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Renewables Need Big Oil To Thrive

Renewables Need Big Oil To Thrive

We need the expertise, experience, and financial backing of Big Oil to drive wind energy forward in the U.S., following years of strong investments from oil firms across the country kickstarting the industry.  As activists and international agencies continue to criticize Big Oil for its role in climate change and environmental degradation, it is precisely those firms that have made some of the more significant investments and added some of the greatest value to renewable energy projects across North America.

Wind capacity is expected to increase by 60 percent over the next five years from 100,000 megawatts (MW) at present. And the global offshore wind market could reach a value of $87.5 billion by 2026 according to predictions, an increase from just $36.1 billion in 2019. However, it will require significant investment and know-how from seasoned energy experts to get wind projects off the ground and meet this demand.

In April this year, Chevron became the first U.S. oil major to invest in offshore wind, signing a deal with Norway’s Moreld to develop Ocergy, a turbine technology company. It follows in the footsteps of European majors Shell, Equinor, and Total, which all have well-established offshore wind energy projects.

The offshore development is part of Chevron’s $300 million low-carbon investment plan. The development will see the construction of floating offshore wind turbines which will be used to power part of the U.S. grid.

Similar projects have already been seen in other areas of the world as Shell, with partners SSE Renewables and Equinor, is currently developing the world’s largest wind farm in the northeast of England. Phases A and B of the Dogger Bank Wind Farm will have a combined power generation capacity of 2,400 MW.

 

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

Why Norway Won’t Give Up On Oil & Gas

Why Norway Won’t Give Up On Oil & Gas

Norway doesn’t have any second thoughts about oil exploration and investment in light of the International Energy Agency’s (IEA) report suggesting that no new fossil fuel exploration would be needed for a net-zero world.

Western Europe’s biggest oil and gas producer is doubling down on oil development and continues to consider oil exploration and production a critical part of its economy and income for the state.

Norway, the country with the highest electric vehicle (EVs) share of new car sales anywhere in the world, is not giving up on one of its core industries. The oil and gas sector is a major employer and the key contributor to the so-called oil fund, the world’s largest sovereign wealth fund with US$1.3 trillion in assets and holdings of 1.4 percent of all of the world’s listed companies.

The Norwegian government believes that the industry could reduce emissions and reach net-zero operations on the Norwegian continental shelf, at the same time ensuring new oil developments to support the local supply chain and employment. Norway is also betting big on offshore wind and carbon capture technology, including with strong financial support from the government, but it believes that oil and gas can continue to create value in the long term.

Norway is betting on offshore wind, hydrogen, and electrification to meet its commitment under the Paris Agreement, but its oil and gas sector will continue to play a major role in long-term job creation, economic growth prospects, and value for the country, the government said in a White Paper last month.

“The main goal of the government’s petroleum policy – to facilitate profitable production in the oil and gas industry in a long term perspective – is firmly in place,” Norway’s Minister of Petroleum and Energy, Tina Bru, said.

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

Has OPEC finally won the war against shale oil?

Has OPEC finally won the war against shale oil?

I have maintained for the past six years that a key goal of OPEC has been to so demoralize investors in shale oil that they stop sending money to the companies that drill for it. As I’ve written previously, I believe that OPEC’s contest with the shale oil industry is “part of a broader strategy meant to maximize Saudi revenues as production in the kingdom hovers at an all-time high over the next decade before beginning a decline.” It now appears that OPEC may have finally won its war against shale.

Investment in shale oil companies has finally collapsed—even as oil prices levitate. It has been a long time coming. The industry would like you to believe that it is now showing “restraint” in its capital spending. But, to use a dieting analogy, there is a big difference between watching what you eat and having your jaw wired shut—involuntarily in this case. The industry has experienced the equivalent of the latter in the capital markets.

What has amazed all of us who watched this battle play out is that OPEC didn’t win sooner. The relentless tolerance for losses among investors was beyond belief. And, when those investors returned in force after a brief vacation during the oil price bust in 2015, we skeptics grew concerned that rational thought had been eliminated from the universe.

