Resources in Israel

Israel has found a lot of gas in deep-sea wells off the north of the country. Already this discovery has caused problems with neighboring countries around it. Tension with Lebanon over distinguishing the maritime border is rising. There has been a battle of royalties; some are demanding a sovereign-wealth fund when the gas starts making profit. This discovery of gas can be problematic because of a pipeline positioned across the seabed to Greece and relations with Israel have become a lot tighter as Turkey progresses to shut down its very old alliance with Israel. Israel has been drilling for decades, but has rarely had success. In 1999 a maritime drill struck gas in commercial quantities 250 meters beneath the Mediterranean, 40km (25 miles) out from Israel’s southern port of Ashdod. Production began in 2004 at the Mari-B where about 2.8 billion cubic meters of gas are piped ashore each year from reserves possibly as large as 22 bcm(billion cubic meters). Last year 238 bcm was discovered in the Tamar field 90km off the northern end of Israel’s coast; the gas is much deeper down, Production should begin in 2014. Tamar was the world’s largest gas find in 2009. But this year Noble Energy says that this field called Leviathan, located 45km farther out to sea, has a potential of 453 bcm and an even chance of what they call a “geological success”. An exploratory drill is under way and the results should be known early next year. If the results are good, production could begin by 2016. These two fields combined should provide gas worth $4 billion a year. Tamar should be able to supply all Israel’s domestic gas needs, both for industry and household consumers, for at least 20 years.

Israeli military aircraft, no longer welcome in Turkish skies, are training over Greece with the Greek air force. Recent diplomatic talks in Jerusalem included a session with Israel’s petroleum commissioner. Israel sees Greece as a gas purchaser and a European core where Israeli gas could be sold and piped on. But Greece may not comply until Israel has agreed with Lebanon and Cyprus on where a border is to be drawn in the sea, distinguishing each country’s economic exclusion zone. Israel is close to an agreement with Cyprus on a “median line” to let them share some of the seabed between them since there is an overlap. Then Israel intends to cautiously approach Lebanon (though the two countries are formally in a state of war), in the hope eventually of holding a UN-backed international negotiation. In the meantime, Israel has run a string of buoys into the sea off the coastal border point between Israel and Lebanon. Lebanon says they are angled too far northward, while Israel points out that Tamar and Leviathan are well south of the line that Lebanon claims as the correct maritime one.

-Kelsey Tomlinson
(The Economist)
http://www.economist.com/node/17468208?story_id=17468208

Schlumberger Bribes Yemen

New Emails and Company documents have emerged that implicate Schlumberger Ltd. in bribery for contracts as well as protection. In 2008 Schlumberger employees raised concerns about possible bribery when they reported that Schlumberger was paying nearly six times the market value for cars from the Yemeni government as well as with a customs broker Dhakwan Management Petroleum Co., who had ties to the Yemeni governments. All of this comes at a bad time for Schlumberger who just last month fell under investigation from the U.S. Justice Department for giving improper payments to the nephew of the Yemeni President.
While bribery is never an acceptable option, company documents reveal that Schlumberger felt it had no choice. The company tried to cancel some of its contracts that they felt were in violation of U.S. Bribery laws however once they cancelled the contracts one of their trucks was hijacked in a volatile area of Yemen. The truck had three tons of explosives; however the truck and explosives were all recovered. When Schlumberger did an investigation into Dhakwan they revealed that Dhakwan had close ties to the government. With this new information they tried to cancel all contracts through Dhakwan however once they did that they found that all of their imports in to the country had been stalled so they felt they had no choice but to continue dealing with Dhakwan
All of this plays in to the volatile nature of the oil industry in that most oil exporting countries that allow foreign companies to operate in their borders are hostile and/or corrupt places. Factors like these show that companies cannot operate fairly unless, unfortunately, they act unfair to level the playing field. This fact about the nature of the oil industry will help to move the energy industry as a whole away from the oil industry and towards alternative energies.

