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The deeply unpopular plan would benefit a few rich oil companies while threatening people, wildlife and the climate.

The Trump administration is barreling ahead with plans to drill for oil in Alaska’s Arctic National Wildlife Refuge, the largest refuge in the country and an area of global ecological importance.

Many refer to the coastal plain of the Arctic Refuge — the very place where oil drilling is being planned — as the “American Serengeti.” A home for grizzly bears, wolves, musk oxen and a host of other species, the area is famous as the birthing ground for the enormous Porcupine caribou herd, which each spring floods across the refuge’s coastal plain in the tens of thousands, arriving in time to raise newborn calves amid fresh tundra grasses. The coastal plain is also the annual destination for millions of migrating birds, who come from nearly every continent on Earth to raise the next generation of swans, terns and over 200 other species. In late summer these avian visitors disperse to backyards, beaches and wetlands across the planet.

Drilling on the Arctic Refuge has long been opposed by most Americans. Among the staunchest opponents of drilling are indigenous people in northern Alaska and the Canadian Arctic, whose cultures and diets are entwined with the Porcupine herd. They include the Gwich’in people of northern Alaska, who have lived in the Arctic for millennia and reside alongside the Arctic Refuge. Their name for the coastal plain is Iizhik Gwats’an Gwandaii Goodlit, or “the Sacred Place Where Life Begins,” a name reflecting the shared destiny of the caribou and the people. For the Gwich’in and others, fighting against drilling is a cultural imperative and a civil-rights issue.

…click on the above link to read the rest of the article…

WSJ Confirms: Trump-Appointed Venezuela Coup Leader Plans Neoliberal Capitalist Shock Therapy

February 3, 2019

WSJ Confirms: Trump-Appointed Venezuela Coup Leader Plans Neoliberal Capitalist Shock Therapy

Venezuela’s US-appointed coup leader Juan Guaidó plans to privatize state assets and give foreign corporations access to oil, the Wall Street Journal admitted.

The Wall Street Journal reported that Venezuela’s US-appointed coup leader Juan Guaidó has already drafted plans for “opening up Venezuela’s vast oil sector to private investment” and “privatizing assets held by state enterprises.”

The report confirms what The Grayzone previously reported.

“Juan Guaidó, recognized by Washington as the rightful leader, said he would sell state assets and invite private investment in the energy industry,” read the Wall Street Journal’s January 31 article.

The paper noted that Guaidó plans “to reverse President Nicolás Maduro’s economic polices,” explaining:

“Mr. Guaidó said his plan called for seeking financial aide from multilateral organizations, tapping bilateral loans, restructuring debtand opening up Venezuela’s vast oil sector to private investment. It includes privatizing assets held by state enterprises … He also said he’d end wasteful state subsidies and take steps to revive the private sector.”

In other words, Guaidó plans to implement the neoliberal capitalist shock therapy that Washington has imposed on the region for decades.

Using funding from US-dominated international financial institutions like the International Monetary Fund (IMF), the Venezuelan coup leader seeks to adopt an aggressive “structural adjustment” program, enacting the kinds of economic policies that have led to the preventable deaths of millions of people and an explosion of poverty and inequality in the years following capitalist restoration in the former Soviet Union.

In a speech, Juan Guaidó even echoed rhetoric that is popular among US conservatives: “Here, no one wants to be given anything.”

It is clear that the coup leader’s priorities reflect those of Venezuela’s capitalist oligarchs and right-wing politicians in the United States. Economic liberalization is the Venezuelan opposition’s first and most important goal; democracy is just a pretense.

…click on the above link to read the rest of the article…

Loonie Slumps As Bank Of Canada Folds On Economic Enthusiasm

December 5, 2018

Loonie Slumps As Bank Of Canada Folds On Economic Enthusiasm

Amid near-record-low Canadian crude prices and a housing crisis, The Bank of Canada appears to have finally given up its narrative that ‘everything is awesome’.

The BoC walked back much of its enthusiasm about the nation’s outlook in a decision that kept interest rates unchanged, spinning bad news as good by saying that the economy may have “additional room for non-inflationary growth.” Of course, if the economy was growing faster, the BOC would simply say that the economy is growing… well, faster or “near potential.”

