Exxon Could Pay $1 Billion for Sabotage of Texas Oil Wells
by Josh Garrett, editor of The HEAT Zone
(image: serembanhalfmarathon.com)
It’s easy to make villains of Big Oil. They take home record profits while we struggle to pay for that extra gallon of gas or heating oil. But realistically, oil companies are just doing what all companies do—chasing profits. So it’s not really fair to single out oil companies as the “bad guys” of the corporate world.
Well, sometimes it is.
(image: pbs.org)
An article from Bloomberg reported earlier this month that, from the late 1980s until 1991, Exxon Mobil sabotaged oil wells in Texas to prevent rival companies from tapping them later. That’s right—SABOTAGED. We’re not talking about Nigerian rebels or terrorists in the Middle East here; we’re talking about Exxon Mobil, an American company operating on American soil. According to Bloomberg, Exxon Corporation, as it was then known, began to abandon some Texas wells in the ‘80s following a dispute over royalty rates the with the owners of the oil land, the O’Connor family. Apparently, they decided to leave behind some thank you gifts when they vacated the premises.
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Oil Prices End Rally on Weak Economic Data, Slipping Stock Markets
At 8:54 am EDT, the price of crude had lost 0.7 percent to move to $67.91 a barrel and the price of heating oil had fallen by 0.6 percent.
HEAT USA Price Report
Today’s average retail heating oil price per gallon: UP $0.02
Morning projection (for Wednesday’s price per gallon): DOWN $0.02
After posting nine consecutive says of gains, the price of crude fell this morning, weighed down by negative economic data and retreating US stock markets. Poor earnings reported by major US corporations (such as health insurance giant Aetna) in recent days have put a damper on hopes of economic recovery and the reinvigorated demand for petroleum products that will presumably accompany such a recovery. This morning, major oil corporation BP issued a mixed earning report that included second quarter profits that were down 50 percent. Negative economic reports from major European banks drove down European stock markets today as well, contributing to lower oil prices.
HEAT USA price experts reported that despite a basically flat day for heating oil on NYMEX yesterday, retail prices crept up this morning.
Climate Change Coalition Waffles on Support for Emissions Bill
(image: earthwillremain.files.wordpress.com)
The Wall Street Journal reported on Monday that climate change legislation now working its way through Congress in the form of the American Clean Energy and Security Act (ACES) is encountering increased resistance from industry as changes are made to the bill. Some of the objections are coming from prominent members of The U.S. Climate Action Partnership (USCAP), a broad group of businesses and environmental organizations that was instrumental in building support for capping U.S. emissions of greenhouse gases in the first place.
In January of this year, USCAP issued “A Blueprint for Legislative Action”– a detailed framework for legislation to address climate change. USCAP CEOs testified before the House Energy and Commerce Committee to discuss their efforts to advance climate legislation with a greenhouse gas cap-and-trade system in 2009. USCAP members, according to the coalition’s website, “have come together to call on the federal government to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions. USCAP has issued a landmark set of principles and recommendations to underscore the urgent need for a policy framework on climate change”
It’s interesting that even though USCAP recommended that the U.S. set emissions standards, the provisions some of its members are having trouble with, according to the Journal article, are the very ones having to do with those standards. Caterpillar, for instance, objects to the standards for off-road heavy equipment like its bulldozers. It also objects to a provision which would impose tariffs on goods from countries that don’t match U.S. efforts to combat climate change. Read More »
Oil Companies Merging in Preparation for Economic Recovery and Surge in Demand
(image: usedrefused.com)
Traders have speculated that Royal Dutch Shell has an interest in buying out Heritage Oil, a Canadian-based exploration company, the UK Guardian reported yesterday. However, just weeks ago, Heritage announced that it had reached a deal to purchase Turkey’s Genel Energy.
