The Competetive Market of Biofuels

Biofuels are garnering renewed attention as they prove not only to be an alternative to petroleum products, but because they have other environmentally friendly applications as well. Anything from sugar cane, to algae, to willow trees (wood biomass pictured on the left) are being used to create bioproducts, including biochemicals, and biofuels. All of this is being done on a large scale, quickly, cleanly and, incredibly, cheaply. Some of the bioproducts that these facilities are creating are products that would otherwise be harmful to the environment, but that can be created without the same harmful pollutants. One such product is an adhesive that uses lignin, the natural glue in wood molecules, as an alternative to more harmful, synthetic glues. Another derivative of biomass is xylitol, a natural sweetener; certainly not something that can be made from petroleum refinery.





The implications of all of this green technology will likely be substantial. The ability of Pure Power, the company that Forbes focused on in particular, to create such a wide variety of products, and to do so in large quantities and cost effectively is a big breakthrough for business to have greater incentive to join the green movement. Pure Power is positioned to become a greater and greater power in biomass exploitation, as they plan to build one or two bio-refineries per year, first in North America, then Brazil and then Asia. Another sign that business has incentive to join create bioproducts is the fact that Pure Power has formidable competitors. As I mentioned in a previous blog post, and as Forbes cites, Solazyme is a major player in algal biofuel technology and proves a source of competition in this pioneering field. So, not only is there competition for what types of fuels will become major players in the future, but there is also competition as to who will produce them.



Scource: Forbes

Images: 1, 2

Germany: Building the Energy Bridge

The German cabinet took a major step forward today in securing their vision of Germany’s energy future. A range of new proposals were passed, with the most talked about being the operational lifespan of the country’s nuclear plants. The plants were initially commissioned to operate through 2020, but plants built before 1980 were instead given an 8 year extension and newer plants were given an additional 14 years of operating time.

Germany has committed fully to the goal of making renewable energy the country’s primary energy source. The plan that was signed off on today outlines that ambitious goal. Chancellor Angela Merkel hopes that the lifespan extension of the country’s 17 nuclear plants will allow enough time for the renewable energy sector to expand. She’d better be right, because the German cabinet has turned its back on nuclear energy and now describes its role as “bridge technology” for future energy sources. The outright abandonment of nuclear energy is an interesting one. It’s still unclear why instead of having nuclear energy work in conjunction with Germany’s renewable sector, which accounts for a mere 16% of the country’s energy output, they have instead declared nuclear energy to be a dead end.

Germany's nuclear plants will be discontinued in 2034

Today’s plan details just how lofty the German renewable energy goals are. By 2050, Germany hopes to have reduced greenhouse gas emissions by 80%, and to have increased renewable energy to 60% of its total output. In order to facilitate the plan, the four German companies who operate reactors will be mandated to invest in additional security measures for the plants, and in return for the additional profits they expect to gain from the life extension, they will return half of those revenues to the government.  

Although the proposals have yet to pass the lower house of parliament, their affirmation looks promising. The renewable energy sector in Germany employed over 210,000 people in 2006; it remains to be seen whether its rapid expansion will result in a net job gain when the nuclear industry evaporates, or if renewable sources will be able to satisfy the expected energy demand.

Sources: The Wall Street Journal, The Energy Collective

Nuclear Energy a temporary replacement for oil and gas?

On Tuesday September 28, 2010 Germany disclosed its new energy policy and plans. According to The Wall Street Journal the plans involve brining down Germany’s consumption of greenhouse gasses by 80% by the year 2050. On a more controversial note the government has decided that nuclear energy is going to be their energy “bridge” to a more environmentally friendly energy source that will hopefully be created by 2050. In Germany this is especially controversial because the previous plan was to have all nuclear power plants closed by the year 2020 and now the last power plant according to this new policy will close at some point in the 2030’s.

Germany making the policy decision to become more reliant on nuclear energy will have repercussions globally as countries throughout the world try to cut down on greenhouse gasses and fuel emissions. It will be interesting to see if in the next few years other countries take on policies similar to Germany and attempt to cut down on their oil consumption. In addition it leads to the possibility of future legislation forcing car companies to make their cars more energy efficient if they want to sell in Germany, or if adopted in other countries, globally. It will also be intriguing to see how the oil and gas market, in Germany, responds to these policies.

