CLIMATE CHANGE: China and India called keys in climate change battle

If the world is going to truly combat greenhouse gas emissions, China and India have to be part of the fight, the chief economist for the Paris-based International Energy Agency said Tuesday. Fatih Birol told oil and gas executives at the Offshore Technology Conference in Houston that the economies of China and India are growing at such a pace that they'll keep needing more energy, much of it from coal. Even if Europe cuts emissions by 20 percent in the next dozen years as pledged, it won't be enough to overcome emissions anticipated to increase in the developing giants, he said.

But don't blame China, the bigger of the two, he said.

China's growth is "simply imitating" what developed countries have already done. Americans love their cars, and increasingly the Chinese do as well, driving most of the increase in that country's demand.

The nation is expected to overtake the U.S. in terms of car ownership in seven to eight years. And by 2030, 14 percent of Chinese will have cars, as opposed to 2 percent today.

By 2015, Birol said three countries will be key to denting climate change: China, India and the United States. Together they'll release half of the world's emissions, and without cooperation among them, he said, "we have no chance to make" a difference.

High oil prices no longer can be expected to shrink demand as it did during spikes in the past, when a vast majority of usage occurred in developed countries, Birol said. Growth in China, India and the Middle East more than offsets flat or shrinking demand in the U.S.

As prices have risen since 2004, global demand has risen alongside them. "Oil demand is much less responsive to high crude prices than in the past," he said.

Changing energy security
Amy Myers Jaffe, an energy analyst with Rice University's James A. Baker III Institute for Public Policy, said the run-up in oil prices has changed the nature of energy security, which once focused on protection against oil shocks.

After the 9/11 attacks, the term began referring more to dependence on oil regimes whose interests aren't necessarily U.S.-friendly. And government-run oil producers are flexing more muscle in terms of controlling their own resources in the high price environment.

Jaffe said she expected the world to increasingly rely on the Persian Gulf and unconventional oil, such as heavy bitumen from Canada's oil sands. Other unconventional sources include coal or natural gas turned to liquid, and oil found in shale.

However, while high oil prices make unconventional sources more economical to tap, they're also carbon-intensive to produce, Jaffe said.

"So climate security and energy security are not always two sides of the same coin," she said.

More coastal access
Randall Luthi, director of the Interior Department's Minerals Management Service, which oversees offshore U.S. production, said the security picture needs to include more access to U.S. areas currently off-limits — such as off the West and East coasts and the eastern Gulf of Mexico.

"We're so dependent on adequate, affordable energy," he said, noting that the federal government predicted in January that the average price for a gallon of regular unleaded gasoline would climb to $3.50 by this month. It reached $3.60 last week and now is expected to top $3.70 nationally by June.

Fossil fuel reliance
Despite growth in alternative and renewable fuels, the federal government and the International Energy Agency predict the vast majority of energy use to stem from fossil fuels through 2050. With that in mind, Luthi said, the only way to lower dependence on imports is to raise U.S. production.

In February the MMS opened the Chukchi Sea off Alaska's north coast for a lease sale. The agency received 667 bids on 488 tracts, and 292 leases have been issued. Companies that bought leases include ConocoPhillips, Italy's Eni, Spain's Repsol, Shell, and Norway's StatoilHydro.

"But the Gulf of Mexico remains the workhorse" of offshore U.S. production, and 85 percent of the nation's coastlines remain unavailable to the industry, he said.

Source: The Houston Chronicle|By KRISTEN HAYS

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UNITED STATES: Aventine Renewable Energy, Beyond a Fad

The question is when will there be more action than talk, and when will investors in companies making such alternative fuels as ethanol reap a bumper crop of benefits in share price.

The company was established in 1981, giving it a marketing strength absent from many of its recently arriving competitors. Little goes to waste at Aventine: while its strength is ethanol, the company also produces and markets biodiesel and such byproducts as corn gluten feed and meal, distillers products, carbon dioxide and brewers’ yeast.

With plants in its hometown of Pekin, Ill., and another in Aurora, Neb., the company’s annual production capacity is around 207 million gallons. Planning for another plant in Indiana, along the Ohio River, is under way, and will bring the eastern Corn Belt into the company’s domain in late 2008 or early 2009.

Including its marketing alliances, the company marketed and distributed 697 million gallons of ethanol in 2006, or nearly 13% of the total volume sold last year in the United States.

Since its July 2006 initial public stock offering, Aventine Renewable Energy’s shares have fluctuated substantially, following the ebb and flow of negative and positive news reports about alternative fuels. Other than for a few days after its IPO priced at $43, investors haven’t seen the stock trading anywhere near that level, with shares most recently idling in the $13-$16 range. During its first quarter as a public company, Aventine’s board authorized a $50 million share-repurchase plan.