Instead, holding rates unchanged at 1.75%, the BOC cited almost everything that has gone wrong:

moderating global growth,
a “materially weaker” outlook for the oil sector,
a faster-than-expected deceleration of inflation,
a drop in business investment and downward historical revisions to output

Following the latest central bank dovish relent, the USDCAD jumped 0.8% to ~1.3374 after touching highest (i.e. the CAD dropping the most) in more than five months on the cautious language, a dovish outlook that could change expectations for 2019 BOC rate hikes.

Even with the dovish undertones, the statement reiterated that rates will need to rise to “neutral range” – which like the Fed it has no idea what it is – within its discussion of recent downside risks, to wit:

“Governing Council continues to judge that the policy interest rate will need to rise into a neutral range to achieve the inflation target.”

Still, the generally less-confident tone is an acknowledgement of developments over the past few weeks that have cast doubt on the strength of the nation’s expansion and prompted investors to scale back the expected pace of future rate increases.

The final nail in the hawkish case coffin was the key shift in tone (red rectangle below) which notes that while the Canadian economy growing in line with expectations, “data suggest less momentum going into the fourth quarter.”

…click on the above link to read the rest of the article…

Big Oil Won’t Spend Despite Fat Profits

October 30, 2018

Big Oil Won’t Spend Despite Fat Profits

Higher oil prices are expected to leave the oil industry flush with cash, but the “capital discipline” mantra remains. Market watchers have wondered whether top oil executives would eschew with tight-fisted spending plans once their pockets fattened up again.

“We’re laser focused on disciplined free cash flow generation and strong execution. Discipline means, we’re not chasing higher prices by ramping up activity,” ConocoPhillips’ CEO Ryan Lance told investors on an earnings call. “By staying disciplined, we generate strong free cash flow, which we then allocate in a shareholder-friendly way.” He went on to stress how committed the company was to boosting the quarterly dividend and share buyback program.

Conoco beat analysts’ estimates, earning $1.36 per share in the third quarter, eight times the earnings from the $0.16 per share a year earlier. Conoco also saw soaring production in the big three shale areas – the Permian, Eagle Ford and Bakken – with output up 48 percent to 313,000 bpd. Lance said that the company still wants to “optimize” its portfolio, which includes $600 million in asset sales.

Conoco’s experience highlights an important industry trend, which is prioritizing profits over growth and size. Lance pointed out that the last time earnings were this good was back in 2014. “Brent was over $100 per barrel and our production was almost 1.5 million barrels of equivalent oil per day. So we’re as profitable today as we were then, despite prices being 25% lower and volumes being 20% lower,” Lance told investors. “So bigger isn’t always better. That’s why we’re focused on per share growth and value, not absolute volume growth.”

Norwegian oil company Equinor (formerly Statoil) echoed that sentiment.

…click on the above link to read the rest of the article…

The Implications Of A Fractured U.S., Saudi Alliance

October 17, 2018

The Implications Of A Fractured U.S., Saudi Alliance

After the resurgence of the U.S. oil industry in recent years due to hydraulic fracking and the shale oil revolution, most thought the days of Middle Eastern oil producers, Saudi Arabia in particular, being able to threaten use of the so-called oil weapon as geopolitical leverage or even coercion were over. But that couldn’t be further from the truth.

Even though the U.S. is pumping oil at record levels, hitting 11 million barrels of oil per day, a rate that should have negated such a threat from ever resurfacing, it seems that Washington has also arguably shot global oil markets in the foot by re-imposing economic sanctions against Iran, with more sanctions slated to hit the Islamic Republic’s energy sector in just a matter of weeks.

The loss of Iranian barrels from global oil markets has already pushed prices well past $80 per barrel recently, and prices could break into the $90 plus range after November. Added to the fray are long term production problems in major OPEC producers Venezuela, Nigeria and Libya – in effect offsetting the ramp-up in U.S. production and the ability for shale producers to play the coveted role of oil markets swing producer. Now Saudi Arabia has taken at least marginal control of oil markets back again – not a comforting prospect for many.

