February, 2006:

By LYDIA POLGREEN
Published: February 25, 2006
IN THE NIGER DELTA, Nigeria — They have, by all appearances, just a handful of boats, some machine guns and grenade launchers and, perhaps equally important, an e-mail address.
Macon Hawkins of Kosciusko, Tex., an employee of a pipe-laying company, is a hostage of the Movement for the Emancipation of the Niger Delta.
But with just those tools the Movement for the Emancipation of the Niger Delta has managed to shut down nearly a fifth of this nation's vast oil production, briefly push global crude oil prices up more than $1.50 a barrel and throw Nigeria's government into crisis over the group's demand that the oil-rich but squalid region be given a greater share of the wealth it creates.
“They have marginalized us for many years now!” shouted a machine-gun-wielding member of the militant group, his face covered in black cloth. “We are taking the bull by the horns now. Niger Delta is ready.”
For the last two months the shadowy militant group has mounted attacks on oil facilities here and taken more than a dozen foreign oil workers hostage, including some Americans, wreaking havoc on the industry that is the mainstay of Nigeria's economy. All of the hostages taken last month were released after 19 days, but new ones were seized last week.
In e-mail messages sent to the news media, the group says it seeks to liberate the Ijaw people, who make up the bulk of the population here and, the group says, have provided the lifeblood of the Nigerian economy, but with little reward.
The government says the group is made up of oil thieves and criminal gangs seeking to control the lucrative trade in oil stolen from pipelines in the labyrinth of creeks that make up the Niger Delta.
“It is pure criminality,” said Information Minister Frank Nweke Jr. “These are thugs who are using the plight of the poor to cover their illegal activities.”
Groups of militant youths in this restive region have long used hostage taking and sabotage to extort money from oil companies and prevent the authorities from stopping oil theft from pipelines, a process known as bunkering.
But the ferocity and frequency of the recent attacks, in which more than a dozen soldiers have been killed, have increased concern. The violence comes as oil prices have spiked and the political climate in Nigeria has deteriorated ahead of its next presidential election, to be held early next year.
Although the attacks have been directed primarily at Royal Dutch Shell, the oldest and largest oil producer in Nigeria, their real target is the government, said Sebastian Spio-Garbrah, an analyst at the Eurasia group, a private research firm.
“They are trying to hurt the government, not really the oil companies,” Mr. Spio-Garbrah said. “If the central government, which receives all these monies, is starved of money, the government will be weakened and they will be stronger.”
On Friday, boatloads of members of the group met with journalists on a creek in the delta to outline their demands and show their strength. They reiterated their insistence that foreign oil companies leave the region and the Nigerian military withdraw. They are also demanding the release of the leader of a militant group and the nation's only Ijaw governor, both of whom are in jail.
“We want the Nigerian military men to evacuate from this terrain,” one of the militants declared, brandishing his M-60 machine gun. “If we get them anywhere we are going to kill them one by one.”
Dressed in military fatigues and white T-shirts, dozens of men armed with Kalashnikov machine guns and grenade launchers sat aboard speedboats decked with the white flags of Egbesu, the Ijaw god of warfare. They showed one of the nine hostages they seized last week from a barge operated by an oil company contractor, and said they were prepared to seize more hostages and blow up more oil facilities if their demands were not met.
“These people are serious, very serious, about what they are doing,” said the hostage, Macon Hawkins, 68, an American from Kosciusko, Tex., who works for a company hired by Royal Dutch Shell to lay pipe in the region.
“They are going to fight,” Mr. Hawkins said, “and they are going to fight till death. So the army is not going to do a whole lot of good here. The best thing the army can do is pull out and get some negotiators in here and try to settle this thing before it really gets bad.”
Efforts to defeat the group militarily have not gone well, and it has managed to carry out several audacious attacks on oil facilities. The government says the group pays for its weapons by stealing oil, but several government officials, including two admirals of the Nigerian Navy, have been charged with stealing oil as well.

