Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
OPEC to Lift Oil Output Modestly
Jad Mouawad, New York Times
OPEC sought to regain its authority over volatile oil markets Tuesday, agreeing to increase production by 500,000 barrels a day. But prices still rose to a record.
At the same time, representatives of leading OPEC nations said they feared that a slowing global economy might limit future demand. The oil cartel signaled that it would be ready to act swiftly to protect its members’ interests.
The decision by the Organization of the Petroleum Exporting Countries, which came as a surprise to many, followed an unusually long day of arguments about the size and timing of a production increase, intended to meet an expected surge in winter consumption and to push prices down.
While the rise in crude oil supplies would be modest, about 2 percent, OPEC nations including Iran, Venezuela and Algeria had initially expressed strong opposition to an increase in production. Others feared that a mistimed decision to add oil to the market might backfire at a time of heightened economic concern.
As Vera de Ladoucette of Cambridge Energy Research Associates, saw it: “The Saudis convinced other OPEC countries that $80 a barrel was a ceiling. They were really worried about contributing to the world economic crisis. They acted prudently.”
(12 September 2007)
What’s Behind OPEC’s Production Hike?
Stanley Reed, Business Week
Recent shifts in the oil market have driven the Saudis to want to cool things with a 500,000 barrel a day increase. So far, it hasn’t worked
—
Until just before the Sept. 11 OPEC meeting in Vienna, just about every prognosticator, including the OPEC chiefs themselves, tended to rule out any increase in oil production. So why did OPEC announce a 500,000 barrel a day increase beginning Nov. 1?
The answer, analysts say, is that a recent, dramatic shift in the dynamics of the oil market alarmed Saudi Arabia, OPEC’s de facto leader. At the same time, the Saudis recognized that credit jitters were threatening the economies of their customers. So they persuaded their colleagues to at least make a gesture to try to cool things down.
So far, it hasn’t worked. On Sept. 12, U.S. light crude for October delivery briefly pushed above $80 a barrel, before closing at a record high of $79.91. Shares in oil majors such as Exxon Mobil (XOM), Chevron (CVX), and Total (TOT) traded slightly up on Sept. 12.
Contrary to what many people may believe, the Saudis think about a lot more than just keeping current prices high. They have a huge chunk of the world’s oil reserves and want to encourage their customers to keep up their oil habit for decades more.
(12 September 2007)
Beware the new world energy order
Claudia Cattaneo, Financial Post
CALGARY – With crude oil prices strengthening and demand for oil continuing to rise, you’d expect three of the most powerful men in the global business to be thrilled with their good fortune.
Instead, Rex Tillerson, chairman and CEO of Exxon Mobil Corp., Jeroen van der Veer, chief executive of Royal Dutch Shell PLC, and Thierry Desmarest, chairman of Total S.A. — brought together likely for the first time last Friday by Alberta utility magnate Ron Southern to address his Spruce Meadows Round Table — are anxious about whether there’s even a future for their business.
As Mr. van der Veer put it: “We got very serious problems.”
Around the world, the rules of the game are changing and their business models become ineffective.
Meanwhile, the solutions are unclear.
Along with facing pressure in the developed world over climate change, from consumers outraged with high gasoline prices, from their respective governments for excessive profits, they’re watching their investments evaporate as scores of host countries rip up deals, nationalize resources and seize the power of oil to exert political influence.
(11 September 2007)
Oil giant agrees to fight greenhouse gases
Tim Reiterman, Los Angeles Times
In a settlement with California, ConocoPhillips must spend $10 million on mitigation measures to offset emissions from a proposed expansion of its East Bay refinery.
—
Taking a new tack on his statewide campaign against global warming, California Atty. Gen. Jerry Brown announced a settlement Tuesday that requires ConocoPhillips to spend $10 million to offset greenhouse gases created by a proposed $600 million expansion of its East Bay refinery.
Brown told a news conference that the accord is believed to be the first time an oil refinery in the country has agreed to mitigate increased carbon emissions from an expansion project.