Ethanol producers face a two-pronged problem: the yin/yang situation is more corn production brings down their costs, but that can result in an oversupply of ethanol. Striking that happy balance is tricky, to say the least.

Ahead of the Labor Day holiday, the last big driving weekend of the summer, analysts delivered some cautiously optimistic opinion about Aventine and the ethanol industry in general. While the analysts were less ebullient about ethanol’s prospects than the rosy picture portrayed in news reports a few months ago – when farmers were planting record corn acreage to meet the demand – they have remained positive.

On August 30, analyst Mansi Singhal increased his opinion of Aventine from “equal weight” to “overweight,” while lifting his general industry outlook from “neutral” to “positive.” In a note to investors, Singhal cited prospects for passage of the Renewable Fuel Standard (RFS) at 55% before the 110th Congress ends next year. The legislation establishes the minimum volume of renewable fuel use.

“Impending legislation in the Congress could provide potential meaningful upside surprise to the stocks,” Singhal explained in his upgrade of Aventine and VeraSun Energy Corp. (NYSE: VSR), another ethanol producer, also to overweight. Singhal has a $20 price target on Aventine; the recent median target price of analysts surveyed by Thomson Financial is $19.50, compared with Tuesday's close at $14.49.

“We think the downside risk may be limited to only 10% to 15%, while the upside potential could be as high as 30% to 50% over the next three months,” Singhal wrote.

Aventine’s chief financial officer, Ajay Sabherwal, is scheduled to make a presentation at the Lehman Brothers CEO Energy/Power Conference on Thursday.

The Lehman note followed an August 8 upgrade by analyst Heather Jones at BB&T Capital Markets, who boosted Aventine to a “buy” from “hold,” and set a price target of $19 per share, indicating that she believed the stock could rise about 25% in value by next June. The report triggered a nearly 8% one-day rise in Aventine’s share price.

In her note to clients, Jones cited Aventine’s strong distribution network and said its Illinois River location makes it easy for the company to ship ethanol to other markets. The new Indiana facility along the Ohio River “will offer eastern Corn Belt presence, as well as more efficient accessibility to the East and Southeast markets,” Jones wrote.

Jones also wrote about how the ethanol producers are likely to benefit from this year’s large corn crop, which should keep prices low. Aventine’s shares also climbed 2% on August 31, thanks to a positive report from Raymond James & Associates analyst Pavel Molchanov, who initiated coverage on another ethanol producer, BioFuel Energy Corp. (Nasdaq: BIOF), at “outperform.” While not even producing ethanol yet, BioFuel “compares favorably” with more established companies because of its growth prospects, the research note said.

For the quarter ending in September, 13 analysts polled by Thomson Financial are looking for earnings of just $0.15 per share, less than half what the company reported a year ago, $0.33. Revenue is expected to decline 8%, with the consensus estimate at $375 million, compared with $407 million in the 2006 quarter.

For all of 2007, analysts are expecting revenue to remain flat at around $1.6 billion, while the Thomson consensus estimate of full-year earnings per share is calling for $0.94, down from $1.64 in 2006.

Amid rising corn costs, Aventine reported for the quarter ended June 30 that net income fell to $12.6 million, or $0.30 per share, from $24.7 million, or $0.70 per share in the 2006 quarter. Net sales dropped to $395 million from $443 million in the same period last year. Still, the results beat consensus estimates in the Thomson survey, which called for $0.27 EPS.

During an Aug. 1 conference call with analysts, Aventine’s president and chief executive, Ron Miller, attempted to assuage the fear of an ethanol glut while noting the expected increase in production capacity over the next few years.

“The general concern of investors and analysts is that the supply will come online faster than new demand will be created, thereby reducing ethanol prices and margins,” Miller said. “We believe that the U.S. is destined to achieve 10% ethanol blending nationally. This blend rate will be achieved either through an increased standard (the RFS legislation) or from additional discretionary blending.”

He indicated that Congress in part holds the company’s future in its hands, as it continues debate on the Renewable Fuel Standard, which has cleared the Senate but must be taken up by the House.

Now that it's a public company, must listen to many more voices than is had to for the first 25 years of its existence. So far, with expansion plans in place and a strong network of marketing alliances, most analysts who track the company apparently think it is gaining traction for the long term -- especially with petroleum prices soaring and the nation looking for ways to trim its dependence on fossil fuel.

