abarrelfull wrote on 21 Dec 2009 06:50
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Should Alberta Control Production
created: 18 Jan 2010 07:58
tags: alberta oil politics sands
Last week, the energy minister for Alberta made a controversial statement in an interview.
"I believe we have an opportunity to sit down as a cabinet and have that discussion and say, 'As this thing starts to crank up again, are we going to change our policy of come one, come all into the development of the oil sands?"
This created a huge amount of discussion. Alberta has gained massively from oil sands development recently and stands to continue to do so in the future.
The problem that the minister wishes to address however is the volatility of activity. In the last couple of years, the oil sands patch has gone from boom to bust. This was primarily due to oil prices. However, it is also due to the massive inflation in costs that went together with the boom, costs that could not be borne as oil prices fell.
The idea seems to be that by controlling investment, this volatility can be decreased. The suggestion is generating a lot of criticism. This is a very relevant one.
That gets into a very tricky situation for government, if that is the case, just simply because they'll be put into a position to determine why some projects should proceed ahead of others
The idea is not without its merits, but in practise it is just not going to work.
The problems that were created by the boom, were primarily shortages of things like labour, and lack of infrastructure capacity. When looking at how royalties are paid, and what is done with the income, perhaps the provincial government could do more to tackle these problems, rather than try to slow development. In fact the current slow down gives a great opportunity to reassess what could be done better.
It would be a shame if the current opportunity were to be missed, as better management of the next boom would ensure that the benefits better extend to everyone in the province.
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Brazil is the New Black
created: 15 Jan 2010 08:14
tags: bg brazil galp petrobras
Today's theme is Brazil, simply because a number of unrelated stories nicely illustrate the rise of that country as an energy giant. Brazil is the most fashionable thing in the industry.
First up we have an update on drilling in the sub salt, by one of the fortunate first movers.
BG Group (25%) and partners Petrobras (65% and operator) and Galp (10%) have announced the conclusion of the formation test on the Iara well (1-BRSA-618-RJS or 1-RJS-656) in the BM-S-11 appraisal area in the Santos Basin pre-salt, offshore Brazil.
The tests proved the exploration potential of the area by producing light 28° API oil and confirmed the estimated recoverable volumes for Iara to be in the order of 3 to 4 billion barrels of light oil and natural gas
There have been many rumours and conspiracies over the size or availability of these reserves, so good news is welcome.
The daddy in that partnership is in the news for other reasons as well. On one hand it is expanding refining capacity.
A ceremony that will include President Luiz Inacio Lula da Silva will mark the start of construction at Bacabeira in the northern state of Maranhao, Petrobras said. Work on the refinery is expected to be completed in September 2013.
Meanwhile Petrobras is talking to Galp (the other partner) about taking a stake in the company.
Brazilian state energy giant Petroleo Brasileiro is in talks to buy a stake in Portugal's Galp Energia, Mines and Energy Minister Edison Lobao confirmed Wednesday.
This would give Petrobras a entrance into the downstream market in Europe. However Petrobras is being coy.
Petrobras, whishes to clarify the news published by the Brazilian and international press regarding: potential acquisition of the stakes held by ENI S.p.A. in Galp Energia; possible partnerships with Galp Energia in the exploration segment; and contracts for oil products distribution in Europe.
The Company clarifies that it is always analyzing investment opportunities in Brazil and abroad that are aligned to the strategies set forth in its Business Plan, but that in this case there is no negotiation in progress.
As they have pursued Galp in the past, there is probably something going on.
Meanwhile, the company has released its reserve data for 2009.
On December 31st, 2009 Petrobras' Proved Reserves of oil, condensate and natural gas amounted to 14.865 billion barrels of oil equivalent (boe), a decrease of 1.5% in relation to last year figures.
The number will no doubt rise as they continue to work in the subsalt.
A few years ago, few people outside the industry had ever heard of Petrobras. In a few years time, you will be hard pressed to find someone who is ignorant of them.
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Russia Threatens to Cut Oil to Belarus
created: 14 Jan 2010 08:52
tags: belarus druzhba pipeline russia
We are familiar with the plotline. In the middle of winter, Russia demands higher prices for its energy exports to its neighbour, and threatens to shut the pipeline if its demands are not met.
Ukraine & Gas? Not this time.
Russian oil flows to one of two Belarussian refineries could be suspended within 24 hours because oil firms are unwilling to confirm volumes due to a ongoing pricing dispute, Russia's pipeline monopoly said.
Once again, we see that Russia sees energy as a source of power, not just a business. The dispute is not just a problem for Belarus either.
Last year, Moscow allowed Minsk to import 20 million metric tons of oil, of which 14.5 million metric tons Minsk re-exported to Europe.
“This is a bilateral dispute between Russia and Belarus. The European Commission expects all sides to honor the commitments both in terms of transit and oil supplies to European citizens,” said Mark Gray, a spokesman for the European Commission.
The European Union receives about 10 percent of its oil via the Druzhba pipeline, which crosses Belarus.
Once again, Eastern and Central Europe may see supply problems.
As always, the Russian argument is not without its merits, and there is no reason why Russia should subsidise cheap energy to its neighbours. However, Russia is cleary abusing its position in order to increase its control over the energy markets. The signal that it is sending out to Europe (if its boneheaded politicians will listen) is that Russia cannot be trusted.
Bit Tooth Energy has a more detailed take on the story
