March 1st, 2006:

United Kingdom; Mar 01, 2006
I've been boycotting Esso and BP service stations on the basis of their environmental records. However, BP has been advertising its research into less environmentally harmful fuels. Should I believe them and remove them from my boycotting list? Also, while all oil companies are bad, are there others that are so bad I should add them to my list?
* Although many of us automatically think of boycotts when we don't like something a company does, they are not always the best way to influence a company's behaviour. There are two essentials for effectively boycotting a company. First, you must write to them to tell them why you are boycotting them (most people don't do this), and second, you need thousands of people to join you. In terms of Esso there is an organised international boycott, as Esso has played a leading role in denying climate change. There is no organised boycott of BP, so one person boycotting the company won't make any difference.
There is no oil company with a good record on the environment, despite what BP might claim, so if you boycott BP for this reason you might as well boycott them all. Other companies also have bad records. The Burma Campaign UK is campaigning against Total Oil as it is in a business partnership with the military dictatorship in Burma.
Chevron is facing a court case relating to allegations of human rights abuses in Nigeria, and of course Shell has also been under attack for its operations in Nigeria. The list goes on and on.
Mark Farmaner, campaigns manager, Burma Campaign UK, London N1 read more

By Ikuko Kao
YUZHNO SAKHALINSK, Russia, March 1 (Reuters) – Earthquakes, rare whales and bitter cold have presented Royal Dutch Shell with high hurdles for its giant Russian Sakhalin energy project. Yet the company can count itself lucky.
Even with further project delays and cost increases possible, it is making steady progress on Sakhalin 2, one of only two developments underway in a region officials say holds more crude oil and natural gas than Europe's North Sea.
A jetty stretching into the icy waters off Russia's far east coast looks forlorn but is a footstep of progress made by Shell , as it tries to challenge nature to ship liquefied natural gas (LNG) to countries enamoured with the clean fuel.
By summer 2008, LNG will start flowing from the jetty on tankers heading around the Pacific, relieving energy markets stretched by surging gas demand for residential and industrial use from Asian and U.S. consumers.
The Anglo-Dutch oil major and its partners, Japan's Mitsui & Co. and Mitsubishi Corp. , missed an initial November 2007 target for the first LNG shipment from Sakhalin 2 by six months because of ecological obstacles and repeated postponements by Russian authorities over expenditure.
Project costs have doubled to $20 billion.
And there may still be a risk of further delays, though the world's largest LNG project is progressing at the quickest pace out of nine energy projects in Sakhalin.
“The project is just over 60 percent complete at the moment,” Sakhalin Energy's chief executive Ian Craig said.
Shell plans to start year-round crude oil production in 2007, Craig said. Its oil production is now suspended for about six months in the year because of drift ice shutting ports.
Sakhalin 2 consists of gigantic offshore platforms, oil and gas pipelines with a total length of 800 kilometres (497 miles), as well as terminals with two LNG trains that chill natural gas to a liquid form for transport.
FROZEN BEAUTY
Sakhalin, an island about the size of Scotland, has a population of around 530,000 and holds an estimated 45 billion barrels equivalent of recoverable oil and gas reserves.
But the biggest challenge is the island's harsh if beautiful natural environment.
In addition to frigid weather that sees temperatures plunge to minus 30 degrees Celsius on winter nights, the land has numerous seismic faults as part of the Pacific's rim of fire.
Pipeline crossing points at active faults at the southern part were still under design, engineer Samar Slim told Reuters.
He has to use the costly technique of horizontal drilling to avoid damaging rivers where salmon come to lay eggs in summer.
“It is a lot more expensive than normal methods (to build pipelines). In my understanding, 10 times more,” Slim said.
The dark waters of the Sea of Okhotsk provide a rich marine environment, harbouring feeding grounds for the endangered Western Gray Whale that environmentalists fear have been disrupted by the project.
Shell says it is working to safeguard the species, with Sakhalin Energy spending about $7 million on whale research from 1997 to 2005 and agreeing last year to reroute offshore pipelines.
