Tag Archives: Statoil

Why You Should Be Skeptical Of Big Oil Companies Asking For A Price On Carbon

Repost from ClimateProgress

Why You Should Be Skeptical Of Big Oil Companies Asking For A Price On Carbon

By Emily Atkin, June 3, 2015 at 4:19 pm

Shell, Statoil, Total, and BP were four of six companies to request a price on carbon be included in international policy frameworks. Six large European oil and gas companies are asking governments across the world to charge them for the carbon dioxide they emit.

In a letter released Monday, Shell, BP, Total, Statoil, Eni, and the BG Group told the chief of the United Nations Framework Convention on Climate Change that a price on carbon “should be a key element” of an international agreement to address global climate change. The letter came while U.N. negotiators met in Bonn, Germany to work towards that agreement.

For those who want to fight climate change, this is good news. But it’s not totally unprecedented. Other high-emitting companies, including Shell, have expressed support for a carbon price before. And big oil companies have been expecting some sort of carbon price for a long time — the biggest ones have already incorporated it into their business plans. Exxon Mobil, ConocoPhillips, Chevron, BP, Shell; they’re all financially prepared for a carbon price if and when it comes their way.

That more and more oil companies are now actively calling for a carbon price, though, is good for the climate fight. Total, BP, Statoil, and Royal Dutch Shell are all among the 90 companies causing the vast majority of global warming via their exorbitant carbon emissions. Now, they’re acknowledging they want to at least pay for some of those emissions, and that seems like a positive development.

At the same time, it’s not like any of those six companies are halting their plans to drill. They haven’t recognized the science that says two-thirds of all proven fossil fuel reserves will have to be left in the ground to avoid catastrophic warming. Shell is still planning to explore for oil in the Arctic; BP just recently expanded its operations in the Gulf of Mexico.

More importantly, though — at least in terms of getting a carbon price in the final U.N. climate deal — the European companies that signed the letter wield little power within the U.S. Congress compared to other big oil companies. This matters because the terms of that deal will almost certainly have to be approved by Congress if it is to include an enforceable price on carbon. Under U.S. law, any international agreement that binds or prohibits the United States from actions not otherwise mandated by law must be ratified by Congress.

BP, Statoil, and Total might be actively calling for a carbon tax, but the three biggest U.S. oil companies — ExxonMobil, Chevron, and ConocoPhillips — aren’t. (ExxonMobil says they would prefer a carbon tax to a cap-and-trade system, but they don’t outright support it). And those U.S. companies are spending much more to influence Congress than the letter-writing companies on campaign donations and lobbying.

Contributions include donations from company employees, PACs, and soft money contributions.
Contributions include donations from company employees, PACs, and soft money contributions. CREDIT: Patrick Smith

To be fair, European companies have more restrictions on how much they can give than U.S.-based companies do. But not only are the biggest U.S. companies spending far more to influence U.S. politics, their money is going to politicians who are actively fighting efforts to price carbon in the United States.

During the 2014 election, for example, the biggest receiver of funds from ExxonMobil, Chevron, and ConocoPhillips was former Sen. Mary Landrieu (D-LA). Landrieu marketed herself, among other things, as the “key vote” that made sure a carbon pricing system wasn’t implemented by Congress in 2010. Other candidates supported by those three companies were John Boehner, Mitch McConnell, Mark Begich, John Cornyn — all have said they oppose a price on carbon.

In fact, the Republican party as a whole in the United States is opposed to policies that price carbon. Though it says nothing about a carbon tax, the last official Republican party platform touts opposition to “any and all cap-and-trade legislation.” Unsurprisingly, the vast majority of all oil company campaign contributions is going to Republicans.

oillobby (1)
Oil Lobby CREDIT: Patrick Smith

There are other reasons to be skeptical of any big oil company fighting for a price on carbon. For one, some companies have said they would support a carbon tax, but only if they can avoid other climate-related regulations. As David Roberts pointed out for Grist back in 2012, “the fossil fuel lobby would never give a carbon tax their OK unless EPA regulations on carbon (and possibly other pollution regs) were scrapped.” It’s also reasonable to assume that oil companies see profits increasing in the markets for low-carbon natural gas while the high-emitting coal industry tanks, and realize that coal would be hurt far worse by the policy.

In other words, it is great that some of the world’s biggest contributors to climate change want to be charged for the carbon they emit. But we still have a long way to go before big oil actually joins the fight.

Oil price crash: companies shelved or delayed 26 schemes, including 9 tar sands projects

Repost from Business Green

Report: Oil price crash stalls more than $100bn of fossil fuel investment

Research on behalf of the Financial Times shows oil majors have shelved or delayed 26 schemes, including nine tar sands projects
By Jessica Shankleman | 19 May 2015
Tar sands in Canada
Tar sands in Canada

Oil majors have put more than $100bn of investment in new projects on ice in response to the plunge in oil price, new analysis by consultancy Rystad Energy revealed today.