Sources: http://online.wsj.com/article/SB10001424052748703882404575519493309998222.html?mod=WSJ_Energy_leftHeadlines
Pictures: http://www.google.com/imgres?imgurl=http://forum.johnson.cornell.edu/alumni/rochester/images/green_energy.gif&imgrefurl=http://forum.johnson.cornell.edu/alumni/rochester/news.html&usg=__vtqoSnWhry5sQybfwuH78oeMwLk=&h=302&w=262&sz=20&hl=en&start=0&zoom=1&tbnid=EJwSkTGpDU0_6M:&tbnh=96&tbnw=84&prev=/images%3Fq%3Dgreen%2Benergy%2Bsymbol%26um%3D1%26hl%3Den%26biw%3D1291%26bih%3D475%26tbs%3Disch:10%2C5&um=1&itbs=1&iact=hc&vpx=104&vpy=123&dur=1965&hovh=241&hovw=209&tx=95&ty=257&ei=QgGkTKevAYX6lwekmf2nCw&oei=QgGkTKevAYX6lwekmf2nCw&esq=1&page=1&ndsp=20&ved=1t:429,r:0,s:0&biw=1291&bih=475

and http://www.google.com/imgres?imgurl=http://skepticalteacher.files.wordpress.com/2010/08/nuclear-power-plant.jpg&imgrefurl=http://skepticalteacher.wordpress.com/2010/08/15/conservapedia-disconnected-from-reality-einsteins-theories-are-a-left-wing-conspiracy/&usg=__L5jEa7bXeXvm9NY0JQSIwrQx_7o=&h=396&w=500&sz=39&hl=en&start=0&zoom=1&tbnid=t3RsnRjXDZjPpM:&tbnh=148&tbnw=246&prev=/images%3Fq%3DNuclear%2Bpower%2Bplant%26um%3D1%26hl%3Den%26sa%3DN%26biw%3D1291%26bih%3D475%26tbs%3Disch:1&um=1&itbs=1&iact=hc&vpx=163&vpy=164&dur=31&hovh=200&hovw=252&tx=207&ty=164&ei=-wKkTObHCcT6lwfPpajRCw&oei=-wKkTObHCcT6lwfPpajRCw&esq=1&page=1&ndsp=11&ved=1t:429,r:6,s:0

Shale Gas projects in Poland

According to Gerson Lehrman Group, Chevron and Exxon Mobil are two of the most influential companies in the oil and gas industry. The gas and oil industry is looking outside the Middle East for future drilling projects. Russia and Poland are two locations that are recently gaining interest from major gas and oil companies such as Chevron Corp. and Exxon Mobil Corp. Chevron has exploration rights for four shale gas contracts to operate in southeastern Poland. Europe prefers shale gas in order reduce its dependence on imported gas specifically from Russia.

ExxonMobil has also have recently gained exploration rights in Poland. Chevron won five-year exploration licenses. These licenses belong to the Zwierzyniec, Kransnik, Frampol, and Grabowiec projects. Chevron has 100 percent ownership in these concessions.

ExxonMobil is targeting Germany and Poland to test efforts at finding shale gas in Europe. Techniques like horizontal drilling (a type of drilling used when it is harder or hardly impossible to drill) make it possible to explore even in densely populated areas. But authorities are concerned by projections that 70% of Europe’s natural gas will be imported by 2030.