Humans are also an endangered species on Sakhalin.
Construction workers at Sakhalin 2's Prigorodnoye terminal in the south, where the two giant LNG trains reside, are bundled up in padded clothes like skiers to protect their bodies from heavy snow, only their frost-crusted eyes visible from outside.
The workers have to warm up machinery parts in tents — not to mention themselves — before putting them into action, a practice hardly necessary in warmer energy producers such as Saudi Arabia, and one adding to the project's time and cost.
“Usually, it takes about 36 months to complete construction works of this kind of facility. But here in Sakhalin, the first train takes 51 months,” said Frank Fletcher, project manager at the plant.
The jetty, chilled by wind from Aniva Bay and still not connected to land like England's fire-wrecked old Brighton pier, is still waiting for spring and the return of more workers, whose numbers rise from 6,000 in winter to 8,000 in summer.
Up to 5,000 construction workers live in a camp just next to the plant. The main office's walls are full of cautious advice: “Drugs don't relax you. It kills you… Alcohol doesn't build friendship, it destroys it… Safe sex, or no sex.”
STILL AHEAD
Shell has sold about 75 percent of its planned 9.6 million tonnes a year of LNG from Sakhalin 2 on long-term supply contracts to Japan, South Korea and the U.S. West Coast.
But Sakhalin 2 is only developing about 10 percent of the area's resources and Shell is not the only one eyeing the riches.
Russia's gas monopoly Gazprom is negotiating with Shell to take 25 percent of Sakhalin 2.
There are eight other new energy projects, including Sakhalin 1 led by U.S. oil giant Exxon Mobil Corp .
Sakhalin 1 started commercial crude oil production in October, but Exxon has not begun to build gas facilities since it first needs a buyer; unlike Shell it plans to transfer gas from Sakhalin 1 to a single customer, possibly China, via a pipeline.
Exxon had hoped to develop Sakhalin 3, under a previous deal scrapped by the government. The field is expected to be auctioned later this year.
“The rest of the projects just have numbers,” an industry official said. read more

By ROBERT SEMPLE
Published: March 1, 2006
Robert Semple is the associate editor of the Times's editorial board.
In This Talking Points
I. Peak Oil
II. Hubbertians vs. Cornucopians
III. Consequences
IV. The Mysterious Saudis
V. What Now?
When President Bush declared in his 2006 State of the Union address that America must cure its “addiction to oil,” he framed his case largely in terms of national security — the need to liberate the country from of its dependence on volatile and in some cases hostile nations for much of its energy. He failed to mention two other good reasons to sober up. Both are at least as pressing as national security.
One is global warming. This is not an issue Mr. Bush cares much about. Yet there is no longer any doubt among mainstream scientists that the earth is warming up, that increasing atmospheric temperatures have already damaged fragile ecosystems and that our only real defense against even graver consequences is to burn less fossil fuel — which means, among other things, using less oil.
The second reason is just as unsettling, and is only starting to get the attention it deserves. The Age of Oil — 100-plus years of astonishing economic growth made possible by cheap, abundant oil — could be ending without our really being aware of it. Oil is a finite commodity. At some point even the vast reservoirs of Saudi Arabia will run dry. But before that happens there will come a day when oil production “peaks,” when demand overtakes supply (and never looks back), resulting in large and possibly catastrophic price increases that could make today's $60-a-barrel oil look like chump change. Unless, of course, we begin to develop substitutes for oil. Or begin to live more abstemiously. Or both. The concept of peak oil has not been widely written about. But people are talking about it now. It deserves a careful look — largely because it is almost certainly correct.
I. Peak Oil
In oil-patch lingo, “peak oil” refers to the point at which a given oil reservoir reaches peak production, after which it yields steadily declining amounts, no matter how many new wells are drilled. As Robert L. Hirsch, an expert on energy issues told Congress last December, the life span of individual oil fields is measured in decades. Peak production typically occurs 10 years or so after discovery, or when the reservoir is about half full. An oil field may have large estimated reserves. But a well-managed field that has reached its peak (as most American fields have) has also reached a point of no return, no matter how much new technology is applied. And what's happening in individual fields will be reflected on a global scale, because world production is by definition the sum of its individual parts.
