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Posts from ‘December, 2011’

Shell’s Arrow Energy Cleared by Australia, China to Purchase Bow

December 16, 2011, 2:21 AM EST

By James Paton

Dec. 16 (Bloomberg) — Arrow Energy Ltd., the natural gas producer owned by Royal Dutch Shell Plc and PetroChina Co., won approval from Australia’s Foreign Investment Review Board to buy Bow Energy Ltd. for A$535 million ($534 million).

The transaction was also cleared by Chinese authorities, Brisbane-based Bow said today in a statement. The decisions follow approval earlier this month by the Australian Competition & Consumer Commission.

Arrow, seeking additional resources for a liquefied natural gas venture in Queensland state, agreed in September to increase its takeover offer to A$1.52 a share in cash from A$1.48. The accord was 72 percent more than Bow’s price of 88.5 cents in Sydney before Arrow made its initial offer Aug. 22.

Brisbane-based Bow was valued at between A$1.14 and A$1.53 a share by independent analyst Grant Samuel, the company said Nov. 17. Samuel found the deal “highly attractive,” given the uncertain economic and market conditions, the premium given to shareholders and the “remote prospect of Bow shares trading above A$1.52 per share in the foreseeable future,” Bow said.

Arrow, also based in Brisbane, plans the fourth LNG venture in Queensland to meet rising Asian demand, following approvals for more than $50 billion in developments led by BG Group Plc, Santos Ltd. and ConocoPhillips. The acquisition may allow Arrow to expand output at the venture’s first two units by as much as 15 percent, it said in September.

Bow expects the transaction to be completed Jan. 11, it said last month.

–Editor: Keith Gosman,

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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Huffingtonpost.com: Kiobel v. Royal Dutch Petroleum

Mike Sacks

Mike Sacks mike.sacks@huffingtonpost.com

First Posted: 12/15/11 12:53 PM ET Updated: 12/15/11 01:25 PM ET

WASHINGTON — A multinational oil company will be coming to the Supreme Court this winter to argue that corporations are not “natural persons” and therefore cannot be held liable for committing international human rights violations such as torture, extrajudicial killings and crimes against humanity.

The case, Kiobel v. Royal Dutch Petroleum, began far from Washington in the Ogoni region of the Niger Delta. About a dozen Nigerians contend that Shell Oil’s parent company aided and abetted the Nigerian government in its violent suppression of environmental and human rights protesters resisting Shell’s operations there in the 1990s. In September 2010, the U.S. Court of Appeals for the 2nd Circuit accepted the oil company’s argument that as a corporation it’s immune from being sued in the United States for the overseas conduct. Since then, three other appeals courts, looking at the same law, have held otherwise — in cases brought against Exxon, Firestone and Rio Tinto for similar alleged atrocities.

At first blush, the idea that corporations are not people under the law sounds perplexing. Didn’t the Supreme Court decide almost two years ago in Citizens United v. Federal Election Commission that corporations have the same First Amendment right to fund political speech as natural persons? If consistency counts for anything, shouldn’t corporations take the same responsibility for their wrongdoings?

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Shell enters shale oil and gas project in Argentina

Shell has agreed to partner with Argentina’s Medanito on a shale oil and natural gas project in southwestern Argentina, with plans to invest at least $200 million over the next five years, a person involved in the deal said Thursday.

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GOP seeks to strip EPA offshore drilling oversight

Dec. 15, 2011, 1:12 p.m. EST

By Tennille Tracy

WASHINGTON -(MarketWatch)- House Republicans are trying to sideline the role of the Environmental Protection Agency in overseeing offshore oil drilling, after Royal Dutch Shell Plc (RDSA, RDSA.LN) complained about the amount of time it is taking the company to secure air-quality permits for drilling in the Arctic Ocean.

In an important piece of spending legislation Thursday, Republicans included a measure that strips the EPA’s authority to issue air-quality permits in the Arctic and shifts it to the Interior Department.

The department already handles air-quality permits in many parts of the Gulf of Mexico, where much of the U.S. drilling takes place.

