REUTERS

* Four new Saudi Arabias needed by 2020

* Shift towards biofuels, natural gas

ZURICH, May 12 (Reuters) – Higher energy prices are inevitable as it gets ever more difficult to extract oil and gas and the cost of carbon emissions is incorporated, Royal Dutch Shell (RDSa.L)’s CEO said in an interview with a Swiss paper.

He also cited rising demand as a spur to price and said by 2020 the world would have to develop oil sources equivalent to four times the capacity of leading exporter Saudi Arabia.

“We assume, (prices) will rise longer term,” Peter Voser told Wednesday’s edition of the Handelszeitung newspaper.

“Technologically, it’s becoming increasingly difficult to extract oil and gas. That’s pushing costs up. In addition, you have to include the costs for CO2. And moreover, demand will rise faster than supply. The consumer will in future have to accept a higher energy price.”

In late 2008, the International Energy Agency, which represents energy consuming countries, said the world would need four new Saudi Arabias if it were to cope with rising consumption and Voser took up the theme.

“To cover demand, by 2020 the world must develop oil sources that are equal to four times the capcity of Saudi Arabia. That’s production of 40 million barrels a day, half of what we have now. For this we need to invest gigantic sums,” he said.

But Voser also acknowledged the huge environmental challenge of escalating use of fossil fuels. In response, he reiterated comment Shell was expanding its production of gas as the cleanest burning fossil fuel as well as developing biofuels.

(Reporting by Catherine Bosley and Barbara Lewis)

SOURCE ARTICLE

An offshore oil rig in Cook Inlet, Alaska Paul Souders / Getty Images

May 12, 2010, 12:40 AM EDT

By Ayesha Daya

May 11 (Bloomberg) — Kuwait is talking with Royal Dutch Shell Plc, Total SA and Exxon Mobil Corp. to develop heavy-crude deposits, Sami al-Rushaid, chairman of state-run Kuwait Oil Co., said today.

Kuwait is seeking to produce 270,000 barrels a day from the heavy oil deposits, he said. Kuwait Oil plans to spend as much as 7 billion dinars in the next five years on projects, al- Rushaid said.

To contact the reporter on this story: Ayesha Daya in Dubai at adaya1@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

SOURCE ARTICLE

Royal Dutch Shell “B”
£18.15½ -0.5p
Questor says BUY

The best investment strategy to use at the moment is to sell the rallies and buy the dips. If you believe in this strategy, you should be buying Royal Dutch Shell.

Shell shares hit a 12-month high on April 30, but have slid by almost 9pc since then on worries over sovereign debt and global growth. The situation with BP has also been unhelpful.

However, the share price fall now means the yield is a very impressive 6.3pc. Questor reckons that now is a good time to top up your holdings or make a new purchase of the shares.

Questor upgraded the shares to a buy on March 17 after the group unveiled its strategic plan for growth. The company is investing heavily in its businesses. Shell’s management says its growth plans should increase cashflow by 50pc between 2009 and 2012 at $60 barrel oil – or by 80pc at $80 a barrel.

The company’s recent consensus-busting first-quarter results have highlighted the group’s earnings power. When this is coupled with the growth and cash generation that it is planning over the next three years, a purchase at this level looks compelling.

Earlier this week, Peter Voser, Shell’s new chief executive, said that it had not been told to stop drilling in the Gulf of Mexico in the wake of the BP Deepwater Horizon incident.

He said that the leak would not have much impact on crude prices, although he highlight the end of global stimulus packages in the second half of the year as a risk.

The shares are trading on a December 2010 earnings multiple of 8.8 times, falling to 7.2 next year. They were recommended on March 17 at £18.56½ and are down 3pc compared with a market down 7pc.

UK investors should buy the “B” class shares because dividends paid on class “A” shares have a Dutch source for tax purposes, which means they could be subject to Dutch withholding tax.

Dividends paid on class “B” shares have a UK source and are therefore not liable to Dutch taxation laws.

Buy for the yield.

