Drumbeat: December 6, 2009

Shale Storm: How an energy revolution in the United States is battering natural gas prices and squeezing Albertans

Pleskie’s troubles stem from a dramatic slowdown in Alberta’s natural gas business, driven largely by an emerging new resource: shale gas.

This “shale gale,” as renowned oilpatch author Daniel Yergin has termed it, is relentlessly moving across North America, driven by technology that has unlocked major stores of the fuel.

And every Albertan, whether they know it or not, is caught in a downdraft, from out-of-work rig hands and rural hotel operators to white-collar executives in downtown office towers and ailing patients lined up in hospital emergency wards.

The natural gas industry — long the bedrock of Alberta’s economy — faces major threats amid a fundamental shift south of the border.

Oil ministers are happy just to go with the flow

To hear the Saudi oil minister tell it, the oil patch is coming up roses. So why am I doubtful?

Thorns are a hazard of rose gardens. But my thumbs are pricking insistently and a show of solidarity among Arab oil producers last Saturday seemed overdone.

US-EU benchmarks threatened by energy price policy switch Gulf region

The historic position held by the West Texas Price Benchmark of Arab crude oil exports seems to be eroding quickly. Saudi Aramco, the largest oil company in the world, and Kuwait have indicated that they are considering to drop its long-standing US pricing benchmark. Aramco has, after years of being frustrated by the price it is receiving for its crude, has ditched already the WTI benchmark last October. Saudi Arabia is not happy with the current pricing schemes, which are not taking into account the fact that the country holds the largest crude oil reserves in the world. Kuwait’s state owned oil company Kuwait Petroleum Corporation has now also indicated to be following the same line of Aramco. KPC has indicated that it could be switching to a less volatile benchmark than WTI to make its oil revenues more predictable. Discussions already have been held with Argus oil pricing group officials at the end of last month.

‘Resources are needed so prices won’t fall far’

His view is largely based on the replacement cost argument, which is easiest to make for oil. There are huge discoveries being made offshore Brazil, but each well costs $250m (£150m, €166m) to develop, says Mr Lockwood. “So even before you get a drop of oil you are committed to spending $250m.

“So far they’ve been successful, but if you go off the west coast of Africa, you’ve had a lot of wells costing $100m that have been dry. And the cost of new mines has risen hugely. So we’re never going to go back to the [price] levels five or six years ago because we just couldn’t produce it.”

Hard times take a toll on Mexico City’s subway

MEXICO CITY — The subway here is a real deal, the cheapest in the world, at 15 cents a ride. But those days could soon be over as the city government plans to increase fares by 50 percent — to 3 pesos, or about 23 cents a ticket.

Why the Copenhagen climate talks matter

They won’t likely deliver a new global treaty on global warming, but the decisions made here may still change our lives.

Nature tourism doesn’t always help

People travel to exotic and pristine locations for all sorts of reasons. Besides adventure and relaxation, there is some comfort in thinking that your tourist dollars help protect the natural beauty you go to visit. But it doesn’t always work that way.

A new study in Uganda found that people who spent more money to see gorillas in Bwindi Impenetrable National Park didn’t necessarily help the local community more. Instead, backpacking on the cheap — but for longer stretches of time — might do more overall good.

Chinese pay toxic price for a green world

At this time of year the lake bed freezes into waves of solid mud. In summer, locals say, it oozes a viscous, red liquid. It is a “tailing lake”, where toxic rare earth elements from a mine 100 miles away are stored for further processing.

Seepage from the lake has poisoned the surrounding farmland. “The crops stopped growing after being watered in these fields,” said Wang Cun Gang, a farmer. The local council paid villagers compensation for loss of income. “They tested our water and concluded that neither people nor animals should drink it, nor is it usable for irrigation.”

This is the price Chinese peasants are paying for the low carbon future. Rare earths, a class of metallic elements that are highly reactive, are essential for the next generation of “green” technologies. The battery in a Toyota Prius car contains more than 22lb of lanthanum. Low-energy lightbulbs need terbium. The permanent magnets used in a 3 megawatt wind turbine use 2 tons of neodymium and other rare earths.

