‘Biggest Oil Discovery In UK Waters This Century’

UK Energy Policy Will Be About Cutting Costs,

Not Emissions, Says Government Chief

 

Brought to you by Benny Peiser's Global Warming Policy Forum

 

Hurricane Energy has made a further oil discovery west of the Shetland Islands days after Royal Dutch Shell and BP won exploration licences in an area the UK is counting on to breathe new life into its struggling oil and gas industry. The latest find adds to a series of successful wells drilled by Hurricane in a geological formation that analysts say looks likely to be the biggest new oil discovery beneath UK waters this century. Hurricane is expected to announce that initial data from its Halifax well indicates the presence of a 1km-deep oil column and that, crucially, it appears to be part of “a single large hydrocarbon accumulation” connected to the company’s adjacent Lancaster field. This would increase confidence behind the London-listed explorer’s claim to be sitting on the largest undeveloped discovery on the UK continental shelf and aid efforts to attract investment in the field from international oil majors. --Andrew Ward and Nathalie Thomas, Financial Times, 26 March 2017

The Government’s energy policy will focus on cutting costs to business as a Whitehall official admits it has ‘neglected industry for too long’. Nigel Pargiter, acting head of energy supply chains at BEIS (Department of Business, Energy and Industrial Strategy), told a North East audience that the emphasis is now on cutting energy costs to homes and businesses. “We have neglected industry for too long and we now have to have a keen focus on costs.” In his earlier address to the conference he said: “The key challenge for us all is how do we get costs down and away from the subsidy regime. This is the biggest challenge we face and one that can be tackled by Government and industry working together.” --Peter McCusker, Newcastle Journal, 23 March 2017

Gas has won approval for a new shale gas exploration project from Nottinghamshire County Council. The firm, one of Britain’s leading shale explorers, has been granted planning consent to develop a hydrocarbon well site and to drill one exploratory well at the Tinker Lane site in North Nottinghamshire. IGas, like other onshore operators around the country, is working to find out if the large quantities of shale that exist in Britain are in the right formations to be commercially prospective, said Stephen Bowler, chief executive of IGas. “The UK is at a critical juncture in the future of our energy mix and supply as we move away from coal towards lower carbon energy sources. We rely significantly on gas in the UK, not just for electricity, but also in heating eight out of 10 homes and as a raw material in the manufacture of many everyday products.” --Courtney Goldsmith, City A.M., 22 March 2017

The heart of Europe’s gas market may finally get a helping hand from the American shale revolution as fuel is poised to cross the Atlantic to replenish depleted inventories after the coldest January in seven years. Northwest Europe, one of the biggest trading regions for the fuel, hasn’t yet attracted any liquefied natural gas cargoes from the U.S., which the shale boom turned into the world’s biggest gas producer. So far, sellers have favored markets in South America and Asia where prices have been higher. But that may be about to change with spring weather poised to damp demand and prices in the biggest consuming region of Japan and South Korea moving closer to those in the U.K. and the Netherlands. Supplies from the U.S. may arrive in the coming months to help replenish European stocks at their lowest level since 2013, according to Houston-based Cheniere Energy Inc., which is expanding its export plant in Louisiana. --Bloomberg, 24 March 2017

OPEC’s worries about the booming U.S. oil production have increased significantly with the big three oil companies’ interest in shale. 2017-19 is likely to see the largest increase in mega projects’ production in history. Exxon Mobil Corp., Royal Dutch Shell Plc, and Chevron Corp., are planning $10 billion of investments in shale in 2017, a quantum jump compared to previous years. All the naysayers who doubted the longevity of the shale oil industry may have to modify their forecasts. OPEC lost when they pumped at will as lower oil prices destroyed their finances, and now they are losing their hard-earned market share as a result of cutting production. Shell’s declaration that they can “make money in the Permian with oil at $40 a barrel, with new wells profitable at about $20 a barrel” is an indication that Shell is here to stay, whatever the price of oil. --Rakesh Upadhyay, Oil Price, 24 March 2017

In global manufacturing, fortunes are starting to shift in America’s favor. That’s despite Donald Trump’s angry election rhetoric about China “raping” the U.S., and his threats to forcibly bring home manufacturing jobs by slapping across-the-board tariffs of 45% on Chinese imports. The trends were clear well before Mr. Trump started rallying his blue-collar base with alarmist messages of protectionism. Job-creating investment from China is booming in particular. Last year, it tripled to $45.6 billion from a year earlier, according to the Rhodium Group. Industrial land in the U.S. is often cheaper than in Chinese coastal cities. The shale-gas revolution has dramatically lowered U.S. energy costs. But the real key is technology: Advanced manufacturing is leveling the playing field. --Andrew Browne, The Wall Street Journal, 21 March 2017