Random Notes  

Posted by Big Gav

Rigzone reports that analysts have cut BHP's earnings forecasts, with CSFB predicting that the Typhoon platform may not be rebuilt - effectively writing off the field it was pumping from, in an example of accelerated oil depletion due to global warming.

Analysts have revised down earnings forecasts for BHP Billiton Ltd after the company cut oil and gas production forecasts in the wake of Hurricane Katrina.

BHP Billiton's Typhoon rig, a 50/50 joint venture with Chevron, was torn from its moorings in the Gulf of Mexico by Katrina, flipped upside down and found days later miles from its normal position having suffered extensive damage.

The company says the impact of the hurricane along with unplanned maintenance in Australia and the impact of falling oil prices on contracts in the Middle East means oil production for 2005/2006 could be as much as 10 million barrels of oil equivalent (mmboe) lower than predicted.

Credit Suisse First Boston (CSFB) analysts on Friday said there was a strong chance the Typhoon project might now be abandoned. "Under our estimates, Typhoon only had approximately three to four years of production left and it is highly possible it will not resume production," the analysts said in a client note.

Rigzone also reports that even though the majors are hesitant about venturing too deep into Iraq because of well grounded security fears, small companies are finding the promise of the greatest prize of all a bit more attractive. I always find references to exploration in the western desert interesting, so here's one such snippet.
John Mitchell, an associate fellow at Chatham House, a London- based research firm that specializes in international issues, said that small, risk-taking companies "are expanding in places like Iraq, Nigeria or Angola they're prepared to take high risks, and the host government is making space for them."

Risks and danger are balanced by the possible financial upside. "For a very small company, if they do well, it transforms them," Mitchell said. Horgan of Petrel said security risks had increased substantially in Iraq since 2003. The company has been working in Iraq since before the war, and has built up good contacts within the Ministry of Oil, where at all but the top levels, many executives still remain from prewar days. But the company encountered its first real problems there when it started doing exploration work in the western desert in early 2004, Horgan said. Petrel received a letter in calligraphic Arabic that said, "Anyone who works with the oppressors will be decapitated and burnt," he said. The letter ended by apologizing for any inconvenience, he added. Petrel has since stopped sending executives to the western desert to do seismic or geologic evaluations, and does not hire employees from countries involved in the coalition that invaded in 2003.

Honduras is asking Venezuela to provide them with oil on preferential terms, in another sign of the erosion of oil fungibility.

Clough has won a bid to do the oil services work for Woodside's Australian oil production.
Clough Limited today announced that it and joint venture partner, AMEC plc have signed an engineering services contract with Woodside Energy Limited. The company said the joint venture had been provisionally selected by Woodside and had now completed the final stage of the selection process by formalising the agreement.

Clough advised the contract would encompass all of Woodside’s Australian oil assets including the Wanaea Cossack Lambert Hermes, Enfield, Legendre and Laminaria-Corallina fields.

In another piece of local news, it seems even gold miners aren't immune to rising oil prices, with Newcrest getting a hiding today on the market (so you gold bugs - be sure to buy the metal rather than equities).

While I always tend to consider opposition leader Kim Beazley a fat windbag (how's that for non-partisan abuse - and he is even from my home town), he has started waking up to oil dependency issues and even if he's not quite as game as the Greens are to address peak oil head on, he has at least started making noises about moving away from oil. Kim says we should be expecting $5 a litre petrol in the not-so-distant future, and that we should be encouraging a shift to LPG for transport fuel, given our relatively large natural gas resources.
Australia could face petrol prices as high as $5 a litre within a decade if it continues to rely on imported petroleum, Opposition Leader Kim Beazley has said. Mr Beazley will outline a plan in Melbourne in which a Labor government would offer incentives including tax breaks to establish a network of gas-to-liquids plants.

"We are now hostage to Middle East oil and international oil and we are becoming more so - more and more dependent on it. That's got to stop," he told the Nine Network. "We actually need to start to stand on our own two feet. The government is way out of touch on this."

Mr Beazley's "blueprint speech" to the Institute of Company Directors would outline Labor's alternative fuels plan which it would take to the next election, he said. "In it is a plan for self sufficiency, by going to alternative fuels and establishing a regime that encourages them to be developed here," Mr Beazley said. "In particular ... taking advantage of massive technological advances in gas to liquid fuel conversion and ensuring that we have that industry here."

"We've got to start standing on our own two feet, we've got to be self reliant and we've got to definitely not allow ourselves to be hostage to what is inevitably going to be massive price hikes over time in the cost of Middle East oil."

Heading to the far north, there are reports from Alaska about plastics shortages caused by the effects of the Hurricanes - it will be interesting to see how much flow on effect these sorts of shortages have on the overall economy.

Meanwhile, the god of inflation and debased currencies, Alan Greenspan, is opining that the current energy situation is "milder than the '70s oil shock". Hidden amongst the fedspeak is
Dr Greenspan noted distant oil futures prices had moved up close to current spot prices and suggested markets did not expect oil production outside of oil-producing OPEC countries to be adequate to meet rising world demand. The Fed chief said OPEC and developing nations appeared to see little benefit in investing in additional production capacity, citing the "significant proportion" of oil revenue invested in financial assets as evidence.

On the Viridian front, WorldChanging has a short note on "plug and play off-grid power systems".
One of the big obstacles to going off-grid is the expertise required to set up a solar, wind, or other self-contained power system--this expertise translates to high installation costs and potential maintenance problems down the line. Wouldn't it be nice if you could just plop down a box and flip the "on" switch?
We're not quite at that point yet, but there's a new player in town that's made big strides towards that: SkyBuilt Power. From their website:

The [mobile power system] sets up in hours and is a complete power system prepackaged in a standard freight container that can be shipped easily worldwide by sea, air, truck and rail. The MPS operates in any climate, needs no fuel, is very low maintenance, rugged, and can be remotely controlled. It can provide power from 3.5kW to 150kW or more for backup or base load power to pump water, provide emergency power for disaster relief and any long-term power needs. It can use any combination of off the shelf components such as solar power, wind, batteries, and micro hydro power, and can work with diesel or other fuel-based systems.

Speculation about an impending attack on Iran seems to be increasing again, after a few months of relative silence. Is it going to happen ? Who knows - I had begun to think that the possibility of this was now remote, but maybe an outbreak of hostilities would divert the attention of the horde currently lathered up over the possibility of some heads rolling over the Plame affair. So we might be in for some dog wagging. Putting a tinfoil hat on for the moment, this would also explain the rush to implement the new wartime style sedition laws here as well.

2 comments

Re: your Iran speculation - maybe Syria? http://guambatstew.blogspot.com/2005/10/it-was-never-ists-it-was-always-ism.html

Re: sedition laws http://guambatstew.blogspot.com/2005/10/tongue-in-check.html

Re: your mining interests http://guambatstew.blogspot.com/2005/09/nearology.html

Syria ? Maybe - I had thought that was what the tea leaves were indicating lately. Who knows though - the political winds are now as variable as the air over the gulf of mexico.

I think those who would make such decisions are engaged in some intense infighting presently (in the heart of the empire anyway - us peasants in the provinces will be told what to do once the outcome is clear).

We seem to be in a period of increasing instability - on all facets of existence...

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