Why did we think that? Because by that time the industry had already burned through hundreds of billions of investors’ dollars, dollars that merely subsidized petroleum consumers while enriching industry insiders. I am reminded of the joke about the business owner who explained that while he loses 5 cents on every sale, he makes it up in volume. Free cash flow numbers for the industry as a whole made it absolutely obvious that shale oil had been a money-loser for years. Why couldn’t investors see something that obvious?

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

Yellen Urges Development Banks To Stop Fossil Fuel Funding

Yellen Urges Development Banks To Stop Fossil Fuel Funding

U.S. Treasury Secretary Janet Yellen is prepared to gather together the heads of development banks to persuade them to stop fossil fuel project funding, according to Bloomberg.

The Treasury Secretary intends to “articulate our expectations that the MDBs align their portfolios with the Paris Agreement and net-zero goals as urgently as possible,” according to a written speech she is set to deliver at a climate conference in Italy.

The speech, soon to be delivered, follows just days behind a similar message that the financial community received at the G20, where financial leaders for the first time every acknowledged that carbon pricing was at least a potential tool in addressing climate change.

While Bloomberg notes that while development banks have never been responsible for the big bucks behind most fossil fuel projects, those funds are largely seen as a stepping stone for the projects to secure hefty commercial funding.

Since the pandemic began, development banks have thrown just $3 billion into oil and nat gas, with $0 going towards coal projects for the first time ever.

Meanwhile, development banks have funded $12 billion in clean energy projects.

But it is precisely these natural gas projects that will allow many countries to quickly and efficiently transition away from coal.

Prior to her appointment as Treasury Secretary, Yellen was criticized for her fossil fuel stock holdings. The Secretary vowed to divest her holdings in all fossil fuel companies as well as any companies that support fossil fuels.

Nevertheless, even before her time as Treasury Secretary and the chairman of the Financial Stability Oversight Council (FSOC), Yellen has been a staunch supporter of the environment and highly critical of the role fossil fuels have played in greenhouse gas emissions.

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

A looming oil price super cycle will likely be the last

After a pandemic and a price war sent petroleum prices tumbling in 2020, they are again on the rise. A new oil price super cycle — an extended period during which prices exceed their long-term trend — seems to be in the making.

That’s being driven by pervasive supply shortages from the lack of investment that has continued since the 2014 collapse in oil prices and, more recently, reduced investment in shale oil production. In addition, demand growth has been triggered by a strong recovery in countries such as China, a big stimulus package in the United States and global optimism about vaccines.
Nevertheless, this could be the last super cycle for oil because major economies appear committed to replacing fossil fuels, and car manufacturers have responded by committing to replacing internal combustion engine vehicles with electric vehicles. This shift will transform the oil market into one consistent with climate goals. But it also poses a risk of disorderly adjustment for economies dependent on oil, with far-reaching effects that in some cases could spill over their borders.

Oil investment crunch

Even with relatively lower oil prices, extraction and exploration companies have been highly profitable. At the same time, perhaps in recognition of a less buoyant future, they have reduced their investment. Production in oil fields and the number of wells are declining, and reserve depletion is rapid. The drop in both capital expenditure and replacement of oil reserves has persisted since 2014.
Covid has exacerbated the investment decline. For example, shale oil output — which has a shorter production cycle and therefore is more sensitive to changes in investment — is now increasing by half a million barrels a year, compared with 2 million barrels a year before the onset of the pandemic…

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

European Bank For Reconstruction And Development Ends All Upstream Oil Financing

European Bank For Reconstruction And Development Ends All Upstream Oil Financing

The European Bank for Reconstruction and Development (EBRD) will no longer invest in oil and gas exploration and production, the bank’s Managing Director Harry Boyd-Carpenter told Reuters as the institution pledged to align all its activities to the Paris Agreement goals from the end of next year.

“We will no longer invest in upstream oil and gas projects,” Boyd-Carpenter told Reuters on Thursday.

