Message To World Elites: Don’t Bet On Coal And Oil Growth

Davos 2014

A mind-boggling sum of about US$ 800 for each person on the planet is invested into fossil fuel companies through the global capital markets alone. That’s roughly 10% of the total capital invested in listed companies. The amount of money invested into the 200 biggest fossil fuel companies through financial markets is estimated at US$ 5.5 trillion.

By keeping their money in coal and oil companies, investors are betting a vast amount of wealth, including the pensions and savings of millions of people, on high future demand for dirty fuels. The investment has enabled fossil fuel companies to massively raise their spending on expanding extractable reserves, with oil and gas companies alone (state-owned ones included) spending the combined GDP of Netherlands and Belgium a year, in belief that there will be ongoing demand for dirty fuel.

This assumption is being challenged by recent developments, which is good news for climate but bad news for anyone who thought investing in fossil fuel industries was a safe bet. Frantic growth in coal consumption seems to be coming to an end much sooner than predicted just a few years ago, with China’s aggressive clean airpolicies, rapidly dropping coal consumption in the US and upcoming closures of many coal plants in Europe. At the same time the oil industry is also facing slowingdemand growth, and the financial and share performance of oil majors is disappointing for shareholders.

Nevertheless, even faced with weakening demand prospects, outdated investment patterns are driving fossil fuel companies to waste trillions of dollars in developing reserves and infrastructure that will be stranded as the world moves beyond 20th century energy.

A good example is coal export developments. The large recent investment in coal export capacity in all key exporter countries was based on the assumption of unlimited growth of Chinese demand. When public outrage over air pollution reached a new level in 2012-2013, the Chinese leadership moved swiftly to mandate absolute reductions in coal consumption, and banned new coal-fired power plants in key economic regions. A growing chorus of financial analysts is now projecting a peak in Chinese coal demand soon, which seemed unimaginable only a couple of years ago. This new reality has already reduced market capitalization of export-focused coal companies. Even in China itself, investment in coal-fired power plants has now outpaced demand growth, leading to drops in capacity utilization.

Another example of potentially stranded assets is found in Europe, where large utilities ignored the writing on the wall about EU moves to price carbon and boost renewable energy. Betting on old business models and the fossil-fuel generation, they built a huge 80 gigawatts of new fossil power generation capacity in the past 10 years, much of which is already generating losses and now risk becoming stranded assets.

Arctic oil drilling is possibly the ultimate example of fossil companies’ unfounded confidence in high future demand. Any significant production and revenue is unlikely until 2030 and in the meantime, Arctic drilling faces high and uncertain costs, extremely demanding and risky operations, as well as the prospect of heavy regulation and liabilities when (not if) the first major blowout happens in the region. No wonder the International Energy Agency is sceptical about Arctic oil, assuming hardly any production in the next 20 years. More

 

Time for Cayman to go green

Could the days of fossil fuels be over in Cayman? Billionaire entrepreneur Sir Richard Branson is looking to wean ten islands off those sources of energy.

“I am having people come to me and say we cannot afford to pay our mortgage and electrical bill this month. We have to decide – do we pay our light bill or our mortgage,” said Nicholas Robson of Cayman Institute.

Environment Minister Hon. Wayne Panton tells Cayman 27 he and Finance Minister Hon. Marco Archer will attend next month’s summit in the BVI.

Cayman 27′s Tammi Sulliman reports.

 

Operation Smart Island Economies

Operation Smart Island Economies aims to transition islands to 100% renewable energy by accelerating commercial investment.

The Carbon War Room's Mission

Islands face increasing challenges from their dependence on imported fossil fuels, which impacts the prices they pay for everything from electricity to food. This is further complicated by the added demand that tourism places on the island’s resources. Natural energy resources are abundant on islands. However, the systems required to use them have not been widely implemented and scaled.

This lack of implementation is the result of multi-market barriers that islands and technology providers encounter. These multi-market barriers include local permitting, long-term fossil fuel contracts, and other legislative barriers. What is missing is a scaled regional approach to these barriers.

The Carbon War Room seeks to bridge this gap by working with islands to identify these barriers and create a regional roadmap for making the necessary changes. This roadmap would detail solutions that can attract both private sector investment and aggregated demand for large-scale renewable energy systems. Learn more about our island selection criteria in the background section. More

 

The Peak Oil Crisis: Cold Fusion Moves East

Many of us believe that life on this planet is in a lot of trouble. The climate is becoming unstable; there are too many people; oceans are dying, sea levels are rising; and water, food, clean air, and minerals are coming into short supply. For many, the economy refuses to grow fast enough to maintain living standards.

Tom Whipple

Although appreciated by only a handful, the evidence continues to build that, unless we have reached some kind of a tipping point, there may be a way out of our mounting problems. A few minutes’ reflection should be enough to convince most that a source of unlimited clean, cheap energy just could reverse global warming, provide unlimited water, food, and a better life for all.