The goal of the measure is to subvert an EPA appeals process that allows environmental groups and citizen activists to challenge the issuance of air-quality permits, said Robert Dillon, a spokesman for Sen. Lisa Murkowski (R., Alaska), a long-time champion of the measure.

The measure has gained support from lawmakers in both the House and the Senate, Dillon said. Murkowski has also spoken to the White House and the Interior Department about the issue.

“We understand this would be acceptable–or not objectionable, at least,” Dillon said. Murkowski has “worked very, very hard and diligently to find a solution to resolve permitting delays without weakening environmental protection.”

The EPA was not available for immediate comment.

Capitol Hill lawmakers are taking an interest in the EPA process for approving air-quality permits after permits issued to Shell were challenged in a formal appeals process, and delayed. The permits haven’t yet been finalized.

Shell wants to begin drilling in the Beaufort and Chukchi Seas in 2012.

The measure was included in a spending bill that would fund the U.S. government through the remainder of fiscal 2012. The components of the bill won support from House and Senate lawmakers earlier this week, but a battle over expiring tax provisions prevented the chambers from moving forward with it.

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Shell’s Brazil Venture Reaches Accord With BP on Jet-Fuel Assets

By Arnaldo Galvao and Lucia Kassai – Dec 15, 2011 4:38 PM GMT

Royal Dutch Shell Plc (RDSA) and Cosan Industria & Comercio SA’s joint venture in Brazil has reached a preliminary accord to sell its jet-fuel unit to BP Plc, the nation’s antitrust regulator said today.

The venture, called Raizen, was granted an additional five days to present the agreement to the regulator before being fined, Olavo Chinaglia, interim president of the agency, said at a meeting in Brasilia today. Cade, as the regulator is known, ordered the sale after Shell and Cosan combined some assets in Brazil, including service stations and the jet-fuel unit that Cosan had bought from Exxon Mobil Corp. (XOM)

“Failure to carry out Cade’s decision means the operation will have to be reverted with a return of assets to Cosan,” said Chinaglia. “This would affects the assessment of the joint venture formed between Shell and Cosan.”

A final ruling on the entire joint venture hasn’t been scheduled yet, Cade’s attorney Gilvandro Araujo said. Raizen is the world’s biggest processor of sugar-cane into sweetener and ethanol.

To contact the reporters on this story: Arnaldo Galvao in Brasilia Newsroom at agalvao1@bloomberg.net; Lucia Kassai in Sao Paulo at lkassai@bloomberg.net

To contact the editor responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net

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Shell Wins Emissions Reduction Advertising Battle

December 15, 2011

The U.K.’s advertising watchdog has ruled in favor of oil giant Shell over claims it made in a magazine advert that its biofuels reduced CO2 emissions.

Nonprofit ActionAid UK had challenged that the advert, which called the fuels “one of the most effective ways of reducing CO2 from cars and trucks today,” was misleading. ActionAid said that evidence showed that biofuels did not reduce CO2 emissions from vehicles when the full life-cycle of the fuel was taken into account.

But the ASA ruled in favor of Shell yesterday stating that the company had provided data for biofuels manufactured in the U.S. and Brazil for distribution in the U.S. and Europe and that that data had shown that its biofuel did indeed have the capability to reduce CO2 emissions compared to that of petrol over its life-cycle.

Shell has been accused of overplaying its environmental credentials in advertising before. In 2009, Greenpeace took issue with an advert that it claimed suggested that more of Shell’s revenue was derived from renewable sources than was true.

In 2007, Friends of the Earth Europe filed simultaneous complaints to the national advertising standards authorities of Belgium, the Netherlands, and the U.K. about a Shell advertisement depicting the outline of an oil refinery emitting flowers rather than smoke.

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Shell Canada sells 250 Gas Stations

Sobeys buys Shell gas stations in Atlantic Canada, Que.

The Canadian Press:  Thu Dec. 15 2011 2:44:52 PM

STELLARTON, N.S. — The Sobeys grocery store chain is expanding its gasoline retailing business with the purchase of 250 gas stations in Atlantic Canada and Quebec from Shell Canada.