It is important that European countries start to be independent of gas. Targeting shale gas project will improve their dependence and diminish it. It is incredible how Chevron and Exxon Mobil are trying to come up with these projections in search of shale gas. Poland has been recently found to be a potential country to drill for shale gas and Chevron and Exxon Mobil have started projecting the area.

http://www.marketwire.com/press-release/Analyst-Study-on-Chevron-and-Exxon-Mobil-The-New-Oil-Gas-Frontiers-1326048.htm

http://oilprice.com/Energy/Gas-Prices/Chevron-to-Seek-Shale-Gas-in-Poland-as-Europe-Focuses-on-Unconventional

http://www.glgroup.com/News/Exxon-Mobil-Royal-Dutch-Shell-BP-Total-Chevron-and-other-big-companies-know-37909.html

Revolutionizing a Revolution

Founded in 2005 in Fremont, California, Solyndra is an up and coming solar energy company that has a technology which promises to transform the solar electric game. The green movement to change the energy industry may itself be changed with Solyndra's solar tube technology that, at the very least, is a product that will keep other energy players on their toes. According to Green Tech Media, Solyndra has technology that will, "allow the company to compete with, and even undercut, the price for standard crystalline silicon solar arrays."


While oil and gas companies primarily focus on the production of oil and gas, all energy companies have invested at least some money and resources into alternative energy technologies. Given the amount of capital at hand, existing energy companies are most easily able to afford spending on research for future technologies, however, many smaller companies, even newcomers, seem to do the job more effectively. Solyndra is one such company that states as a goal to provide the lowest cost of installation in the commercial rooftop market. This strategy enabled the company to get contracts from Frito Lay and Anheuser-Busch, two major corporations looking to take advantage of this cost effective technology. The cost effectiveness of the Solyndra system is not from production cost, but from correlative money savers that come with installation, including tax credits and the incidental energy savings given the nature of having a reflective, white roof that is an essential part of what makes Solyndra's tubes so effective.

With a greater demand and movement toward renewable energy sources, not only will oil and gas companies have to protect their direct sales to power companies, but also the shift toward hybrid electric and fully electric vehicles now threaten the long standing sales of oil and gas to fuel transportation. The future of  oil and gas companies is relying, to a greater and greater extend, upon renewable energy, and battle that is being won, in many cases, from the ground up.


 Scources:

1. Bloomberg and Businessweek 
2. Green Tech Media
3. Solyndra

Champions of Electricity

Since its founding in 2005, Champion Energy Services has quickly climbed its way to the top of the private electricity providers in the U.S. Champion primarily serves markets in Texas, Illinois, and Pennsylvania with affordable energy from a company who values customer service. In 2006, Champion acquired competitor Mpower; the combined entity makes Champion one of the top 20 retail electric providers in deregulated domestic markets.

Deregulation in the energy industry is cited by the company as a key reason for its success and ability to grow as a company. Aware that consumers don’t usually judge the “quality” of electricity, but instead whether it is affordable and reliable, Champion has made a major push to be a leader in customer service. The company has changed the competitive landscape of the by making a distant but necessary commodity, such as electricity, accessible to the average consumer. This includes customer-friendly electricity bills, 24/7 live assistance, no hidden fees, and a commitment to offering the most competitive electricity rates.

Despite the fact that most energy companies are well established veterans who influence the industry with their sheer size and capital, Champion Energy has offered a new, focused approach to providing the best consumer experience possible—and it’s paying off. 

Sources: Eisenbach Consulting, Champion Energy

TAQA one of the latest companies in the energy industry

Abu Dhabi National Energy Company, known as TAQA, is a government controlled energy holding company of Abu Dhabi, United Arab Emirates founded in 2005. As a global company TAQA aims not only to create jobs and make profits, but also be a responsible employer and corporate citizen.

TAQA introduced some ethical values to the energy industry. TAQA employs people across the world from 41 nationalities. In terms of competition, TAQA in its fourth year excelled as one of the best performing companies in the region based on training & skills development, employee communication, and work atmosphere. TAQA signed an agreement with LRN, a company that helps businesses develop ethical corporate cultures. This means that TAQA is interested in performing successful corporate ethical environment.

It also supports communities through many projects that include more people than just those who work for them. In 2008 they prioritized health and education initiatives that were directly beneficial to our local communities.