While there may be sources of clean cheap energy that as yet we have no idea exist in this universe, for the present, cold fusion or the preferred term Low Energy Nuclear Reactions (LENR) looks like the only solution currently extant with the potential to save us. It may not be a stretch to say that either we develop and put into widespread use this technology or it is “game over” for life as we know it.

For the last 25 years, the U.S. government, at the urging of its scientific advisors who unfortunately had, and in some cases still have, axes to grind on the LENR issue, has been denying that the “cold fusion;” or LENR phenomenon, actually exists. According to the government, the anomalous heat that so many have been reporting on since 1989 is only experimental errors or scientific fraud or even wishful thinking. When the U.S. government says there is no such thing as “cold fusion” then naturally most other governments and the mainstream media with minor exceptions say the same.

This position may be changing however. While a few scientists at NASA have been saying that the LENR phenomenon is real for some time, the Department of Energy which reigns supreme in these matters remains pretty firm in its denial despite occasional reviews. Recently, however, we may have seen the beginnings of change when a component of DOE which funds exotic energy R&D efforts said it would entertain proposals to fund LENR experiments. Now this may simply be a case of the right hand not knowing what the left hand is doing, but it would be nice to believe that at least somewhere in DOE, a few are coming to their senses,

So where are we on this revolutionary and likely disruptive technology? There are dozens of independent laboratories around the world experimenting with low energy nuclear reactions at the lab bench scale, but only three or four saying, and in some cases demonstrating, that they have devices producing enough energy that commercially useful products should be available soon.

Readers of this column know by now that there is a small but devoted blogosphere out there in cyberspace that not only fervently believes that cold fusion is real and someday will save humanity, but follows and comments on developments daily.

For several years, interest has focused on the Italian inventor Andrea Rossi and his E-Cat nuclear device, which many still consider a scam despite numerous validations. Nearly a year ago, Rossi told his cyber space followers that he had partnered with a well-healed American firm that was helping him develop a commercial product. Until last week Rossi’s American partner was a well-kept secret with speculation focusing on industrial giants such as GE or United Technologies who have much to gain if LENR ever becomes a commercial product replacing combustion of fossil fuels as the principal source of heat in the world.

Last week a hint leaked out when one of Rossi’s associates noted in his biography that he was consulting for an obscure hedge fund called Cherokee Investment Partners LLC, located in Raleigh, North Carolina. The blogosphere jumped on this clue and within days enough information about Cherokee and its new subsidiary, Industrial Heat LLC, was brought to light to conclude that this organization is indeed Rossi’s new American partner in the development of LENR. Cherokee, which has a capitalization of circa $2 billion and has invested $11.5 in the E-Cat project, has a record of investing in cleaning up polluted properties and funding renewable energy projects. More

 

AREVA, EDF sign accords for Saudi nuclear program

RIYADH - EDF and AREVA signed two sets of agreements aimed at supporting the Saudi nuclear energy program on Monday, coinciding with the visit of French President François Hollande's to Riyadh. The two companies have signed Memorandums of Understanding (MoUs) with 5 Saudi industrial partners - Zamil Steel, Bahra Cables, Riyadh Cables, Saudi Pumps, Descon Olayan.

The agreements aim to develop the industrial and technical skills of local companies. They reflect AREVA and EDF's desire to build an extended network of Saudi suppliers for future nuclear projects in the country.

A second series of agreements signed with 4 Saudi universities - King Saud University in Riyadh, Dar Al Hekma College and Effat University in Jeddah and finally Prince Mohammed bin Fahd University in Al-Khobar - are intended to contribute to the development of nuclear expertise in the Kingdom.

These agreements follow on from the previous operations organized by EDF and AREVA, through their joint office in Riyadh. These include the "Suppliers' Days" in March and October 2013, the visit to France by Saudi industrial companies in November, the agreement signed with the local professional training institute (NIT) in July 2013, the visits to French nuclear facilities organized for Saudi university faculty members in June 2013 and internship offers made to Saudi students since the summer.

EDF CEO Henri Proglio said: "These new agreements underline EDF and AREVA's commitment alongside the Kingdom of Saudi Arabia to enable it to successfully implement its national energy strategy and in particular to develop its future nuclear program by contributing to the development of a local network of manufacturers and by training qualified engineers."

Luc Oursel, President and CEO of AREVA, added: "These agreements demonstrate the common will of EDF and AREVA to establish a true long-term partnership with the Kingdom of Saudi Arabia. They will enable the country to build a strong industrial base and a robust skills management program."

The EDF group, one of the leaders in the European energy market, is an integrated energy company active in all areas of the business: generation, transmission, distribution, energy supply and trading. The Group is the leading electricity producer in Europe. In France, it has mainly nuclear and hydropower generation facilities where 95.9 percent of the electricity output is CO2-free.