The study, commissioned by The Financial Times, shows that 26 projects in 13 countries have been delayed or axed since oil prices started to tumble last year, including nine Canadian tar sands schemes.

The revelation follows warnings from analysts such as the Carbon Tracker Initiative that capital and carbon intensive projects such as tar sands developments and deep sea drilling operations will struggle to turn a profit if oil prices remain low.

The price of oil crashed to $45 per barrel in January from a high of $115 in June 2014 as a result of surging output of US shale oil and lower than expected demand in Asia. The downward trend in prices was further accelerated by the decision of the Organization of the Petroleum Exporting Countries (Opec), led by Saudi Arabia, to resist calls for it to curb supplies in a bid to protect prices.

As a result, companies such as Royal Dutch Shell, BP and Statoil have been forced to shelve some of their costlier projects.

The analysis shows that at least $118bn of investment has been hit, which is likely to delay future production by as much as 1.5 million barrels per day. This in turn could lead to a substantial rebound in the price of oil, said Rystad.

The report follows a series of studies that have warned capital intensive fossil fuel projects could become stranded assets if the transition to a low carbon economy leads to tighter environmental regulations and reduced demand for fossil fuels.

The findings come after a report from the Institute for Energy Economics and Financial Analysis (IEEFA) yesterday showed how coal company stock prices have collapsed in recent years, concluding that the industry now faces a “grim outlook” as a result of tightening environmental legislation and increasing stranded asset risks.

Moreover, yesterday saw the University of Oxford confirm it will not invest in coal and tar sands as part of its ethical policy to fight climate change.

Tar Sands Going the Way of the Dodo? – Energy companies canceling tar sands projects

Repost from OneEarth.org

Are Tar Sands Going the Way of the Dodo?

Energy companies are canceling their tar sands projects.

By Brian Palmer | March 6, 2015
Photo: O.F.E.

Shell withdrew its application to extract tar sands from Canada’s Pierre River mine last week. The cancellation is news in itself, but the oil company’s decision to walk away from a massive seven-year project says a great deal about the viability of tar sands generally. Last year, the Canadian Association of Petroleum Producers cut its 2030 tar sands production forecast by 400,000 barrels per day. Last week, the energy consultancy Wood Mackenzie predicted that cash flows from tar sands would drop $21 billion in the next two years. The industry is undeniably shrinking.

Tar sands won’t disappear tomorrow, of course—most of the expense comes in opening the mine, so producers will keep operating their existing mines for several decades. New mines, however, are economically unfeasible. It’s difficult to break even in the tar sands business at current low oil prices. Over the medium term, the lack of pipeline access challenges any prospects for profitability. (That’s why the industry is so desperate for the Keystone XL and Energy East pipelines.) Looking deeper into the future, the specter of carbon taxation is enough to scare energy executives away.

All this is good news for the climate. Tar sands are the most carbon-intensive form of energy on the planet, emitting three or four times more greenhouse gas than conventional crude oil (which isn’t exactly good for the environment either). Here’s a brief rundown of all the canceled or deferred Canadian tar sands projects in recent months, and how much carbon they could have pumped into the atmosphere.

Pierre River Mine
Company: Shell
Stated reason for withdrawal: “Our current focus is on making our heavy oil business as economically and environmentally competitive as possible.”
Projected barrels per day: 225,000
Carbon saved from the atmosphere each day, in tons: 21,000

Corner Oil Sands Project
Company: Statoil
Stated reason for withdrawal: “Costs for labor and materials have continued to rise in recent years…Market access issues also play a role, including limited pipeline access.”
Projected barrels per day: 40,000
Carbon saved from the atmosphere each day, in tons: 3,700

Christina Lake Expansion
Company: MEG Energy
Stated reason for withdrawal: None given
Projected barrels per day: 150,000
Carbon saved from the atmosphere each day, in tons: 14,000

Narrows Lake
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 130,000
Carbon saved from the atmosphere each day, in tons: 12,200

Grand Rapids
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 180,000
Carbon saved from the atmosphere each day, in tons: 16,800

Telephone Lake
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 90,000
Carbon saved from the atmosphere each day, in tons: 8,400

MacKay River Expansion
Company: Suncor
Stated reason for withdrawal: “Cost management has been an ongoing focus…In today’s low crude price environment, it’s essential we accelerate this work.”
Projected barrels per day: 40,000
Carbon saved from the atmosphere each day, in tons: 3,700

Joslyn Mine
Company: Total
Stated reason for withdrawal: “Costs are continuing to inflate when the oil price and, specifically, the [net profit] for the oil sands are remaining stable at best—squeezing the margins.”
Projected barrels per day: 160,000
Carbon saved from the atmosphere each day, in tons: 15,000

* * *

Tally that up and these canceled or postponed projects represent nearly 95,000 tons of carbon dioxide staying in the ground rather than floating into the atmosphere. That’s the equivalent of taking 6.6 million cars off the road. Murmurs in the energy industry suggest that several other projects will soon be deferred or canceled, as oil prices show few signs of recovering. Stay tuned.