When will oil peak? At least one maverick geologist says it already has. Others say 10 years from now. A few actually say never. The latest official projections from the Energy Information Administration put the peak at 2037, or 2047 — depending, of course, on how much of the stuff is out there and how fast we intend to use it up. But even that relatively late date does not give us much time to adjust to a world without cheap, abundant oil.
II. Hubbertians vs. Cornucopians
Let's start with the true pessimists, proudly known as Hubbertians after the legendary Shell Oil Company geophysicist, M. King Hubbert. In the 1950's, Mr. Hubbert collected a wealth of historical data on oil discoveries and production, developed some complex mathematical formulas, and produced a bell-shaped curve showing that the rate at which oil could be extracted from wells in the United States would peak around 1970 and then begin to decline. Though perhaps not the most popular guy at Shell headquarters, he turned out to be right. U.S. oil extraction peaked at about 9 million barrels a day in 1970, and is now below 6 million a day. His basic methodology has been used ever since. Various economists and geologists have applied the Hubbert technique to the world oil supply. Among the more readable and entertaining of Mr. Hubbert's disciples is another Shell alumnus, Kenneth S. Deffeyes, who is now a professor emeritus at Princeton. Mr. Deffeyes holds that nature's original oil bequest amounted to about two trillion barrels, of which nearly half has already been consumed. Armed with Mr. Hubbert's bell curve, and incorporating all sorts of up-to-date data, Mr. Deffeyes concludes with playful certainty that the apocalypse is not only upon us but has in fact occurred. “I nominate Thanksgiving Day, Nov. 24, 2005, as World Oil Peak Day,” he says at the outset of his latest Hubbert-related book, “Beyond Oil: The View From Hubbert's Peak.” “There is a reason for selecting Thanksgiving. We can pause and give thanks for the years from 1901 to 2005 when abundant oil and natural gas fueled enormous changes in our society. At the same time, we have to face up to reality: World oil production is going to decline, at first slowly, and then more rapidly.”
Other prognosticators — Mr. Deffeyes dismisses them as “cornucopians” — paint a much cheerier picture. The most authoritative of these is not one person but 40 — the number of geologists and physicists the U.S. Geological Survey assigned to carry out the most comprehensive study ever conducted of the oil resources outside the United States. The study was done between 1995 and 2000. When combined with the results of an earlier survey of U.S. resources, it suggested that earth's original oil endowment was 3 trillion barrels, not 2 trillion as supposed by Mr. Hubbert and his followers. It also suggested that the remaining inventory was more than twice Mr. Hubbert's — 2. 3 trillion barrels, consisting (in very round figures) of 900 trillion in proven reserves, 700 trillion in “reserve growth” (additional barrels that can be retrieved through advanced technology) and 700 trillion in “undiscovered” reserves, meaning oil the USGS experts think we can find given what we know about geological formations. These figures, admittedly speculative, are undeniably more upbeat than anything the Hubbertians have to offer (Mr. Deffeyes, for instance, puts the “undiscovered reserves” figure at 100 million barrels, max). And, of course, these rosier official calculations yield a much later oil peak — 2037, assuming a steady annual increase of 2 percent in worldwide demand, and maybe later, if another mammoth oilfield kicks in somewhere on earth. No reason yet to abandon the family S.U.V.