AREVA supplies advanced technology solutions for power generation with less carbon. Its expertise and unwavering insistence on safety, security, transparency and ethics are setting the standard, and its responsible development is anchored in a process of continuous improvement. Ranked first in the global nuclear power industry, AREVA's unique integrated offering to utilities covers every stage of the fuel cycle, nuclear reactor design and construction, and operating services. The group is actively developing its activities in renewable energies - wind, bioenergy, solar and energy storage - to become a European leader in this sector. More

 

 

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Israel: Gas, Oil and Trouble in the Levant

Israel is set to become a major exporter of gas and some oil, if all goes to plan. The giant Leviathan natural gas field, in the eastern Mediterranean, discovered in December 2010, is widely described as “off the coast of Israel.”

At the time the gas field was: “ … the most prominent field ever found in the sub-explored area of the Levantine Basin, which covers about 83,000 square kilometres of the eastern Mediterranean region.” (i)

Coupled with Tamar field, in the same location, discovered in 2009, the prospects are for an energy bonanza for Israel, for Houston, Texas based Noble Energy and partners Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration.

Also involved is Perth, Australia-based Woodside Petroleum, which has signed a memorandum of understanding for a thirty percent stake in the project, in negotiations which have been described as “up and down.” There is currently speculation that Woodside might pull out of the deal: “ …since the original plans to refrigerate the gas for export were pursued when relations between Israel and Turkey were strained. That has changed, more recently, which has opened the door for gas to be piped to Turkey.”

The spoils of the Leviathan field has already expanded from an estimated 16.7 trillion cubic feet (tcf ) of gas to nineteen trillion – and counting:

”We’ve discovered nearly 40 tcf of gas, and we have roughly 19 tcf of that gas that’s available for export to both regional and extra-regional markets. We see exports reaching 2 billion cubic feet a day in capacity in the next decade. And we continue to explore.”, stated Noble Vice Chairman Keith Elliot (ii) There are also estimated to be possibly six hundred million barrels of oil, according to Michael Economides of energytribune.com (“Eastern Mediterranean Energy – the next Great Game.”)

However, even these estimates may prove modest. In their: “Assessment of Undiscovered Oil and Gas Resources of the Levant Basin Province, Eastern Mediterranean”, the US Department of the Interior’s US Geological Survey, wrote in 2010: “We estimated a mean of 1.7 billion barrels of recoverable oil and a mean of 122 trillion cubic feet of recoverable gas in this province using a geology based assessment methodology.”

Nevertheless, Woodside Petroleum, might also be hesitant to become involved in further disputes, since they are already embroiled, with the Australian government, in a protracted one in East Timor relating to the bonanaza of energy and minerals beneath the Timor Sea, which has even led to East Timor accusing Australia “of bugging East Timorese officials during the negotiations over the agreement.”(iii)

Woodside’s conflict in East Timor however, may well pale against what might well erupt over the Leviathan and Tamar fields. The area is not for nothing called the Levantine Basin. Whilst Israel claims them as her very own treasure trove, only a fraction of the sea’s wealth lies in Israel’s bailiwick as maps (iv, v) clearly show. Much is still unexplored, but currently Palestine’s Gaza and the West Bank between them show the greatest discoveries, with anything found in Lebanon and Syria’s territorial waters sure to involve claims from both countries.

In a pre-emptive move, on Christmas Day, Syria announced a deal with Russia to explore 2,190 kilometres (850 Sq. miles) for oil and gas off its Mediterranean coast, to be: “… financed by Russia, and should oil and gas be discovered in commercial quantities, Moscow will recover the exploration costs.”

Syrian Oil Minister, Ali Abbas said during the signing ceremony that the contract covers “25 years, over several phases.”

Syria, increasingly crippled by international sanctions, has seen oil production plummet by ninety percent since the largely Western fermented unrest began in March 2011. Gas production has nearly halved, from thirty million cubic metres a day, to 16.7 cubic metres daily.

The agreement is reported to have resulted from “months of long negotiations” between the two countries. Russia, as one of the Syrian government’s main backers, looks set to also become a major player in the Levant Basin’s energy wealth. (vi)

Lebanon disputes Israel’s map of the Israeli-Lebanese maritime border, filing their own map and claims with the UN in 2010. Israel claims Lebanon is in the process of granting oil and gas exploration licenses in what Israel claims as its “exclusive economic zone.”

That the US in the guise of Vice President Joe Biden, as honest broker, acting peace negotiator in the maritime border dispute would be laughable, were it not potential for Israel to attack their neighbour again. In a visit to Israel in March 2010, Biden announced: “There is absolutely no space between the United States and Israel when it comes to Israel’s security- none at all”, also announcing on arrival in Israel:”It’s good to be home.” More

 

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Beijing in $130bn global assets spree as it builds energy security

CHINESE state-owned oil and gas companies such as China National Petroleum Corporation (CNPC) have outlaid more than $130 billion since 2007 to snap up assets across the globe in their ongoing quest for energy security.