Saudi Arabia said on Sunday it would retaliate against any punitive measures from the U.S. linked to the disappearance of Washington Post columnist Jamal Khashoggi with even “stronger ones.” In what Bloomberg News called an implicit reference to the kingdom’s petroleum wealth, the Saudi statement noted the Saudi economy “has an influential and vital role in the global economy.”

1973 oil embargo remembered

…click on the above link to read the rest of the article…

The Oil Industry Needs Large New Discoveries, Very Soon

October 2, 2018

The Oil Industry Needs Large New Discoveries, Very Soon

Market participants and analysts are all focused on the imminent oil supply gap that is opening with the U.S. sanctions on Iran just five weeks away.

But beyond the shortest term, a larger and more alarming gap in global oil supply is looming—experts forecast that unless large oil discoveries are made soon, the world could be short of oil as early as in the mid-2020s.

The latest such prediction comes from energy consultancy Wood Mackenzie, which sees a supply gap opening up in the middle of the next decade. At the current level of low oil discoveries and barring technology breakthrough beyond WoodMac’s assumptions, that supply gap could soar to 3 million bpd by 2030, to 7 million bpd by 2035, and to as much as 12 million bpd by 2040.

It’s not that discoveries aren’t being made, they just aren’t enough to offset the natural decline at mature fields while global oil demand is still expected to continue to rise.

The main reason for lower discoveries is that spending on exploration has drastically plunged since the 2014 oil price crash. The good news is, according to Wood Mackenzie, that the volume of new discoveries is correlated with spending on exploration. So if spend were to increase, the chance of more and major oil discoveries gets higher.

As early as the beginning of this year, WoodMac said that the share of exploration of upstream investment has slipped to below 10 percent since 2016 and is not about to recover. “This could be the new normal, with the days of one dollar in six or seven going to exploration forever in the past,” the consultancy said in its ‘5 Things to look for in 2018.’

…click on the above link to read the rest of the article…

Seawalls for oil refineries and other ironies of climate change adaptation

August 27, 2018

Seawalls for oil refineries and other ironies of climate change adaptation

A friend of mine includes a saying with each of his emails that goes like this: “It shouldn’t be easier to imagine the end of civilization than the end of air conditioning.” But in most depictions of the end of civilization at the cinema these days, the air conditioning (or heat, if it is winter) is going full blast until the very moment of civilization’s demise.

What he is alluding to, of course, is that we can’t imagine ourselves giving up much of anything even in the face of the biggest man-made threat to human survival ever, namely, climate change. To make sure that we don’t have to, the oil industry is championing a plan that will use federal money to build a seawall along the Texas coast in order to protect—you guessed it—oil refineries, a large number of which are located near the water’s edge.

It will protect a lot of other stuff as well. But the irony is not lost on the reporter of the linked piece who in droll understatement writes: “But the idea of taxpayers around the country paying to protect refineries worth billions, and in a state where top politicians still dispute climate change’s validity, doesn’t sit well with some.”

Elsewhere, efficient use of water, especially in agriculture, is deemed wise policy as water demand rises and water supply becomes more uncertain in the face of climate change. The U.S. Department of Agriculture states the following on its website:

Agriculture is a major user of ground and surface water in the United States, accounting for approximately 80 percent of the Nation’s consumptive water use and over 90 percent in many Western States. Efficient irrigation systems and water management practices can help maintain farm profitability in an era of increasingly limited and more costly water supplies.

…click on the above link to read the rest of the article…

Life, the Sea and Big Oil

May 24, 2018

Life, the Sea and Big Oil

Photo by Glenn Beltz | CC BY 2.0

“It is a curious situation that the sea, from which life first arose, should now be threatened by the activities of one form of that life. But the sea, though changed in a sinister way, will continue to exist: the threat is rather to life itself.”