On the same day, the bank announced that its Board of Governors decided at the Annual Meeting 2021 to accelerate decarbonization across the regions it operates, supporting them to reach net-zero emissions by 2050.

The EBRD invests in projects in central and eastern Europe, Central Asia, and the Southern and Eastern Mediterranean.

The EBRD, however, will continue to invest in selected oil and gas projects in the downstream and midstream that are aligned to or contribute to the Paris Agreement goals, EBRD’s Boyd-Carpenter told Reuters.

“The low carbon transition requires the world economy to move in less than 30 years from a more than 80 per cent reliance on fossil fuels to a net-zero model. This is a challenge that is unprecedented in economic history. Similarly, the associated opportunity is enormous,” the EBRD’s First Vice-President Jürgen Rigterink said in a statement.

The EBRD is the latest bank to announce it would halt financing for one or other form of oil and gas.

Last year, Deutsche Bank ended financing for new oil and gas projects in the oil sands and the Arctic region effective immediately.

In the United States, Goldman Sachs said in December 2019 that it would decline to finance new Arctic oil exploration and production and new thermal coal mine development or strip mining. Wells Fargo and JPMorgan have also said they would stop financing new oil and gas projects in the Arctic.

Earlier this year, UN Secretary-General António Guterres’ said that banks should finance low-carbon climate-resilient projects, not big fossil fuel infrastructure that is not even cost-effective anymore.

BC Spends More Subsidizing Fossil Fuels Than on Fighting Climate Change: Report

BC Spends More Subsidizing Fossil Fuels Than on Fighting Climate Change: Report

Government says its upcoming royalty review will ensure ‘a fair return on our resources.’

Over the past year, the BC NDP have given away $1.3 billion in fossil fuel subsidies, which is more than the $1.1 billion it pledged to fight climate change, according to a new analysis by Stand.earth.

The report looks at B.C.’s “runaway” fossil fuel subsidies, which have been on the rise since the new government took over in 2018.

The subsidies provided in 2020-21 ($1.3 billion) are more than double what they were the last year the BC Liberals were in power ($557 million), the report says. Stand.earth predicts subsidies will surpass $1.8 billion in the next three years, which would be triple what the Liberals spent in 2016–17.

B.C. is only outdone by Alberta when it comes to the “generosity” of subsidies given to the fossil fuel industry, the report says.

Some of these subsidies are leftover policies from the BC Liberals that have “exponentially grown” and others, like ones aimed at encouraging LNG Canada, are “conscious decisions” from the BC NDP government, according to Sven Biggs, Stand.earth Canadian oil and gas program director.

The Stand.earth report was calculated using the World Trade Organization’s definition of fossil fuel subsidies, which Biggs says includes “any kind of tax break, or direct incentive or direct subsidy to oil and gas producers that encourage fossil fuel growth.”

It found the largest source of rising subsidies is the Deep-Well Royalty Program, which the report calls a “loophole for fracking operators” that will cost taxpayers $421 million this year in lost royalty revenue.

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

Shale oil and gas fraud: A sign of a peak in oil supplies?

Shale oil and gas fraud: A sign of a peak in oil supplies?

Those of us who watched incredulously as investors shovelled more and more money into what we were sure were money-losing shale oil and gas drillers do not find the current spate of fraud lawsuits against these drillers surprising.

The gargantuan claims about shale hydrocarbon reserves—which were compared more than once to those in Saudi Arabia—were clearly designed to woo investors into bidding up the stock price and/or hoovering up the constant stream of junk bonds emitted by the shale oil and gas drillers. The hype succeeded for a long time, even during the crash in oil prices in 2015 and beyond when investors convinced themselves that they were picking up “bargains.”

It wasn’t until the pandemic-induced plunge in oil prices that the reality of those outlandish claims was revealed, and many companies disappeared.