. Consequences
Or is there? Think about it: the year 2037 is a mere half-generation away. Despite their differences, neither Mr. Hubbert's disciples nor the optimists showed the least interest in doing a straight-line calculation to figure out when earth will yield its last drop of oil (a calculation easily done, by the way — dividing USGS's 2.3 trillion by today's average annual consumption of 30-plus billion gives us about 80 years until the fat lady sings) . But that's not the important date. The important date is the point at which demand zips past supply. In the past several years, the gap between demand and supply, once considerable, has steadily narrowed, and today is almost in balance. Oil at $60 a barrel oil may be one manifestation. Another is the worried looks on the faces of people who fret about national security. In early 2005, for instance, the National Commission on Energy Policy and another group called Securing America's Future Energy (SAFE) convened a bunch of Washington heavyweights at a symposium called, alarmingly, Oil ShockWave, and asked them to imagine what it would take to drive oil prices into the stratosphere and send shockwaves reverberating through America and the rest of the western world. It wouldn't take much — a terrorist attack on Alaska's Port of Valdez would reduce global oil supply by 900,000 barrels a day; unrest in Nigeria, 600,000 barrels; an attack on Saudi Arabia processing facilities at Haradh, 250,000. Throw in an unseasonable cold snap across the Northern Hemisphere, boosting demand by 800,000 barrels, and before long you're staring at a net shortfall of 3 billion barrels, or about 4 per cent of normal daily supply. This, in turn, is enough to drive oil prices from about $60 to $161 a barrel. The cost of fuel at the pump — indeed, the cost of most petrochemical-based products — rises dramatically. The U.S. economy slides into recession. Millions are thrown out of work. More broadly, the quintessentially American lifestyle — two-car suburban families commuting endlessly to office, school and mall — suddenly becomes unsustainable. But what the peak oil experts are saying is that we don't need terrorists to make this happen. Essentially the same scenario is unfolding now, right before our eyes, without benefit of bombings or cold snaps, simply through the normal laws of supply and demand.
The 2005 International Energy Outlook from the government's Energy Information Administration is instructive on this point. Over the next two decades, global oil consumption is expected increase by more than half, from about 84 million barrels per day now to nearly 119 million barrels by 2025. U.S. consumption alone is expected to jump from 20 million to 30 millions barrels a day, one fourth the world's total. But the thirstiest consumers of all will be the emerging giants of Asia, particularly China, which is expected to quadruple the number of cars on its roads in the next 20 years and whose oil needs are expected to grow by a minimum of 3.5 per cent every year, well above the worldwide norm. Can supply keep pace? Put differently: Can Saudi Arabia bail us out?
IV. The Mysterious Saudis
Conservative projections and simple arithmetic tell us that the world will need at least 35 million more barrels a day in 2025 than it needs now. The Energy Information Administration is cautiously optimistic that those barrels can be found. It foresees steady production increases in the old Soviet Union, Africa and the Caribbean. It hopes that Iraq's oil industry will survive the war and return to its old self. It does not even mention the possibility of blackmail by Iran. And it sees no reason why Saudi Arabia — the elephant in the oil patch, the country whose 260-plus billion barrels in proven reserves is one-quarter of the world's total, twice Iran's and ten times the U.S.'s — shouldn't be able to keep the oil flowing our way. Forecasters at the E.I.A. and elsewhere assume that the Saudis will be able to make a contribution commensurate with the overall 50 percent rise in production the world will need to produce those extra 35 million barrels, jacking up output from 10.5 million barrels a day now to 12.5 in 2009 to 15 million after that. But there are some people who seriously doubt whether Saudi Arabia can turn on the spigot as it's always done before. Matthew Simmons is one of them. Indeed, Mr. Simmons is not sure that Saudi Arabia can do much of anything. Mr. Simmons is a Texas businessman and oil expert who runs a consulting firm in Texas, making good money advising energy companies. Like Mr. Deffeyes, he is seen as a maverick. His other trademark is pessimism — a pessimism nourished, he told Peter Maass of the New York Times Sunday Magazine, by months of poking around in obscure data about Saudi oil fields that left him with deep doubts about Saudi Arabia's ability to deliver the oil the world will ultimately need. His studies of Saudi Arabia's huge Ghawar field, which has produced an astonishing 55 billion barrels in the last half-century, left him particularly wide-eyed. “Twilight at Ghawar is fast approaching, ” he says in a new book, “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.” “Saudi Arabia clearly seems to be nearing or at its peak output.” Or as he told Mr. Maass: “The odds of the Saudis sustaining [even] 12.5 million barrels a day is very low. The odds of them getting to 15 million for 50 years — there's a better chance of me having Bill Gates's net worth.” Publicly, Saudi officials and many American experts scoff at Mr. Simmons the way official Washington scoffs at Mr. Deffeyes. Other industry consultants, including the much-admired author Daniel Yergin, believe that Mr. Simmons and Mr. Deffeyes and “peakists” in general are being much too gloomy. ” This is not the first time the world has run out of oil,” Mr. Yergin wrote last year. “It's more like the fifth. Cycles of shortage and surplus characterize the entire history of the oil industry.” Privately, however, a few well-placed Saudis share Simmons's doubts, and for one obvious reason: Hitting the Energy Information Administration's targets will require the Saudis to extract increasing amounts of oil from fields that may already be past their prime.
