the Kentucky Coal Academy, a collaborative effort for workforce development that trains soon-to-be miners and works with local companies to place students in particular jobs. Asimilar program - the West Virginia Coal Academy - exists at Southern West Virginia Community and Technical College’s Logan, W.Va. campus.

Big swings in the prices of coal and other commodities are common. But while the price of coal has slipped slightly in recent weeks, many analysts and companies are wondering whether high prices are here to stay.

As increasing numbers of the world’s poor join the middle classes, hooking up to electricity grids and buying up more manufactured goods, demand for coal grows.

World consumption of coal has grown 30 percent in the past six years, twice as much as any other energy source. About two-thirds of the fuel supplies electricity plants, and just under a third of the fuel supplies industrial users (mostly steel and concrete makers).
(9 May 2008)

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