Media Credit: Sam Shumaker
Shell President John Hofmeister speaks to a standing-room only crowd in the Student Union Memorial yesterday on the future of energy security and affordability in the United States.

Oil Co. president appeals to enter global warming sentiment
By: Claire Conrad
Issue date: 8/31/07 
 
John Hofmeister, president of Shell Oil, spoke about energy security in the United States and fielded questions from a standing room-only crowd in the Kiva Room of the Student Union Memorial Center yesterday afternoon.

Hofmeister’s visit is part of a 50-city tour titled “A Dialogue with Americans on Energy Security,” in which Shell hopes to converse with the American public about energy supplies and security.

Energy security since the 1990s has been more precarious than previous years, Hofmeister said.

Following the 2005 hurricane season, which included Hurricane Katrina, storms disrupted national energy networks and concerns of energy shortages in the United States were brought to the forefront, Hofmeister said.

Cheap and available fuel is important to a functioning, socially just society, he added, as the public needs access to transportation and energy to live.

“The economic base of our society is predicated on available and affordable energy,” Hofmeister said.

Shell has developed technology to produce oil from domestic sources as well as Canadian sources, he said. The technology creates natural gasses from coal in an environmentally responsible way. Shell also uses solar and wind technology, as well as hydrogen fuel cell technology, he added.

Another method Shell has undertaken for energy security is the management of greenhouse gases in the interest of global warming, which Hofmeister said Shell acknowledges as a fact.

“When 90 percent of the world’s leaders or more, when most of the civilization, says we are worried about climate issues, who are we to say, ‘Well, let’s debate the issue.’ ”

Following the speech, the audience questioned Hofmeister about oil-extracting technology, Shell’s operations in Nigeria and the environment, among other subjects.

“I think universities are ideal locations for engaging in this dialogue,” said Ed Stiles, dean of the College of Engineering, who helped host Hofmeister and conducted meetings with Shell.

The question period was interrupted at one point by a loud comment from an audience member about Shell’s role in the international community, but then proceeded in an orderly manner.

Another audience member, Will Hodges from the Center for Biological Diversity, questioned Hofmeister about Shell’s offshore leases in Alaska, where oil reserves exist alongside fragile ecosystems and endangered species.

The Center for Biological Diversity, along with four other environmental advocacy groups and an Alaskan indigenous rights group, have filed a lawsuit that has successfully halted Shell exploratory drilling until the process can be reviewed.

“You literally can’t fathom how important the environment is,” Hodges said. “It’s not just a national park that’s nice to look at out the window, it’s the underlying basis of our survival.”

http://media.wildcat.arizona.edu/media/storage/paper997/news/2007/08/31/News/Shell.Touts.Energy.Work-2946604.shtml

Aug 31, 2007 2:23:00 PM MST
 
VANCOUVER (CP) _ Native protesters blocking a coalbed methane project in northern B.C. can continue their blockade this weekend.

Shell Canada applied for a B.C. Supreme Court injunction to stop the blockade but the case has been adjourned indefinitely.

The company can bring its application forward again but only in Prince Rupert or Terrace, closer to the area the natives want to protect.

More than 100 people, including environmentalist David Suzuki, gathered outside the Vancouver courthouse to voice their opposition to the coalbed methane project.

The Tahltan First Nation says the project is in the Sacred Headwaters, the birthplace of the Skeena, Nass and Stikine Rivers.

A spokesman for the Tahltan says the natives‘ resolve to protect the Sacred Headwaters is stronger than ever.

(CKNW)

http://www.oilweek.com/news.asp?ID=11155

Western Canada Wilderness Committee
Aug 31, 2007 15:08 ET

VANCOUVER, BRITISH COLUMBIA–(Marketwire - Aug. 31, 2007) - First Nations and concerned citizens in Vancouver and Smithers today say Royal Dutch Shell’s delay of legal action against the Sacred Headwaters blockaders shows Shell is concerned about growing opposition.

Members of the Tahltan First Nation are blockading Shell’s coalbed methane project in the Sacred Headwaters, the birthplace of the Skeena, Nass and Stikine Rivers. Shell was to appear in Vancouver court today to request an injunction that would allow them to have the blockaders arrested.

“Our resolve to protect our Sacred Headwaters is stronger than ever,” said Oscar Dennis, a spokesperson for the Tahltan blockaders. “Our blockade will stand until we see our Sacred Headwaters protected from Shell.”

Over 100 people, including Dr. David Suzuki, gathered outside the Vancouver courthouse today to voice their opposition to Shell’s coalbed methane project.