Int’l oil investment shrinks 20% amid financial crisis: OAPEC

CAIRO (Xinhua) — Oil ministers of the Organization of Arab Petroleum Exporting Countries (OAPEC) said Saturday that international investment in petroleum has shrank 20 percent due to the global financial crisis.

They made the remarks at the 83rd OAPEC ministerial meeting, during which a chorus of satisfaction over the current oil prices and production quota, set one year ago by Organization of Petroleum Exporting Countries (OPEC) in Oran, Algeria, was heard.

“The international companies have reduced their investments by 20 percent in 2009, compared to 2008, especially in the area of research and exploration,” said Egyptian Minister of Petroleum Sameh Fahmi.

Saudi Cuts Europe January Oil Prices; U.S. Marker New

(Bloomberg) — Saudi Aramco, the world’s largest state-owned oil company, lowered its official selling prices for all crude grades for customers in Northwestern Europe and the Mediterranean for January. Asian price changes were mixed and a new benchmark was used for U.S. customers.

The company cut the price of its Arab Extra Light Crude the most, for European buyers, widening the discount versus the Brent benchmark to $1.65 a barrel in January from a discount of $1.05 in December, Dhahran-based Aramco said in an e-mailed statement on Dec. 5. The Brent price is the weighted average crude benchmark posted by Intercontinental Exchange.

Small producers find new energy

Chris Holden is betting this will be a big year for Canada’s small oil and gas producers.

The co-portfolio manager of Investors Group’s Canadian Natural Resources fund and Global Natural Resource Class fund believes smaller domestic energy firms are attractive because the price of oil and natural gas will remain high as demand from the developing world continues unabated.

When it comes to oil, the logic is inescapable.

“Two years ago if you had said, `There will be $100 (U.S.) oil and there will be problems filling supply,’ it would have been a tough argument to sell,” says Holden.

‘Extensive’ ice plugs found in leaky BP line

ANCHORAGE, Alaska (Reuters) – The pipeline that leaked oily material onto the tundra at BP Plc’s Lisburne oil field in Alaska was filled with extensive ice plugs, including one about 1,500 feet (457 metres) long, state officials said on Saturday.

Total, Exxon Mobil most fined polluters in Texas

DALLAS — In one industrial accident alone, Total Petrochemical’s sprawling oil refinery in southeast Texas sprayed tons of sulfuric acid and carbon monoxide into the sky.

The French company’s 62-year-old facility also has released toxins such as cancer-causing benzene, regularly surpassed allowable pollution limits, failed to report dozens of emissions — or to even fully identify what or how much was released.

British Gas aims to become top insurance provider

First it was gas, and then electricity. Now British Gas is gearing up to become one of the UK’s top 10 insurance companies and the provider of choice to its 4.5m customers.

Texas Refinery Boiler Failure Kills 1, Injures 2

TEXAS CITY, Texas (Reuters) – Workers at a Texas refinery were trying to restart a giant industrial boiler when a catastrophic failure killed one worker and injured two others late on Friday, a company spokesman said on Saturday.

Ghana: Oil And Gas Driven Industrialization

The Government of Ghana announced in its 2010 Budget and Policy Statement the plan to develop an Oil and Gas Industrialization Plan as a sustainable model of managing her petroleum resources. The oil and gas driven industrialization is expected to make Ghana’s oil a blessing. For this reason, the government plans to use oil and gas resources to boost the manufacturing and agricultural sectors, through economic diversification, create jobs and promote private sector development.

Water, the new green worry

“The tragedy of water is that for too long we have taken it for granted,” said Piet Klop, head of capital markets at the World Resources Institute, a Washington DC think tank.

“People ask me if water is the next oil. If only it were. At least then if would have a price that reflects its true value. There is no way out of this pickle unless we put a real price on water. The business world is just starting to wake up to this.”

National Grid fears ‘smart metering’ being rushed

British consumers could end up spending billions of pounds on redundant smart metering technology if the introduction of the energy saving devices to all 26 million homes in the country is rushed through too quickly, the chief executive of National Grid said.

Bloomberg Drops an Effort to Cut Building Energy Use

After intense opposition from building owners, Mayor Michael R. Bloomberg has dropped the most far-reaching initiative of his plan for reducing greenhouse gas emissions.

The plan, which the owners said was too costly, called for all buildings of 50,000 square feet or more to undergo audits to determine which renovations would make them more energy efficient, and for owners to then pay for many of those changes.

