As the Iraqi Kurds boost their bargaining power with their first unilateral sale of crude oil on the international market, and new unilateral pipelines coming online soon, Kurdish officials and Baghdad have reached a tentative agreement to restore relations.
Last week, the Iraqi central government and authorities of the semi-autonomous Kurdistan Regional Government (KRG) put together a seven-point deal that could see the Kurds resume oil exports to Iraq in return for a revision of the Iraqi 2013 budget, which cut two-thirds out of the Kurd’s share.
On 1 May, KRG Prime Minister Nechirvan Barzani announced that the two sides had made headway in discussions on the issue following over a month of boycotts of the Iraqi parliament by Kurdish deputies over the budget discrepancy.
In January, the KRG halted exports of crude through Iraqi-government-controlled pipelines over non-payment of fees by Baghdad (to wit: $4.5 billion). Baghdad has refused to pay arrears for foreign oil companies operating on KRG territory, which the Iraqi central government says is a violation of the country’s sovereignty. (Related article: OPEC Falling Apart at the Seams) ( Continue… )
JPMorgan Chase is reportedly accused of manipulating energy prices to make money-losing power plants seem profitable.
Between 2010 and 2011, JPMorgan Chase sold electricity to authorities in California and Michigan at prices “calculated to falsely appear attractive,” reads a confidential government document acquired by The New York Times.
The alleged market manipulation cost the states $83 million in excess payments.
The nation's largest bank could face stiff penalties from the Federal Energy Regulatory Commission (FERC), a low-profile agency charged with regulating the sale of electricity. FERC has not yet made a public statement about the investigation, but analysts suggest the regulator is likely to pursue charges. Call it the "Enron effect."
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"In 2001, FERC acted as if market manipulation was a sort of boys-will-be-boys situation," Frank Lindh, general counsel at the California Public Utilities Commission (CPUC), said in a telephone interview. "Now, they seem to be taking it more seriously." ( Continue… )
Growing security risks in the Middle East are giving oil companies the jitters. French supermajor Total said recently that it was spending more on security since the January attack on the In Amenas gas facility in Algeria. BP said it had its own concerns, noting it was holding back on natural gas projects in the country because of the security situation there. OPEC-member Algeria has seen production declines in every month so far this year. In a lackluster economy, there hasn't been much from OPEC members to suggest there was any sort of revival. But with seven of the 12 members of the cartel experiencing at least some form of upheaval, the cost of doing business suggests members may need more than a little bit of luck to return to glory.
In January, fighters affiliated with al-Qaida stormed the In Amenas natural gas facility in Algeria. The facility is operated by British supermajor BP, Norwegian energy giant Statoil and Algerian state-owned oil and natural gas company Sonatrach. A four-day operation by Algerian forces left dead more than two dozen militants and 37 hostages, some of them energy company employees. The attack was perpetrated by an al-Qaida group, dubbed Those who Sign with Blood, from across the border in Libya. (Related article: Saudis Dare U.S. to Play Oil Ball)
Four months on and energy companies working in the region are expressing concern that the cost of doing business in the region may be too high. BP suspended an oil contract in Libya when civil war descended on the country in 2011. By last year, it said the situation there had approved enough to consider exploratory drilling but backed off again after the cross-border attack in January. It's Algeria's turn this time around, with BP saying it was reviewing its plans to develop natural gas fields in the country. ( Continue… )
As usual, the real news belongs to a couple of things you may have missed this week.
One, at first completely unrelated to energy, but of major consequence to everything else was the discovery that the Reinhart/Rogoff economic study that underpinned austerity economics world-wise had a key error in it.You couldn’t make this up. Reinhart and Rogoff certainly didn’t but they did make two key errors in the 2010 economic study that was cited world-wide as the reason why governments should cut back spending during the recession instead of spending their way out. In short, it was all down to an Excel error and leaving some key information out. This was easy to miss due to the newsflow from Boston and Texas, but seek this amazing story out or go directly to Paul Krugman in the NY Times or just one of several places in the FT. Think of this as paradigm shift equal to that of shale energy, only bigger and quicker.
I can hardly believe that I'm about to write this sentence: oil companies - some of the most highly valued companies in the world - may actually be undervalued on the stock markets. Let me explain.
As those of us who follow the energy industry know, the oil industry is undergoing a sea-change. Usually cited as the result of a combination of hydrofracking and horizontal drilling, there is a boom in oil production. It is doubtless that those technologies were important, but it is how they have been paired with information technology and seismic imaging that has completed the puzzle. The companies now know where to drill and what will come out, long before any steel goes in the ground.
The results speak for themselves; only five years ago, North Dakota was producing 172,000 barrels of oil per day, today it is producing 779,000 barrels per day - an almost 5-fold increase. Similar things are happening at previously obscure shale plays around the country.