-Tom Langevin
http://online.wsj.com/article/SB10001424052748704166204575608580089662298.html?mod=WSJ_Energy_leftHeadlines

Japanese Oil Company on the Rise

Solar Frontier KK's new solar-panel factory in southern Japan has the potential to produce more photovoltaic cells than any factory in the world once it is up and running in July. The solar company is part of one of Japan's largest oil company, Showa Shell Sekiyu KK. While some companies in the US, such as BP, are pulling back their investments in alternative fuel, Japan feels that now is the time to invest and it will begin to see major profits within the next year on solar energy. The new solar panels consist of thin-film CIS cells, which are made from copper, indium and selenium. They cost less overall than the thicker silicon-based crystalline cells. Analysts expect sales for solar panels to increase by five times its current rate.

Current reports state that solar energy is the largest growing source of energy among the alternative energy options and it is expected to keep growing in the future. If these reports stay consistent Japan could in fact change the landscape of the energy industry with this one factory within the next few years.


-Nicole Lombardo (DAISUKE WAKABAYASHI And MARI IWATA, Wall Street Journal)
http://online.wsj.com/article/SB10001424052748703957804575603531119514328.html?mod=WSJ_Energy_leftHeadlines

Report: BP Ignored Warning Signs

Though everyone all over the world realizes that BP made a huge mistake with the oil spill in the Gulf of Mexico, a recent report came out that BP and it contractors missed and ignored warning signs before the oil-well blowout. "Among the hazards highlighted in the panel's report were several tests that indicated the cement at the bottom of the hole wouldn't be an effective barrier to an influx of oil and gas." (Wall Street Journal) There were also reports about month before the oil spill that BP had lost drilling materials deep down in a hole. This was a sign that BP was not paying attention to any of their risks when bad things were occurring.

It is hard to say what actually caused the oil spill still after 11 workers had died from this tragic incident but what the media does know is that there are little incidents that did occur to maybe involve the oil spill. "Interior Secretary Ken Salazar asked in May for the investigation by the academy, saying he wanted "an independent, science-based understanding of what happened." (Wall Street Journal)

-Michael Sheinfeld

http://online.wsj.com/article/SB10001424052748704648604575620511160070900.html?mod=WSJ_Energy_leftHeadlines

Entergy's Future Plans

Entergy Corp., a New Orleans company is considering selling off its Vermont Yankee nuclear plant. The company has been fighting to relicensing it the plant for another 20 years but its 2012 expiration is approaching fast and the state is giving the company a hard time because recently the plant has been leaking nuclear material. With the current state of the economy the value of natural gas has become depressed and the company has faced a decline in returns because it trades at market prices rather than regulated prices to match the new demand. Marc De Croisset, an analyst with FBR Capital Markets & CO., says that new ownership could have better luck getting the plant a new license. The Chairman of the company assures that they have been successfully resolving any issues with obtaining a license and the company has been securing long term deals with local electric companies. This coupled with an 8% profit rise in its third quarter shows that the company has been successful with managing this issue.
This article reveals a startling trend in the energy industry that when oil and gas declines alternative energies will also decline. Without extraneous support coming from outside of the free market alternative energies are unlikely to surpass oil and gas until we physically use up all of our resources or they become so scarce the price skyrockets. The article also reveals that even in the face of radioactive waste being released into the environment the energy industry is very secure. In most industries this would be a PR nightmare however it doesn't seem like it has really effected the company at all.

~Tom Langevin
http://online.wsj.com/article/SB10001424052748703805704575594723506042644.html?mod=WSJ_Energy_leftHeadlines

Sudden Decline in Oil Due to New Storage

In a response to an article posted earlier, while some speculated that the rising oil prices were due to that cold weather would finally prompt heating demand and cut into domestic supplies, a loss from the increasing rate of oil put a dent in this suspicion. Natural gas for December delivery decreased 3.9% after Tuesday. An Analyst from Summit Energy in Louisville Ky. said "while a lower-than-expected build in reserves might normally propel prices upward, the larger matter of oversupply won out on Wednesday"(Wall Street Journal, Ryan Dezember). Prices for oil dropped because the Energy Information Administration said 19 billion cubic feet of gas were added to U.S. inventories.