“Despite Shell’s latest move, little has changed and Shell continues to threaten the Sacred Headwaters with its destructive coalbed methane project,” said Andrea Reimer, Executive Director of the Western Canada Wilderness Committee. “Shell’s international reputation is once again in jeopardy, and we will continue to mobilize concerned citizens around the world to protect the Sacred Headwaters.”

The Victoria-based Dogwood Initiative is calling on the BC government to back off its coalbed methane agenda.

“The BC government continues to push coalbed methane on communities against their wishes,” said Dogwood’s Executive Director Will Horter. “This is a risky, unproven industry and it’s time the BC Ministry of Energy and Mines started standing up for its citizens instead of acting as Shell’s marketing department.”

B-roll footage available by request

Download photos at www.skeenawatershed.com/images/downloads

Contact: (250) 847-9293

For more information, please contact

Western Canada Wilderness Committee
Andrea Reimer
Executive Director
(604) 719-3920

or

Dogwood Initiative
Will Horter
Executive Director
(250) 418-1672

http://www.marketwire.com/mw/release.do?id=765835

Ariz. shortchanged by the heat; activists pursue fairer fill-ups
Ryan Randazzo
Aug. 31, 2007 12:00 AM

Each time drivers fill their fuel tanks in Arizona’s simmering summers, they likely see $1 or more evaporate.

Because gasoline expands in the heat, that’s the estimated dollar amount of energy they purchase but they never receive.

Nobody serves hotter gas than stations in the Arizona desert, and after more than a year of discussion, debate over the issue is beginning to boil.

The state Department of Weights and Measures is taking fuel temperatures at gas stations and considering voluntary temperature compensation, while consumer advocates are pushing aggressively for changes.

When gas heats up, it takes up more space but doesn’t provide any more energy. That means there is less energy in a tank full of 105-degree gas than the same tank filled with 70-degree gas. However, stations charge by the volume of gas they sell, not how much energy it contains.

“Arizona is the epicenter of hot-fuel rip-offs,” said Judy Dugan, a founder of OilWatchdog.org, which is calling for gas stations to compensate for the temperature of gas they sell. “With the weather Phoenix is experiencing now, every time you fill the tank, you could be losing a dime a gallon. It’s an extra penalty for living in the desert imposed on you by the oil companies and oil refineries.”

Major oil companies and independent station operators argue that retrofitting pumps and compensating fuel sales for temperature won’t save consumers money and oppose moves to require such equipment or even allow it in the marketplace.

At least 38 lawsuits have been filed nationwide against gas stations and oil companies. Earlier this month, Sen. Claire McCaskill, D-Mo., introduced legislation that would require new and upgraded pumps to use temperature-compensation equipment.

But things have heated up even more in Arizona:

• The Arizona Department of Weights and Measures is taking fuel temperatures at stations to get a 12-month average but already has found summer temperatures of about 104 degrees. Based on that data, Valley motorists pay about $1 more for a 15-gallon fill-up than they would for the same amount of energy if the gas were 60 degrees, the industry standard. That figure rises when prices hit the $3 mark they saw earlier this summer.

• Exxon Mobil Corp. stations owned by the company, not franchisees, in Arizona and California have begun putting warning stickers on pumps to let people know they don’t compensate for temperature, ostensibly a response to the lawsuits.

• A recent report for the U.S. House found Arizona has the highest hot-fuel premium nationwide, based on temperature data collected in 2003.

Local lawsuit

Fuel experts have known for decades that gas expands when heated, and that trait can benefit or harm buyers and sellers when not calculated into transactions.

The current debate flaredin 2002 when the Missouri-based Owner-Operator Independent Drivers Association representing truckers got involved.

OOIDA began investigating the mileage variances in diesel fuel when truckers suspected fraud.

The group found that temperature accounted for the different mileage truckers were experiencing, even though diesel doesn’t expand as much as gasoline when heated.

Their research and subsequent news coverage prompted dozens of class-action lawsuits on behalf of independent truck drivers and motorists, all of which are being consolidated in Kansas.

Among the 38 cases with more than 150 plaintiffs and defendants is James Anliker, owner of Jim’s Trucking Inc. in Tolleson. He and another Arizona motorist, Christopher Payne, filed their suit in May on behalf of everyone who has bought fuel warmer than 60 degrees in the state from the nine defendants, including Exxon Mobil, Shell, Flying J and Chevron.

“The defendants have resisted all efforts to change their deceptive marketing practices and retrofit service-station fuel pumps with temperature-correction devices because the petroleum industry profits from the sale of motor fuel to consumers and non-standard, non-temperature-adjusted gallons,” their complaint says.