But this story of fraud and exaggerated claims is much more than a legal story. The large production gains that did take place in American oil fields had people believing America would be or already was “energy-independent,” a phrase that meant the country would not be a net importer of energy resources. Though U.S. dependence on imported energy resources did decline, it didn’t reach zero until the pandemic dramatically crashed U.S. oil demand below U.S. production. But as the world and U.S. economies rebound, that dependence is almost certain to return as the so-called “shale miracle” turns out to be something less than miraculous, bankruptcies continue and reserve estimates come back into line with reality.

But the fallout extends even further. The U.S. oil boom was the principal source of increased world production for most of the last 15 years. Without that boom and the boom in the Canadian tar sands, world oil production would have grown little or even declined.

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

Who pays for the care of “orphaned” oil and gas wells? You do

Who pays for the care of “orphaned” oil and gas wells? You do

When oil and gas wells end their useful life, one of two things happens: 1) They are plugged and capped to prevent further flows or 2) they are simply abandoned.

When they fall into the second category, they are called “orphaned” wells and they become the responsibility of the government to secure. But that’s if the government actually knows about them. Records of well placements are not always so carefully maintained and can get lost during bankruptcies and changes in ownership or due to sheer carelessness. As a result, there appear to be far more abandoned wells than the orphaned ones that governments know about.

Since I last wrote about this problem in 2012, there has been a huge wave of drilling in Texas, North Dakota, New Mexico and Colorado as the so-called shale revolution unleashed billions of barrels of previously inaccessible oil and trillions of cubic feet of natural gas on the world. Now that drillers in the shale fields have fallen on hard times, many wells are idle and at risk of being abandoned.

Companies are required to post bonds to pay for the plugging and capping of wells by the state if the companies fail to plug and cap them. However, these bonds are entirely inadequate. According to Grist, in Texas the bonds covered just 16 percent of the costs incurred by the state in 2015. In New Mexico the number was 18 percent.

The pattern here is a familiar one. The profits of oil and gas production get privatized and the costs—in this case, environmental and health costs—get socialized, that is, members of the public get saddled with the costs either through clean-up or damage to health and property

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

 

The ‘Big Con’ Revealed: Report Details Fossil Fuel Industry’s Deceptive ‘Net Zero’ Strategy

Big coal rig. Net Zero scam.

A brown coal mining machine operating at the Welzow-Sued lignite opencast mine in Welzow, eastern Germany. A new report out Wednesday details how so-called “net zero” pledges are simply schemes propagated by the fossil fuel industry and other powerful interests “to mask inaction, foist the burden of emissions cuts and pollution avoidance on historically exploited communities, and bet our collective future through ensuring long-term, destructive impact on land and forests, oceans, and through advancing geoengineering technologies.” (Photo: Patrick Pleul / dpa / AFP via Getty Images)

The ‘Big Con’ Revealed: Report Details Fossil Fuel Industry’s Deceptive ‘Net Zero’ Strategy

“Big polluters and rich governments should not only reduce emissions to Real Zero, they must pay reparations for the huge climate debt owed to the Global South.”

A new report published Wednesday by a trio of progressive advocacy groups lifts the veil on so-called “net zero” climate pledges, which are often touted by corporations and governments as solutions to the climate emergency, but which the paper’s authors argue are merely a dangerous form of greenwashing that should be eschewed in favor of Real Zero policies based on meaningful, near-term commitments to reducing global greenhouse gas emissions.

“Increasingly, the concept of ‘net zero’ is being misconstrued in political spaces as well as by individual actors to evade action and avoid responsibility.” —Report

The report—titled The Big Con: How Big Polluters Are Advancing a “Net Zero” Climate Agenda to Delay, Deceive, and Deny” (pdf)—was published by Corporate Accountability, the Global Forest Coalition, and Friends of the Earth International, and is endorsed by over 60 environmental organizations. The paper comes ahead of this November’s United Nations Climate Change Conference in Glasgow, Scotland and amid proliferating pledges from polluting corporations and governments to achieve what they claim is carbon neutrality—increasingly via dubious offsets—by some distant date, often the year 2050.