SOURCE ARTICLE

By Peter Millard and Joao Lima

May 11 (Bloomberg) — Royal Dutch Shell Plc, Europe’s biggest oil company by market value, found more evidence of oil at a project in Brazil’s offshore Campos Basin where the company has increased production faster than expected.

Shell made the discovery at the Nautilus field, which is 1,571.75 meters (5,157 feet) deep, the Brazilian petroleum regulator said. The field, located in block BC-10, was declared a commercial find in December 2005.

Companies including Shell, Chevron Corp. and Galp Energia SGPS SA have boosted production this year in Brazil’s Atlantic waters, where state-run Petroleo Brasileiro SA made the largest oil discovery in the Americas since 1976 at the Tupi field. Shell has brought production on line at BC-10 faster than it expected, Chief Financial Officer Simon Henry said in a conference call with investors April 28.

“It’s one of their priority projects going forward,” Evgeny Solovyov, an analyst at Societe Generale SA who has a “buy” recommendation on Shell, said in a telephone interview from London. “Brazil is very important and will remain so for Shell.”

The Hague-based Shell produced 85,000 barrels a day at BC- 10, also known as Parque das Conchas, in January, spokesman Jaryl Strong said March 14. The company is using a vessel that can process 100,000 barrels of crude and 50 million cubic meters of natural gas per day at the block.

–Editors: Carlos Caminada, Bob Brennan.

To contact the reporters on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net Joao Lima at jlima1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

SOURCE ARTICLE

Avoid Dispersants

ONE of the oil industry’s favorite tools in fighting oil spills is chemical dispersants — indeed, over 300,000 gallons have been used so far in the Gulf. But as anyone who studied high school chemistry knows, like dissolves like: crude oil responds only to oil-based solvents, which are extremely toxic.

The first dispersants, released in the late 1960s, were quickly shelved because they turned out to harm wildlife more than crude oil did. Drums of Corexit 9527, a dispersant used to clean up the Exxon Valdez spill in 1989, came with warning labels: “prevent liquid from entering sewers, watercourses or low areas.” Little has changed in 20 years. Even worse, spraying dispersants in the Gulf in an attempt to minimize the oil’s damage to the coast would kill shrimp eggs and larvae and young fish in the open water. They can linger in the water for decades, especially when used in deep water, where low temperatures can inhibit biodegradation. Dispersants may sound like a good idea, but they’re bad news, and their use should be avoided unless absolutely necessary. — RIKI OTT, marine toxicologist and author of “Not One Drop: Betrayal and Courage in the Wake of the Exxon Valdez Oil Spill”

Forget Acoustic Sensors

IN Norway and Brazil, offshore oil rigs are required to have switches that close valves whenever they sense an acoustic pulse in the water, which could signal a blowout. In the wake of last month’s accident, many have argued that similar switches should be required on American rigs.

But the Deepwater Horizon was hardly without safety precautions: it had manual switches at several different stations and two backups — a “dead man” switch that would automatically send a shut-off signal to the valve if there was a loss of electrical communication from the surface, as well as a mechanism to allow a remotely operated vehicle to shut it off. Either these all failed, or they worked and the valve still failed to close. Would a third backup sending yet another signal reduce risk? Maybe. But it would be of marginal benefit, and could result in a false alarm or premature signal. When a safety switch is thrown, a device cuts the drill pipe, letting it fall into the hole. Fishing it out, and even testing it regularly, is a dangerous proposition, putting worker safety at risk — precisely what such systems are designed to avoid. — KEN ARNOLD, energy industry consultant

Stop Outsourcing

LIKE many other American corporations, oil and gas companies have been outsourcing critical, high-risk operations for several decades, sacrificing control to save money. Today, platforms like the Deepwater Horizon resemble small villages, home to distinct chains of command from several different subcontractors. Workers for different companies may hardly know one another despite working side by side; they often answer to different bosses.

Some argue that the level of specialization and technical expertise required to run a platform demands teamwork by different companies, each with its own research and development and command structures. True, but specialization and cost-cutting can go too far. Fragmented control is not likely to blame for the Gulf spill, but it is likely to hamper the search for the real cause and the effort to enact reforms to keep such disasters from happening again. Slowing, or even reversing, the outsourcing trend is a critical next step for the industry.