– Rachel Carson

When I learned about the oil giant BP’s plan to drill off the coast of my home, my heart felt like it dropped out of my chest. As I write this the West Aquariusrig is well on its way to the Nova Scotian Shelf. By the time this is published, it might have already arrived. My thoughts went immediately to those oil sullied shorelines in the Gulf of Mexico, and to the fishermen there whose families and livelihoods were shattered to pieces, and the countless species of fish, mammals and marine birds suffocated in the earth’s primordial blood. BP forever damaged that region and not only in an environmental way. The scars, the untraceable diseases, the suicides and domestic conflicts induced by despair, the financial ruin, displacement and alienation persist to this day.

Many of my ancestors were fishermen here in Nova Scotia for generations. They negotiated the treacherous storms endemic to the North Atlantic and many of them perished in the icy waters which surround this rocky, unforgiving peninsula. I’ve several relatives whose livelihoods are still dependent upon the ocean. But it is more than just a job. The sea is entwined with one’s heart here. It informs the culture, the food, the language. The life of this province cannot be separated from it.

Until settlers stole their ancestral lands, Mi’kmaq, the region’s First People, lived in balance and harmony with this sea for thousands of years, carefully studying its character and respecting its surly and churlish mood swings.

…click on the above link to read the rest of the article…

Alberta’s Aggressive Renewable Energy Push

March 29, 2018

Alberta’s Aggressive Renewable Energy Push

One Canadian province has set its sights on generating almost a third of its electricity from renewable sources by 2030. This will take some US$7.77 billion (C$10 billion) in investments by that year to add 5 GW of renewable capacity, creating more than 7,000 jobs.

The province is Alberta—the center of Canada’s oil industry.

Alberta has been aggressively pursuing renewable energy, switching power plants from coal to gas, and last December, organizing its first renewable power bidding round, which ended with commitments from three energy companies to develop four wind power projects that will add a combined 600 MW to the province’s renewable capacity.

Now, the government is preparing another two bidding rounds, to take place later this year, and it is raising the local carbon tax to fight emissions.

As of January 1 this year, Alberta’s carbon tax has jumped to US$23.30 (C$30) per metric ton. That’s a 50-percent increase although it’s still lower than the carbon tax that will enter into force in neighbor British Columbia from April 1, at US$27 (C$35) per ton.

An urge to go green is not the only reason for the steep tax increase, however. It is expected to help the government’s efforts to balance its books.

In the current fiscal year, Alberta’s Finance Ministry has projected a deficit of US$6.8 billion (C$8.8 billion). This is a decline on last year’s figure and the deficit should continue to decline over the next four years until the province returns to a surplus, albeit moderate, in fiscal 2023-24. The carbon tax will contribute to the deficit shrinkage but it won’t be even close to enough for Alberta to swing into the black.

…click on the above link to read the rest of the article…

North Sea Oil Has Escaped Its Death Spiral

March 22, 2018

North Sea Oil Has Escaped Its Death Spiral

The oil industry is expected to increase spending in the North Sea and the number of projects that could receive a greenlight is set to rise this year for the first time in half a decade.

An estimated 12 to 16 green-and brown-field projects are expected to be sanctioned in 2018, according to a report from Oil & Gas UK. To put that in context, only 17 projects moved forward between 2014 and 2017, combined.

That would translate into additional spending of about 5 billion pounds and the production of 450 million barrels of oil equivalent over time. As a result, revenues for oilfield service and supply chain companies will rise for the first time in years, the report predicts.

More spending and drilling will ultimately mean more oil and gas production from the UK North Sea over the next two years, although the level of spending and drilling “still falls short of the level required to sustain long-term production at current levels,” Oil & Gas UK said.

“While the project landscape for 2018 is the healthiest the industry has seen since 2013,” the industry will still need “greater exploration success” and will also need to boost production in existing assets in order to avoid decline. For its part, Standard Chartered says that without more gains in spending and the sanctioning of new projects, output will once again head into decline after 2019.

The lack of investment from the last few years will soon start to bite. “Between 2014 and 2017, 33 new fields came on stream. This year, just four to six new field start-ups are expected,” Standard Chartered wrote in a note. “Drilling remains an ongoing concern; exploration, appraisal and development continue to falter.”

The bank says that only 94 wells were drilled in 2017, the lowest figure since 1973.

…click on the above link to read the rest of the article…

The Soft Belly of The Oil Industry: an Upcoming Seneca Collapse?