Nigeria is the world's eighth largest exporter of oil and an important supplier to the United States. Despite generating hundreds of billions of dollars in revenue since oil was discovered here in the 1950's, the Niger Delta is one of the poorest and least developed parts of the country. read more

By REUTERS
Published: February 25, 2006
BERLIN/TEHRAN (Reuters) – U.N. nuclear experts arrived in Iran on Saturday after Tehran promised answers to outstanding questions about work the U.N. fears could be linked to atomic ''weaponisation,'' Western diplomats said.
Separately, two diplomats said Tehran had begun operating 10 uranium enrichment centrifuges at its Natanz plant in central Iran, meaning the Islamic Republic has made good on its threats to resume the small-scale production of uranium fuel.
On Thursday, a senior diplomat in Vienna told Reuters the Iranians had promised the deputy director general of the Vienna-based International Atomic Energy Agency (IAEA), Olli Heinonen, information about a shadowy uranium-processing project that Western intelligence has linked to possible atom bomb work.
In addition to this uranium project — called the “Green Salt Project'' — an EU diplomat in Vienna briefed on the IAEA's probe of Iran's nuclear program said Tehran had also promised information related to possible work on nuclear ''weaponisation.''
“This trip is related to the entire issue of weaponisation, one of the major unresolved issues,'' said a European Union diplomat who follows Iran. “The Iranians have promised answers but it's unclear whether the answers will be sufficient to clear up all the IAEA's questions about Iranian weaponisation work.''
The term weaponisation includes making, testing and fitting a nuclear warhead to a delivery system, such as a missile.
Two Vienna diplomats said they doubted the Iranians were ready to finally come clean after decades of covering up work that the United States, European Union and their allies believe has been part of a covert plan to develop atomic weapons.
Iran denies wanting nuclear weapons and says it is only interested in the peaceful generation of electricity.
DELAY OF SECURITY COUNCIL ACTION
One EU diplomat said the Iranians were afraid the IAEA report would include complaints that Tehran continues to stonewall U.N. inspectors in their attempt to verify whether or not Iran's nuclear program is peaceful.
“They are afraid (IAEA chief Mohamed) ElBaradei's report for the March 6 board meeting will not have very good things to say regarding their refusal to answer questions about weaponisation,'' the diplomat said. “They want to soften it.''
He predicted Iran would give the IAEA enough information to require lengthy examination. This could delay any action by the U.N. Security Council, which will receive a copy of ElBaradei's report once it is discussed by the IAEA board next week.
Corey Hinderstein of the Institute for Science and International Security (ISIS), a U.S. think-tank, said the IAEA's unanswered weaponisation questions included Iran's high explosives tests, its design information related to the core of a nuclear weapon and the military's role in its nuclear work.
There were also questions related to U.S. intelligence recovered from a stolen laptop computer that suggests Iranian missile experts have been trying to develop a missile re-entry vehicle capable of carrying a relatively small nuclear warhead.
The EU diplomat said Iran's decision to press ahead with the enrichment of uranium, a process of purifying it for use as fuel in nuclear power plants or weapons, was especially disturbing given the open questions about possible weaponisation.
He said Iran's decision to feed uranium gas into 10 centrifuges was not in itself “a big deal.'' A thousand centrifuges of the type Iran has at Natanz would need several years to produce enough highly-enriched fuel for a single bomb.
“Weaponisation combined with enrichment is a big deal,'' he said.
The 10 centrifuges had been sealed by the IAEA until Iran decided to resume enrichment earlier this year, prompting France, Britain and Germany to end 2-1/2 years of talks aimed at resolving the stand-off with Iran.
But while Western nations threatened to press ahead with sanctions, Iran is to grant gas contracts to European firms Total, Shell and Repsol, an Iranian state oil firm said.
Iran is the West will balk at setting sanctions on OPEC's number two exporter while oil prices remain high. read more

The Independent – United Kingdom; Feb 25, 2006
Shell's $20bn(pounds 11bn) Sakhalin project off Russia's eastern coast was boosted when it emerged that an environmental impact report for the European Bank for Reconstruction and Development was broadly favourable.

Database
Legal
• London's plan to provide wireless networking throughout the City may expose companies to security breaches and legal action, lawyers believe.
• Former Morgan Crucible chief Ian Norris lost his legal challenge to Britain's extradition arrangements with the US.
• Royal Dutch Shell said it believes it has “strong grounds” to appeal a reported $1.5bn fine a Nigerian court has ordered it to pay the country's Ijaw people for environmental damage.

