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Special report: How BP’s oil spill costs could double
Tom Bergin, Reuters
Last month, BP increased by $8 billion the financial provisions it was taking for the Gulf of Mexico oil spill; the company’s shares rose. Better-than- expected underlying profits and upbeat comments from new Chief Executive Bob Dudley were taken by the market as a sign the company had turned the corner and would soon return to pumping out steadily rising dividends.
Key to this sanguine outlook is confidence that the new estimate of the total cost of the spill — $40 billion — will be sufficient. …
That optimistic view may turn out to be true. BP executives have said this is their “best estimate” of costs, adding they could turn out lower. But history shows there is ample scope for nasty surprises from BP. The London-based oil giant — last year it was the biggest non-state controlled oil and gas producer in the world — has so far consistently underestimated the scope and potential cost of the Gulf spill. It also has a track record of low-balling disasters, including the fatal Texas City refinery blast in 2005. Not only has the company underestimated the cost of repairing equipment and ecosystems in the past, it has also made overly optimistic assumptions about legal challenges.
That may be happening again.
CEO Dudley, an American who took over from Briton Tony Hayward in October, has said a $20 billion fund BP created to compensate victims of the spill should cover all damages claims. The lawyers who are suing BP don’t think so.
(1 December 2010)
A Scramble for the Arctic
Chris Arsenault, Al-Jazeera-English
With one fifth of the world’s oil and gas at stake, countries are struggling to control the once-frozen arctic.
… as the planet warms, as northern sea lanes become accessible to shippers, as companies hungrily eye vast petroleum and mineral deposits below its melting ice, a quiet, almost polite, scramble for control is transpiring in the Arctic.
“Countries are setting the chess pieces on the board. There are tremendous resources at stake,” said Rob Huebert, director of the Centre for Military and Strategic Studies at the University of Calgary.
The frozen zone could hold 22 per cent of the world’s undiscovered conventional oil and natural gas resources, according to the US energy information administration.
Canada, the US, Russia, Norway and Denmark have competing claims to the Arctic, a region about the size of Africa, comprising some six per cent of the Earth’s surface.
… But polite conventions did not stop Russia from planting a flag more than 4,000 metres below sea level under the North Pole in 2007, in a flash-back to past imagery of colonial control.
“This isn’t the 15th century. You can’t go around the world and just plant flags and say ‘We’re claiming this territory’,” Peter MacKay, Canada’s foreign minister, said at the time.
But Canada, which prides itself on being the “great white north,” is also seen as an aggressor by many analysts. The country plans to build at least five navy patrol boats to guard potential shipping lanes in the Northwest Passage, along with new Arctic military bases and a deep water port on Baffin Island.
“Russia and Canada are the only two Arctic states who have ramped up the rhetoric on the military front,” said Wilfred Graves, a researcher at the University of Toronto.
Much of Russia’s military capacity, especially naval power, rusted away with the collapse of the Soviet Union, while Canada – protected by the US defence umbrella – lacks powerful military hardware.
Like small dogs with more bark than bite, or the impotent Hemmingway character sleeping beside a rifle, Canada and Russia are likely upping the rhetoric due to an inability to seriously project hard power.
(1 December 2010)
Leaked cables reveal Saudi minister of petroleum helped craft toothless Copenhagen climate accord
Christopher Mims, Grist
… buried in these cables [just released by Wikileaks] are tantalizing clues about the back-door negotiations that surrounded last year’s Copenhagen climate conference. …
1. Nobody f*#ks with the Saudis
It’s not clear if the following is an actual secret or an open secret, but here goes: A cable dated Jan. 26, 2010, records Assistant Secretary of State Jeffrey D. Feltman, of the Bureau of Near Eastern Affairs, saying that Saudi Arabia’s minister of petroleum, Ali bin Ibrahim Al-Naimi, “was involved in crafting the final agreement” of the Copenhagen Accord.
The cable goes on to note that because Al-Naimi participated in the drafting process, Feltman and the U.S. were “counting on Saudi Arabia to associate itself with the accord by January 31.” That didn’t happen, even though Saudi Arabia’s lead negotiator later declared himself “satisfied” with the Copenhagen accord.
2. Saudi Arabia has the most to lose from any binding emissions targets, and will never sign on to them
The Saudis believe greenhouse-gas regulation is one of the greatest threats to their economic future, right up there with a nuclear Iran and internal political instability.
A second secret cable from ambassador to Saudi Arabia James Smith to Secretary of State Hillary Clinton, dated Feb. 11, 2010, lays it out: …
(1 December 2010)
The Truth About the Risks to Freshwater Aquifers Posed by Underground Carbon Sequestration
Mike Orcutt, Scientific American
Rather than raising alarm, new study results could help pave the way toward better methods for monitoring geologic carbon sequestration areas and detecting CO2 leaks
It could take decades, at least, to replace cheap, abundant fossil fuels with low-carbon energy sources. In the meantime, many scientists and government officials around the world think the next best option for keeping Earth’s rising levels of atmospheric carbon dioxide (CO2) in check is to prevent the gas from escaping in the first place. This can be done by using a chemical solvent to separate it from the emitted byproducts of power plants and other high-polluting facilities like aluminum manufacturing plants and then burying (technically injecting) it deep underground—a process known as carbon capture and sequestration (CCS). Ideal storage areas include depleted oil and gas reservoirs, unmineable coal seams or deep saline formations, because they are all under sufficient pressure to force the greenhouse gas to stay put and are made of porous rock that can soak up CO2 like a sponge.
The Department of Energy estimates that deep saline formations in the U.S. could hold up to 12,000 gigatons of CO2, meaning they are a viable long-term solution because human activities currently emit around 33 gigatons of CO2 per year. Although burying billions of tons of CO2 underground may sound like a daunting, perhaps even dangerous task, engineers have a pretty good idea how to do it, and scientists have reason to think it can work safely on a large scale. The oil and gas industry began injecting various fluids underground in the 1930s; since that time, researchers have been working to understand the effects of the process on the geochemistry of storage sites and the risks it may pose to human safety. A handful of CO2 storage sites, including a Norwegian project beneath the North Sea initiated in 1996, are already active around the world, showing that the concept, on a small scale, can work.
One potential risk that has garnered a lot of research attention is that of an inadvertent leak—especially a hypothetical case in which CO2 seeps into drinkable groundwater supplies. This was the focus of a study published online November 11 in the journal Environmental Science & Technology.
… Even though these results may seem like cause for alarm, the truth is they aren’t surprising, says Julio Friedmann, the leader of the Carbon Management Program at Lawrence Livermore National Laboratory and an expert on CCS. “If CO2 gets into shallow freshwater aquifers, small amounts of trace metals will be freed from the rock volume,” he says. “This is something we’ve understood.” How a CO2 leak might affect drinkable groundwater was “one of the first questions the community asked 15 years ago,” he adds. “It’s the place where we have put most of our experimental emphasis.”
(29 November 2010)
EB contributor RD writes:
“Many may not be aware of potential problems from deep injection of CO2.
Although the energy required to carry out such CO2 sequestration operations will probably prohibit widespread application, the geo-chemical interactions and byproducts of such schemes are not simple and neutral.”