V. What Now?
There are many economists who believe that a nasty oil-price shock might not be such a bad thing, just as a big fat increase in gas taxes might not be such a bad thing. Sharply higher price increases might force us to conserve in ways we never have before, and lead also to a public outcry for fuel-efficient cars that neither Detroit nor the Japanese have been willing to build on a large scale. Higher prices for conventional oil could also make other sources of energy more attractive, including unconventional forms of oil. These include the heavy oil lodged in the Canadian tar sands, where there are thought to be many billions of barrels and where companies like Exxon are poking around. There are also the billions of barrels of unconventional oil trapped in shale formations out West. In the 1970's, during Jimmy Carter's synthetic fuels craze, a lot of people lost their shirts on shale oil, which needs to be heated and basically boiled out of the rock. Getting at tar and shale oil require heavy, energy-intensive mining operations. And despite the serious bets being placed on the tar sands, unconventional oil won't be available in large enough quantities to make a real difference until well down the road. The same can be said of the hydrogen energy President Bush has been touting ever since he came to office; the National Academy of Sciences says we won't see affordable hydrogen-powered cars in meaningful numbers for 30 years, if that. This does not mean that we shouldn't keep trying — future generations will not forgive us if we don't. What it does mean is that we need to look quickly for near and medium-term solutions that can help us cushion the shock when we hit the peak, assuming we haven't hit it already. There is no shortage of ideas about what to do to reduce the demand for oil. In the last two years, there have been three major reports remarkable for their clarity and for their convergence on near-term strategies — from the Energy Future Coalition, consisting of officials from the Clinton and first Bush administrations; from the Rocky Mountain Institute in Aspen, which concerns itself with energy efficiency; and from the above-mentioned National Commission on Energy Policy, a collection of experts from academia, business and labor. All three groups call for much stronger fuel economy standards, beginning very soon. All three call for major tax subsidies and loan guarantees to help the carmakers develop and market these more efficient cars on a massive scale without going bankrupt. And all three call for an aggressive program to develop gasoline substitutes from starch and sugars, known loosely as cellulosic fuels. These strategies would not only help reduce oil dependency but, in the bargain, greatly reduce greenhouse gas emissions, 40 percent of which come from vehicles. They would not threaten economic growth, especially if Washington stood ready to ease Detroit's transition from the S.U.V.'s and light trucks they depend on for their profits (such as they are) to a new generation of cars and trucks. And they are not pie-in-the sky. Off-the-shelf technology can boost our average fuel economy from 26 to 45 miles an hour in a decade. Brazil already has its cars running on cellulosic fuels. What these groups are talking about — and what distinguishes them from the administration's rather more passive approach — is not more research but getting good ideas into commercial production in a hurry. This is going to take serious investment. It will also take real leadership, which may be the biggest missing ingredient of all.