Among competition, TAQA signed an agreement with atmosfair, a German non-profit organization, to make up for all their greenhouse gases caused by the company’s business air travels starting in January. “TAQA is the first corporation headquartered in the Middle East to commit to offset its flight emissions with atmosfair, said a company official.”[1] Now, there are more companies willing to help clean the air. Since much of their wealth comes from oil and gas interests, the funds set up by nations from Norway to the Middle East and China would be surpass their image by helping finance clean energy projects.

With new innovations not in drilling or technology advances, but also on humanistic purposes such as valuing employees and helping up communities, companies standout from all others. It is incredible hoe TAQA is willing to improve the well being of the environment relating to this German organization to make up for the greenhouse gasses.

---

[1] http://www.ameinfo.com/209943.html

alternet.org

Continental Resources Incoporated and Shale formations, the future of the energy industry?

A company that has recently emerged in the energy industry in the past five years, according to The Wall Street Journal and Bloomberg, is Continental Resources incorporated, who just last year had a 53% capital budget increase to be able to spend more on drilling shale. Continental Resources Incorporated has become a major player in the energy industry in the wake of the recently discovered Bakken Formation, otherwise known as the Bakken Shale Deposit, which spans North Dakota, Saskatchewan and Montana. Continental Resources has been critical in developing a new drilling technique to be able to reach the oil in the Bakken Formation.

The new technique involved drilling several thousand feet into the ground and then turning and going horizontally, which allows for a single well to get more oil. This technique was first used in Texas on natural gas fields and was then later attempted in North Dakota. The first few attempts were unsuccessful; however, Continental Resources Incorporated and various other oil companies including the Marathon Oil Corporation were able to master the technique.

The Bakken Formation itself is, according to the Wall Street Journal, the largest oil discovery in the United States in the past forty years. With the discovery of recoverable oil in the Bakken Formation and of several oil fields in the Gulf of Mexico the United States in 2009, for the first time since 1991, experienced a rise in oil production.

The Bakken Formation region looks very promising as some are prognosticating that it could have upwards of 4.3 billion barrels of recoverable oil. The energy industry, as a result of the new drilling technique used in the Bakken Formation, will now be able to recover oil in similar terrain around the world. This should lead to a worldwide increase in oil production, which could help turn around the current downward trend of the energy industry during the recession.

Sources:http://online.wsj.com/article/SB10001424052748703795004575087623756596514.html
http://www.bloomberg.com/news/2010-07-09/continental-resources-raises-capital-budget-53-to-exploit-oil-rich-shale.html

The Consequences of the San Bruno Pipe Line Blast

Following the September 9th explosion of a gas line in San Bruno, California, residents and officials are calling for action. The blast and the inferno that followed engulfed 58 homes, left four dead and four more missing. A pipe line explosion of this magnitude in a residential area will is not going without great inquiry by the public nor representatives. California Senators Barbara Boxer and Dianne Feinstein have asked for an inspection of the state's gas lines.

While the blast itself was destructive, the inferno that followed did much of the damage. And while some gas lines today employ technology that automatically enables gas pipe lines to be closed in the case of seismic activity, pressure change, as well as damage inflicted to the pipe line, the pipe line running through San Bruno is aging and the line must be closed manually in the case of a leak. Surprisingly, the leak was preceded by only two minor complaints that gas was smelled since July 1st.

Aging pipe lines similar to this have been a concern for many federal officials, especially those that run through residential areas. Urban encroachment is blamed for the proximity to the pipe line, as the pipe line was built before the San Bruno subdivision that was devastated by the blaze. The pipe line failure occurred despite the consideration by officials of the possible threat of building home in close proximity to a major gas line, and it comes despite the inspections that officials implemented in order to combat issues of age. Although, the last inspection was six years ago and the next one was not due for another two years in 2012.

New regulations for the energy industry are nothing new today as the moratorium on off shore drilling is still in effect and the White House looks onto energy companies with distaste. Because an overhaul of pipe line technology, such as automatic shut off valves would likely prove impractical and overly costly, at least in the short term, more frequent inspections of pipe lines, particularly those in well populated areas, is the most likely outcome of this disaster.