It also criticizes the fact that stations don’t report the temperature of fuel being sold so consumers can calculate the purchase themselves.

The complaint also alleges the companies pay taxes on the amount of fuel they purchase at the industry standard of 60 degrees and could collect more taxes than they remit on the fuel when it is sold hotter and, therefore, “obtain a tax windfall at the expense of the consumers.”

Solution debated

Hot-fuel critics see a double standard, with Canadian gas stations compensating for temperature to prevent being left short when chilly weather reduces the volume of gas they sell.

Not to mention the temperature calculations oil companies often use when making shipments and major sales in the U.S.

For those large transactions, the industry standard is 60 degrees. That way, companies get an even trade when exchanging 5,000 temperature-compensated gallons of fuel in California, where it is 90 degrees, for 5,000 gallons of temperature-compensated of fuel in Minnesota, where it is 60 degrees.

Too costly, industry says

But industry representatives say that’s not needed at pumps.

And spending $2,000 or more per pump to add temperature-compensating equipment will only hurt consumers, said Andrea Martincic, executive director of the Arizona Petroleum Marketers Association, representing the 93 percent of the state’s 2,000 stations who are independent.

“Consumers likely will see a price increase,” Martincic said.

She represented her views in Chicago this week during a National Conference on Weights and Measures meeting on the possible pitfalls of introducing temperature compensation in the U.S.

“The advocates for this are assuming the stations will sell fuel at the same price with the new equipment,” she said. “It’s a little misleading to say consumers are losing a dollar or whatever per sale. A gallon is a gallon.”

Temperature adjustment also could require more state inspectors, increasing fees on stations that could be passed on to consumers.

And if temperature adjustment is simply allowed, not required, it could create unfair competition among stations, she said.

“There is a risk in rural communities or at older stations, where potentially owners just say it’s not worth it,” she said. “If we don’t know it will help consumers, then why would you move forward with it?”

Industry opposition

Oil companies such as Shell Oil and Exxon Mobil also have argued that the cost of adding the equipment to gas pumps would only hurt the business owners who run most of their franchises.

And temperature compensation won’t mean they get more gas to fit in their tanks or that stations will lower prices, they said in testimony before a special committee of the U.S. House last month.

“Shell believes that making automatic temperature adjustment permissive throughout the United States would not be a good idea,” said Hugh Cooley, Shell’s vice president and general manager for national wholesale and joint ventures.

“First, if in any given area some stations adopted the technology and others did not, consumers would be confused over how to compare prices.”

Exxon Mobil provided similar comments but would only reply via an informal e-mail when asked by The Republic about the new stickers on Arizona pumps. And then the company wouldn’t answer why just two states were singled out.

“(The stickers are) simply a reminder that the dispenser sells motor fuel by volume,” spokeswoman Prem Nair wrote. “This is how fuel has traditionally been sold at retail in the continental United States.”

Awareness limited

Most drivers haven’t yet heard of the issue, even those who take fuel seriously.

“I didn’t know that,” 18-year-old Tim Senzee said while filling his pickup this month at a Phoenix QuikTrip as the mercury hit 109 degrees. “And I drive for a job, and have to pay for my own gas.”

Senzee can write off his delivery-service mileage on his taxes but still watches spiking prices.

“It definitely is a problem,” he said. “It can be pretty annoying.”

Other consumers were a bit cynical about hot-fuel regulation.

“I don’t think they’ll do it unless there is a law changed,” Kay Averkamp said as she pumped $27.86 worth of gas into her Honda Prius at a Phoenix am/pm station. “I don’t think they’ll do it out of the goodness of their hearts.”

But truckers say they see the impact, even though major trucking companies such as Phoenix-based Swift Transportation have stayed out of the fray.

“When you don’t get a real gallon of fuel, that’s when it hurts my wallet,” independent driver Sam Battaglia of Louisville, Ky., said recently after putting $170 worth of diesel into his International 9900 near Nashville.

“You notice when you fill up, then park overnight and the gauge reads less than full in the morning,” said Battaglia, a member of the independent-truckers group pushing for temperature compensation.

The state Department of Weights and Measures investigates about 1,000 complaints a month regarding gas pumps, but it hasn’t taken a stance on hot fuel, spokesman Steve Meissner said.

“The oil industry says it’s too expensive,” Meissner said. “So we could say, ‘OK, how about a voluntary system where the pump is labeled (as compensating for temperature),’ and if they have to charge an extra nickel a gallon or so, fine, they could let the market decide if it’s worth it.”