November 20, 2017

The Soft Belly of The Oil Industry: an Upcoming Seneca Collapse?

Ugo Bardi explains his idea of an impending “Seneca Collapse” of the world’s oil industry at the session on climate change of the meeting of the Club of Rome in Vienna, on 10 Nov 2017. What follows are not the exact words said, but a text which maintains the gist of this brief comment. It was focused on the concept that the oil industry has a “soft belly” in the fact that it produces mainly fuel for engines used for transportation. If this market were reduced by the introduction of electric vehicles and other transportation innovations, the whole industry could collapse. That would be a good thing for the earth’s ecosystem and for humankind in general.

Dear colleagues, we are having an interesting discussion on how to stop climate change and I think I could add some thoughts of mine on the basis of my recent work that I published in the form of the book titled “The Seneca Effect“.

The problem we have been discussing is how to limit emissions and we saw that it needs to be done fast and even drastically if we want to avoid the worse effects of climate change. Obviously, it is not easy. (image from Skeptical Science)

Most of what has been said today was based on a “top-down” approach, which I may also describe as supply-limiting. That is, we are speaking of a carbon tax, of emission limits, and the like; measures that governments should take in order to limit the production of fossil fuels. I don’t have to tell you that it is an effort that has been ongoing for several years and yet emissions keep growing. It doesn’t seem to work

So, can we take the opposite approach? That is, look at the demand side in a “bottom-up” approach?

…click on the above link to read the rest of the article…

WORLD’S LARGEST OIL COMPANIES: Deep Trouble As Profits Vaporize While Debts Skyrocket

October 17, 2017

WORLD’S LARGEST OIL COMPANIES: Deep Trouble As Profits Vaporize While Debts Skyrocket

The world’s largest oil companies are in serious trouble as their balance sheets deteriorate from higher costs, falling profits and skyrocketing debt. The glory days of the highly profitable global oil companies have come to an end. All that remains now is a mere shadow of the once mighty oil industry that will be forced to continue cannibalizing itself to produce the last bit of valuable oil.

I realize my extremely unfavorable opinion of the world’s oil industry runs counter to many mainstream energy analysts, however, their belief that business, as usual, will continue for decades, is entirely unfounded. Why? Because, they do not understand the ramifications of the Falling EROI – Energy Returned On Invested, and its impact on the global economy.

For example, Chevron was able to make considerable profits in 1997 when the oil price was $19 a barrel. However, the company suffered a loss in 2016 when the price was more than double at $44 last year. And, it’s even worse than that if we compare the company’s profit to total revenues. Chevron enjoyed a $3.2 billion net income profit on revenues of $42 billion in 1997 versus a $497 million loss on total sales of $114 billion in 2016. Even though Chevron’s revenues nearly tripled in twenty years, its profit was decimated by the falling EROI.

Unfortunately, energy analysts, who are clueless to the amount of destruction taking place in the U.S. and global oil industry by the falling EROI, continue to mislead a public that is totally unprepared for what is coming. To provide a more realistic view of the disintegrating energy industry, I will provide data from seven of the largest oil companies in the world.

The World’s Major Oil Companies Debt Explode Since The 2008 Financial Crisis

…click on the above link to read the rest of the article…

A Hot Mess

September 1, 2017

A Hot Mess

It wasn’t until more than a week after Hurricane Katrina slammed into New Orleans in 2005 that the full extent of the damage was recognized and so it will go with the hot mess where Houston used to be. Mostly, it is inconceivable that the business activity which made Houston the nation’s fourth largest city and, according to Chris Martenson, equal to the 10^th largest economy in the world, will ever return to what it was before August 26, 2017.

The major activity there has been the refining and distribution of oil products, and no activity is more central to the functioning of the US economy. So the public and our currently clueless leaders across the political spectrum, plus a legacy news media lost in the carnival of race and gender freak shows, is about to discover the dynamic relationship between energy and an industrial economy.