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

Annual Reserve Revisions Part III: Larger Independents

Annual Reserve Revisions Part III: Larger Independents

The story here is of a gradual decline in the size and importance of most of these (once) large independents. Their combined reserves and production is not sizeable compared to the super majors and majors but their history may be indicative of what is coming the way of the larger companies. All but one of these companies is American owned. Most have or had holdings in shale or oil sands but many have sold off most of these and chosen to concentrate on a shrinking core business. There is probably a fuller picture to see if their financial performances, such as debt loads or share buy back schemes, were also considered but that’s a bigger job than I’m prepared for or capable of.

For the reserves charts the right hand axis shows liquid (green) and gas (red) replacement ratio with the organic ratios and their trend lines as solid lines and total ratios, including trades, as diamond markers.

On the the production charts I have not shown R/P for the oil sands production (nor the replacement ratio on the reserves chart) as for the small producers it tends to whizz about all over the place as prices change, but see the future post on Canada and oil sands for some more details.

On the revision summary charts I have not shown the cumulative trades (acquisitions/dispositions) or adjustments and revisions if they go negative, as the charts are complicated enough as they are, though really colourful, which is what I mostly go for. However, in such cases, I have shown the final figure in the legend.

ConocoPhilips (COP)

In the last fifteen years, pretty much since its inception in the merger of 2002, COP has lost over half of its reserves, averaged below 100% replacement ratio (and falling) and seen production half…

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Today’s Contemplation: Collapse Cometh XIX

Today’s Contemplation: Collapse Cometh XIX

Tulum, Mexico (1986) Photo by author

Andrew Nikiforuk is an author and contributing editor of the online media site The Tyee. He has been writing about the oil and gas industry for close to 20 years. In his most recent article he writes about the lies being told by the Canadian government regarding its attempts to reduce carbon emissions. The Canadian government is certainly not alone in its misinformation (propaganda?) and one of the issues I believe is contributing to the lies is a (purposeful?) misidentification of our planet’s fundamental existential dilemma. Below is my comment on Andrew’s excellent discussion.

Thank you, Andrew. You’ve laid out the case for some very, very difficult decisions/choices/discussions that lay ahead of us.

I’m not convinced we will make what I consider to be the correct choices or even engage in some meaningful and productive dialogue since the changes that I believe are needed (degrowth) would be viewed as exceedingly painful to many as it challenges not only some core beliefs but what could be considered rights/entitlements/expectations regarding living standards (and it doesn’t help that we are genetically predisposed to avoid pain and seek pleasure). The brakes that need to be applied to some social practices/policies (perhaps most? all?) would also be challenged by some because I would contend the fundamental dilemma we are having to address is not necessarily carbon emissions, which I would argue is one of the consequences of the underlying issue, which is ecological overshoot.

The finite, one-time cache of easy-to-retrieve and cheap-to-access energy provided by fossil fuels has ‘fuelled’ an explosion in human numbers and sociopolitical/cultural/economic complexities unlike any other time in human pre/history. With this energy resource at our disposal we have constructed a complex, global, and industrialised world with technological wonders that would certainly appear magical to past generations.

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

German Ambassador Seconds Putin’s Fiery NS2 Remarks: “European Energy Policy Not Determined By Foreigners”

German Ambassador Seconds Putin’s Fiery NS2 Remarks: “European Energy Policy Not Determined By Foreigners”

The day after Putin announced the completion of the first leg of the Russia-to-Germany natural gas pipeline Nord Stream 2, declaring that essentially Washington’s best efforts to halt it via an avalanche of sanctions have been defeated, Germany appears to have seconded his assessment.

German Ambassador to Russia Geza Andreas von Geyr on Saturday in his own statements on the sidelines of the St. Petersburg International Economic Forum said that US efforts are illegal, going against international law. As cited in Russian media reports, the ambassador said: “At the moment, important negotiations between the American and German governments are ongoing, which include the topic of Nord Stream 2, but our stance on the matter is clear, and it will not change: we are convinced that the energy security of Europe, as well as European energy policy should be determined by Europeans only, and not by foreigners,” he stated confidently.