Some of their biggest buys include shale assets in western Canada and the US, oilfields in Egypt, Iraq and Africa, stakes in Australian liquefied natural gas joint ventures, and a share in some of the most challenging energy projects in the world: the Kashagan field in the Caspian Sea, the Yamal LNG project in northwest Siberia, and the "presalt" deepwater fields off the coast of Brazil.

Chinese companies accounted for 21 per cent of all oil and gas mergers and acquisitions in the first nine months of 2013, spending $US18.6bn ($20.8bn) out of a total $US90.8bn market, according to data released recently by US oil industry information and advisory firms PLS and Derrick Petroleum Services.

Cumulative figures by PLS/Derrick show that since 2007, CNPC and other state-owned entities such as China Petrochemical (Sinopec), China National Offshore Oil Corporation (CNOOC) and Sinochem Group invested $US129bn in oil industry mergers and acquisitions.

Since those figures were released, CNPC has made further investments in Latin America and the Middle East. In November, it agreed to pay $US2.6bn for the Peruvian oil assets of Brazil's state-owned Petrobras, while in the same month its listed arm PetroChina said it would buy 25 per cent of Iraq's West Quran 1 gasfield from ExxonMobil. The deal price was not announced, but analysts estimate the stake could be worth more than $US1bn.

The previous month, PetroChina agreed to join CNOOC in a consortium led by Royal Dutch Shell and Total that won the right to join Petrobras in developing the Libra field, located in deep water off the Brazilian coast. The field, part of what is known as Brazil's "presalt" oil and gas reserves, potentially can produce up to one million barrels a day.

CNPC made the single biggest international buy of 2013, agreeing in September to spend $US5bn for ConocoPhillips' 8.4 per cent stake in the massive Kashagan project in Kazakhstan's part of the Caspian Sea.

Kashagan, regarded as one of the biggest oil and gas finds of the past 40 years, has so far proved an expensive undertaking for its international investors. After a five-year delay, it finally began producing in September, but a series of leaks from its main gas pipeline forced its shutdown. A decision on resuming production is expected this month.

Earlier last year, CNPC also committed to pay about $US4.2bn for a 20 per cent stake in Italian oil producer Eni's Mozambique offshore gas project known as Area 4, part of the wider Rovuma gasfield.

Last year, CNOOC made what remains the single biggest acquisition by a Chinese company, paying $US15.1bn for 100 per cent of Canadian company Nexen, which has extensive shale and oil sands assets in western Canada and interests in the Gulf of Mexico. The Nexen deal closed in February last year, after approvals by Canadian and US regulators.

Also in February, Sinopec agreed to pay $US1.02bn for half of Chesapeake Energy's Oklahoma shale field known as the Mississippi Lime, while a month earlier Sinochem said it would buy a 40 per cent stake in Pioneer Natural Resources' Wolfcamp shale field in Texas for $US1.7bn.

In August, Sinopec agreed to buy 33 per cent of US producer Apache's oil and gas assets in Egypt for $US3.1bn.

The $US130bn cumulative figure since 2007 does not include the value of oil purchase agreements and investments that CNPC struck during 2013 with Russian state-owned companies Gazprom and Rosneft, and with the privately owned Russian gas producer Novatek.

In June, Rosneft agreed to supply CNPC with oil worth up to $US270bn over a 25-year term from 2018. The deal includes a $US70bn prepayment to Rosneft. In October, the two companies agreed to work on a joint venture that would develop oil and gas reserves in eastern Siberia.

CNPC and Gazprom struck a deal in September covering gas supplies to China. The final terms have yet to be decided.

In June, CNPC agreed to join Novatek and France's Total in the Yamal LNG development in Siberia, committing to a 20 per cent stake. The value was not disclosed but is estimated to be $US800 million-plus. In October, CNPC followed up by signing a 15-year deal with Novatek to take 3 million tonnes a year of LNG. Yamal is expected to begin production at the end of 2016.

Novatek plans to ship the gas to China via the Northern Sea Route, which runs along the top of Russia in Arctic waters. The route, which is shorter than the conventional journey from Europe, is open for about six months a year, and requires special ice-proof tankers and icebreaker support.

China, the world's biggest energy consumer, imports about 10.5 million barrels of oil a day, or about 60 per cent of its crude oil requirement. While much of that comes from the Middle East, part of China's quest for a diversified energy supply involves bringing in more oil and gas via pipelines from Central Asia, Russia and Myanmar, and more LNG from Australia, Russia, Canada and the US. More