The pivot in this relationship is banking, which enables the conversion of oil’s raw power into everything else that goes on in a so-called advanced economy. The popular assumption is that federal disaster relief can compensate for all losses. That assumption may go out the window with the Houston flood of 2017. And no amount of federal aid can compensate for the hours, days, and weeks that will tick by as businesses struggle to return to something like their former level of normal operation.

Many businesses will never recover, especially the smaller ones that support the big one — the little tool and die shops, the construction outfits, the trucking and shipping concerns, the riggers and pipefitters, the cement companies, and so on. All of that activity existed in highly rationalized chains of on-time production and service and nothing will be on-time in Houston for a long time to come.

…click on the above link to read the rest of the article…

When the Butterfly Flaps Its Wings

August 28, 2017

When the Butterfly Flaps Its Wings

It remains to be seen what the impact will be from Mother Nature putting the nation’s fourth largest city out-of-business. And for how long? It’s possible that Houston will never entirely recover from Hurricane Harvey. The event may exceed the physical damage that Hurricane Katrina did to New Orleans. It may bankrupt large insurance companies and dramatically raise the risk of doing business anywhere along the Gulf and Atlantic coasts of the USA — or at least erase the perceived guarantee that losses are recoverable. It may even turn out to be the black swan that reveals the hyper-fragility of a US-driven financial system.

Houston also happens to be the center of the US oil industry. Offices can be moved elsewhere, of course, but not so easily the nine major oil refineries that sprawl between Buffalo Bayou over to Beaumont, Port Arthur, and then Lake Charles, Louisiana. Harvey is inching back out to the Gulf where it will inhale more energy over the warm ocean waters and then return inland in the direction of those refineries.

The economic damage could be epic. Much of the supply for the Colonial Pipeline system emanates from the region around Houston, running through Atlanta and clear up to Philadelphia and New York. There could be lines at the gas stations along the eastern seaboard in early September.

The event is converging with the US government running out of money this fall without new authority to borrow more by congress voting to raise the US debt ceiling. Perhaps the emergency of Hurricane Harvey and its costly aftermath will bludgeon congress into quickly raising the debt ceiling. If that doesn’t happen, and the debt ceiling is not raised, the federal government might have to pretend that it can pay for emergency assistance to Texas and Louisiana. That pretense can only go so far before government contractors balk and maybe even walk.

…click on the above link to read the rest of the article…

Oil Industry To Waste Trillions As Peak Demand Looms

June 28, 2017

Oil Industry To Waste Trillions As Peak Demand Looms

ExxonMobil and its peers risk blowing $2.3 trillion on oil projects that will not be needed if the world hits peak demand in the next decade.

A new report from The Carbon Tracker Initiative analyzed what would happen if the oil market saw demand peak by 2025, a scenario that would be compatible with limiting global warming to just 2 degrees Celsius. The headline conclusion is that about one-third of the global oil industry’s potential spending – or about $2.3 trillion – would not be needed. In other words, the oil industry is on track to waste a massive pile of money if demand peaks in less than ten years.

Of course, the vulnerability to peak demand varies by company. Carbon Tracker surveyed 69 global oil and gas companies, and their exposures range from 10 to 60 percent of their potential spending. That is, 10 to 60 percent of their spending could be unnecessary or wasteful if demand peaks by the middle of the next decade. The latest report adds more detail to the “stranded assets” theory – the notion that large volumes of oil will be left in the ground because demand peaks, whether because of alternatives or climate regulation, or both.

Some medium-sized companies like Southwestern Energy and Apache Corp. topped the list with 60 to 70 percent of their potential upstream capex vulnerable in a peak demand scenario. As for the oil majors, ExxonMobil would be the most vulnerable to peak demand, with about half of its potential spending through 2025 unneeded. Other oil majors fare a bit better, although not by much. Chevron, Eni and Shell could see 30 to 40 percent of their capex spent on wasted projects.

Which projects are subject to redundancy largely comes down to economics. U.S. shale drilling has seen dramatic costs declines, pushing some higher-cost projects out of the range of viability in this scenario.

…click on the above link to read the rest of the article…

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Venezuela’s US-appointed coup leader Juan Guaidó plans to privatize state assets and give foreign corporations access to oil, the Wall Street Journal admitted.

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