CALGARY, Alberta (Reuters) – Shell Canada Ltd. (SHC.TO: Quote) has halted production at its Muskeg River oil sands mine to repair a conveyor belt that was damaged on Friday, the company said.
The Calgary-based firm said bitumen production at the mine, which supplies feedstock to the Scotford upgrading refinery near Edmonton, Alberta, won't be restarted until it assesses the problem and a course of action can be determined.
The mine produced 178,000 barrels of bitumen a day during the fourth quarter, much of which was shipped to Scotford where it was converted to synthetic crude.
Janet Annesley, a spokeswoman for the majority-owned unit of Royal Dutch Shell Plc (RDSa.L: Quote), said the company has also reduced production at Scotford to the minimum needed to maintain critical systems, but would not specify current output.
“Production at the mine is being reduced and production at the upgrader has been reduced to a minimum,” she said. “We're hopeful that we'll be able to maintain some production.”
Annesley said workers at the mine site 75 km (45 miles) north of Fort McMurray, Alberta, noticed a tear in the conveyor belt, which Shell Canada says is the world's largest, on Friday morning. The company is trying to find out if the belt can be repaired or if it needs to be replaced by another that is on hand.
Annesley couldn't say how long the mine would be shut down for the repair. However Western Oil Sands Inc. (WTO.TO: Quote), which owns a 20 percent stake in the project, said in a release that replacing the belt would take four weeks.
Shell Canada said it will issue an update on the planned repairs early next week.
Chevron Corp. (CVX.N: Quote) is the third partner in the project with a 20 percent interest. read more

· Oil giant will appeal against court decision
· Kidnap and sabotage cripple production
Rory Carroll, Africa correspondent
Saturday February 25, 2006
A Nigerian court yesterday ordered Royal Dutch Shell to pay $1.5bn (£858m) in damages for polluting the Niger delta, a fresh blow to the company which was already reeling from a kidnap crisis and a wave of sabotage against its installations.
A federal high court in Port Harcourt, the heart of the country's oil industry, ruled that Shell must compensate communities in Bayelsa state for degrading their creeks and spoiling crops and fishing. The decision was a major victory for the Ijaw people – who have campaigned for compensation for more than a decade – and one of Shell's worst legal setbacks.
The ruling came on the same day that news emerged of the nine employees of a US subcontractor kidnapped on February 18. The kidnappers of the nine – a Briton, three Americans, two Egyptians, two Thais and a Filipino – are demanding that people in the country's south receive a greater share of the region's oil wealth. The kidnappers have released what they call “pictures of our hostages with a section of the unit that secured their capture”.
Yesterday they also brought one of the Americans along the Niger delta by boat to speak to journalists. Identifying himself as Macon Hawkins, from Texas, he said: “We're being treated quite well. Just let's hope it ends well.”
Communities have repeatedly accused Shell of letting its oil spill into the rivers of the Niger delta, degrading the environment, spoiling crops and poisoning fish. Shell says most spills are caused by saboteurs trying to steal the oil for sale by international criminal syndicates on the world market.
As well as the court ruling and the kidnapping, this week has also seen militants blowing up pipelines and storming a loading platform, crippling Shell's output.
Justice Okechukwu Okeke's ruling in Port Harcourt yesterday upheld a vote by Nigeria's senate in August 2004 to fine Shell $1.5bn. Shell had argued that the parliamentary committee that made the original order in 2000 did not have the power to require payment. But the judge ruled that since both sides agreed to go before parliament, the order was binding.
Shell in London said the company would not comment in detail until it had received the text of the judgment; “however, we believe that we will have strong grounds to appeal as independent expert advice demonstrates that there is no evidence to support the claims”.
It added that it remained committed to dialogue with the Ijaw people – a claim rejected by Ijaw leaders. Chief Malla Sasime, the ruler of the Ijaw Epie kingdom in Bayelsa, said: “Our people have gone through due process to get the judgment.”
“They must pay the money or be ready to leave our land.” Another Ijaw leader, Ngo Nac-Eteli, said Shell would be prevented from operating on Ijaw territory if it tried to buy time by appealing against the judgment.
Militant groups in the Niger delta have fought the government and the oil industry for 15 years, demanding a greater share of oil revenues and compensation for environmental damage. In 1995 the writer and campaigner Ken Saro-Wiwa was executed after leading a peaceful uprising of the Ogoni in opposition to Shell. read more

A report published by the European Bank for Reconstruction and Development today said Shell's plans for oil and gas pipelines in eastern Russia had environmental shortcomings. Reuters reported.
The bank is considering whether to extend a loan to the Shell-led Sakhalin Energy consortium for the $20 billion Sakhalin-2 project.
The application could be turned down if the bank decides the project fails to meet its environmental rules.