Scource: WSJ , http://www.boston.com/news/nation/articles/2010/09/09/homes_on_fire_after_explosion_reported_in_calif/

The Human Rights trend of the Energy Industry

In the energy industry a key ethics issue that has come up in the previous twenty years is the problem of alleged human rights abuses. Most major companies have at minimum had a conflict of interest if not a more involved role, which resulted in a law suit. One such company was ExxonMobil who purportedly committed human rights violations in Indonesia. This supposedly took place in Aceh where the Arun Natural Gas Oil Fields, otherwise known as Lhokesumawe Industrial Zone, is located. The events that took place in Aceh are that the Indonesian Military under the security contract of ExxonMobil took on operations against the Free Aceh Movement, an armed pro-independence group. As a result of these human rights violations Amnesty International worked to created disincentives for ExxonMobil to prevent them from continuing to commit human rights abuses. The primary method used was pressuring ExxonMobil through Shareholder resolutions. These detriments ultimately led ExxonMobil to make Corporate Social Responsibility a key part of its core values in 2004 so that they could continue to succeed in the international investment community.

Unfortunately, human rights abuses by energy companies is not unique to only ExxonMobil and may even be considered a trend. One other known example of this include Royal Dutch Shell’s alleged human rights abuses in Nigeria following the 1995 executions of environmental activist Ken Saro-Wiwa and eight fellow activists of his. The families of the victims ended up suing ExxonMobil in Manhattan District Court under the Alien Tort Statue, which allows federal courts to hear cases that are, “committed in violation of the law of nations or a treaty of the United States” (Alien Tort Statue). Another example of this is Canada’s Talisman Energy, who, invested in a significant amount of the oil available in Sudan in the late 1990’s during Sudan’s second civil war, where human rights abuses and possible genocide were reported.

I personally think its abhorrent that in this day and age we continue to hear of some of the world’s largest corporations such as Royal Dutch Shell and ExxonMobil committing human rights violations and not only ignoring what is ethically correct, but above all what is moral. Any killing is immoral especially if it is done in order to drill for oil, which these corporations already have plenty of throughout the world. These corporations have, however, rectified their previous stances on Human Rights and have made pledges to be socially responsible corporations by making their employees aware of what is defined as ethical and unethical workplace conditions.

sources:
http://www.amnesty.org/en/library/asset/AFR54/010/2001/en/97b04192-d94e-11dd-a057-592cb671dd8b/afr540102001en.html
http://www.amnestyusa.org/business/xom_background.html
http://online.wsj.com/article/SB124338378610356591.html?hat_input=talisman+energy+sudan
http://online.wsj.com/article/SB124450531968496113.html

Regulation to Drill U.S. Economy

Well, maybe. 

The $250 million dollar legislation aimed at tightening offshore drilling regulations is currently in limbo. The vote regarding the future of the Environmental Protection Agency (EPA)'s ability to regulate is also still up in the air. Yesterday's vote was cancelled due to a request for an additional $64 million dollars in funding which would raise the cost of the bill to $250 million from $184. If passed, the legislation would provide the EPA with a stimulus of funds to use at its discretion. 

This possible free license of funds drew outrage from the American Petroleum Association (APA). Not only would the EPA be able to enact new policies that could yet again shake the profit margins of the energy industry, but the bill allowing them to do so would be financed in part by the companies themselves; the White House has suggested taxing the oil and gas companies even more in order to make the numbers for its $250 million regulatory bill. The industry isn't alone in its outrage, though. Senator Lisa Murkowski (R., Alaska) has floated the possibility of proposing an amendment to prohibit the EPA from spending money on greenhouse gas regulation from power plants and other major emitters in response to the bill. Additionally, some Democrats agree that this is not the time for greenhouse gas regulation. 

With the economy still fragile, the APA and Congress alike are worried that the proposed legislation will stifle investment and job creation— as they should be. Additional regulation would be the second major blow to the industry this year as it currently suffers from the moratorium. More importantly, this isn't just any industry, it is the US Energy Industry: an industry whose operational sector alone employs over 413,000 people across upwards of 10,000 companies.  