To compensate for an initial emissions increase of 500,000 metric tons of carbon dioxide annually at its Rodeo facility, the oil giant agreed to fund a $7 million offset program under the Bay Area Air Quality Management District, a $200,000 restoration of the San Pablo wetlands and a $2.8 million reforestation effort that is projected to sequester 1.5 million metric tons of greenhouse gases.
In addition, ConocoPhillips agreed to identify all greenhouse gas emissions sources and reduction opportunities at its California refineries, identify energy savings measures for its Rodeo refinery and surrender a permit for a petroleum coke purification plant at its Santa Maria facility, which emitted 70,000 metric tons of greenhouse gases annually until it was shut down earlier this year.
(11 September 2007)
Climate-change paradox: Greenhouse gas is Big Oil boon
Mark Clayton, The Christian Science Monitor
Snyder, Texas – Gazing across a rejuvenated old West Texas oil field, Larry Adams sings the praises of carbon dioxide.
That might seem odd. The gas is linked to global warming, which has prompted calls from governments and environmentalists alike to reduce oil use. But here at the SACROC field in America’s fading oil belt, CO2 is providing the boost the industry needs.
By pumping the greenhouse gas deep underground, oil companies are squeezing out more oil and providing new life to fields that have been declining for decades. But if the companies can capture the carbon dioxide that other industries produce, then the greenhouse gas may become cheap and plentiful enough to be a boon to Big Oil.
“This process of using CO2 for enhanced oil recovery is just a niche today, but if other man-made sources became available, it could become a boom,” says Mr. Adams, CO2 engineering manager for Kinder Morgan, the nation’s largest transporter of CO2 for enhanced oil recovery or EOR.
…Others, however, are skeptical.
For one thing, the infrastructure is a major undertaking. To provide enough carbon dioxide to meet EOR demands, the oil industry would have to capture and pipe as much CO2 (in liquid form) in a day as Americans consume in oil in a 24-hour period.
For another, the plan does little to discourage the use of fossil fuels.
“If you use CO2 to squeeze oil out of the ground, and then you burn that oil, it releases at least as much CO2 as was pumped into the ground,” says Joseph Romm, a senior fellow at the Center for American Progress. “You’re not really helping the planet any.”
(11 September 2007)
For oil companies, the good old (bad old) days are over
Eric Reguly, Globe & Mail
ROME — It used to be so easy. A North American or European energy company eager to ramp up foreign production would traipse into a bankrupt, yet oil-rich, country – anywhere in North or West Africa would do – make nice with the local strongmen, promise jobs, technology and export sales, and walk away with oil and gas concessions that made shareholders weep with joy. Reserves and production went up, costs were relatively low, and environmental regulations were the very palest shade of green.
Those were the good old days. Now look at what’s happening. Economic nationalism is on the rise. Poor countries that once begged foreign oil companies to develop resources buried in deserts and jungles are now kicking these same companies out. Development, revenue and tax laws are being furiously rewritten to favour domestic interests.
It’s happening everywhere and, if it keeps up, your favourite oil company will have an increasingly tough time replacing waning reserves and production.
(7 September 2007)
Big Oil Firms Talk Up Carbon Capture, But Do Little
Jane Merriman, Reuters
ABERDEEN, Scotland – Major international oil companies say carbon capture and storage is a way to curb carbon dioxide emissions while continuing to burn fossil fuels, but their critics say few are actually investing.
Carbon dioxide is the commonest of several manmade greenhouse gases widely blamed by scientists for heating the earth and so risking more extreme weather and sea level rise.
But these harmful emissions could be reduced if the carbon can be captured and stored, in depleted oilfields or saline aquifers, for example.
“Without CCS (carbon capture and storage), fossil fuel use would have to be cut by more than half,” said Malcolm Brinded, executive director of exploration and production at Royal Dutch Shell. Commercialising the technology to capture and store carbon dioxide was a major priority, said Brinded, who was speaking at the OffshoreEurope industry conference this week.
But he said while carbon capture was not impossible, it would not be easy or cheap.
Environmental campaigners say the oil companies need to act on carbon storage, but have done little so far.
“New investments coming forward in this is pathetic,” said Jonathon Porritt, who heads green lobby group Forum for the Future.
(6 September 2007)
