Showing posts with label emissions. Show all posts
Showing posts with label emissions. Show all posts

Wednesday, January 1, 2014

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

 

 

Friday, November 15, 2013

Richard Heinberg's Museletter - The Climate-PR Puzzle

How do we effectively communicate an important but difficult message, even as it appears to fall on deaf ears? The first essay in this month's Museletter addresses this thorny issue, one which I face every day in my work here at PCI, and which will be familiar to many of you. The second essay is a reminder that in some places the message is getting through and that change does happen. Richard hopes that you will find some hope in his report from a recent visit to Seoul, Korea.

The Climate-PR Puzzle

If we hope to avert climate apocalypse in the decades ahead, we must make fundamental changes to industrial society. Before those changes can be approved and implemented, citizens and policy makers must first come to understand they are essential to our survival. Public relations—the management of the spread of information between an individual or organization and the public—will be an unavoidably necessary tool in the process.

But a PR message capable of persuading policy makers and citizens to end society’s environmental rampage remains elusive. In this essay I hope to explore why an effective PR message is so hard to formulate, and how the whole project might be reconsidered.

Let’s start with what needs to be conveyed. After years of research and thought, I would summarize our dilemma with three general conclusions:

1. Energy is the biggest single issue facing us as a species.*

Global warming—by far the worst environmental challenge humans have ever confronted—results from our current fossil-fuel energy regime, and averting catastrophic climate change will require us to end our reliance on coal, oil, and natural gas. Ocean acidification is also a consequence of burning fossil fuels, and most other environmental crises (like nitrogen runoff pollution and most air pollution) can be traced to the same source.

Therefore ending our addiction to fossil fuels is essential if we want future generations of humans (and countless other species) to inherit a habitable a planet. But these energy sources are “unsustainable” also in a more basic, economic sense of the term: oil, gas, and coal are depleting, non-renewable resources. Already, depletion of the easy-and-cheap sources of petroleum that drove economic growth in the 20th century has led to persistently high oil prices, which are a drag on the economy. We have picked the low-hanging fruit of the world’s petroleum resources, and as time goes on all sources of fossil energy will become more financially costly and environmentally risky to extract. This is a big problem because the economy is 100 percent dependent on energy. With lots of cheap energy, problems of all kinds are easy to solve (running out of fresh water? Just build a desalination plant!); when energy becomes expensive and hard to get, problems multiply and converge.

One way or another, whether our concern is the environment or economic growth, it’s mostly about energy.

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*Arguably, overpopulation is as big an issue as our energy-climate conundrum. I’ve chosen not to focus on it here merely to streamline the narrative. There are many feedbacks between population, energy, and climate, and these deserve discussion elsewhere.

2. We are headed toward a (nearly) all-renewable-energy economy one way or the other, and planning is essential if we want to get there in one piece.

If society is to avoid civilization-threatening levels of climate change, the use of fossil fuels will have to be reduced proactively by 80-90 percent by 2050.

At the same time, despite the claims of abundance of unconventional fuels (shale gas, tight oil, tar sands) by the fossil fuel industry, evidence overwhelmingly shows that drillers are investing increasing effort to achieve diminishing returns.

Either way, fossil fuels are on their way out.

Most nations have concluded that nuclear is too costly and risky, and supplies of uranium are limited.

That leaves renewable energy sources—solar, wind, hydro, geothermal, tidal, and wave power—to power the economy of the future.

3. In the process of transition, the ways that society uses energy must change at least as much as the ways society produces energy.

Every energy source possesses a unique set of characteristics: some sources are more portable than others, or more concentrated, intermittent, scalable, diffuse, renewable, environmentally risky, or financially costly. We have built our current economy to take advantage of the special properties of fossil fuels. The renewable energy sources that are available to replace oil, gas, and coal have very different characteristics and will therefore tend to support a different kind of economy—one that is less mobile, more rooted in place; less globalized, more localized; less when-we-want-it, more when-it’s-available; less engineered, more organic.