— JOHN HOFMEISTER, former president of Shell and author of “Why We Hate the Oil Companies: Straight Talk from an Energy Insider”

Soak Up the Oil

ONE tactic for reducing the amount of oil in the Gulf would be to seed the affected waters with absorbent materials — for example, cellulose fibers or animal hair — that can soak up oil. Once they’ve done their job, these materials can be retrieved and either compressed into blocks for burning or, better still, fed to microbes in quarantined spaces. Absorbent materials are cheap and readily available, and there’s a fleet of commercial fishing vessels already in place for dispersing them. — TERRY HAZEN, microbial ecologist at Lawrence Berkeley National Laboratory

Do Nothing

THE best thing to do in response to the Gulf spill’s landfall is … nothing. Sure, larger oil concentrations can be sopped up, and large animals can be cleaned. But cleanup efforts can do only so much: evidence suggests that they reduce hydrocarbon concentrations only over the short term. And many responses have harmful side effects. Controlled burning spreads toxic materials and kills plants that retard erosion, thus hurting the very lands we’re trying to protect. Nutrient-rich detergents or active bioremediation — which encourages the growth of bacteria that can break down oil — can fundamentally disturb the ecological balance for decades.

Instead, we should recognize that nature can do many things far better than we can, and with less collateral damage. Oil is a natural byproduct of biological and geological processes; if left alone in coastal environments, wave action, the sun and microbes in the sediment will naturally break down hydrocarbons. Meanwhile, money saved can go to helping local economies deal with the loss of income, improving safety regulations and enforcement and developing a clean energy policy. — KEVIN M. YEAGER, assistant professor of marine sciences at the University of Southern Mississippi

Experts fear the oil could cause an ecological disaster

The US is to break up a federal oil industry watchdog – amid conflict of interest fears – following the Gulf of Mexico oil spill disaster.

Interior Secretary Ken Salazar unveiled the plans to split up the Minerals Management Service, which both inspects rigs and collects oil royalties.

Oil executives have been passing blame, as they were grilled at a Senate hearing into the spill, amid protests.

President Barack Obama says he is “frustrated” the leak is not plugged.

British firm BP will make a second attempt this week to seal the oil well.

An attempt to drop a huge box on to the leak failed at the weekend and BP will now try to cap it with a smaller box.

MARDELL’S AMERICA There’s been plenty of technical detail in Washington as three companies try to explain what went wrong… In simple language it’s a blame game Mark Mardell BBC North America editor Read Mark’s blog

The energy giant is also expected to try to plug the well using rubbish like tyres and golf balls.

Oil executives were met by angry protesters as they attended a congressional hearing into the disaster on Tuesday.

Senate energy committee chairman Jeff Bingaman said at the outset it was important to remember the 11 lives lost in the disaster.

He added: “The sobering reality is that despite the losses and damage that have already been suffered, we do not yet know what the full impact of this disaster will be.”

Blame game

The Deepwater Horizon rig that blew up in the Gulf of Mexico on 20 April was owned and operated by drilling firm Transocean, but leased by BP.

The head of BP America told the Senate hearing he had reason to believe a critical safety device called a blowout protector had been modified, reports news agency Reuters.

Lamar McKay also noted the 450-tonne device was owned by Transocean.

I hear one message – don’t blame me Sen John Barrasso Senate Energy Committee Bayou fishermen’s wait goes on

But Transocean’s boss said there was no reason to believe its blowout protector had been at fault, as he pointed the finger at BP.

“Offshore oil and gas production projects begin and end with the operator, in this case BP,” said chief executive Steven Newman.

He also pinned blame on the failure of a cement oil-well casing, built by BP contractor Halliburton.

But Halliburton executive Tim Probert argued his firm had followed all requirements set out by BP and industry practices.

Senator John Barrasso said: “I hear one message – don’t blame me. Shifting the blame game doesn’t get us very far.”

A separate hearing into the oil disaster was being held on Tuesday by the Senate environment committee.

Sex and drugs

Meanwhile, Interior Secretary Salazar announced plans to split up the Minerals Management Service (MMS), which critics say is riddled with conflicts of interest.

