OGJ Newsletter

Nov. 2, 1998
U.S. Industry Scoreboard 11/2 [44,159 bytes] Climate change concerns continue to target the energy industry, and fossil fuels in particular, in the shadow of the Nov. 2-13 Buenos Aires meeting on climate change strategy (see related stories on pp. 27-39).
Climate change concerns continue to target the energy industry, and fossil fuels in particular, in the shadow of the Nov. 2-13 Buenos Aires meeting on climate change strategy (see related stories on pp. 27-39).

Germany's new green coalition government has proposed a new spectrum of energy taxes that would take effect Jan. 1. First in the taxers' crosshairs is gasoline, targeted for a 16¢/gal hike. Taxes on natural gas, heating oil, and electricity would follow in stages. The German finance ministry says the gasoline tax alone could raise $7.5 billion. The tax proposal has already stirred up a ruckus among Europe's oil companies and energy consumers, who decry its consideration amid a wobbly economic outlook.

Private firms may get a chance to join in the global trading of greenhouse gas emission credits. Japan plans to propose such a system at the global climate change meeting in Buenos Aires. Tokyo is going to introduce a proposal authorizing companies and industrial groups to secure emissions quotas if they contribute to reductions of greenhouse gases in other countries. The companies then would be allowed to sell the emission credits to countries that need them. The European Union has insisted that only nations be allowed to trade emission credits, citing the threat of industrial fraud, but Japan favors a corporate monitoring and reporting system to ameliorate that threat.

Most of the climate change abatement scenarios include industrialized countries turning more and more to natural gas.

A gas grid connecting Finland, Sweden, and Denmark with gas fields in Norway and Russia could be economically viable in the next 10 years.

That is the conclusion of a study commissioned by seven Nordic energy companies led by Neste Oy. This Nordic gas grid, developed in stages, could also be a hub for Russian gas transshipped to Western Europe and a link between the Baltic countries and Western Europe. With the investment such a grid would require, it would still be possible to maintain the price of gas it carries at the European average, the study found. It also concludes that the first stage of the Nordic gas grid could be completed by 2005 at the earliest.

Shell International and Public Gas Corp. of Greece signed a memorandum of understanding to study the feasibility of importing gas from Turkmenistan into Greece.

The agreement is part of a larger project between Shell and Turkmenistan involving transport of Turkmen gas to Turkey and on to Europe. To be included in the study is the possibility of importing LNG at a terminal at Revithousa.

And it is no surprise that mounting climate change fears bode well for renewable energy sources.

Shell International Renewables and South African state electric utility Eskom have formed a joint venture to bring solar power to 50,000 homes that stand little chance of ever being connected to the country's national grid. Shell and Eskom will target these homes over the next 2-3 years with a unique solar power system sold and serviced via local franchises. Designed by Shell Solar and Conlog (Pty.) Ltd., it will cost customers-currently dependent on candles and paraffin-only about $8/month," said Shell, "roughly the same as they spend now on less effective, unsustainable fuels." Customers will be able to buy from the local outlets each month a magnetic card that can be inserted into a solar unit for 30 days' operation. Shell sees the JV as a blueprint for initiatives under its new renewables business unit (OGJ, Nov. 24, 1997, p. 29).

The campaign in California against MTBE (OGJ, Oct. 19, 1998, Newsletter) has hit two major roadblocks. California Energy Commission says the immediate removal of the controversial additive from gasoline, used by many states to reduce car emissions, "would be drastic for consumers and catastrophic for California's economy." In a new study, CEC says that, even if a 3-year phaseout program were selected, Californians would face a hike in gasoline prices of as much as 7¢/gal. The price hike would depend on the choice of replacement additive and would, over time, level out, staying under 3¢/gal.

The report comes on the heels of Calif. Gov. Pete Wilson vetoing a bill that would have lifted the state's gasoline oxygen content cap, thus bolstering the market for other additives, notably ethanol, which is already marketed in every state except California. In response to a number of local controversies, including lawsuits, over MTBE contamination of water supplies in the state, California EPA has drafted two documents on MTBE's possible carcinogenicity and on its developmental and reproductive toxicity.

Meanwhile, governments crack down even harder on air emissions.

The U.S. Justice Department and EPA have announced the largest Clean Air Act enforcement action yet. Seven makers of heavy-duty diesel engines will spend more than $1 billion on environmental improvements, including a record $83.4 million civil penalty, to resolve allegations they installed devices on diesel engines that defeated emissions controls. EPA said the settlement would prevent 75 million tons of nitrogen oxide air pollution over the next 27 years. The firms, which comprise 95% of the U.S. heavy-duty diesel engine market, will reduce their total NOx emissions from diesels by a third by 2003.