Canada’s second-biggest grocery chain already has gas bars at some of its Atlantic stores. However, this deal will give the company a strong presence in the Quebec market as well, Sobeys’ parent company Empire Company Ltd. (TSX:EMP.A) said Thursday.

“This is an exciting opportunity for us to grow our existing retail gas operations while leveraging our significant wholesale and convenience business to better serve our customers and support our affiliates and dealer operations,” Sobeys president and chief executive Bill McEwan said.

Under the deal, the stations will continue to operate under the Shell banner and the big oil major will supply the gas sold at the fuel outlets.

Financial terms of the transaction were not revealed.

David Saint-Laurent, general manager of Shell’s retail business in Canada, said the company remains committed to the retail side of the business.

After the sale, it will still operate about 1,350 gasoline stations from British Columbia to Ontario.

“In the rest of the country we will continue to invest in new sites,” Saint-Laurent said.

Shell closed down its Quebec refinery two years — its largest Canadian refinery — after rejecting potential offers for the 76-year-old operation in east-end Montreal. The company also converted the business to a fuel depot as part of an efficiency drive.

Many integrated oil companies — from Imperial Oil (TSX:IMO) in Canada and its U.S. parent Exxon Mobil Corp. (NYSE:XOM) have been selling parts of their retail networks to focus on core production and refining operations, which require huge amounts of capital.

This summer, Montreal-based convenience store chain Alimentation Couche-Tard acquired 33 On the Run gas bars from Exxon Mobil in southern Louisiana for an undisclosed price.

In Shell Canada’s case, the Calgary company is spending billions of dollars to expand its Athabasca oilsands mine and is looking at other potentially expensive energy projects.

While Sobeys did not disclose the price it is paying for the Shell stations, the grocery chain will use existing cash to finance the purchase.

The deal came as Empire reported a profit, net of a minority interest, of $78.1 million or $1.15 per diluted share for the latest quarter.

That compared with a profit of $142.9 million or $2.09 per diluted share a year ago when earnings were boosted by a $81.3 million gain on the sale of its stake in the Wajax Income Fund.

Excluding one-time items, Empire reported a profit of $74.6 million or $1.10 per diluted share for the quarter ended Nov. 5, compared with a profit of $69.9 million or $1.02 per share a year ago.

Empire, which owns real estate as well as the Sobeys grocery store chain, reported sales of $4.04 billion during the quarter, up 3.4 per cent from $3.9 billion in the same period a year earlier.

Same-store sales increased 1.9 per cent compared with the same quarter last year.

Earnings from the Sobeys grocery stores totalled $68.5 million, up from $59.7 million, while Empire’s real estate and other operations totalled $9.6 million, down from $83.2 million a year ago when the Wajax stake was sold.

Empire shares were down 68 cents at $61.32 in trading on the Toronto Stock Exchange on Thursday.

Sobeys employs more than 95,000 people and owns or franchises more than 1,300 stores across Canada under retail banners that include Sobeys, IGA, Foodland, FreshCo, and Thrifty Foods.

Shell Canada, with 8,200 employees, is one of the country’s largest integrated oil and gas companies, with major operations in the northern Alberta oilsands. The company is also a big natural gas producer, liquefied natural gas developer and chemical plant operator.

Before the Sobeys deal, Shell Canada ran about 1,600 Shell-branded gasoline stations across the country as well as refineries in Alberta and Ontario.

The company is a wholly owned unit of Royal Dutch Shell Group, one of the world’s biggest energy producers, and holds nearly a third of the parent company’s worldwide energy resources.

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Cuadrilla admits drilling caused Blackpool earthquakes

Private company Cuadrilla Resources has admitted that its activities probably caused two “seismic events” that occured in Blackpool earlier this year.

By 12:36PM GMT 02 Nov 2011

In April, a tremor measuring 2.3 on the Richter scale was felt in the Lancashire seaside resort, followed by an event in May that measured 1.5 on the scale.