As the White House continues its attempts to lower unemployment and restart the economy, it should look to provide investment incentives to stable employers instead of stopping them. The oil spill has Americans angry, but what has them angrier is the grim unemployment outlook and a lack of available capital. The industry isn't perfect, and BP has their work cut out for them, but what the country needs now is a spark, not more red tape. 

Sources: S&P Industry Index, The Wall Street Journal

U.S. Expects to Sue Over Deepwater Horizon Disaster

The U.S. Justice Department will file a civil suit in respond to the Deepwater Horizon disaster. The U.S. has all the rights to make a suit and claim damages, including the Clean Water Act and the Oil Pollution Act.

It is ethical for BP to receive a suit because of all the damages they occasioned. BP is behaving ethically because of the reactions it is taking according to the claims made. However, this would clearly isolate BP because of the reputation it will get. BP, according to The Wall Street Journal, did not comment on the issue, "BP declined to comment". BP is showing social responsibility by trying to seal the spills and help the damages caused, even though most of it was lost.

BP’s corporate values state as follow: “BP wants to be recognized as a great company – competitively successful and a force for progress. We have a fundamental belief that we can make a difference in the world. We help the world meet its growing need for heat, light and mobility. We strive to do that by producing energy that is affordable, secure and doesn’t damage the environment. BP is progressive, responsible, innovative and performance driven.” This clearly shows the interest BP has in social responsibility because it wants to help the world in a accommodative and easy way.

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424052748704190704575490303549250386.html?mod=WSJ_Energy_leftHeadlines

Algae as an Alternative

As energy companies invest more and more money and resources into renewable sources of fuel, not only is the scale of alternative fuel production increasing, but also the sheer number of alternatives. One technology that energy companies and even consumer product goods companies are investing in is algal oil production. Algae can be used for a great array of products, including: foods, cosmetics and oil (including biocrude, biodiesel, and even jet fuel).
Algae are not only are readily available, but there are thousands of species of algae that scientists are now researching as possible contenders for the most efficient at producing lipids in large quantities. The oil-rich lipids are what make algae such a prospect for the energy industry and determining what algae to produce and how to produce it on such a large scale as would be needed to impact the energy industry at all are what researchers are hoping to determine.
As stated in a video excerpt from an Wall Street Journal article, algae "could be the key to future alternative fuels." In fact, last year Exxon Mobil invested $600 million in algal oil technology with Synthetic Genomics Inc.. Another key player in algal oil technology is Solazyme, which has investment from Chevron Corp. and has recently gotten attention from a large investment made by consumer product goods company Unilever. But, while the future of the energy industry is most likely going to be a combination of many different options, algae is certainly going to continue to be a major consideration for many, if not all, of the major oil companies world wide.
http://online.wsj.com/article/SB10001424052748703720004575477531661393258.html?mod=WSJ_Energy_leftHeadlines&mg=com-wsj

According to The Wall Street Journal Canacol Energy in 2008 in conjunction with Emerald Energy discovered the Capella oil field in Colombia. It is the largest oil discovery in Colombia in over 25 years. The oil field itself is expected to have probable reserves of 2.2 billion barrels and prospective resources of 27.4 billion barrels of crude oil. Canacol currently owns 10% of the Capella oil field with China’s Sinochem International Corporation, who bought Emerald Energy in 2009, owning the remaining 90% of the Capella field.

In addition to this Canacol owns 1.6 million acres of land in areas surrounding the Capella oil field, which leads to a high probability of finding other crude oil rich fields in the surrounding area. As a result of their potential earnings, Canacol Energy’s stock prices have quintupled since September 2009.

I believe that Canacol Energy is a promising investment because their stock prices will most likely continue to go up for the time being as they continue to drill for oil on their 1.6 million acres of land. Canacol is a relatively small company, which is currently producing 3,000 barrels of crude oil. Canacol’s value will most likely continue to go up because of the possibility of it being acquired by a larger energy corporation in the future. As a result I think that Canacol Energy is definitely a company to watch over the next few years.