German Ambassador to Russia Geza Andreas von Geyr, Via FT

“As for the sanctions, our position is that such an instrument – extraterritorial sanctions – is not applicable, as it goes against international law“, he explained.

There’s nothing new in this position of Germany seeing in it a question of European sovereignty over its own energy policy. Both Russian and German sides have remain undeterred in completing the pipeline, yet interestingly it’s Washington’s position under Biden which appears to have softened and even reversed.

The Biden White House announced last month that it would waive sanctions for the German company overseeing its side of the 745-mile long pipeline project while at the same timing slapping more punitive measures on Russian vessels under Gazprom. Ostensibly an initiative to heal ties with Germany, it was clearly contradictory, as many observed…

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ESG = Energy Stops Growing

For most of my career, oil demand has grown each year and supply has roughly kept up. Sure, it’s overshot in both directions. We’ve seen shortages and we’ve seen gluts. We’ve even seen oil go negative. Throughout this time, we’ve always intuitively known that the cure for high prices is high prices. Last week may have forever changed this prudent logic. I’m starting to wonder if ESG really means Energy Stops Growing.

For those not paying attention, an obscure ESG hedge fund, Engine No. 1, captured two Exxon Mobil (XOM – USA) board seats. It now seems that for companies in indexes, whoever controls the ETF’s votes, now effectively controls their corporate destiny. ETFs are about marketing and asset gathering. There is no better way to stay in the news, looking responsible, than to burnish your ESG credentials. Does an ETF manager care if energy, one of the smallest weightings in most indexes, is now forced to destroy capital by going into run-off while trying to do “green” things? Probably not—they’re all cheering as BP (BP – USA) does exactly that. The attack on XOM was meant as a warning shot to all of corporate America; go along with ESG—or risk a pirate attack.

Meanwhile, over in Europe, Royal Dutch Shell (RDS.A – USA) was told by a court in The Hague to cut emissions by 45% by 2030. Clearly this is impossible even if they don’t drill another well. I expect that this will only embolden similar lawsuits. Most will be thrown out, but enough will be decided against energy producers that it will move the needle. If courts legislate against energy production, then producers will go into run-off. It’s not like there are a lot of investors stepping up looking to fund production growth anyway.

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

Change BC Fracking or Expect Damaging Earthquakes: Report

Change BC Fracking or Expect Damaging Earthquakes: Report

The new warning comes from a former senior scientist with the province’s oil and gas commission.

Since 2005, British Columbia’s experiment with hydraulic fracturing of gas wells has changed the geology of the province’s northeast. It is now home to some of the world’s largest fracking-induced earthquakes outside of China.

In 2018, one magnitude 4.6 tremor tied to fracking even rattled buildings in Fort St. John and stopped construction on the Site C dam. It was followed by two strong aftershocks.

Now, a comprehensive new scientific study warns that stress changes caused by the technology could trigger a magnitude 5 earthquake or greater in the region, resulting in significant damage to dams, bridges, pipelines and cities if major regulatory and policy reforms aren’t made soon.

Allan Chapman, the author of the paper served as a senior geoscientist for B.C.’s Oil and Gas Commission and as its first hydrologist from 2010 to 2017. Prior to working for the commission, he directed the Ministry of Environment’s River Forecast Centre, which forecast floods and droughts.

Chapman, now an independent geoscientist, said that he felt compelled to write the paper because researchers have concluded that fracking “induced earthquakes don’t have an upper limit” in terms of magnitude.

In addition, “there is a clear and present public safety and infrastructure risk that remains unaddressed by the regulator and the B.C. government.”

B.C.’s Oil and Gas Commission rejected Chapman’s conclusions in a statement to The Tyee, saying his study contained “speculation.”

Recent events in China’s Sichuan province prove that fracking can trigger large and destructive earthquakes.

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

Olduvai IV: Courage
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Olduvai II: Exodus
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