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This is important to a company's valuation because in the past, oil companies were valued by the amount of reserves they have available. However, with this new suite of technologies, oil production has become more akin to advanced manufacturing. The companies apply skilled labor, scientific know-how, and large amounts of capital to a resource area that doesn't looks like a traditional oil field - and you get a valuable product out. Because of this, the oil majors should be treated more like manufacturing companies than resource extraction firms. Traditional oil drilling (as it is still practiced in most of the world) was like sticking a straw into a water balloon - you knew how much was in the balloon, and valued the company based off those estimates. ( Continue… )
A solar-powered plane took off from an airfield near San Francisco early Friday morning, intent upon completing the first cross-country flight relying only on the power of the sun.
If you're picturing photovoltaics glistening on jumbo-jet wings, some curbing of enthusiasm is in order. Friday's landmark event is less a peek into the future of commercial flight than it is a dramatic endorsement of clean-energy technology.
"It is the first and only airplane that can fly day and night on solar power without any fuel," said Bertrand Piccard, a pilot of the so-called Solar Impulse, in a midflight interview via radio with CBS 5 News Phoenix.
"It is possible because all the technologies we use are really energy-efficient technologies," Mr. Piccard added, his voice crackling through static as he soared 13,000 feet over Fresno, Calif., en route to Phoenix. "We want to promote these technologies." ( Continue… )
On 26 April, the world largely yawned as a nuclear anniversary came and went.
Twenty-seven years ago, the Ukrainian SSR nuclear power plant at Chernobyl exploded, providing a severe test of the USSR’s General Secretary of the Communist Party Mihail Gorbachev’s policy of “glasnost” (“openness,”), which the sclerotic Soviet leadership signally failed, providing a less than candid drip feed of news about the magnitude of the disaster.
Nothing to see here, move along.
Twenty-five years later, Tokyo Electric Power Co.’s six reactor Fukushima Daiichi NPP was decimated by a tsunami generated by the offshore Tohoku earthquake in the western Pacific, estimated at 9.0 on the Richter scale. ( Continue… )
The race for acceptance of electric vehicles has gone from a two-car competition to a three-car free-for-all.
For the second month in a row, the Nissan Leaf beat the Chevy Volt in sales and could soon take over in sales year to date. Now, luxury carmaker Tesla Motors is joining the fray. Even though sales of electric cars cooled in April, the appearance of Tesla is livening up the competition.
"It’s a neck-and-neck race for those three," said Alec Gutierrez, senior market analyst for Kelley Blue Book, in a telephone interview.
Leaf sales dip after a record month. Nissan sold 1,937 Leafs in April, a 423.5 percent increase from a year ago, but down from March 2013's record sale of 2,236 Leafs. March is always a strong month for Japanese manufacturers because it marks the close of their fiscal year, Mr. Gutierrez noted. So it's no surprise that Leaf sales growth would slow a bit in April, which is typically a slower month for the industry overall. ( Continue… )
Okay, I'm going to give you the shortest course ever in energy abundance: Energy abundance depends entirely on the RATE of energy flow. Let me say it again: Energy abundance depends entirely on the RATE of energy flow.
Now, here is what it does NOT depend on: supposed, but often unverified, fossil fuel reserves in the ground; hypothetical, sketchy, guesstimated, undeveloped, undiscovered resources imagined to be in the ground by governments or by energy companies and often deceptively referred to as "reserves"*; claims about future technological breakthroughs; mere public relations puffery about abundance in the face of record high average oil prices.
Why is the rate of flow the key metric? Because in order to function the global economy depends entirely on continuous, high-quality energy inputs. We cannot shut down the world's electric generating plants for six months or even three months without crashing world society into a state of irretrievable chaos and decline. We cannot shut down the world's shipping fleet for even a few weeks without doing irreparable harm. Modern global society has become like a shark. It either keeps barreling forward or it dies.
Fossil fuels that are actually proven to be in the ground are by definition not currently being used, whatever we may consider their potential. Fossil fuels that are hypothetical and undiscovered by definition cannot be used. Technology is NOT energy. Technology runs ON energy. Energy first, then applied technology. The ancient Romans designed and built small steam engines and used them to animate children's toys. But, the Romans lacked the dense energy sources needed to make steam engines practical as a mode of transportation or of power for manufacturing. ( Continue… )
The announcement, on Tuesday, will benefit California-based solar panel developer SunPower Corp. (SPWR), which will supply and install solar panels in over a dozen Verizon facilities across five US states.
The clean energy spending spree will also benefit Oregon-based fuel cell maker ClearEdge Power, which will supply and install hydrogen fuel cells at Verizon facilities in California, New Jersey and New York. (Related article: Could MLP’s be Embraced by the Renewable Energy Sector)
Verizon says the $100 million price tag on its clean energy plan makes economic sense in the long run. ( Continue… )