Reach the reporter at ryan.randazzo@arizonarepublic .com or (602) 444-4331.

http://www.azcentral.com/arizonarepublic/news/articles/0831biz-hotfuel0831.html

XOM Blocked at Russia’s Sakhalin

Posted on Aug. 31, 2007
By Pavel Romanov and Michael J. Economides

Exxon Mobil may be the world’s largest corporation, but it is no match for Russia’s “Energy Strategy” – the plan rolled out in 2002 by Putin’s government.

The central concept of the Russian Energy Strategy is simply re-nationalization, and the policy’s foundation is state control of the oil and gas sectors. Yukos, Sibneft, Shell, BP, Russneft, and Exxon Mobil have all lost control over their Russian energy assets, or are in the process of losing it.

As we wrote here in July, it is almost certain that Exxon Mobil will lose its controlling interest in the massive Sakhalin-1 project. Those suspicions were bolstered in early August when the Russian energy ministry rejected the company’s plan to export gas from Sakhalin-1 to China, saying it is “Russia’s priority to supply gas from Sakhalin-1 to the domestic market.”

Gazprom’s deputy chairman Alexander Ananenkov recently reported to the Russian government that the country’s easternmost regions need some 15 billion cubic meters (530 Bcf) of gas per year and suggested that the partners in Sakhalin-1 supply it. But that move could be costly. Blocking Exxon Mobil’s gas exports to China will mean that the state could lose revenue that would have come via the Sakhalin production sharing agreements. (Exxon Mobil has also held talks with Japan and India, both eager to import LNG from the Sakhalin project.)

In 2004, Exxon Mobil signed a memorandum of understanding with China’s CNPC to export gas from Sakhalin across the border. That deal contradicts the ongoing negotiations between Gazprom and China for gas exports, thus directly competing with Gazprom for a share of the Chinese market. And given the Russian Energy Strategy and its insistence on full control over oil and gas exploitation and exports, it’s easy to predict what will happen to Exxon Mobil’s export plans.

http://www.energytribune.com/articles.cfm?aid=615

DAVID EBNER
From Friday’s Globe and Mail
August 31, 2007 at 7:00 AM EDT

After three decades working for Royal Dutch Shell PLC, Clive Mather arrived in Calgary as the new CEO of Shell Canada in 2004. He quickly okayed a $12.8-billion expansion of Shell’s oil sands facilities and bought BlackRock Ventures Inc. for $2.4 billion. But Mather also called for action on global warming. In June, at age 59, he stepped down and returned to Surrey in England after Royal Dutch Shell bought the 22% of Shell Canada it didn’t already own for $8.7 billion.

You’re a young retiree. What’s next?
I think work is great fun. Who on earth would want to stop working? I am retiring from Shell but I’m not retiring. My grandfather farmed in Oxfordshire, in central England, until he was 94. I have a huge energy source inside me that will not be bottled up.

Any ideas? Canada, England, elsewhere?
I’m talking to people, particularly about how I can stay connected with Canada. I think you’ll see me back here—but in different roles, and I shall not be doing oil and gas. I’m interested in trade issues and environmental issues and things that would help the country in the longer term.

Are you pleased that your peers in the industry are now taking global warming more seriously?
I derive enormous satisfaction from all we’ve done here, and that’s been a big part of it—but not the only part. I’m thrilled about what we’ve achieved over the last few years in terms of our growth and our profitability and, yes, I do care deeply about climate change and the responsibility we all bear. We may not know or understand all of the science, but the impact is pretty clear.

But did you feel guilty speaking out while also running a big oil company?
Hydrocarbons have been a wonderful energy source for the world. Our modern civilization has been built upon them. My message on all this is, we’re in it together. We’ve enjoyed the benefits, but now we have to live up to the consequences. I like to think that this industry, which has been so successful in developing cheap, reliable and safe energy, will also be part of the solution.

What qualities got you to the top ranks of the oil industry?
I have always been ambitious. I will be absolutely honest: I’ve always wanted this job. I always thought that the CEO of Shell Canada was the best job in Shell—and I still do. On the way, of course, you have to evidence some expertise, some performance, and frankly, you have to benefit from a bit of good luck.

The best job in Shell?
First of all, this is a wonderful country. Second, Shell is an integrated energy company, and that makes for enormous fun. We literally go from the mine to the motorist, or from the well to the wheels, as we say. The third reason is that I was running a public company, so you had the competitive challenge of a share price and the marketplace—and that turns me on. I’m a competitive animal. I like to have that test every day of how the stock is doing.

