Newsletter

U.S. Industry Scoreboard 12/8 [44,398 bytes]

The U.S. is trying to gain support-or at least empathy-for the climate change proposal it is defending at the U.N. climate change conference in Kyoto (see story, p. 18). U.S. Sec. of State Madeleine Albright wrote a piece for London's Financial Times justifying the approach, which has been criticized in Europe as being too unambitious.

"The American proposal," said Albright, "would return greenhouse gas emissions to 1990 levels between 2008 and 2012. Cuts below 1990 levels would follow. This target is tough and realistic. It represents our commitment to do what we promise, not promise what we cannot do. And it would mean that by 2010 U.S. emissions would have been cut by about 25% from newly projected levels."

With the spotlight on Kyoto, it appears energy industry players are competing for a place on the greenhouse gas stage.

Elf has said that it plans to reduce greenhouse gas emissions 15% by 2010 (OGJ, Dec. 1, 1997, Newsletter). U.K.'s Chemical Industries Association joined the bidding with a promise to reduce energy consumption per ton of product by 20% from 1990 levels by 2005.

Meanwhile, Eurogas-the EU gas industry association-has made a strong plea that the Kyoto conference consider replacing higher-carbon-content fuels with natural gas.

Compared with other fossil fuels, natural gas has a lower carbon-to-hydrogen ratio per unit of energy produced, and it generates 41% less CO2 than hard coal, 28% less than heavy fuel oil, and 24% less than heating oil, said Eurogas. For this reason, the association wants to promote use of natural gas vehicles, adopt energy schemes that combine natural gas and renewables, encourage R&D for natural gas applications, increase energy efficiency, and assist gas-technology transfer to developing countries.

Not to be outdone, the European Commission adopted a white paper setting out a plan to double Europe's share of renewable energy in primary energy use to 12% by 2010.

Among its aims are EU-wide installation of: 500,000 solar power systems in schools and public buildings, large wind farms with combined generating capacity of 10,000 MW, biomass CHP schemes totaling 10,000 MW capacity, and 100 renewable energy schemes in communities for local power supply.

Meanwhile, the U.K. is reportedly considering proposals for a £300 million/year ($480 million) subsidy to promote renewable energy schemes as part of a strategy to combat climate change.

The U.K. is mulling funding development of fledgling technologies, such as wind and solar power, through a "vastly increased" levy on electricity supply.

Showing how Northwest Europe's operators may have to think in a greener world, Saga has revealed plans for its Snorre 2 platform.

Saga said Snorre 2 could be the first Norwegian offshore development to adopt new technology that sharply reduces NOx and CO2 emissions.

Per Movig, Saga's R&D vice-president, said, "Clean production is a key target for Snorre 2 development. Use of exhaust heat, low-nitrogen-oxide turbines, closed flaring, and injection of produced water and drilling mud are already design criteria. These approaches will give minimal discharges to the sea and emission cuts of 70% for NOx and 30% for CO2. However, we're considering whether to go a step further."

Movig said contractor Kvaerner has started developing new technology for reducing carbon emissions in flue gases. Saga will install a pilot plant on Snorre 2 for CO2 stripping, if R&D goes as planned.

Norway's new environmentally-friendly energy minister Marit Arnstad complimented Saga for its initiative, in a way that suggested the same would be expected of others: "I take this as a clear signal that substantial emission cuts can be achieved on new installations."

Recently announced increases in OPEC oil production quotas are prompting a decline in crude prices (see story, p. 21).

Purvin & Gertz (P&G) expects prices to weaken through the remainder of the decade as a result of increased OPEC output. And this will occur despite demand increases of 2 million b/d/year, said P&G, adding: "Varying expectations for non-OPEC output growth continue to result in widely divergent market outlooks. WTI prices have already fallen $3.50/bbl from early fourth quarter peaks, and further declines are probable."

Pipeline projects continue to capture petroleum industry interest.

