1) Oil price hits UK, Qatar, Keystone, Falklands, Arctic, Tesla…..
The price of oil rose jolted up a little yesterday before falling again slightly this morning in what is becoming an increasingly costly dynamic for big energy investors.
The FT reports that billions of dollars of oil products have now been put on hold – pending a recovery in the price – including Statoil’s arctic investments we covered yesterday.
Shell & Qatar have ditched a £4.3bn investment in a gas to chemicals plant whilst explorer Premier oil have warned the falling oil price could leave a £200m hole in their balance sheet and said it would delay a possible £2bn investment in oil near the Falkland islands (see the FT above).
In the UK Staff in BP’s North Sea operation are expected to be briefed later about plans for significant job cuts.
When the news was announced last month a BP spokesman said: “The fall in oil prices has added to the importance of making the organisation more efficient and the right size for the smaller portfolio we now have.”
In the US the decision over Keystone could also be swayed by the market. At low oil prices, Penn Energy reports, Keystone becomes more important to the development of Canadian Oil sands meaning the US may have to revise it’s impact on climate change, a key factor in the decision. Worth noting though, when the project was proposed oil was even cheaper than it is now.
And it’s not just at the producer end that there are problems. Quartz reports that electric car maker Tesla has seen its shares “smoked” and “spanked” thanks – in part – to the lower price of gas.
One strange thing though. The drill count for fracking operations may be falling but in the heart of America’s shale boom – North Dakota – oil production just reached a new record. If Saudi Arabia is genuinely trying to kill US shale they might need to keep the price low for a while longer.
2) Gazprom warns Europe on gas
With the gas price falling along with oil the much heralded “gas war” promised over the Ukraine crisis really hasn’t happened – but the winter is not yet over and Gazprom is warning it still may.
“The transit risks in Ukraine remain this winter,” Gazprom chief Alexei Miller was quoted as saying following a meeting with the new European Commissioner for Energy Union, Maros Sefcovic, in Moscow.
The company has also suggested that it may shift gas transit from the Ukraine to Turkey though some may suggest the Russian energy giant is seeking to recover leverage in negotiations lost when fossil fuels apparently became cheap & plentiful.
3) China orders more coal shutdowns, Nuclear plant construction
China’s state planning agency has ordered the city of Shanghai and the provinces of Zhejiang, Jiangsu and Guangdong to draw up plans to reduce coal consumption in a bid to improve air quality, according to a policy document released on Wednesday.
The attempts to curb coal use due to air pollution come as China is also grappling to control water use, according to a team of scientists, with huge amounts needed for coal and energy development.
On the flip side China is expected to start building at least five new nuclear reactors this year, according to Bloomberg, though progress on the first of an advanced new model the country hopes to export faces further delays.
China’s nuclear investments have come under scrutiny in the UK where ministers are refusing to disclose if a Chinese investment in Hinkley was looked at by the National Security council.
4) Companies to be forced to reveal fracking chemicals
Fracking companies will be legally bound to reveal the chemicals used to blast gas out of every well they drill and to better monitor for groundwater pollution, under concessions made by the government in parliament which have failed to placate the opposition Labour party.
The UK move comes as the US The White House laid out its long-awaited strategy to reduce emissions of methane from the oil and gas industry on Wednesday.
However, the plan applied only to future oil and gas wells and infrastructure – and not the thousands of existing sites which are leaking methane, campaigners noted.
5) Wind, solar power become more competitive (though so does oil, gas)
As firms pull out of Arctic exploration Quartz reports on a new study which claims that offshore wind power in the US could provide more energy – and jobs – than offshore drilling (though it doesn’t say at what cost).
Cost is less of an issue for solar which – according to some reports – already costs less than grid power in major US cities. That might be why US utility NRG is aiming to become the second-biggest US rooftop solar company by the end of the year.
“We expect to convincingly persuade our investors that NRG has an embedded SolarCity within it,” said CEO Crane. “Everyone is beginning to believe that residential solar is this trillion-dollar market that currently has about 1 percent market penetration.”
It may be – but when it comes to investments in global solar things haven’t always worked out as the analysts at The Motley Fool observe.