Via: Seekiing Alpha

RSS | Aventine Renewable Energy,Shell,BP,Valero Energy,ExxonMobil,ConocoPhillips,renewable energy,Marathon Oil,Chevron,energyblog

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RUSSIA: La compañía operadora del proyecto energético Sajalín-2 pagará 11 millones de dólares por contaminar el medio ambiente

La compañía operadora del proyecto energético Sajalín-2 pagará 11 millones de dólares por contaminar el medio ambiente de esta isla rusa del Pacífico, anunció Ian Craig, director del consorcio Sakhalin Energy.

"El pago por daños medioambientales corresponde al operador del proyecto", aseguró Craig durante la conferencia internacional "Petróleo y Gas en Sajalín", citado por la agencia Interfax.

Craig explicó que esa suma fue establecida por el Organismo de Protección Medioambiental de Rusia (OPMR) en concepto de compensación.

Las autoridades rusas amenazaron en septiembre del pasado año a Sakhalin Energy con suspender el proyecto si no garantizaba la seguridad ecológica del mismo y, por la misma razón, paralizaron en diciembre las obras de construcción de su principal gasoducto.

Las amenazas de suspensión del proyecto cesaron cuando los integrantes del consorcio operador desde 1994 -la anglo-holandesa Royal Dutch/Shell y las japonesas Mitsui y Mitsubishi- vendieron la mitad de sus acciones en el proyecto al gigante ruso Gazprom por 7.450 millones de dólares.

Craig adelantó que, según un plan elaborado por Gazprom y el OPMR, se procederá a la recogida de las basuras durante toda la duración del proyecto, y también se inspeccionará que éste no afecte al desovado de los salmones en la temporada estival.

El ministro ruso de Recursos Naturales, Yuri Trutnev, mantiene que Sakhalin Energy nunca debió de haber obtenido la autorización ecológica de su ministerio para la puesta en marcha del proyecto en 2003, cuando el titular del ministerio era Vitali Artiujov.

El ex ministro fue acusado de haber firmado 62 licencias para la exploración de yacimientos de petróleo horas antes de abandonar el cargo en marzo de 2004.

Sajalín-2, valorado en 20.000 millones de dólares y que emplea a unos 17.000 trabajadores, es considerado el proyecto de inversión exterior más importante de Rusia.

El consorcio ya tuvo que desviar en 2005 la ruta de uno de los oleoductos clave en la isla para proteger a las ballenas grises, especie en peligro de extinción que habita en esa zona del Pacífico.

Según el consorcio internacional, los yacimientos de Sajalín-2 tienen reservas comprobadas de 150 millones de toneladas de petróleo y 500.000 millones de metros cúbicos de gas.

Esa isla acoge también el proyecto Sajalín-1, operado por el consorcio Exxon Neftegaz, que integra a la petrolera norteamericana Exxon Mobil, la nipona Sodeco, la india ONGC Videsh y la mayor petrolera estatal rusa Rosneft.

Via: EFE
Russia|Organismo de Protección Medioambiental de Russia,Sakhalin-2,Sakhalin-1,environment,Mitsubishi,Shell,Neftegas,Gazprom,OPMR,Yuri Trutnev,Sakhalin Energy,Vitali Artiujov,ExxonMobil,ONGC,SODECO,Videsh,Rosneft,Russia,Mitsui,medio ambiente,energyblog

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CO2: New technology would store carbon underground

Standing near an 800-meter-deep bore hole in the ground here, Frank Schilling picked up a fist-sized cylinder of sandstone and poured water onto its surface, watching the tiny stream skitter until it suddenly disappeared inside the rock's porous body.

The rapid absorption of the water , he said, showed how easily a much-less benign substance - carbon dioxide - could be stored once he and a team of researchers started pumping it into the half-mile-deep shaft.

"Everyone assumes we're going to store carbon dioxide inside of a cavern but the key is the tiny holes in this rock," said Schilling, a professor of mineral and rock physics. "We're going to press in the carbon dioxide and push out the salty water that's already there."

Schilling is spearheading a project near this small town about 20 kilometers, or 12 miles, west of Berlin that could change the way countries and industries store carbon dioxide, a fast-growing type of pollution, for generations to come.

Even as the drive to reduce greenhouse gases linked to global warming picks up, a number of countries are increasingly turning to coal as a major source of energy. The push for wide-scale development of coal that is quickly gaining in China is also growing steadily in some parts of Europe and the United States, forcing governments and businesses to consider how to dispense with carbon dioxide, a harmful side-product.

Several countries already bury carbon dioxide in sites off shore. At an undersea saline aquifer off Norway, Statoil buries carbon dioxide extracted from natural gas to avoid paying pollution taxes to the Norwegian government. Other projects involve oil fields, like those at Weyburn, Saskatchewan, where operators pump carbon dioxide back underground as part of efforts to extract hard-to-reach hydrocarbons in aging wells.