On the central Asian front, Turkmenistan has chosen Shell EP International Ventures to lead a project to build a gas export pipeline to Turkey via Iran. France's Sofregaz will perform a feasibility study on the project and finalize plans by yearend. The 2,000-km line will transport 2.7-2.9 bcfd of gas from Yashlar and Davletabad fields. It will run parallel to the Caspian coast, either on land or in shallow water.

Meantime, construction of a gas pipeline from Myanmar to Thailand, widely denounced by international activist groups, is now the target of protests by Thai factions. About 100 opponents of the line, a project of the Petroleum Authority of Thailand, rallied outside Thai government headquarters last week.

The protesters claim human rights abuses and environmental damage. They say ethnic minorities have been forced to work on Myanmar infrastructure projects related to the pipeline and that Thailand does not need the gas.

The Myanmar section of the line is complete, but the activists want to halt construction of the 260-km Thai section unless the route is changed to bypass virgin forest, home to endangered species.

The Alliance Pipeline project has obtained financing for its $3.7 billion (Canadian) project to move more than 1.3 bcfd of natural gas from British Columbia to the Chicago area (see related story, p. 32). Funding for the project will come from equity partners and major banks that will provide debt financing. Alliance has $8 billion of shipping commitments in 15-year contracts.

Meanwhile, Canada's National Energy Board has handled pre-hearing motions and will start the main Alliance hearing Jan. 6 in Calgary.

The board ordered Alliance to release the names of shippers and the volumes of gas they have agreed to ship on the line. Alliance fought release of the information, which was requested by NOVA and other interests opposed to Alliance (OGJ, Nov. 17, 1997, p. 46). NEB said Alliance had not adequately demonstrated the need for confidentiality on the information. NOVA, which moves about 90% of gas within Alberta, said it needed the information to determine what effect Alliance would have on its business. Alliance and NOVA talked earlier this year but failed to make a deal under which NOVA would participate in the Alberta section of the Alliance line. Alliance wants to begin construction in mid-1998 and finish by November 1999.

Saudi Arabia may allow U.S. and European oil companies to participate in the Khafji offshore concession, now held exclusively by Japan's Arabian Oil Co. (OGJ, Nov. 3, 1997, Newsletter). The announcement is thought by some to be an exertion of pressure on Japan to step up liftings of Saudi crude.

The current concession contract between AOC and Saudi Arabia will end in 2000-a fact that Saudi Arabia may be using as a bargaining chip.

Before his government collapsed last week, former Indian Prime Minister Inder Kumar Gujral's was attempting to kick-start the petroleum ministry's new exploration licensing policy into action.

At a government meeting in New Delhi last month, Gujral directed the ministry to follow to the letter guidelines set forth by the country's ministers for awarding 12 small and medium-sized oil fields and 47 exploration licenses to the private sector. Although the new licensing policy was announced 6 months ago, no new blocks have been put up for bid by the government. This comes at a time when the country is struggling to achieve a crude oil production target of 34.373 million metric tons in fiscal 1997-98.

The Prime Minister's review shed light on how procedural bottlenecks are delaying the course of reforms, even in a vital area like petroleum.

British Gas has moved into electricity supply just as U.K. gas industry regulator Ofgas announced dates for opening up more areas of Britain to competitive gas supply.

Centrica, the U.K. gas supply company which still trades under the name British Gas and was formed when British Gas plc demerged late last year, will be the only new supplier to enter the electricity supply industry when it is liberalized next year. Although electricity suppliers have already moved into gas supply, Centrica claims it will be the only national supplier of both gas and electricity.

Meanwhile, 2.8 million residential customers in the U.K. will be able to choose their gas supplier as of Feb. 27, 1998. And 2.9 million more will have that privilege after Mar. 27, 1998. This will bring total customers in the liberalized U.K. market to 10 million-more than half the number of households. The rest of Britain, including the most-congested southeastern corner, will open to competition by next summer.