By Rhys Blakely and agencies
The Nigerian Federal High Court today ordered Shell, the Anglo-Dutch oil company, to pay $1.5 billion (£859m) to the Ijaw people of the country’s Bayelsa region. The Ijaw were first made the award in 2000 for environmental damage to their homeland in the Niger Delta through Shell’s oil exploration. Shell refused to pay and has since been targeted by Ijaw militants who have attacked the company’s facilities in Nigeria and are currently holding nine foreign oil workers hostage.
A statement today from the Movement for the Emancipation of the Niger Delta, the armed ethnic Ijaw group, said: “There have been reports that negotiations are ongoing towards the release of these individuals. This is absolutely untrue.”
It added: “We are continuing with our attacks on oil facilities and oil workers in the next few days. We will act without further warning.”
Following the violence, Shell – the biggest oil producer in Nigeria – has halved its output from the country.
A spokeswoman for the company told Times Online that the company was unable to comment on the court ruling because it had not yet been made aware of it.
She added Shell remained convinced “independent expert advice” showed that it strong grounds to appeal the order to pay compensation.
“We remain committed to dialogue with the Ijaw people,” she said.
According to the BBC, Shell's lawyers argued in the Pourt Harcourt Federal Court that the joint committee of the Nigerian National Assembly that made the order in 2000 did not have the power to compel the oil company to make the payment.
The Nigerian Senate approved the fine in August 2004 after it was presented to the lower House of Representatives in 2003 and reviewed by an independent legal advisory panel set up by the lower house.
However, Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Shell has argued in the past that most oil spills in the southern Niger Delta, which kill fish and crops, are caused by saboteurs trying to steal oil.
A report published by the European Bank for Reconstruction and Development today said Shell's plans for oil and gas pipelines in eastern Russia had environmental shortcomings. Reuters reported.
The bank is considering whether to extend a loan to the Shell-led Sakhalin Energy consortium for the $20 billion Sakhalin-2 project.
The application could be turned down if the bank decides the project fails to meet its environmental rules. read more

· Shares in Vestas rise 6% on rumours of symbolic step
· Move comes amid rising interest in green energy
Terry Macalister
Friday February 24, 2006
The oil major Shell was linked yesterday to a possible $3.5bn (£2bn) takeover of a leading wind turbine manufacturer, adding to the excitement around the alternative energy sector. The value of Vestas rose 6% on the Copenhagen stock market amid mounting expectation that a major oil group could make a symbolically important move into “green” technology. Shell declined to comment.
There has been a massive surge of City interest in what has been seen until recently as a fringe part of global stock markets, helped by the high profile given to the government's energy review.
The latest green company admitted to the London market yesterday, Econergy, saw its shares rise 11% within hours. A day earlier, another company, Ceramic Fuel Cells, announced plans to list its shares and raise cash for new factories, probably in the north of England.
Shell, which made £13bn of profits last year, is already involved in some alternative energy projects but has so far only spent a relatively paltry $1bn in a range of small projects in areas such as wind, biofuels and solar.
The Anglo-Dutch group is using Vestas to provide turbines for an offshore wind scheme in the Netherlands as part of plans to increase its wind energy capacity from 350 megawatts to 500MW by 2007.
Shell is also planning to construct a £1.5bn wind farm in the south-east of England and has hopes of building others as far afield as China. But a move to buy Vestas would underline its green energy credentials and show a determination to be at the heart of the wind business, seen by British politicians as the most promising of the new energy sources.
A Shell spokesman refused to give any guidance on whether it was interested or not in the Danish wind firm. “We don't comment on market rumours,” he said.
Analysts said it would be a good time to buy Vestas, given that its share price was hit by a profit warning before Christmas. There has been previous speculation that industrial predators such as Siemens or GE might be tempted to make a takeover move.
Mainstream energy analysts such as Bruce Evers at Investec Securities would not rule out a move by Shell but believed the returns from alternative energy schemes would be unsatisfactory for traditional shareholders.
“Shell is having trouble replenishing its oil reserves without getting involved in a sideshow such as this. Wind farms, fuel cells and the like is pretty tiny stuff when you look at Shell's quarterly profits from oil and gas, but I would not put a takeover past it,” he said.
The oil industry is awash with money from historically high crude prices, which has attracted criticism. A bigger move into the wind sector would barely dent cash reserves and would improve its image with environmentalists who have been screaming for big oil majors to do more.
In November its rival BP launched its own alternative energy division and said it would invest up to $8bn over the next 10 years creating a low-carbon power business. BP intends to produce annual revenues of $6bn from this new business and is planning hydrogen plants in Scotland and California.
Possible diversification moves by Shell brought back bad memories for some oil industry experts. They remembered another time of very high oil prices in the past when Mobil – now ExxonMobil – bought the retail chain Montgomery Ward and BP had a meat business in the US.
But the purchase of Vestas by Shell or another mainstream industrial group would give further credibility to those alternative energy companies who have been beating their way to the stock market in Britain.
Econergy and Ceramic Fuel Cells join about 20 others in a growing alternative energy sector, which is estimated to be worth, in total, £1bn by the end of last year. Their value is estimated to have risen a further 30%, partly on the back of renewed interest in alternative technology following the government's energy review into the future of Britain's power needs.
But there are many uncertainties surrounding the sector, not least whether Tony Blair will, as expected, opt for a new generation of nuclear power stations. That could suck money away from alternative energy projects and companies, green supporters fear. read more