But existing oil and gas wells might only be able to accommodate a few decades worth of carbon dioxide. Offshore aquifers, even though they are vast, would require enormous lengths of pipeline to carry carbon dioxide out to sea.

"Putting CO2 offshore has the obvious advantage of public acceptability," said Jeff Chapman, chief executive of the Carbon Capture & Storage Association in London.

"But we know that there are centuries worth of space for storage onshore," he said, citing examples of promising sites in China, Germany, Poland and the United States.

Schilling's three-year experiment, called CO2Sink, makes Ketzin an important test of whether carbon dioxide might safely and durably be buried inland, where underground storage space could be almost endless. It involves pumping 100 tons of the gas each day into the sandstone beneath this flat Brandenburg countryside and monitoring the ecosystem for adverse results.

If the carbon dioxide stays put, as Schilling expects, that would give a major boost to carbon capture and sequestration, or CCS, an emerging technology that would allow industries based on fossil fuels to meet stringent emissions requirements - and stay in business for decades.

"I won't say it's not dangerous, but it's less dangerous than people think," Schilling said. Ketzin, he added, could be "writing a piece of history."

Shell, Vattenfall, E.ON, Statoil and RWE are contributing money and expertise to the project, which is overseen by the National Research Center for Geosciences in Germany, Schilling said. But he said that the bulk of total financing, about €30 million, or $41.5 million, comes from the European Union and Germany, which is heavily dependent on burning coal for its electricity and where the government faces widespread opposition to nuclear power, the main alternative to coal.

Some environmentalists favor the technology because it might be the only way to control carbon dioxide emissions at a time when developing countries like China are burning ever-greater amounts of coal to fuel their booming economies.

"The growth of coal plants is absolutely scary," said Sanjeev Kumar, a carbon emissions expert with the environmental group WWF in Brussels. "If we can make fossil fuels as green as we can, then we should try to get carbon capture and storage to work on a global level."

EU policy makers still are considering whether to make it mandatory for all new coal plants to incorporate the new, cleaner technologies after 2020.

That is not fast enough for Kumar, who is lobbying for an immediate moratorium on new coal plants in Europe unless they are constructed so that carbon dioxide technology can be incorporated as soon as it becomes available.

But a number of environmentalists are concerned that further development of the technology for commercial use will simply encourage industries and governments to rely more heavily on coal. They argue that funding should be channeled into the development of renewable energies rather than on prolonging the use of fossil fuels and accumulating vast amounts of underground waste.

"You've got to consider the load on future generations to take care of these storage sites," said Gabriela von Goerne, a climate campaigner for Greenpeace in Germany. "We believe this technology does not solve our problems at all."

Environmentalists said they were also skeptical that the new technology made underground carbon dioxide storage secure. One potential hazard is that concentrated carbon dioxide is heavier than air. Large quantities of escaped gas have, in the past, settled in low-lying areas with tragic results.

In 1986, about 1,800 people were suffocated at Lake Nyos, Cameroon, when a massive cloud of carbon dioxide escaped from the formerly volcanic site. Environmentalists have warned of similar dangers if leakages occur and gas settles in dips and valleys, where people live.

Leaks from carefully selected storage sites, properly monitored, would not carry those same risks, backers of the technology say.

"If CO2 ever does get to the surface, it's not going to be in our lifetimes or much of our near-descendants' lifetimes," said Chapman of Carbon Capture & Storage Association.

At the CO2Sink project, Schilling said he expected only about 1 percent of the 60,000 tons of carbon that is to be buried at Ketzin over the next three years to escape over the next century, and about at most 5 percent over the next millennium - amounts he said would be benign.

Any leaks would be most likely to occur at the bore hole, but around-the-clock monitoring would ensure problems are quickly fixed, he said. The carbon dioxide used in the experiment will be provided by Linde, which provides gas for carbonated beverages.

But people who live in and around Ketzin are worried about having carbon dioxide stored directly underneath their feet. The latest effort to bury gas in the neighborhood reminds many residents of environmental sacrifices already made in the name of industrial progress. During the mid-1960s, leaks of carbon monoxide from a former underground gas storage site at Ketzin required the permanent evacuation of a nearby village, Knoblauch.

"They already have a garbage factory in Ketzin and now this as well," said Beatrice Görtz, 35, who lives with her toddler, Mia, in Neu Falkenrehde, a hamlet two kilometers from the injection site. "I can't imagine that it's positive."

