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StatoilHydro Reports Small Gas Leak From Kvitebjørn Pipeline
Thursday, August 21, 2008
During a routine inspection, a small leak was discovered in the gas pipeline between the Kvitebjørn platform and the Kollsnes gas treatment facility outside Bergen.
In the autumn of 2007, this pipeline was dragged out of position by a ship's anchor. In January this year, the pipeline was qualified for temporary use pending a permanent repair. This summer it was decided to make the permanent repair in 2009.
The leak which has now been discovered is in the same place as the pipeline was damaged last autumn, around 10 kilometres from the platform.
StatoilHydro will now consider various repair solutions for the Kvitebjørn pipeline. On this basis, it will be decided when operation of the pipeline and the Kvitebjørn field can be resumed.
Turnaround operations are presently being carried out at Kvitebjørn and Kollsnes and the pressure in the pipeline has accordingly been reduced. The pipeline will now be further depressurized and emptied via flaring at Kollsnes.
The Visund platform also normally utilises the Kvitebjørn pipeline for gas export, but has reinjected gas during the turnaround at Kvitebjørn and Kollsnes. Oil production from Visund is being maintained, but at a somewhat lower level than usual.
StatoilHydro’s gas customers are not likely to be affected by the incident.
StatoilHydro has standby vessels patrolling the area in the vicinity of the leak.
This story was featured on the OilVoice website.
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The falling oil price is a lull in the storm
Thursday, August 21, 2008
By Nick Butler of The Financial Times
Little more than a month ago the suggestion that Russian troops would be engaged in a shooting war in Georgia leading to the closure of the Baku-Ceyhan pipeline would have triggered a dramatic rise in oil prices. A barrel of crude was already trading at more than $140 and the loss of another million barrels a day of supply could have pushed the figure on and up towards the $200 predicted by some banks and by the chief executive of Gazprom.
In fact prices are almost 20 per cent below their July peak. The fall has come despite a month of assertive Russian nationalism, whose victims to date include not just Mikheil Saakashvili, Georgia’s president, but also Robert Dudley, chief executive of TNK-BP, who has been forced into exile in an undisclosed central European location. Other problems also persist – including civil conflict in Nigeria and the failure of the Maliki government in Iraq to agree on the legal structure through which international companies can invest in new oil developments.
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Companies face crackdown on electricity greenwash
Wednesday, August 13, 2008
Dozens of companies face having to report embarrassing sharp increases in their carbon pollution under government plans to crack down on "greenwash".
The move could undermine the environmental claims of firms such as BT, which have invested heavily in so-called green electricity tariffs to cut their carbon footprints.
Under the proposed changes, companies using such green tariffs, which are also popular with eco-friendly domestic customers, will no longer be able to claim massive carbon savings by using power coming from renewable sources.
BT, which could be forced to double its reported carbon emissions and to scrap an ambitious target to cut carbon 80% by 2020 under the plan, is lobbying heavily against the move, and says other companies back its position. Johnson and Johnson, Vodafone and several banks including HSBC also buy green electricity tariffs.
Hilary Benn, environment secretary, said the change was to make the system more transparent and to ensure that such tariffs brought genuine environmental benefits. "It is increasingly difficult to demonstrate that buying a renewable electricity tariff is offering additional carbon emissions reductions," he said. "Businesses signed up to green tariffs based on the evidence available at the time, but their choices have been producing only limited additional renewable generation capacity."
Individual consumers opting for green tariffs may also "not have been generating the environmental benefits they anticipated", he added.
Green tariffs have become a popular way for firms and individuals to cut their carbon footprints. They exploit the 5% of UK grid electricity generated from clean hydroelectric and wind sources, which suppliers claim they can effectively ringfence and sell separately.
In 2005, the government said companies buying such renewable electricity tariffs could report them as producing zero emissions. It hoped that wide take-up of green tariffs would drive investment in further renewable sources.
But environmental campaigners and energy experts have long questioned the benefits of some green tariffs. Harry Morrison of the Carbon Trust, which advises companies on climate issues, says the market in them has been "a bit cowboy" and needs clearing up. He compared the use of green tariffs to the sale of carbon offsets, with concern over transparency, double counting and additionality – ie whether they cut carbon emissions over and above what would have happened anyway.