“It is highly probable that the hydraulic fracturing of Cuadrilla’s Preese Hall-1 well did trigger a number of minor seismic events,” Cuadrilla admitted. The report also said there was no threat to people and property in the local area caused by the drilling.

Hydraulic fracturing, or fracking, involved pumping a solution at high pressure through shale to crack the rock formation. This allows trapped gas to be released and collected.

The process is widespread in the US, but it has prompted concerns about the chemicals used in the process and the effect on the water table. However, “unconventional” gas has caused gas prices in the US to stay extremely low, even as the oil price soared.

“The seismic events were due to an unusual combination of geology at the well site coupled with the pressure exerted by water injection as part of operations,” Cuadrilla added, saying that this combination of geological factors was extremely rare and would be unlikely to occur together again at future well sites.

In response, the company will modify the amount of fluid it use and have installed a seismic early warning system.

The news came as protestors from anti-fracking group Frack Off stormed one of Cuadrilla’s rigs at a drilling site in Hesketh Bank, Lancashire this morning.

“The action is aimed at highlighting the hypocrisy behind the ‘Shale Gas Environmental Summit’ starting today in London: a conference sponsored by a host of companies involved in the oil and gas industry who are trying to spin the rapid expansion into the untapped fossil fuel as ‘green’,” the protest group said in a statement.

Mark Miller, chief executive of Cuadrilla, told The Daily Telegraph: “It’s a shame that this has got to the stage where people are putting themselves in danger.”

He said it would be better for people who object to tthe operation to sit down with the company experts and ask them their “toughest questions”

Mr Miller said that drilling would not restart until the regulators had examined their findings. This is expected to take “some time”. He said that “a lot of economic benefits would come from the find both locally and nationally, as Cuadrilla had shown there was “enormous amounts of gas in place”.

Martin Stewart-Smith a partner in international law firm Morgan Lewis’s Energy Transactions Practice said that although they are drilling deep wells the benefits in terms of energy security for the UK made the operation attractive.

“My personal view is that they should be permitted to proceed,” Mr Stewart-Smith said.

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Add Quakes to Rumblings Over Gas Rush

By

A version of this article appeared in print on December 13, 2011, on page D1 of the New York edition

YOUNGSTOWN, Ohio — Until this year, this Rust Belt city and surrounding Mahoning County had been about as dead, seismically, as a place can be, without even a hint of an earthquake since Scots-Irish settlers arrived in the 18th century.

But on March 17, two minor quakes briefly shook the city. And in the following eight months there have been seven more — like the first two, too weak to cause damage or even be felt by many people, but strong enough to rattle some nerves.

“It felt like someone was kicking in the front door. It scared the stuffing out of me,” said Steve Moritz, a cook who lives on the city’s west side, describing the seventh quake, which occurred in late September. It was the strongest one, with a magnitude of 2.7.

Nine quakes in eight months in a seismically inactive area is unusual. But Ohio seismologists found another surprise when they plotted the quakes’ epicenters: most coincided with the location of a 9,000-foot well in an industrial lot along the Mahoning River, just down the hill from Mr. Moritz’s neighborhood and two miles from downtown Youngstown.

At the well, a local company has been disposing of brine and other liquids from natural gas wells across the border in Pennsylvania — millions of gallons of waste from the process called hydraulic fracturing that is used to unlock the gas from shale rock.

The location and timing of the quakes led to suspicions that the disposal well was responsible for Youngstown’s seismic awakening. As the wastewater was injected into the well under pressure, the thinking went, some of it might have migrated into deeper rock formations, unclamping ancient faults and allowing the rock to slip.

As the United States undergoes a boom in the production of gas from shale, hydraulic fracturing, or fracking, has come under fire from environmentalists and others for its potential to pollute the air and contaminate drinking water. But the events in Youngstown — and a string of other, mostly small tremors in Arkansas, Oklahoma, Texas, British Columbia and other shale-gas-producing areas — raise the disquieting notion that the technique could lead, directly or indirectly, to a damaging earthquake.