At the same time, the sheer quantity of energy that will be available during the transition from fossil to renewable sources is in doubt. While ever-more-rapid rates of extraction of fossil fuels powered a growing economy during the 20th century, society will struggle to maintain current levels of total energy production in the 21st, let alone grow it to meet projected demand. Indeed, there are credible scenarios in which available energy could decline significantly. And we will have to invest a lot of the fossil energy we do have in building post-fossil energy infrastructure. Energy efficiency can help along the way, but only marginally.

The global economy will almost certainly stagnate or contract accordingly.

There it is. It is a complicated message. I’ve just conveyed it in 661 words punctuated by three short summary sentences (here’s a summation of the summation: it’s all about energy; renewables are the future; growth is over.) However, only readers with a lot of prior knowledge will be able to truly understand some of these words and phrases. And many people who are capable of making sense of what I’ve written would disagree with, or dismiss, much of it. The message faces a tough audience, and it flies against deep-seated interests.

Many economists and politicians don’t buy the assertion that energy is at the core of our species-wide survival challenge. They think the game of human success-or-failure revolves around money, military power, or technological advancement. If we toggle prices, taxes, and interest rates; maintain proper trade rules; invest in technology R&D; and discourage military challenges to the current international order, then growth can continue indefinitely and everything will be fine. Climate change and resource depletion are peripheral problems that can be dealt with through pricing mechanisms or regulations.

Fossil fuel companies may understand the importance of energy, but they have a powerful incentive to avoid acceptance of the message that “renewables are the future.” If humanity is headed toward an all-renewable energy economy, then their business has no future. The industry’s strategy for diverting the general public’s buy-in to conclusion 2 is to claim that there is plenty of oil, gas, and coal available to fuel society for decades to come.

Some policy wonks buy “it’s all about energy,” but are jittery about “renewables are the future” and won’t go anywhere near “growth is over.” A few of these folks like to think of themselves as environmentalists (sometimes calling themselves “bright green”)—including the Breakthrough Institute and writers like Stewart Brand and Mark Lynas. A majority of government officials are effectively in the same camp, viewing nuclear power, natural gas, carbon capture and storage (“clean coal”), and further technological innovation as pathways to the solution of the climate crisis without any need for curtailment of economic growth.

Other environment-friendly folks buy “it’s all about energy” and “renewables are the future,” but still remain allergic to the notion that “growth is over.” They say we can transition to 100 percent renewable power with no sacrifice in terms of economic growth, comfort, or convenience. Stanford professor Mark Jacobson and Amory Lovins of Rocky Mountain Institute are leaders of this chorus. Theirs is a reassuring message, but if it doesn’t happen to be factually true (and there are many energy experts who argue persuasively that it isn’t), then it’s of limited helpfulness because it fails to recommend the kinds or degrees of change in energy usage that are essential to a successful transition.

The general public tends to listen to one or another of these groups, all of which agree that the climate and energy challenge of the 21st century can be met without sacrificing economic growth. This widespread aversion to the “growth is over” conclusion is entirely understandable: during the last century, the economies of industrial nations were engineered to require continual growth in order to produce jobs, returns on investments, and increasing tax revenues to fund government services. Conclusion 3, which questions whether growth can continue, is therefore deeply subversive. Nearly everyone has an incentive to ignore or avoid it. It’s not only objectionable to economic conservatives, it is abhorent to many progressives who believe economies must continue to grow so that the “under-developed” world can improve standards of living.

But ignoring uncomfortable facts seldom makes them go away. Often it just makes matters worse. Back in the 1970s, when environmental limits were first becoming apparent, catastrophe could have been averted with only a relatively small course correction—a gradual tapering of growth and a slow decline in fossil fuel reliance. Now, only a “cold turkey” approach will suffice. If a critical majority of people couldn’t be persuaded then of the need for a gentle course correction, can they now be talked into undertaking deliberate change on a scale and at a speed that might be nearly as traumatic as the climate collision we’re trying to avoid?

To be sure, there are those who do accept the message that “growth is over”: most are hard-core environmentalists or energy experts. But this is a tiny and poorly organized demographic. If public relations consists of the management of information flowing from an organization to the public, then it surely helps to start with an organization wealthy enough to be able to afford to mount a serious public relations campaign.

This is all quite discouraging, to the point that a fourth conclusion seems justified: More