He said: "Many companies bought these tariffs in good faith but there are no guarantees that they actually save carbon. They didn't pay much of a premium for the carbon savings they could claim in their marketing statements, so they have basically been given a free ride."
Morrison said many companies were concerned about how the government's changes would affect their green credentials and corporate image. It could also cost them money. From 2010, thousands of UK companies will be forced to calculate, publish and reduce their emissions as part of a domestic carbon trading scheme. "They're worried about being ranked badly. Nobody wants to come bottom of a table of their peers," he said.
Richard Tarboton, energy and carbon programme director at BT, said: "This is a serious problem for a number of companies who have followed the government's guidelines and gone out and purchased green electricity, and are now being told that green source is no longer valid."
BT, one of the country's largest users of electricity, has used the zero-carbon rating given to green tariffs to claim it has reduced its emissions 58% over the last decade. Tarboton said the new rules would see its reported emissions double, and that the increase would pose "communication" problems for the firm.
He agreed that the existing scheme was flawed but said the suggested solution put too much responsibility on energy suppliers and let customers off the hook. BT says the answer is better labelling, with different tariffs given a carbon rating similar to electrical appliances such as dishwashers. It held a meeting of 30 companies this week to discuss the idea.
Defra, the environment department, which announced the changes to the company reporting guidelines in June, now says it will launch a consultation on the proposal. A spokesman denied this was down to corporate pressure and said the department had always planned to consult.
This article was featured on The Guardian website.
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Rejected EDF has more irons in fire
Monday, August 11, 2008
British Energy still hopes to strike a takeover deal with EDF, but the cash-rich French utility has a number of other options it could pursue if negotiations with the East-Kilbride-based nuclear power generator collapse.
Top executives at Paris-based Electricité de France, which is controlled by the French state, are looking at other ways to build on the company's global nuclear leadership and develop lucrative new businesses such as gas.
EDF was expected to announce a full cash £12bn offer for British Energy on August 1, after a marathon round of talks and winning the approval from the UK Government, which owns 35% of the Scottish-based nuclear power plant group.
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But two key institutional investors in British Energy - Invesco and M&G - unexpectedly rejected a bid valued at around 770p to 775p a share for being too low, sending EDF back to the negotiating table and threatening to derail a deal that may be crucial for the development of new British nuclear power stations and EDF's expansion plans.
Both companies are still talking, but City power industry analysts and market players believe EDF is unlikely to increase its offer and risk overpaying for British Energy, the owner of most of Britain's existing nuclear power plants and whose land around existing sites is viewed as the location for new developments. Many of British Energy's plants are old and have been plagued by breakdowns. The company has proved hard to value because of the volatile price of electricity, which has both soared and eased off during the months of negotiations.
"EDF doesn't seem ready to make an acquisition at any cost and this is rather good news for investors," said Jacques-Antoine Bretteil, a Paris-based fund manager at International Capital Gestion.
However, failing to close a deal with British Energy would not mark the end of EDF's ambitious plans to expand in Britain. The company already owns London Electricity and other power companies in southern England, and claims to be luring customers in Scotland away from Scottish & Southern Energy and Iberdrola-owned ScottishPower.
"British Energy would have been an ideal entry point for EDF, and EDF may have regrets about the deal not happening, but this doesn't at all slam the British nuclear door in their face," said Colette Lewiner, an energy sector expert at French management consultancy Capgemini.
"If a deal does not materialise, British Energy will be encouraged to strike partnerships on (new nuclear) sites, so it will just involve a different scenario for EDF," she added.
EDF is the world's biggest single producer of nuclear energy, and is France's biggest power provider with 25 million household customers.
French power tariffs, which are set by the state, are among the lowest in Europe because EDF produces relatively cheap electricity from its 58 nuclear reactors.
It could still be at the forefront of Britain's nuclear power renaissance, but this time by agreeing joint ventures or building new-generation reactors on its own land.
In May, the French group bought land next to two nuclear power plants in Britain. One is located at Hinkley Point in south-west England, and the other is at Wylfa in north Wales. EDF acquired the land in the hope that it can build new reactors on the sites and use the grid connections and infrastructure around existing reactors in adjacent areas.