Alternative energy enthusiast confident

Tim Guinness, veteran energy fund manager, is the first to admit launching a fund at the end of 2007 was not the best timing. Six months into the credit crisis investors were thinking more about piling out of stock markets than investing in alternative energy.

The Guinness Alternative Energy fund was down 67 per cent in 2008 compared to a 70 per cent fall in the Wilderhill Clean Energy Index. This year it has gained 30 per cent, while the index has moved up just 18 per cent.

Renewables to supply one-third China’s energy by 2050

BEIJING (Reuters) – China’s renewable energy strategy through 2050 envisions renewable energy making up one-third of its energy consumption by then, the China Daily said, as the upcoming Copenhagen conference on climate change highlights the world’s dependence on fossil fuels.

Coal-dependent China, the world’s biggest greenhouse gas emitter, last month said it would cut the amount of carbon dioxide produced for each yuan of national income by 40-45 percent by 2020, compared to 2005 levels.

Ethanol, biodiesel linked to water pollution

Growing U.S. production of biofuels such as ethanol and biodiesel could increase water pollution, a government report warned this week.

Ethanol refineries discharge chemicals and salts that can contaminate drinking water and endanger fish and other aquatic life, according to a Government Accountability Office report released Monday.

Flying the flag for non-carbon energy

Some of the most innovative ideas hail from the developing world. Here they recognise that energy independence will offer environmental and economic benefits. Some use sugarcane, others prefer steam. But all are making a difference right now.

Ingenuity got us here; it will get us there; ‘Transitions’ champions human continuities as ‘peak oil’ answer

What’s not to like about a proposition that expects the same ingenuity that created our hydrocarbon world will create its replacement?

“We demonstrated phenomenal levels of ingenuity and intelligence as we raced up the energy curve over the last 150 years, and there’s no reason why we can’t use those qualities, and more, as we negotiate our way down from the peak of the energy mountain,” the Transition Initiatives Primer reads.

“If we plan and act early enough, and use our creativity and cooperation to unleash the genius within our local communities, then we can build a future that could be far more fulfilling and enriching, more connected and . . . gentle on the earth than the lifestyles we have today.”

Seeking Profits at a Nonprofit

Zeus Energy Movement is a charity established last year by four engineers in Texas to develop devices to harness various forms of alternative energy, like a gadget that turns the energy from ocean waves into electricity.

Dennis J. Gray, one of the founders, said the group decided to establish itself as a nonprofit organization because it had trouble attracting federal grant money to support research and development.

“We’ve got no revenues, we’re poor, and we’re trying to access funding for these types of devices,” Mr. Gray said. “If we had revenues or some means of income, then we’d be a for-profit.”

He added, “Right now, we’re a scientific group spending our own money and time developing solutions to energy needs and problems that the world has got to figure out.”

New technology ‘must drive global carbon emissions cuts’

New technology including smart meters, “intelligent” electricity grids and teleconferencing systems could cut global carbon dioxide emissions by up to 20 per cent, according to the chairman of BP.

Carl-Henric Svanberg, the newly appointed chairman of Britain’s biggest company, said such technology would play a significant role in tackling climate change by cutting energy wastage and demand for domestic and international travel.

Climate change has silver lining for English vineyards

LONDON (AFP) – As world leaders grapple with how to tackle climate change in Copenhagen next week, England’s winegrowers are embarrassed to admit that global warming is suiting them rather well.

This year’s crop has been one of the best yet, with a record three million bottles produced — twice the average production of the past five years — and producers think the changing climate is the cause.

“We are benefiting from a global disaster. It seems horrible, inappropriate, but that’s how it is,” admitted Christopher Foss, the head of wine studies at Plumpton College in Sussex.

UN climate chief: hacked e-mails are damaging

The U.N.’s top climate official on Sunday conceded that hacked e-mails from climate scientists had damaged the image of global warming research but said evidence of a warming Earth is solid.

George F. Will: The climate-change travesty

The travesty is the intellectual arrogance of the authors of climate-change models partially based on the problematic practice of reconstructing long-term prior climate changes. On such models we are supposed to wager trillions of dollars — and substantially diminished freedom.