National Public Radio: Fiery Oil-Train Derailments Prompt Calls For Less Flammable Oil

Repost from National Public Radio
[Editor: An excellent overview of efforts to regulate the volatility of Bakken Crude.  Audio appears first below, followed by text version.  Significant quote: “Energy economist Philip Verleger, says the resistance is about money. ‘The industry never wants to take steps which increase the cost of production, even if it’s in the best interests of everybody,’ he says. Verleger says the opposition to proposed safety rules is short-sighted, and that the industry could actually hurt itself if there’s another serious incident. ‘I think the movement of crude oil by rail is one accident away from being terminated,’ Verleger says.”  – RS]

Fiery Oil-Train Derailments Prompt Calls For Less Flammable Oil

A fireball goes up at the site of an oil train derailment in Casselton, N.D., in this Dec. 30 photo. The fiery crash left an ominous cloud over the town and led some residents to evacuate.
A fireball goes up at the site of an oil train derailment in Casselton, N.D., in this Dec. 30 photo. The fiery crash left an ominous cloud over the town and led some residents to evacuate. Bruce Crummy/AP

Once a day, a train carrying crude oil from North Dakota’s Bakken oil fields rumbles through Bismarck, N.D., just a stone’s throw from a downtown park.

The Bakken fields produce more than 1 million barrels of oil a day, making the state the nation’s second-largest oil producer after Texas. But a dearth of pipelines means that most of that oil leaves the state by train — trains that run next to homes and through downtowns.

After several fiery accidents, oil companies are under pressure to make their oil less explosive before loading it onto rail cars. But oil companies say rules requiring those modifications will create more problems than they solve.

The trains passing through Bismarck worry Lynn Wolff, an activist with the environmental group Dakota Resource Council. “Last December we got the wake-up call,” he says. “That was the explosion and derailment of an oil train in Casselton, N.D.”

Wolff is referring to a crash in farmland just outside the small town of Casselton. No one was hurt, but the crash could have been deadly had it happened in town.

This summer, Bismarck officials ran through a simulated oil train derailment, with responders operating on the assumption that some of the town’s buildings would be devastated or destroyed, says Gary Stockert, Bismarck’s emergency manager. “We exercised with the assumption that we had over 60 or 70 casualties.”

Around the country, other cities and towns with oil train traffic are preparing for similar disasters.

In neighboring Minnesota, Gov. Mark Dayton “is concerned primarily about the safety of people along oil train routes, and in particular about the fact that this is a very volatile oil,” says Dave Christianson, an official with the Minnesota Department of Transportation.

Dayton has joined activists in asking North Dakota to force oil companies to “stabilize” the oil — to make it less explosive by separating out the flammable liquids.

Last month, North Dakota Gov. Jack Dalrymple convened a public hearing on the idea. Keith Lilie, an operations and maintenance manager for Statoil, which has a big presence in the Bakken, testified in front of a room full of oilmen in suits and cowboy boots who came to the hearing from places like Oklahoma City and Houston.

Lilie said he opposes having to build expensive tanks to heat the oil and separate out flammable liquids, like butane.

“Statoil believes the current conditioning of crude oil is sufficient for safely transporting Bakken crude oil by truck, rail and pipeline,” he said.

Eric Bayes, general manager of Oasis Petroleum’s operations in the Bakken, also testified. He asked what companies are supposed to do with those explosive liquids once they’re separated from the oil.

The stabilization process, he says, would “create another product stream you have no infrastructure in place for.”

But energy economist Philip Verleger, says the resistance is about money. “The industry never wants to take steps which increase the cost of production, even if it’s in the best interests of everybody,” he says.

Verleger says the opposition to proposed safety rules is short-sighted, and that the industry could actually hurt itself if there’s another serious incident. “I think the movement of crude oil by rail is one accident away from being terminated,” Verleger says.

Activist Lynn Wolff supports new rules that would make the oil less explosive, and says such regulation would protect people beyond North Dakota. “These bomb trains have been in Virginia and Alabama and blown up there as well,” he says.

Federal officials in Washington are also considering ways to make oil trains safer, such as strengthening tank cars.

As for making the oil leaving the Bakken less flammable, officials in North Dakota say they’ll make a decision by the end of the year.

This story was reported with Inside Energy, a public media collaboration focusing on America’s energy issues.