You’ve worked throughout the world. What was your favourite country?
They’re all different. I lived in Borneo, which is tropical rain forest, so you can’t get more different than Alberta. But it’s glorious, in its own way. South Africa was fantastic—terrific political challenges, but a beautiful country, too. And my own country, England, which you could fit into Alberta many times, is wonderful. It’s green and pleasant and civilized. But I think the scale and splendour of Canada is particularly inspiring.

Any regrets?
My big regret is that the Flames didn’t make the Stanley Cup final this year. I’ve become a big fan. I must say that a night out at the Saddledome is one hell of a good night.

http://www.theglobeandmail.com/servlet/story/RTGAM.20070829.rmexit0829/BNStory/Technology/?page=rss&id=..rmexit0829

By Toby Shute - August 31, 2007
 
I’ve given PetroChina (NYSE: PTR) plenty of virtual ink around here lately, but it’s not the only exciting Chinese E&P story. CNOOC (NYSE: CEO), as a pure play on upstream offshore oil & gas activity, is also an interesting name, and with the release of the firm’s first-half results, I have occasion to dive into the company’s operations.

First-half production rose 4.5% to just more than 470,000 BOE per day. This growth, which slightly outpaced PetroChina’s pump-up, came entirely from natural gas — oil production was essentially flat. Oil prices, on the other hand, were decisively down, and that cut into revenues by roughly 7%. After factoring in higher exploration and operating expenses, as well as a windfall profit tax, net profit came in 11% lower than last year.

The big growth in gas output slightly shifted CNOOC’s product mix from 84% oil last year to 80% this year, but the company is still very oil-oriented. Given that mix, I’m surprised to see the gas-heavy players that CNOOC identifies as its peer group. A comparison to prodigious producers like Apache (NYSE: APA) and Devon (NYSE: DVN) seems bound to come up short, no?

Well, in terms of production growth, sure, but CNOOC shows up remarkably well in terms of its cost structure. It even edges out low-cost dynamos like XTO Energy (NYSE: XTO) and EOG Resources (NYSE: EOG). Of course there’s no breakout of finding costs, because CNOOC wouldn’t show up as favorably, but I’m still impressed by its low per-barrel operating expenses.

Offshore players have to shell out a lot more for exploration, thanks in part to soaring dayrates on semisubmersible rigs. The availability of deepwater rigs, or lack thereof, is one of the greatest cost pressures that CNOOC will face over the next several years. With a success rate below 70%, the firm is going to have to drill a lot of wells in order to organically add reserves on a regular basis. Unless, that is, it can make better use of state-of-the-art seismic and controlled source electromagnetic data. But that’s a story for another day.

© 2007 Universal Press Syndicate

http://www.themoneytimes.com/articles/20070831/a_look_at_cnooc-id-108864.html

VIENNA (Thomson Financial) - OMV AG said it is “fundamentally” interested in looking at any oil and gas exploration and production (E&P) licenses for the British Isles that are offered up for sale, including any from Royal Dutch Shell PLC.

Shell recently said it is offering interested parties the opportunity to acquire equity by funding work programmes in five of its gas and oil licenses in Ireland, the United Kingdom and the Faroe Islands, including the William oil prospect and the Dooish gas condensate. Shell said that participation offers will be due on Oct 15.

“OMV is fundamentally interested in growing in its core E&P regions and will always look at opportunities that allow it to do so,” OMV spokesman Thomas Huemer said.

Huemer declined to comment on whether OMV intends to bid for the license participation Shell is offering.

Earlier this week, OMV concluded an asset swap with Island Oil & Gas PLC that provides the Austrian company with a 50 pct stake in a deepwater license that includes the Killala prospect, off the coast of Ireland.

peter.klopf@thomson.com pkl/am
COPYRIGHT

Copyright AFX News Limited 2007.

http://www.hemscott.com/news/latest-news/item.do?newsId=48500919009787

LEIGHTON KEITH
leighton.keith@tnl.co.nz - Taranaki | Saturday, 1 September 2007

New Plymouth business owner Greg Barley is boycotting Shell and urges all Taranaki residents to follow suit.

Mr Barley cancelled his petrol accounts with Shell in protest over the petrol company’s treatment of Gordon and Karen Mace, the owners of Junction Service Station at Awakino.

“Mr heart goes out to this hard-working family, who have put so much into their business and built up the asset value, only to be kicked in the guts by Shell,” he said.

This week the oil industry giant confirmed it would not renew its supply contract with the Maces, forcing them to close their business of 16 years.

Mr Barley, who is in the construction business, said he would no longer be spending