A Nigerian court has ordered oil multinational Shell to pay $1.5bn to the Ijaw people of the Delta region.
The Ijaw have been fighting since 2000 for compensation for environmental degradation in the oil-rich region.
They took the case to court after Shell refused to make the payment ordered by Nigeria's parliament.
Ijaw militants have staged a spate of attacks against Shell facilities recently and are holding seven foreign oil workers hostage.
Following the violence, Shell – the biggest oil producer in Nigeria – has halved its output from the country.
Shell says it believes there is no evidence to support the claim, and will appeal against the ruling.
A statement said: “We remain committed to dialogue with the Ijaw people.”
Warning
Shell's lawyers argued in the federal court in Port Harcourt that the joint committee of the National Assembly that made the order in 2000 did not have the power to compel the oil company to make the payment. But Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Ijaw community leader Ngo Nac-Eteli said that if Shell wanted to buy time by taking the case to the appeal court, the company would not be allowed to operate on Ijaw land until the case was settled.
He did not elaborate on how the community would stop Shell's operations.
The BBC's Abdullahi Kaura Abubakar in Port Harcourt says the case has the support both of community elders and the militant groups that have been attacking oil installations in the Delta region.
But our correspondent warns that even if the money is paid, the region would not necessarily be pacified unless the various groups were happy with how it was distributed.
Nigeria is one of the world's biggest oil exporters but despite its oil wealth, many Nigerians live in abject poverty. read more

(Updates item published at 1314 GMT with comments from Shell)
LONDON (MarketWatch) — A Nigerian court has ordered oil multinational Royal Dutch Shell PLC (RDSB.LN) to pay $1.5 billion to the Ijaw people of the Niger Delta region, the BBC reports on its Web site Friday.
The Ijaw have been fighting since 2000 for compensation for environmental degradation in the oil-rich region. They took the case to court after Shell refused to make the payment ordered by Nigeria's parliament.
Ijaw militants have staged a spate of attacks against Shell facilities recently and are holding foreign oil workers hostage.
Shell intends to appeal against the judgment.
“We have yet to receive the text of the judgment and can't comment until we've studied it in detail,” a spokeswoman from Shell told Dow Jones Newswires.
“However, we believe we will have strong grounds to appeal as independent expert advice demonstrate that there's no evidence to support the claims. We remain committed to dialogue with the Ijaw people,” she added.
Shell's lawyers argued in the federal court in Port Harcourt the joint committee of the National Assembly that made the order in 2000 didn't have the power to compel the oil company to make the payment. But Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Nigeria is one of the world's biggest oil exporters but despite its oil wealth, many Nigerians live in abject poverty.
Web site: http://www.bbc.co.uk
-Contact: 201-938-5400 read more