Scientists say the likelihood of that link is extremely remote, that thousands of fracking and disposal wells operate nationwide without causing earthquakes, and that the relatively shallow depths of these wells mean that any earthquakes that are triggered would be minor. “But still, you don’t want it to happen,” said Mark Zoback, a geophysicist at Stanford University.

Others point out that among the thousands of small earthquakes in central Arkansas since last year that were thought to be linked to disposal wells was one of magnitude 4.7, and that a disposal well at the Rocky Mountain Arsenal in Colorado — for wastewater from weapons production, not gas drilling — was tied to numerous quakes in the 1960s, including several of magnitude 5.0 or higher that caused minor damage in Denver and other cities. Deeper geothermal wells have caused damaging quakes as well.

“It’s true that you can’t have an earthquake larger than a given fault can provide,” said Serge Shapiro, a professor at the Free University of Berlin who has studied what scientists refer to as induced seismicity. “But an earthquake even of magnitude 4 in a populated area can be an unpleasant thing.”

Officials with D & L Energy, the Youngstown company that has been disposing of the waste, and with the Ohio government say there is no proof of a link between the disposal well and the earthquakes. “Right now we can’t definitively say yes or no,” said Tom Tugend, deputy chief of the gas and oil division of the Ohio Department of Natural Resources. But the state has asked the company to plug the bottom 250 feet of the well with cement as a precaution, to ensure that it is sealed from the deeper rock where the earthquakes are thought to have occurred.

State officials are also working with researchers from the Lamont-Doherty Earth Observatory, a part of Columbia University, who have installed four temporary seismometers within several miles of the well. If more earthquakes occur, the instruments will help determine location and depth more precisely. “It should help us make the case one way or another — is this related or not,” said John Armbruster, a Lamont seismologist.

C. Jeffrey Eshelman, a spokesman for the Independent Petroleum Association of America, said that as far as the industry was concerned, “it has been impossible to determine whether hydraulic fracturing has anything to do with” the quakes like those in Ohio.

“But it’s in our best interest to understand what’s going on,” he said. “Although they are minor incidents, they are still something to be taken seriously.”

Scientists say that although it is known that wells — and reservoirs and quarries, among other things — can induce earthquakes, it can be difficult to prove a connection because there is not enough data. So specific cases often become a subject of debate.

“Scientific research needs to be done to understand the data on fluid injections and volumes,” said William Leith, senior science adviser for earthquake and geologic hazards at the United States Geological Survey, which has re-established a project to study induced seismicity in response to the string of suspicious quakes in shale-gas areas.

In Arkansas, the State Oil and Gas Commission was concerned enough about a possible link between disposal wells and earthquakes that in July it ordered that one well be shut down, and it placed a moratorium on new ones in an 1,100-square-mile area. Three other disposal wells closed voluntarily. While small earthquakes are still occurring in the area, their frequency has declined substantially.

In Oklahoma, a state seismologist concluded that there was a “possibility” that a series of small quakes in January about 50 miles south of Oklahoma City were induced by a nearby fracking operation. “The reason I can’t make any real conclusive statements is just because of the limitations of the data,” the seismologist, Austin A. Holland, said.

In northwestern England, however, an independent report commissioned by a drilling company, Cuadrilla Resources, concluded that two quakes of magnitude 1.5 and 2.3 near the city of Blackpool last spring were related to a fracking well. The report suggested several ways to avoid further quakes, including monitoring and limiting the pressures and volumes of fluid used.

Fracking is known to cause very slight tremors — far weaker than even the Youngstown quakes — when the fluid is injected into the shale under high pressure. Drilling companies often send sensitive instruments called geophones into the drill holes to analyze these tiny tremors because they indicate whether the rock is fracturing as expected.

But the larger earthquakes near Blackpool were thought to be caused the same way that quakes could be set off from disposal wells — by migration of the fluid into rock formations below the shale. Seismologists say that these deeper, older rocks, collectively referred to as the “basement,” are littered with faults that, although under stress, have reached equilibrium over hundreds of millions of years.