But the UK is only one of four countries that EDF targets for its international development. It has ambitious nuclear plans in the United States, South Africa and China, where it will run two new-generation reactors with China Guangdong Nuclear Power Corporation.
EDF has set aside 35bn for investments between 2008 and 2010, and if the cash is not used for acquisitions, it will be spent on industrial projects to spur organic growth.
In its core nuclear power business, Lewiner said EDF has "many irons in the fire" with its international development, and plans to flesh out its French fleet of 58 reactors with one, or maybe two, new-generation European pressurised reactors.
"They will need money for these projects. Just in Britain, they must buy land and build reactors. We're talking about a few billion euros for each one, which is not trifling," she said.
EDF has projects to build a gas business at a time when the newly merged GDF Suez group can offer a one-stop shop for electricity and gas, threatening to poach EDF customers.
On Thursday, EDF received a boost from the French government when the finance ministry proposed allowing regulated power rates for households to rise by as much as 2% and natural-gas tariffs by an average of 5%.
The government also said electricity charges may climb by 2% for small companies, 6% for mid-sized businesses and 8% for large consumers. The increase in gas rates will be the same for all customers.
"The rise in electricity rates is closely correlated to current inflation and this is better than what the market had in mind," said Peter Wirtz, a Dusseldorf-based analyst at WestLB Equity Markets. "The government is paying more attention to what EDF needs."
EDF, which produces continuous electricity from its reactors in France, also needs to invest in gas-fired plants, which can be switched on and off fast to meet peak electricity demand.
The utility, which in June got the green light to build one of Europe's biggest liquefied natural gas terminals in the port of Dunkirk in northern France, may seek to secure gas imports from producers such as Qatar, or invest in gas fields.
EDF has so much cash that it could afford to spend nearly 5bn to finance a thrust in the gas sector, roughly the price of Belgian gas firm Distrigas, which the French group lost to Eni (Ente Nazionale Idrocarburi), Italy's national energy corporation, in a bidding process organised by Suez in June.
"Distrigas was definitely a very interesting asset that was on the market. Gas Natural is another one, but with Union Fenosa now they will probably become too big," said analyst Koen Dierckx, a broker at KBC Securities in Brussels, referring to Spanish-based Gas Natural's recent deal to buy a 45% stake in Union Fenosa from debt-laden builder ACS (Actividades de Construcción y Servicios).
"They may just try to grow the gas business organically with not so much of a focus on acquisitions at this time," Dierckx added.
This story was featured on The Herald website
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Gas could be cheaper
Friday, August 01, 2008
Price rises from British Gas and EDF provide a further headache for households struggling to make ends meet. Thanks to the Government's dithering over new nuclear plants, British energy suppliers are reliant on competing globally for energy imports, which is likely to remain the case for the next decade.
Monday's report by the Business and Enterprise select committee argued that energy markets are "not functioning as efficiently as they should", in part because of short-termism.
Producers seem unwilling to sell gas into a forward market, which would enable suppliers to buy future supplies when prices are low. MPs have rightly called for the regulator, Ofgem, to investigate.
It is a pity, therefore, that Ofgem has been neutered, thanks to the Government's ironically-named programme of "better regulation".
Instead of the highly-accountable, single-person regulators that operated in the 1990s, who were able to speak powerfully for consumers, markets are now examined by faceless regulatory boards.
But, as Charles Clover argues elsewhere, it would be a mistake to deal with these state failures by imposing a windfall tax; the objective should be to cut bills, after all, not increase the size of the public sector.
Most vitally, the UK needs to build capacity for storing gas. Years of flowing North Sea supplies made this irrelevant, but now that we rely on imports, we are dramatically more vulnerable than our neighbours to short-term fluctuations in price. While the UK has capacity for 13 days' storage, Germany has 99 and France 122.
Perversely, mainland Europe buys our gas in the summer to cheapen their winter energy bills, but we then buy their gas during the cold months at higher prices. And, as the select committee points out, European suppliers can be remiss in lowering prices in line with the market when selling back to us.
This story was featured on the Telegraph website.
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