President Clinton has signed a bill designed to persuade the major U.S. trading partners to legislate against bribery in international business transactions. The U.S. passed the Foreign Corrupt Practices Act in 1977, but U.S. firms complain it has put them at a disadvantage with foreign competitors.

The law would seek international cooperation by creating the Organization for Economic Cooperation and Development Convention Against Bribery.

Removing offshore oil and gas platforms carries a hefty price tag.

Decommissioning and removing more than 6,500 platforms and other facilities off 53 countries would cost $35-40 billion, Phillips Petroleum's W.S. Griffin Jr. told a workshop in Jakarta last week.

Size matters: 400 big North Sea platforms would cost $12-15 billion to remove; 4,000 Gulf of Mexico platforms would cost $5 billion. About 1,000 structures in Southeast Asia would carry a removal cost of $2 billion.

Another 750 platforms are in the Middle East.

For those involved in process control in the oil and gas industry, a recent vote by the IEC (International Electrotechnical Commission) takes the industry further away from an international fieldbus standard.

The IEC rejected the IEC 61158 Final Draft International Standard (FDIS) documents for the data link layer (DLL) and the application layer (AL), a disappointment for the Fieldbus Foundation (FF), which supports the international IEC 61158 fieldbus standard (OGJ, May, 20, 1996, p. 78). "The preliminary results-if they stand-are really a setback for the world's end users, who are overwhelmingly in favor of establishing a single, international, interoperable fieldbus standard," said FF Pres. John Pittman.

Profibus International opposes the proposed IEC 61158, saying, "In standardization terms, these FDIS documents are fundamentally flawed. Weellipsewill support a good IEC 61158 standard, if one can be developed."

The FDIS documents were rejected by 11 of the 33 IEC member countries casting votes; the 11 represent about 13% of the international process controls market. Although no IEC-member at presstime has appealed the vote, Dick Caro, chairman of the IEC SC65C/WG6 Fieldbus committee, suspects that a number of appeals are in process.

Depressed U.S. petroleum company earnings reflect the effects of low oil prices, flat gas prices, and weak refining margins.

In many U.S. company third quarter reports, adverse weather in the Gulf of Mexico also was blamed for contributing to poor earnings.

Year-to-year declines in net income-in many cases to negative numbers-are abundant.

Except where noted, the results shown are for the third quarter and in millions of dollars, with 1998 results shown first, followed by 1997 results. Losses appear in parentheses: Exxon 1,400 vs. 1,820, Duke Energy 428.7 vs. 309.5, Amoco 295 vs. 635, Shell 258 vs. 479, Texaco 215 vs. 490, PG&E 210 vs. 257, Kerr-McGee 195 vs. 37, Enron 168 vs. 134, Coastal 89.5 vs. 80.4, Tosco 80.3 vs. 100.9, Sun 80 vs. 111, El Paso 52 vs. 44, CalEnergy 47.6 vs. 46.4, Murphy Oil 46.8 vs. 100.5, Phillips 46 vs. 216, Dynegy 43.6 vs. 25, Oxy 38 vs. 157, Vastar 37.6 vs. 52.4, Utramar Diamond Shamrock 35.5 vs. 55.6, Williams 32.1 vs. 13.7, Northern Border 18 vs. 12.7, Burlington Resources 15 vs. 65, Nuevo 14.2 vs. 17.6, Columbia Energy 11.2 vs. 0.1, Frontier 9.4 vs. 9.2, Murphy 9 vs. 42.3, Holly Corp. (fourth fiscal quarter ended July 31) 8 vs. 3.5, Enron Oil & Gas 5.9 vs. 31.2, Valero 4.3 vs. 51.5, Apache 2.6 vs. 30.8, Houston Exploration 2 vs. 5.5, Magellan Petroleum (fiscal year ended June 30) 1.04 vs. 0.69, Unit (consolidated results) 0.7 vs. 2.1, CEC Resources 0.05 vs. 0.09, TransTexas (second fiscal quarter ended July 31) (0.8) vs. 262.7, Cotton Valley Resources (0.83) vs. (2.01), Delta Petroleum (0.96) vs. (2.46), McMoRan Oil & Gas (1.1) vs. (6.5), Colonial Gas (5.2) vs. (4.6), Pogo (9.9) vs. 9.9, Union Pacific Resources (17) vs. 67, Santa Fe Energy (17.8) vs. 9, and Cross Timbers (30.3) vs. 2.8.

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