Although this small draw back to oil prices seems to deflate the claim that oil prices will rise due to the weather, forecasters still seem hopeful. Over the past few years natural gas supply has grown greatly as companies discover new reservoirs in onshore shale formations. The prices for natural gas have steadily increased and has the analyst form Summit Energy states "We've had a decent rally to get up to $4.20; to push it on further from there is really a step too far"(Wall Street Journal, Ryan Dezember). The sudden decrease might just be due to the prices hitting a ceiling and the new imports of oil to the US inventory. Forecasters predict that the new inventory of supplies will still be cut into within the next few weeks as the temperatures drop, so not to worry for the oil companies of the US.


-Nicole Lombardo
(Wall Street Journal, Ryan Dezember)
http://online.wsj.com/article/BT-CO-20101110-716795.html?mod=WSJ_Energy_middleHeadlines

Should the Government Fun Renewable Energy Projects?

Obama’s advisors have recently stated that tax dollars should not be spent on alternative energy projects because there are other areas in which the money would be better allocated. There was a discussion on constructing more wind and solar farms across the country; however, his advisors believe there would be a better time to do this in the future (Power). Understandably, the leaders of our country see the need to improve areas damaged by the recent recession and even though it may be beneficial to use renewable resources, it isn’t a priority compared to other crumbling industries. However, there is still anger held towards this decision because the Obama administration has previously promised to commit to advancing the production and use of renewable energy (Power).

Caithness Energy LLC and General Electric Co. are the two companies who intend to sponsor the project of developing the wind and solar farms. They both agreed that even if the government refuses to provide funding, they will still carry on with the project because they believe it is crucial to continue to develop this industry (Power). The government does wish to eventually subsidize projects similar to this because they believe our country could benefit from wind investment (Power). Obama’s administration has reasonable answers to this issue; however, they will have to hold true to their promise of eventually providing funds to receive popularity and confidence from their supporters.

http://online.wsj.com/article/SB10001424052748703506904575592843603174132.html?mod=WSJ_Energy_leftHeadlines

-Ashley Luddy

Panasonic Invests in Telsa

Panasonic Corp. have indicated that they will invest in Telsa Motors, which is a car company that is known for making electric cars. Panasonic will invest $30 million in the project to see if they can make an electric car with rechargeable batteries in new hybrid cars. "Panasonic, which already supplies lithium-ion batteries for Telsa's automobiles, is said to now hold around 2% of Telsa's shares." (Wall Street Journal) Panasonic is now moving onto the energy industry after they had a tough time selling flat-pannel televisions. They believe since it is a time for everything to be more "green" that Panasonic should invest their shares into Telsa, while also using their lithium-ion batteries.

They have also said that Panasonic and Telsa will jointly plan to sell Telsa battery backs using Panasonic's battery cells. The reason Telsa is picking Panasonic for this joint market is because the world is slowly turning towards lithium-ion batteries and Panasonic is known for making the best around. Panasonic will now be in the running against Sanyo Electric Co. which is working their battery technology for numerous car companies, such as Honda, Volkswagon, etc.

-Michael Sheinfeld

http://online.wsj.com/article/SB10001424052748704506404575593162128563810.html?mod=WSJ_Energy_leftHeadlines

Iraq's Oil Production Threatened

The International Energy Agency (IEA) says that they will not be able to produce their target of 12 million barrels of oil per day by 2017. They say it could take an extra 20 years to produce half of the amount. It is predicted that their oil production will overtake Iran’s production by 2015. Iraq has awarded licenses for the development of 11 major oilfields. Unless the targets are met and the investment of approximately $150 billion takes place, the desired production amount will not be reached in the next seven years. IEA stresses the mammoth nature of the task, saying that the “sheer scale of the required construction of infrastructure, coupled with political uncertainties, suggests that the expansion of capacity will be much slower”.