Chevron to Explore for Oil off Liberia

Liberia had been in conflict for over 15 years. Now, it is recovering since about 5 years ago that the conflict is over. This has caused interest to mining and agriculture companies. One of the companies that has reflected this interest is Chevron Corp. Chevron Corp made a deal with Liberia to explore for “oil and gas in three deepwater blocks off the West African country's coast”.

The idea to explore for oil and gas in Liberia came to Chevron about one year ago when Anadarko Petroleum Corp made a find in Sierra Leone, near Liberia's border. This exploration will begin this year and will last for approximately about three years. Along with making this deal, Chevron will implement all the new technology, the best practices in transparency and efficiencies. It will as well bring an excellent source of community and social responsibility.

This will help the oil and gas industry to increase if in any case they get any findings in Liberia since now a days this resources are very scarce. More companies would start to take interest in establishing companies in Liberia. If Chevron results positive in this exploration, it will make a large amount of money because they are making their own exploration and will not need to buy this resources from other exploration company, having a lower cost and selling it at a higher cost. This would make their income much greater.

Sources: Reuters

BP: Beyond Propaganda

Since rebranding itself in 2000 as ‘Beyond Petroleum’, BP has made numerous declarations of its commitment to environmentally friendly policy and to investment in alternative energy sources. Complete with a new logo and an aggressive marketing campaign, the world’s fourth largest company has sought out to be a leader in the green movement and to stay ahead of the evolving 21st century energy market.

So what has BP done for the environment and the energy industry in the last ten years? Besides causing the worst oil spill in U.S. history and investing a small fraction of their portfolio in alternative energy, BP has only given us reason after reason to doubt the business motives behind the energy supermajors. The major oil companies have already been under public scrutiny for high gas prices and a lack of environmental consciousness while continually reporting record profits. But unlike BP, the other supermajors haven’t claimed to be innovators in the move for sustainability. In fact, Exxon could care less. After reporting a $10 billion third quarter profit in 2005, company spokesperson Dave Gardner said, “We’re an oil and gas company. We’d rather re-invest in what we know.” BP’s deception led to them being awarded the “Emerald Paintbrush” in 2008 from Greenpeace, an independent environmental group in the UK, for the worst greenwash of the year. The term greenwash refers to the use of green marketing in order to promote a misleading perception that a company’s policies or products are environmentally friendly, when in fact they are not.

What BP needs to realize is the effects of its actions are felt throughout the entire industry, an industry that is currently in danger of being mauled with regulation. The Deepwater Horizon spill has been in the public eye for months, but the spill is only one part of BP’s atrocious environmental record. In the last five years alone, BP has been involved in major incidents such as the spilling of over 264,000 gallons of oil into Alaska’s North Slope, the Texas Refinery explosion which left fifteen people dead, and a helicopter crash in the North Sea which killed sixteen. Politically, BP has been equally as bad.  The company was convicted in 2007 and 2008 for manipulating propane and oil prices, and settled a lawsuit in 2006 in which Columbian farmers sued BP for allegedly benefiting from a terror regime that protected a company pipeline.

Deepwater Horizon explosion, April 20th, 2010

The time has come for the energy behemoth to own up to its past mistakes, including the Deepwater Horizon spill which BP publicly denied full responsibility for this morning. The company has the opportunity to be a catalyst for change in the industry and to spark investment for the energy of tomorrow. We can only hope that BP is finally ready to set an example. 

Sources: The Daily Green, Greenpeace, S&P Industry Profile, BP

The Moratorium Is Helping No one

In light of April’s Deepwater Horizon oil spill, the worst domestic oil spill in U.S. history, President Obama has stood by his decision to levy a six month moratorium on offshore drilling. The moratorium, officially declared by Secretary of the Interior Ken Salazar, is scheduled for repeal on November 30^th.

But what do we do in the meantime?

With the oil industry facing threats of increased regulation and the potential for an overhaul of its safety protocol, the worst may be yet to come. The potential impacts of the moratorium are worth examining. The government has a six month period of pure stagnation to work on crafting legislation aimed at helping to prevent a repeat spill, but will the attempted legislation serve any benefit? In terms of the oil industry, increased regulation will likely only hurt the bottom line by adding additional expenses to already decreasing revenue as a result of the spill. More strikingly, the positive environmental effect that they hope to achieve with legislation may instead push companies away to countries with easier environmental standards. Foreign Policy writer Eric Smith echoed this sentiment in an August 30^th piece which claimed that banishing the deepwater sector from domestic drilling would only worsen the problem.