TheHopeReport
Well, here we go again. It's the time of year when the chairmen of some of our biggest companies prepare to face their shareholders at this year's annual meeting in the next 12 weeks.
Those of us who cling to the belief that shareholder democracy is still alive at UK plc attend these meetings in the hope that investors will make their boards sweat.
This doesn't always happen of course, not least because the biggest companies ensure that their chairmen are primed for the toughest questions by their investor relations team and highly paid PR advisers.
So, to make the battle more equal, here is a cut-out-and-keep list of the top 10 questions to make the chairmen squirm:
1. Which shareholders are most loyal to you, institutions or individuals?
2. Do you know what percentage of the company's shares is actually owned/controlled by hedge funds?
3. How often does the senior non-executive director meet private investors?
4. Do you think your company's registrar is doing a good job?
5. Why is there so much stuff in the annual report about corporate governance and corporate social responsibility, and not more about strategy?
6. Is your company committed to automatically reinvesting dividends in more shares for private investors?
7. Private shareholders at Shell and Hilton have found themselves facing large tax bills. Does the board agree it has a moral responsibility to offer options that are as tax efficient as possible for the individual investor?
8. If I was having breakfast with Gordon Brown this morning, I would tell him that he needs to cut capital gains tax, inheritance tax and council tax. Which three corporate breaks would the board ask for from the Chancellor?
9. How much of your company's overheads are driven by external regulation?
10. What is your company doing to encourage online voting at annual meetings?
Christopher Hope read more

Cathy Proctor
Shell Exploration & Production Co. said it's pulled high-quality crude oil from Colorado's vast oil shale reserves but is still a few years away from determining whether oil shale is commercially viable in the long run.
The giant oil company, perhaps the furthest ahead in research on freeing oil locked in layers of rock deep underground, is moving into the next phase of its research — methods to stop potential groundwater pollution around shale sites.
“We are in this to make money. It's not a science fair project,” Mike Long, Shell's manager of regulatory affairs, said during his presentation on the company's research at the National Western Mining Conference in early February.
Other companies and the federal government are getting involved in oil shale, too.
In mid-January, the Bureau of Land Management said it will do environmental analysis on eight proposals for oil shale research filed by six companies: Chevron Shale Oil Co., EGL Resources Inc., Exxon Mobil Corp., Oil-Tech Inc., Shell Frontier Oil & Gas and Oil Shale Exploration, LLC. Projects that pass the environmental test will get 160-acre leases for oil shale research and development, and the right to reserve another 4,960 acres for commercial development.
The BLM hopes to make decisions on the projects and the leases next fall.
The goal is nothing less than bringing billions of barrels of domestically produced oil to the U.S. market.
The oil is locked in underground rock formations that sprawl across 16,000 square miles in Colorado, Utah and Wyoming. It's the largest known concentration of oil shale in the world and holds an estimated 800 billion barrels of recoverable oil, enough to meet U.S. demand for oil — at current levels — for 110 years, according to the BLM.
Six of the projects the BLM is considering are in Rio Blanco County on Colorado's Western Slope. The other two are in Utah.
But local officials, burned by the boom and bust of oil shale efforts in the early 1980s, are cautious about the latest development efforts.
“They're all R&Ds,” said Garfield County Commissioner Larry McCown, who worked in the oil shale industry in the 1980s and 1990s, and who remembers the day in May 1982 that Exxon announced it was pulling out of its research efforts — a day still known as “Black Sunday” among locals.
“Until we get further along on what the companies' plans are, I think it's premature to yell 'wolf' — that we're in another boom cycle,” McCown said.
“I think it's a tremendous resource. I don't think it can be overlooked,” McCown said of the oil shale reserves. “I'm not a naysayer, I'm optimistic about all types of alternative energy. This one's here. Whether it can be developed economically or not, I would hope that it's up to free enterprise.”
Shell has been working on oil shale since laboratory research started in 1981. It's had field tests in the Piceance Basin in Colorado since 2000.
“Colorado oil shale is the most concentrated energy source in the world,” Long said. “Basically, we hope to create a new domestic oil industry.”
The first tests revolved around “in situ” efforts — inserting electronic heaters into holes drilled into underground rock formations. The heaters slowly heated the rock to between 650 and 700 degrees over three or four years. Once hot enough, the oil shale melts into liquid, and both oil and natural gas began flowing into conventional wells, according to Shell.
The company said it got 1,500 barrels of light oil plus natural gas from a small plot.
The product was one-third natural gas and two-thirds light oil, easily refined into high-dollar products such as diesel and jet fuel and gasoline, Long said.
One acre can produce oil and natural gas equivalent to about 1 million barrels of oil, he said.
The underground heating process offers advantages, Long said.
Traditionally, oil shale was mined using open pits. The rocks were hauled to an above-ground heater, or retort, to melt the oil out of the rock.
The “in situ” or underground method doesn't require open-pit mining, there are no tailings to dispose of, it's more efficient — with a smaller footprint offering more oil and natural gas — and the product is a higher quality that needs less refining, Long said.
Shell believes the process is economical when the market price of oil ranges between $25 and $30 per barrel, said Jill Davis, spokeswoman for the Shell's “Mahogany Research Project” that's focusing on oil shale.
Oil has traded above $60 per barrel for much of this year.
Shell's next round of research, isolating a chunk of ground the size of a football field by freezing the groundwater around it in a “freeze wall,” kicked off late last year, Long said.
The test is to see if groundwater, heat and oil and natural gas can be contained in an area by a wall of frozen groundwater, and not be allowed to flow and mix outside that area, he said.
The test questions are: “Can we make it? Can we break it? How can we break it and can we fix it?” Long said.
If the company gets a 160-acre lease from the BLM, the third research phase will kick in — integrating the heating to get the product, and the freezing to contain the product, he said.
The process is still energy-intensive and will require Shell to build a power plant to support the heating and freezing equipment, Long said. But the company said its process produces 3.5 units of energy for every unit used.
And while decisions to move ahead on a large scale are far off, the company's research effort still is creating activity in the area, Davis said.
For instance, Shell is planning a 16,000-square-foot office-conference building to house employees now working out of trailers, she said.
Shell has about 35 employees and 30 contractors working at the site, plus 100 others in Houston and Denver supporting the research project.
The company also plans studies on roads and housing in the area — what's there and what's needed, Davis said.
“Economically viable, environmentally responsible and socially sustainable,” Davis said. “Those are the three things that will determine commercial viability. In the meantime, we'll start scoping and studying things. You don't build a large commercial project without that kind of scoping.” read more