Among experts, there are growing concerns that public opinion could turn against the technology in the same way it did against nuclear power and genetically modified foods.

David Reiner, a lecturer in technology policy at Judge Business School at Cambridge University who has coordinated public opinion polls on carbon storage in six countries, said that if the public remained in the dark about the way carbon storage was supposed to work, there was no way of knowing how they would react to wide-scale development.

"Many people have an initial negative impression," he said, "although once they learn more we tend to see a more positive inclination."

Via: International Herald Tribune
by James Kanter
Neu Falkenrehde,Beatrice Görtz,Frank Schilling,Cambridge University,Shell,Vattenfall,EON,Statoil,RWE,Germany,china,Cameroon,CO2Sink project,Technology,carbon and greenhouse gases,co2,energyblog

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EOLICA: Portuguese utility has deal for Houston power developer Horizon Wind Energy

Breezing in from Europe

Less than two years after Houston-based Horizon Wind Energy was purchased by Goldman Sachs, the wind power developer will be sold to Portugal's largest utility for $2.2 billion.

Energias de Portugal, a utility with nearly 7 million customers in Portugal and Spain, announced its successful bid for the firm on Tuesday.

EDP said it will invest an additional $600 million in existing wind power projects as part of the deal and assume about $180 million in debt, bringing the total deal value to nearly $3 billion.

The move is another example of European companies' taking a greater interest in the U.S. wind energy business. BP and Shell have been growing their American portfolios in recent years while Spanish utility Iberdrola has entered the U.S. wind business through its acquisition of Scottish Power.

Goldman Sachs' ownership of Horizon over the past two years helped it move forward on a number of projects, Chief Development Officer Michael Skelly said. In the past, the company maintained small stakes in the projects it built, but since Goldman's involvement it has remained the primary owner.

Today, Horizon has 559 megawatts of wind power on line and 997 megawatts under construction.

"Under EDP's ownership we should be able to continue to expand, particularly since renewable energy is at the heart of its business," Skelly said.

One megawatt of wind power can power about 300 homes, according to wind industry data.

EDP has said previously it plans to triple its wind-energy capacity by 2010 by investing in Europe and the U.S.

"We believe the U.S. wind energy market has a significant growth potential," EDP's chief executive, Antonio Mexia, said in a prepared statement.

Financier once owned it

Horizon was previously known as Zilkha Renewable Energy, a company co-owned by Houston energy financier Selim Zilkha and his son, Michael Zilkha.

In March 2005, Goldman Sachs announced it would purchase the company. Terms were not disclosed at the time, but several news reports, including those from online energy news site SparkSpread, cited unnamed sources who said the price was less than $1 billion.

Goldman began shopping Horizon late last year. A large number of companies reviewed Horizon's books for a possible purchase, according to sources familiar with the process, including Exxon Mobil. Its officials declined to comment.

Prominent role of U.S.

The U.S. is the birthplace of large-scale wind projects and up until at least 1990 was home to up to 90 percent of the world's wind power capacity, said Randall Swisher, executive director of the American Wind Energy Association.

In the 1990s, however, countries like Denmark, Germany and Spain created a broad range of incentives for wind projects. Today, Europe has 70 percent of worldwide wind energy production and seven of the 10 largest wind equipment manufacturers. Firms like BP, Shell and Spain's Iberdrola are among some of the biggest wind power developers.

A lot has changed in the U.S. renewable energy business in recent years, however, particularly in the two years since Goldman purchased Horizon.

A continuation of a federal production tax credit for wind projects, the broadening of renewable power goals in states like Texas and utility companies' increased familiarity with wind projects helped fuel an investment in wind power, Swisher said.

The European market is far from saturated when it comes to wind projects, but the U.S. has much greater capacity for new projects.

"You've got some pretty strong capabilities in Europe around the wind business, so they are now turning their attention to markets like Asia and the U.S.," Swisher said.

The U.S. had the greatest increase in new wind capacity last year, with 2.5 gigawatts of equipment worth about $4 billion installed, according to the Global Wind Energy Council. Texas accounted for about one-third of all new wind generation installed in 2006 and overtook California as the top wind-energy-producing state in the U.S., with 2,768 megawatts of capacity.

Houston will likely continue to be a hub for wind energy in the U.S., Swisher said.

In addition to Horizon, which Swisher called "one of the crown jewels of the U.S. wind industry," Shell and BP have their American wind businesses based here. Australian developer Babcock & Brown has a sizable Houston office, and PPM, a wind power subsidiary of Scottish Power, also has an office here.

Houston will play host to the American Wind Energy Association's annual meeting in May 2008, which could attract as many as 7,000 participants.

Chron