“There are plenty of faults,” said Leonardo Seeber, a seismologist with the Lamont-Doherty Earth Observatory. “Conservatively, one should assume that no matter where you drill, the basement is going to have faults that could rupture.”

Drilling and disposal companies do not usually know that those faults exist, however. Seismic surveys are costly, and states do not require them for oil or gas wells (although larger companies routinely conduct seismic tests as part of exploration). Regulations for disposal wells are concerned about protecting aquifers, not about seismic risk. The federal Environmental Protection Agency, which regulates oil- and gas-related disposal wells unless its cedes its authority to the states, has no seismic requirements for its disposal wells, an agency spokeswoman said.

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Could Chinese Shale Mean the End of U.S. Shale Gas Boom?

By Pierre Bertrand | December 12, 2011 5:47 PM EST

China‘s natural gas industry is still developing, but already it is showing signs that worry some players in the U.S.

Last week, Royal Dutch Shell and Chinese officials announced the company found shale gas in two wells in the Shichuan province, and that production was overall positive. That was coupled with reports that China‘s state-run PetroChina was producing more than 10,000 cubic meters of gas from 20 wells in the province, according to the Business Monitor International.

The news was met with some trepidation, fostering fears among U.S. players that a strong Chinese domestic natural gas industry will cut global demand for liquified natural gas and natural gas exports — effectively killing the U.S. shale gas boom.

IHS Global Insight, in a report published this month, expects a large portion of U.S. growth will depend on natural gas exploration and production. By 2035, the industry is expected to support 1.6 million jobs and bring in $231 billion to the country’s GDP — that’s a 203.9 percent increase from last year.

But John Felmy, chief economist with the American Petroleum Institute, said as long as the U.S. natural gas market remains isolated from the rest of the world, China’s developing natural gas industry is unlikely to hurt the U.S.

Unlike the oil industry, which is linked extensively to the rest of the world, natural gas is less connected, he said. This protects the country’s natural gas industry from foreign players like China, whose natural gas resources are believed to be larger, Felmy added.

But if the U.S. starts trading more natural gas and establishes more connections with the Asian country, Felmy said he suspects analysts would worry that China could gain a productive advantage like it has done with other products it exports to the U.S., and that could come back to hurt the local natural gas industry.

Andrew Snyder, editorial director of Insiders Stragety Group, a financial research firm based in Baltimore, said the U.S. is facing a natural gas glut and in trying to relieve it, the idea of exporting it to overseas markets is growing, and that includes China, the world’s top energy consumer.

But if China starts developing its own natural gas industry, the country will not need foreign imports, leaving the U.S. with increasing supply and nowhere to ship it. Snyder said he suspects natural gas prices are going to fall and keep falling as Chinese and European natural gas plays pick up speed. This invariably would slow the domestic natural gas boom seen in the U.S. Northeast, Northwest and Texas.

“If we lose that, it’s not going to be doom and gloom, but it’s not the big boom people are expecting,” Snyder said. “[The boom] is not going to be as euphoric as many people think.”

China by 2015 expects to produce 6.5 billion cubic meters, or 229.54 billion cubic feet of natural gas. That same year, Chinese government officials say the country will have roughly 7 trillion cubic feet of recoverable natural gas with an additional 35.3 trillion cubic feet in reserves, according to The China Perspective, an online Chinese financial news publication.

The Center for American Progress, in a report published in October, said China has 1,300 trillion cubic feet of shale natural gas reserves, compared to 862 trillion cubic feet the U.S. has in reserves.

“After a while, we are going to hit a saturation point,” Snyder said, adding that natural gas in the in the U.S. would have to reflect the dropping prices.

The U.S., however, can look to be ahead for a while longer. Given the amount of time it took the U.S. to start tapping into its shale deposits, Snyder believes that it won’t be for another decade before China gets on the ball and taps into its own resources.

To report problems or to leave feedback about this article, e-mail: p.bertrand@ibtimes.com

To contact the editor, e-mail: editor@ibtimes.com

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