Due to the size of this operation, the IEA believe that this may progress a lot slower. Other things such as basic infrastructure, including road, bridges, airports and water supply, need to be repaired and expanded. Because Iraq’s existing export routes are fully utilized, a major expansion of the shipping ports will be needed. So the IEA projects Iraqi output of 6.5 million barrels of oil per day in the 2030s, compared to the 2.5 million barrels currently produced per day. A lower oil production in Iraq should help Opec avoid any conflict with its members over output allocation. Analysts warn that a dispute could threaten the cartel’s unity. This could be a threat to the cartel’s ability to manage the global oil prices.

-Kelsey Tomlinson

http://www.ft.com/cms/s/0/def69f28-e76c-11df-b5b4-00144feab49a.html

India's NTPC Plans on Expanding

NTPC Ltd. is a power utility company owned by the Indian government that has recently been planning to purchase $3.85 billion in new equipment. The company plans on purchasing nine sets of coal-fired boilers, turbines and generators that will each produce roughly 800 megawatts of energy. NTPC is also saying that they have “supercritical” technology that allows them to burn less fuel and create more energy. Another Indian company, Reliance Power Ltd. recently made a deal to purchase nearly 30,000 megawatts for a cost of around $10 billion. All of this comes as no surprise from the Indian government because recently they have stated that they intend on doubling their generating capacity in the next six years to match the growing infrastructure. NTPC Ltd. is also in the process of building new plants that will bring 17,000 megawatts of generating power to the country; that is roughly 10% of the total generating power of India.
This is another example of how the energy industry will continue to grow as people and places continue to grow. While alternative energies may help to diminish the global consumption of fossil fuels it will be a long time before the need for these fossil fuels will be significantly diminished, especially if nations continue to grow economically. India has one of the fastest growing populations in the world which is why it is a great country to look at to view this one extreme of energy consumption.

-Tom Langevin
Raghuvanshi, Gaurav. NTPC to invite 3.85 Billion Bids

White House Runs into a Dilemma with Renewable Energy Funds

President Obama and his administration have come across a dilemma in the department of funding for alternative energy. He wants to pull funds from the federal loan gaurantee program that is meant to help the construction of wind and solar farms and other alternative energy projects. He believes the taxpayers money could be spent more wisely elsewhere. His decision to pull money form the program would hurt his alliance with congressman as well as hurt his reputation that has been spent promoting a Recovery Act program. As of now, Obama's senior advisers are reporting that the alternative energy project would move forward without a loan grant because the administration doesn't see any benefits and too many things would have to fall into place in order for the loan guarantee to be effective.
The response to this is provided by GE who says "This project, already under construction, is generating a significant number of jobs in an area of Oregon that has one of the highest unemployment rates in the state,"(Wall Street Journal). Although Obama's stance on this matter seems clear, a spokeswoman for the president says "We are taking steps to streamline the [loan guarantee] process while still protecting taxpayers who, ultimately, are the ones investing in these projects," (Wall Street Journal). This debate has not been resolved yet, but Obama would rather see the taxpayers money go towards.


-Nicole Lombardo

(Wall Street Journal, Stephen Power)
http://online.wsj.com/article/SB10001424052748703506904575592843603174132.html?mod=WSJ_Energy_leftHeadlines

Rising Oil Prices

Recent reports show a rise in oil prices and the prices are likely to continue to rise. Ali Naimi, the Saudi Oil Minister, believes the market would allow the prices to raise up to $90 a barrel (Lin). He came to this conclusion after watching the most recent prices reach the highest they have been in the past five months (Lin). The barrel should cost between $70 and $80 to suit the needs and wants of suppliers and consumers. However, the increase in demand will allow the price of the barrel to be as high as $90 (Lin). Also, the surplus of oil was a major reason the prices remained low because companies wanted to lower their supplies, but with the high demand, this is no longer an issue.

The question is, what is the reason for this increase in demand? The most logical answer at this point would be the impending winter months that we are about to endure and many homes have begun to stock up on oil while prices are still fairly low. As the price continues to fluctuate, the answers to these questions will be found.

http://online.wsj.com/article/SB10001424052748704865104575588660085365170.html?mod=WSJ_Energy_leftHeadlines

-Ashley Luddy