UPI Energy Watch
By ANDREA R. MIHAILESCU
UPI Energy Correspondent
Royal Dutch Shell, which ranks third among the top five Western oil companies, could face a serious challenge in securing additional reserves, a prevalent fear among Wall Street analysts.
Whether Shell is able to replenish reserves will determine the company's ability to maintain growth and production in the future.
It is a crude reality, but the problem is not new.
Last year, Britain's TimesOnline depicted Shell in need of 3.8 million barrels per day, due to declines in output in the North Sea and United States along with rising costs worldwide. The Times graphic suggested a takeover or access to Iraqi oil might be a solution to some of Shell's problems.
Last year's earnings of $23 billion could be the best the British-Dutch venture can secure in years to come if it is unable to make a find to replenish its reserve count.
Fortune magazine said analysts fear “that buried beneath the record profit figures are worrying signs of a business in decline.”
Shell remains unsuccessful at making a discovery that is able to equate to the amount of oil and gas the company is currently pumping — it is still unable to replace 30 percent of what it produced in 2005.
In 2004, the company managed to replace 19 percent of what it extracted out of the ground. Shell's reserve problems and controversy surrounding improperly booked assets led the company to reduce estimated reserves by roughly 30 percent and resulted in the resignation of its chief executive officer Phil Watts in 2004.
Shell's competitors Exxon Mobil Corp. and BP managed to replace 112 percent of its production and 95 percent, respectively.
Turkey to diversify gas supplies
Turkey, which receives its natural gas from Russia and Iran, will begin purchasing its supplies from Egypt as of 2008, according to a bilateral agreement secured this week.
The move is designed to protect its stock and prevent problems during periods of high demand.
Under the agreement, the two sides will set up a joint venture called Tergas that will transfer natural gas, construct pipelines and also market Egyptian gas to Europe.
Tergas is expected to construct a 240-kilometer pipeline from Syria to the Turkish border, with an extension of 93 km from the Turkish border to the Turkish national network, Turkish Energy Minister Hilmi Guler said in a joint statement with Egyptian Oil Minister Sameh Fahmey.
Guler said he expects to have three-party talks in Cairo in early March with Syria and Egypt to discuss selling gas to Europe.
The project is aimed at diversifying natural gas sources for Turkey and Europe, Guler said, echoing the statements of Turkish Petroleum Cooperation General Manager Sami Dinc said.
Fahmey said Syria and Romania could possibly join the Tergas venture later.
The pipeline's proposed 93 km Turkish part is supposed to transport a total of 6.5 billion cubic meters of natural gas, of which 1.5 billion will be transported to Lebanon, 2 billion to Syria and 3 billion to Jordan.
Azerbaijan to boost output by 30 percent
Azerbaijan plans to boost its crude oil output by 30 percent to 30 million tons for 2006, Industry and Energy Minister Natik Aliyev told a meeting of Black Sea Economic Cooperation Organization experts last week.
The increase in production is expected to come primarily from growth in development of the Azeri-Chirag-Gyuneshli contract area consisting of three offshore oil fields in the Caspian.
The government hopes to see production at the contract area go up to 21.2 million tons against 13.2 million tons produced last year.
Aliyev said the first tanker carrying Azerbaijani crude could leave the Turkish port of Ceyhan in May.
“By that time construction will be completed of the Baku-Tbilisi-Ceyhan pipeline with a throughput of 50 million ton a year,” Aliyev said.
The boost in production would also help Azerbaijan's electric power production, as the country hopes to link its electric power grids with those of Russia, Georgia and Turkey.
“This would make it possible for us to exchange electricity and to market it in third countries,” he said.
Ecuador declares state of emergency
Ecuador declared a state of emergency Tuesday after strikes emerged in two provinces, one of which is a gasoline-producing region, as protesters demanded enhanced funds from the central government.
Global oil prices are affected by violent incidents such as those Ecuador and Nigeria. The prices of oil on London and New York markets were above $60 Tuesday and West Texas Intermediate rose again Wednesday to $62.05.
Last August, demonstrations provoked a force majeure on petroleum exports.
State-owned PetroEcuador had to halt crude oil exports Tuesday and closed a key pipeline that pumps 380,000 barrels per day as a result of protests, local reports said.
Protesters damaged the oil pipeline in the Amazonian Napo province.
Local reports said if the chaos continues, Ecuador will need to mobilize a multinational force to control it.
Ecuadorian Defense Minister Oswaldo Jarrin condemned sabotage done to the oil industry by locals claiming resources promised by the Executive.
Protesters want the government to construct two highways and an airport — projects promised by former President Lucio Gutierrez before he was forced out of office in April 2005.
Oil revenue accounts for approximately 25 percent of Ecuador's GDP.
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MARK WILLIAMSON February 24 2006