ATTEMPTS TO CONTROL SLICK Booms have been partly successful although rough seas have washed oil over them Some controlled burning of oil has taken place, but it causes serious air pollution About 325,000 gallons of dispersant have been used, although scientists warn it may kill marine life A relief well is being drilled but could take many weeks A huge steel funnel suffered a build-up of ice-like crystals and had to be put aside In maps: Fighting the slick

Critics say the agency’s two core responsibilities are diametrically opposed – making money off the industry by collecting royalties, while also cracking down on it in ways that may affect the industry’s bottom line.

Announcing the proposed split of the MMS, Mr Salazar said it was important to ensure “a strong and independent organisation holding energy companies accountable”.

A 2008 interior department investigation found some MMS employees took drugs and had sex with energy company representatives.

Some staff had also accepted gifts and free holidays, amid “a culture of ethical failure”, according to the investigation.

The interior secretary has also been conducting a 30-day review of offshore drilling, at the request of President Barack Obama.

BP and US officials have been desperately trying to seal the damaged oil well, which is gushing 5,000 barrels (210,000 gallons) a day into the sea.

The broken pipe is almost a mile (1.6km) below the ocean’s surface, with little visibility for remote-controlled vehicles.

A sheen from the slick is surrounding island nature reserves off Louisiana, and tar balls have reached the Alabama coast.

SOURCE ARTICLE

By Nicholas Comfort

May 11 (Bloomberg) — Exxon Mobil Corp. and Royal Dutch Shell Plc are considering a sale of natural-gas storage capacity in Germany as they focus on exploration, according to three people familiar with the matter.

The companies may begin a sale process next month after deciding which assets to offload from their BEB Erdgas und Erdoel GmbH unit, said one of the people, who declined to be identified because the plans are private.

Shell and Exxon hold equal stakes in the Hanover, Germany- based gas-storage operator, which has about 2 billion cubic meters of working storage spread over three facilities in the north of the country, according to its Web site.

Energy companies are selling filling stations, pipelines and refineries as they boost spending on oil and gas production to take advantage of rising prices. Shell is divesting two German refineries to curb costs and spending, while Exxon sold a stake in a Norwegian pipe network in April as it reviews assets.

The BEB storage assets may attract energy suppliers seeking to stockpile gas to lessen the impact of price fluctuations. Gas futures in the U.K., Europe’s largest market for the fuel, slumped 43 percent in 2009 and are up 15 percent this year.

Gas-Price Volatility

“The attraction of this kind of asset has risen because of volatility on the gas market,” said Christian Kleindienst, an analyst at UniCredit SpA’s Munich unit with a “market weight” rating on Shell bonds and no coverage of Exxon notes. “You don’t want to be just a middleman — utilities will be looking to bolster their margins by securing gas they can use to counter price fluctuations.”

Exxon, the largest U.S. oil company, sold its 9.43 percent stake in Norwegian gas-pipeline network Gassled to Njord Gas Infrastructure AS last month.

Shell said May 6 that it’s in talks with potential buyers for some of its liquefied petroleum gas assets. The company is also in discussions with India’s Essar Oil Ltd. and other interested parties on the sale of three refineries in Germany and the U.K.

Exxon and Shell sold about 3,100 kilometers (1,925 miles) of gas pipelines in Germany to Dutch grid operator Nederlandse Gasunie NV in 2007.

Most of Germany’s gas storage is located in the north of the country, where rock formations are suited to holding the fuel. BEB also sells crude oil and sulfur, according to its Web site.

–Editors: Amanda Jordan, Jonas Bergman

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

SOURCE ARTICLE

The Ogoni people and National Union of Ogoni Students’ USA shall always remember him for his calm demeanor, professional decorum as he approached turbulent issues in Nigeria. He had a listening ear. Ingrained on our minds is his support of the position of the Ogoni people against Shell Oil Company.

The fact that An Bord Pleanála had recently found up to half of the modified onshore pipeline route to be unacceptable on safety grounds had exacerbated fears among residents living close to the gas terminal, Ms Healy said.