Such is life in the oil exploration industry, where mergers and buyouts have become commonplace in recent weeks. The UK’s Emerald Energy has said that an unspecified firm has inquired about purchasing the company. Sinopec, China’s state-controlled oil refiner, has purchased Addax, an exploration firm with assets in West Africa and the Middle East. Both BP and German utility RWE have been rumored to have interest in Dana Petroleum, which owns fields in both the North Sea and Africa. And shareholders of Scotland’s Venture Production turned down a merger bid from Centrica, which ranks as England’s biggest energy supplier. At first glance, this rapid consolidation in the industry doesn’t make much sense; worldwide demand for oil has bottomed out and prices are once again falling. But these firms are strategizing based upon many factors. Read More »
Exxon Makes Big Investment in Algae Biofuels
(image: embrownny.files.wordpress.com)
An artist's conception of a massive alage biofuel farm. (image: claytonbodiecornell.greenoptions.com)
The world’s largest publicly traded oil company, Exxon Mobile, is investing $600 million in the world’s smallest plants, the AP reported today. Exxon just announced a partnership with biotech company Synthetic Genomics to develop transportation fuels from algae.
Fossil fuels, such as coal, natural gas, and petroleum, as well as their many derivatives, such as gasoline, number 2 home heating oil, diesel, and propane, are formed from the remains of organisms that lived and died millions of years ago. They are primarily made of hydrocarbons, which are the principal ingredients of all living organisms, especially plant life. There’s no reason why, with the proper processing, fuel can’t be made from currently living organisms, skipping the whole buried-in-the-ground-for-millions-of-years part. And that’s what biofuels are—fuels produced from plants or other living organisms.
Biofuels can—and have been—produced from many different types of plant matter, including corn, switchgrass, and wood chips. Exxon appears to be betting on algae–tiny water-dwelling plants often called “pond scum” (though most algae lives in salt, not fresh, water). Why algae? To begin, algae are ferociously efficient at converting sunlight and carbon dioxide into algae—they can actually double their weight several times a day under the right conditions. Fast growing means algae can produce a lot of biomass to convert into fuel; some estimates suggest that algae can produce 15 times more oil per acre than other biofuel crops like corn or switchgrass. Also, since they “feed” on carbon dioxide (using the energy from sunlight to convert it into useful organic compounds through the process of photosynthesis), algae capture carbon dioxide, helping with global warming and offsetting carbon emissions from industry. Even better, algae also needs other nutrients, such as those found in sewage. Theoretically, you can run pipes from your sewage treatment plant and from you coal-fired power plant directly to your algae tanks, cleaning up your air and water at the same time you produce fuel. Read More »
Obama Gives Nod to Importance of Ghana's Oil Reserves in Speech
A sign showing president Obama and Ghanaian president John Evans Atta Mills welcomed Obama to the country. (image: bbc.co.uk)
Last week, President Barack Obama delivered a well-received speech in Accra, the capital of Ghana. In his remarks, Obama discussed many issues, ranging from the importance of democracy to the tragedy of the continent’s HIV/AIDS crisis, the Canadian newspaper The Globe and Mail reported on Sunday.
Obama’s speech totaled close to 4,000 words. But it’s one word that he mentioned twice that stands out: oil.
In 2007, a British exploration firm discovered an oil field in Ghana’s territorial waters that holds an estimated 600 million barrels of proven reserves. This could represent a potential goldmine for the nation of 23.9 million. But, as Obama noted, it also has its share of pitfalls: “Oil brings great opportunities. And you have been very responsible in preparing for new revenue. But as so many Ghanaians know, oil cannot simply become the new cocoa.”
Obama’s warning addressed the tendency that some nations have had in becoming dependent upon a sole commodity as its primary source of revenue. In many cases, these nations do not diversify what they produce, which leads to stagnating economies. Read More »
Iraqi Unions Slow Progress of Oil Industry Development
Iraqi workers demonstrating in Basra. (image: uslaboragainstwar.org)
The Iraqi government gets more than ninety percent of its revenue from energy exports, primarily oil, which also generate over 70 percent of the nation’s total economic activity. For a nation with rampant unemployment and a low standard of living, widespread sectarian strife and frequent out-and-out conflict, as well as an infrastructure that is still shattered eight years after the invasion, there would seem to be no greater priority than ramping up its one and only productive industry to bring in the foreign exchange and revenue it desperately needs for investment, social welfare, government operations, and—last but certainly not least—security. One would think that all Iraqis would recognize this, and would rally behind any proposition that stood to make its oil sector more productive and profitable.