If anything, it seems to me that Congress is looking to make an example out of Big Oil rather than critically examine the impact that such a sweeping legislation may have. And while a future ban on offshore drilling entirely may be a stretch, the possibility of the industry being masked in red tape is a startling one.

Sources: Think Again: Offshore Drilling, Blaze Shakes Oil Industry

Gulf of Mexico Oil Spill: Well Integrity Test Shows Oil Stopped

BP recently caused damage because of the oil spill in the Gulf of Mexico around April. The problem as a whole is affecting BP’s reputation, just like Greenland does not want any of BP’s establishments to prevent oil spills or any other problem. However, well-suited solving problems have arisen. BP developed a new containment cap, which successfully contained the leak preventing oil spill.

A test was conducted to check the cap. The hypothesis were that the chances for oil to spill before the test was over, were high. While the testing process was taking effect, engineers were recording minute by minute data to check the pressure, if the pressure lowered the oil was going to probably leak. The test was delayed. “Government officials requested a delay for analysis, out of fears that the cap could damage the leaking well further and do more harm than good.”

http://abcnews.go.com/WN/gulf-oil-spill-bps-cap-success-oil-stops/story?id=11173330

Crude Reminder

Less than six months after the Deepwater Horizon oil rig exploded and sank in the Gulf of Mexico, another oil rig exploded in the Gulf. This comes after the Obama administration issued a moratorium on deep water drilling in order to reassess its rules and regulations for drilling. More stringent regulations and inspections would seem to be the answer to this problem, but what is in place now is apparently not enough to prevent such the occasional platform explosion.

The potential implications of what this event means for the oil industry is disputed. The Democratic Congress will likely seek further regulations of the oil industry, but Lee Hunt, the president of the International Association of Drilling Contractors, believes this is little more than an unfortunate incident and that it should not have an effect on the scheduled end of the moratorium on drilling. The Obama administration indicated it might lift the moratorium before the scheduled date of November 30th if it is able to indicate whether certain types of oil rigs pose less risk than others.

Still others believe this event will affect the Obama administration's plans to end the moratorium, including Bruce Bullock, director of Maguire Energy Institute at Southern Methodist University. I also happen to believe this is likely to add to the administrations regulations, otherwise public opinion might find the administration to be weak and impudent. Given the already unfavorable standing of nonrenewable, emissions producing oil in our increasingly green economy, and given the April 20th explosion of the Deepwater Horizon rig, this will have proven another blow to the already unpopular oil industry.

Future Ethanol Investment

According to a recently published report by Bloomberg, ethanol prices have for the first time in nine months gone higher than gasoline. The article claims in part that this is a result from the Federal Government's 45 cent tax break for ethanol-fuel blending. Ethanol prices since May have gone up 22%, leading ethanol to become more expensive than gasoline. As a result, more barrels have been produced with the most recent numbers indicating that in the week of August 20th, 810,000 barrels of ethanol were sold.

Ethanol in the short term is a very profitable investment in accordance with the current trend, which indicates that demand is skyrocketing for ethanol. In addition to this, ethanol prices should continue to go up because of the element of scarcity. The ongoing drought in Russia has led the Russian government to halt all exporting of grains until the drought is over. The current financial incentives have laid the groundwork for significant monetary gains for producers of ethanol.

In the long term, however, it remains uncertain how profitable ethanol will be as the EPA has recently announced that they are going to investigate the effects of having as much as 15% ethanol in gasoline on vehicles, lawnmowers and boats. This may lead to the possibility of a ban on E-15 vehicles that specifically rely on gasoline mixed with 15% or more ethanol. The U.S. House Ways and Means Committee is also considering legislation regarding whether or not to lower the tax break by 20% while simultaneously promising to continue tariffs on foreign imports of ethanol.