A couple of years ago, David Goodstein, vice provost of the California Institute of Technology, published a slim, intelligent, and spry little book called “Out of Gas: The End of the Age of Oil.” A Hubbertian at heart, he nevertheless thinks we have time to avoid the worst, but only if we stop deluding ourselves. He also knows, though, that human nature does not easily leap to a challenge that seems always to be receding, and for that reason he does not think that we will really act until the wave crashes down upon us. “Our present national and international leadership is reluctant even to acknowledge that there is a problem,” he writes. “The crisis will occur, and it will be painful. The best we can realistically hope for is that when it happens, it will serve as a wakeup call, and will not so badly undermine our strength that we are unable to take the giant steps that are needed.”
Lela Moore contributed research for this article. read more

Mar 01, 2006
LLOYD'S List has been asked to point out with reference to the article 'Talisman buys Shell stake in Auk and Fulmar platforms' (Tuesday, February 21, 2006) that though its UK subsidiary has entered into exclusive negotiations for these assets, Talisman Energy has not yet acquired these interests and that any agreement will be subject to co-venturer and UK government approval.

By Alison Maitland in London
Published: March 1 2006 02:00 | Last updated: March 1 2006 02:00
The furore over US internet companies' compliance with censorship laws in China is a good example of why the corporate world must have clearer human rights standards, says John Ruggie, the UN secretary-general's special representative on human rights and business.
In an interview to coincide with this week's publication of his interim report on corporate human rights responsibilities, Professor Ruggie said Google, Yahoo, Microsoft and Cisco had been “caught flat-footed” over censorship because they had not thought about the standards that should govern their operations in China.
“It's going to be difficult, but we do need clearer standards and better tools,” said Prof Ruggie of Harvard University, whose final report will be submitted to the United Nations next year.
In his interim report, Prof Ruggie says existing voluntary initiatives contain weaknesses because they tend not to cover determined laggards – the companies that cause the biggest problems – and leave many areas of human rights poorly protected or uncovered.
However, he also risks angering human rights activists by denouncing the “exaggerated legal claims and conceptual ambiguities” of what are called the UN norms on human rights and business. The draft rules, put forward by a UN sub-commission in 2003, led to bitter wrangling between business groups that opposed them and activists who supported them.
“What the norms have done is to take existing state-based human rights instruments and simply assert that many of their provisions now are binding on corporations as well,” he writes. “But that assertion itself has little authoritative basis in international law.”
Prof Ruggie, appointed by UN secretary-general Kofi Annan last year to end the stalemate over the norms, said the question of whether rules should be voluntary or obligatory could be answered only when appropriate standards had been agreed.
While there could be common standards for procedures such as corporate disclosure of human rights policies and practices, he suggested “substantive standards” would vary between sectors. “A set of guiding principles [for the extractive industry] isn't likely to have direct applicability in the IT sector,” he said.
In his report, he says the oil, gas and mining sector “utterly dominates” 65 alleged cases of corporate human rights abuses recently reported by activists. The food and drinks industry comes “a distant second”, followed by clothing and footwear.
Sir Geoffrey Chandler, the former Shell director and ex- chair of Amnesty International UK business group, welcomed the report, saying: “Never have companies faced greater need to persuade the public that they are motivated by principle as well as profit.” read more

By Patti Waldmeir in Washington
Published: March 1 2006 02:00 | Last updated: March 1 2006 02:00
The US Supreme Court yesterday reaffirmed the right of joint ventures to set prices without violating US price-fixing laws, overturning a ruling vigorously criticised by US businesses and the Bush administration.
The case was one of several being watched by US businesses, in a court term heavy with business cases. “As a single entity, a joint venture, like any other firm, must have the discretion to determine the prices of products that it sells,” Justice Clarence Thomas wrote for a unanimous court.
The ruling threw out a lawsuit that accused Royal Dutch Shell and Chevron of using a pair of joint ventures to increase the price of petrol to service station owners. A federal appeals court in San Francisco had let the lawsuit go forward. Many businesses had lobbied the Supreme Court to shield joint ventures from price-fixing claims. read more