One would think. However, this is Iraq, where it seems that if you ask three people the time, you’ll get four different answers, and where forging a national consensus is like trying to build a skyscraper on shifting desert sands. Iraq’s labor unions are rallying against, not for, recent and proposed deals to bring foreign investment and expertise in to help the nation’s oil industry, Reuters reported this morning. Specifically, unions are lobbying against Iraq’s new contracts with BP and China’s CNPC to develop the nation’s largest oil field. The unions feel that the contracts would overcompensate the foreign firms, though the foreign firms themselves feel they are being undercompensated (or rather, overcharged). While both unions and oil companies obviously have their own interests in mind and cannot be taken as unbiased actors, it’s worth noting that out of eight fields bid out for development last month, foreign firms only tendered acceptable bids for one—suggesting that the oil companies are right, and that what the Iraqi government wants to charge is too high, not too low. Read More »
150 Years After First Oil Well, Concerns About Peak Oil and Other Dwindling Resources
The world's first oil well, drilled by Colonel Edwin Drake in Pennsylvania in 1859. (image: chemistryexplained.com)
We’ve previously looked at the Peak Oil theory here on The HEAT Zone. The idea is that oil is running out and what’s left is becoming harder to find and more difficult to extract. Eventually, it will either simply be gone, or be so difficult and expensive to get at, that nobody will be able to afford it. There are arguments against this and certainly there are still huge reserves of oil in the Middle East and elsewhere. But, any way you do the numbers, oil’s a finite resource. They’re not making any more of it and, sooner or later, what remains will be used up. The hope is that alternative energy sources will gradually replace oil altogether, but many of those sources may face their own problems with availability and pricing.
An article that appeared this week on the investment website Seeking Alpha reminds us that on August 27th we’ll celebrate the 150th anniversary of Colonel Edwin Drake’s completion of the world’s first successful oil well near Titusville, Pennsylvania. That discovery, writer John Petersen, says, “planted the seeds of an industrial, economic and cultural revolution that transformed America from an agrarian backwater into a global superpower.” Read More »
Nigeria Extends Amnesty to MEND Rebel Leader Amid Increasing Violence
MEND rebel leader Henry Okah. (image: AFP via google.com)
Nigeria is Africa’s biggest oil producer and the world’s eighth-largest, but a years-long struggle between rebels in the Niger Delta and the Nigerian government has seriously hampered oil production. As reported earlier this month on The HEAT Zone, the Movement for the Emancipation of the Niger Delta, better known as MEND, has launched repeated attacks on Nigeria’s oil infrastructure in recent weeks. To many, MEND is a group of freedom fighters doing battle against a government ranked among the most corrupt in the world that exploits the region. But to others, MEND is a terrorist group that seeks sole control of the region’s oil in its own quest for power.
Since 2006, overall production in the country has been reduced by 20 percent due to the violence, which has roiled the world’s oil markets. Some have estimated that MEND’s attacks have caused a crude output reduction of 900,000 barrels a day.
In order to quell the violence, Nigerian authorities are attempting a new strategy: offering MENDs rebels, including its leader, Henry Okah, amnesty, the AFP press agency reported yesterday. By doing so, Nigerian authorities hope to reach a truce with MEND and bring the conflict to the negotiating table. Okah has been imprisoned for over 18 months by Nigeria’s government on charges of gun smuggling and treason against the state. Read More »
Oil Prices Up on Nigeria Attack and Stock Rally
The price of crude rose 3.3 percent today to close at $71.49 a barrel and the price of heating oil gained 2.9 percent.
HEAT USA Price Report
Evening projection (for Tuesday’s average retail price per gallon): UP $0.06
Crude and heating oil prices posted another big rally today, boosted by supply concerns stemming from a Nigerian rebel attack on an oil platform that broke a cease fire early this morning. A rising Dow Jones Industrial average showed a flurry of buying on American stock markets, stimulated by new hopes of soon-to-come economic recovery.
HEAT USA Price Experts adjusted this morning’s price forecast to reflect the expectation of a large increase in retail prices tomorrow.