Some climate scientists compound their delusions of intellectual adequacy with messiah complexes. They seem to suppose themselves a small clerisy entrusted with the most urgent truth ever discovered. On it, and hence on them, the planet’s fate depends. So some of them consider it virtuous to embroider facts, exaggerate certitudes, suppress inconvenient data, and manipulate the peer-review process to suppress scholarly dissent and, above all, to declare that the debate is over.

Yellowstone a petri dish for climate change

Reporting from Yellowstone National Park – Roy Renkin is a biologist by training but a detective by inclination, and something about the willows was nagging him.

The shrubs flanking a creek in Yellowstone’s Blacktail drainage had never grown so tall and lush. But why?

Many of the park’s scientists theorized it was related to the successful reintroduction of wolves, which might have pushed elk out of the area, putting an end to the constant nibbling that stunted willows’ growth.

But this summer, Renkin and a colleague arrived at their own theory: climate change.

The Most Surprising Results of Global Warming

At the United Nations meeting on climate change next week, scientists will be discussing some of the potentially devastating effects of global warming, such as rising temperatures, melting ice caps and rising sea levels in the near future. But Earth’s changing climate is already wreaking havoc in some very weird ways. So gird yourself for such strange effects as savage wildfires, disappearing lakes, freak allergies, and the threat of long-gone diseases re-emerging.

Negotiators at Climate Talks Face Deep Set of Fault Lines

With the scientific consensus more or less settled that human activity — the burning of fossil fuels, torching of forests, and so forth — is contributing to a warmer and less hospitable planet, one might reasonably ask, why is it so hard to agree on a plan to curb those activities?

The answer lies with the many fault lines that cut through the debate over climate change. Those deep divisions will be on display beginning this week as representatives of 192 nations gather in Copenhagen for a United Nations conference on the issue.

Climate pledges ‘sending world towards 3.5 C rise’

PARIS (AFP) – Current pledges from rich and developing nations for cutting carbon pollution will stoke potentially catastrophic warming by century’s end, according to a study released on Sunday on the eve of the Copenhagen climate summit.

National commitments proposed so far for the December 7-18 UN conference would mean the global temperature would rise by 3.5 degrees Celsius (6.3 degrees Fahrenheit) over pre-industrial times, way over a 2.0 C (3.6 F) threshold widely considered safe, the study said.

Arctic threats and challenges from climate change

OSLO (AFP) – Rising temperatures are causing the Arctic’s ice sheets to melt, opening the door for an economic boom in the region but also posing a major threat to the survival of its indigenous peoples.

The mercury is rising twice as fast in the Arctic as elsewhere, offering a frightening preview of what the future holds for the planet and prompting UN Secretary General Ban Ki-moon to describe the situation as “a canary in a coalmine.”

Melting Himalayan glaciers threaten 1.3 bln Asians

KATHMANDU (AFP) – More than a billion people in Asia depend on Himalayan glaciers for water, but experts say they are melting at an alarming rate, threatening to bring drought to large swathes of the continent.

Glaciers in the Himalayas, a 2,400-kilometre (1,500-mile) range that sweeps through Pakistan, India, China, Nepal and Bhutan, provide headwaters for Asia’s nine largest rivers, lifelines for the 1.3 billion people who live downstream.

But temperatures in the region have increased by between 0.15 and 0.6 degrees Celsius (0.27 and 1.08 degrees Fahrenheit) each decade for the last 30 years, dramatically accelerating the rate at which glaciers are shrinking.

Dutch defense against climate change: Adapt – As the world works to prevent disaster, the Netherlands plans for it

AMSTERDAM — With the Copenhagen summit starting Monday, chances remain uncertain for a historic breakthrough in the fight to prevent climate change, but the Netherlands is leading a fight of a different kind: How to live with global warming.

As sea levels swell and storms intensify, the Dutch are spending billions of euros on “floating communities” that can rise with surging flood waters, on cavernous garages that double as urban floodplains and on re-engineering parts of a coastline as long as North Carolina’s. The government is engaging in “selective relocation” of farmers from flood-prone areas and expanding rivers and canals to contain anticipated swells.

The measures are putting this water world of dikes, levies and pumps that have kept Dutch feet dry for centuries ahead of the rest of the world in adapting to harsher climates ahead.