Other Energy Headlines – 30 September, 2005

September 29, 2005

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Shell Nederland president sees five-fold rise in oil production costs

AFX News, Silicon Investor
Shell Nederland president Rein Willems said that oil production costs may rise five-fold in the near future.

He said that for Shell, the higher costs will mainly be the result of more difficult resource-gathering and refining methods as the company moves to retrieve oil from sources other than the conventional oil wells.

In an interview with Dutch engineering magazine ‘De Ingenieur’, Willems said that the higher production costs will likely lead to a stronger focus on alternative sources of energy as opposed to raw fossile fuels such as oil.

But he reiterated that Royal Dutch Shell itself is not investigating alternative energy sources because oil reserves are supposedly running out.

Stating that ‘there is enough oil to last a hundred years’, Willems added that Shell is more worried about the effect of greenhouse gas emissions.
(22 September 2005)
It seems a bit of an obvious contradiction that even as the company comes up against the end of cheap oil they can simultaneously make claims about an almost endless supply of oil, claims far in excess of even any overly ‘optimistic’ official projections. -AF

A quick look at natural gas

Jean-Yves, Oil Stories
Oil is not the only thing in the world’s energy market. In fact, natural gas provides 24% of the US total energy consumption. You hear about oil every day in the news, but not about natural gas. They should talk about it, as it is almost as important as oil. As you can see in the graph above, (source: www.wtrg.com/daily/gasprice.html ) The natural gas prices are skyrocketing even more than oil, coming from 4.50$ to over 12$ in a single year. That is a 266% increase in one single year.

Yet, it accounts for more than 90 percent of new electricity capacity built in last 5 years in the US. 57% of the US households are heated by natural gas. It provides the energy source or raw material to make a wide range of products, such as plastics , steel, glass, synthetic fabrics, fertilizer, aspirin, automobiles and processed food. Nearly all the commercial and industrial fertilizers and pesticides are made from natural gas.

Prediction: Natural gas prices will reach 20$ during winter of 2005. This will spark high heating prices for worldwide households. This will increase the trading activities during the rest of 2006. More headlines will be on natural gas during 2006 than right now, I can guarantee that.
(25 September 2005)

US panel backs offshore gas drilling

David Whitney, Sacramento Bee
Two areas off California’s coast could be exploited quickly if the bill passes.
WASHINGTON – A House committee voted Wednesday to end long-standing moratoriums that have prevented opening new areas off the coast of California and other states to natural gas development.

If enacted into law, the provision could immediately open for development the Eel River basin in Northern California and the smaller Pitas Point gas field in the Santa Barbara Channel.

The federal Minerals Management Service estimates that there is some 2 trillion cubic feet of natural gas in those deposits, mostly in the Eel River area.

But the bulk of natural gas reserves off the California coast, estimated at some 17 trillion cubic feet, are in areas where they coexist with oil deposits, and therefore could not be touched unless the state were to specifically agree to incentives in the bill and open those federal waters to oil drilling.
(29 September 2005)

Welcome to Gastoria!
LNG terminals not popular

Nick Budnick, Willamette Week Onlne
How the economic boon promised by liquefied natural gas would bring mega-tankers, terror alerts and environmental threats to the Columbia River.
One recent evening in a small concrete building in Astoria, 10 people-many sporting Birkenstocks and munching on apples and chocolate cookies-sat watching Mel Gibson as Mad Max in The Road Warrior. The film, a cult favorite for its graphic violence, might seem a strange one for granola types to watch. But the larger message of the movie, the apocalyptic scenes of a world that has run out of oil, had the group transfixed.

“Without fuel, they were nothing,” the narrator intoned in a somber introduction. “They’d built a house of straw … Machines sputtered and stopped. Their world crumbled.”

“It’s a stupid movie,” observed Tom Duncan, a family doctor who organized the viewing. But the symbolism of a society gone mad in pursuit of dwindling petrol supplies is, Duncan believes, a message that has significance today in Oregon’s northwest corner.

The trim, gray-haired Duncan does not fancy himself a hunky hero à la Mad Max. But he does believe his group is battling the overwhelming forces of the global energy industry, forces he says threaten to turn Astoria-a sleepy coastal community that has seen a recent rebirth in both its tourist trade and its sardine business-into an industrial zone and a terrorist target.

Specifically, four separate companies want to build terminals on the Columbia River-two further upriver, and two just downriver of Astoria. Each would cover 50 to 75 acres-more than 40 football fields-and sprout storage tanks as high as a 17-story building, to receive imported liquefied natural gas, also known as LNG.

…The irony to all this is that despite all the hubbub over LNG terminals, we may not need them, says Robert McCullough, a Portland energy economist and former PGE executive who has been heavily involved in a number of high-profile energy fights.

The natural-gas markets project the new high prices to last through 2010, which in his view means investments in new gas-fired power plants can be expected to cease. That’s because photovoltaic cells have suddenly become economical in some parts of the country-i.e., without Portland’s rain-and in the others the new generation of “clean coal”-fired plants will be far cheaper to run. Thus, he says, any LNG terminal built in Oregon may wind up being a “white elephant.”

If he’s right, it would be like The Road Warrior-in what Duncan says is his favorite part. In the end, the tanker truck Mel Gibson and everyone have been fighting over turns out to be full of sand. In other words, instead of squabbling over a prize of dubious value, Duncan says we should be focusing on renewables and energy efficiency-not replacing one fossil-fuel habit with another. “The only solution,” he says, “is to become less addicted.”
(28 September 2005)
Outstanding in-depth article about an issue which will be playing out in many places throughout the world, as the lure of LNG terminals becomes more compelling. -BA

Texas tea from a Russian Sea

James Brooke, NY Times
YUZHNO-SAKHALINSK, Russia – Just north of Japan and across the Pacific from California, a long-forbidden Siberian island is about to join the global energy map.

On Oct. 1, three decades after vast pools of oil and gas were discovered off the lonely shores of this former Soviet-era prison colony, a consortium led by Exxon Mobil is to start pumping up to 250,000 barrels of oil a day, its first oil and gas from seven wells drilled deep in the Sea of Okhotsk.

That will be the start of major production from Sakhalin’s offshore reserves, a rich energy island province that some geologists call, with a bit of swagger, this decade’s Alaska North Slope. Noting the string of ministers flying here from Moscow in September to inspect the newest riches in oil, Galina N. Pavlova, Sakhalin’s top energy official, boasted: “They believe Sakhalin is the second Kuwait.” (28 September 2005)

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