The head of Shell's UK business said the oil giant could commit to taking on an additional drilling rig in the North Sea this year although tax rates are set to rise sharply from April. James Smith, chairman of Shell UK, told The Herald the North Sea remained a “crucial” part of the company's business and it had not ruled out the possibility of acquiring another rig to work the area this year, or in 2007.
Speaking during a visit to Edinburgh, Smith said fears Shell would “slash” activity in response to chancellor Gordon Brown's decision to increase taxes were as yet misplaced.
Following the chancellor's announcement in December that the tax premium payable on North Sea profits would rise from 10% to 20% from April, Shell said it had cut the number of rigs to which it would commit from three to two.
However, that did not mean it would drill fewer wells in coming months, said Smith.
Committing to rigs involves making judgment calls based on a variety of factors. North Sea rates have been increasing in response to soaring oil and gas prices and a relative shortage of kit.
“We had a tender out for three rigs and decided to cut that to two,” said Smith. “That does not mean we decided to reduce our drilling programme, we were simply preserving our options. We would still be able to acquire a rig.”
Maintaining the North Sea was in “vigorous middle age”, Smith made it clear Shell had no intention of abandoning the province in favour of emerging areas like West Africa.
“There are substantial volumes of oil and gas still to be produced in the North Sea. We are committed and will be staying in for the long term.”
Smith said Shell had not changed its plans for the current year in response to the tax increases as most projects were in train before the change was announced. Like other oil and gas companies it would factor the changes into its planning for future years.
However, he said it would make the government aware of any impact the tax changes were expected to have on its UK activity.
“Our hope is he (Brown) will keep the tax system under review and if prices fall, will reduce rates accordingly.”
Smith was in Edinburgh to award prizes to companies that have developed technology to tackle climate change under the Shell-sponsored Springboard programme read more