Blowout week 5

Big Oil: Is in big trouble. ExxonMobil, Shell and Chevron report profits down, capex up and production flat

Nuclear: EC criticises Hinkley deal; radiation scare at Sellafield

Denmark: Government in trouble over energy deal with Goldman Sachs

Weather: Polar vortex continues to swirl in N America; snow affects deep south.

Capex and production comparisons for three of the Super Majors, courtesy of  The Wall St Journal (pay wall). NB I suspect there may be significant time lags between capex on big projects and production coming through. If production does not rise in response to this expenditure and capex is reduced going forward then OECD oil production may decline. 18 stories from around the world below the fold.

UK: SSE ‘on course’ for £1.5bn profit

Energy supplier SSE has announced it is on course to make more than £1.5bn in profit this year, despite losing 250,000 gas and electricity customers.

UK:  SSE treads carefully

SSE is walking a difficult path through a minefield, in which it has to balance political, consumer and investor pressure. In doing so, it’s trying to go on the offensive.

With power companies now down there among the most loathed of national institutions, new chief executive Alistair Phillips-Davies must have known that a hint of rising profits would go down badly.

World: Warm temps blamed for massive avalanche that cut off Alaskan town

A warmer winter is being blamed for the mammoth Alaskan avalanche that has cut off a port city’s sole road to the outside — stoking fears of flash floods and future landslides.
Snowy debris hundreds of feet long and up to 40 feet deep slammed onto Valdez’s Richardson Highway early Friday and again on Saturday.

World: Deep South in winter storm emergency

The US Deep South, a region used to sultry weather and hurricane warnings, is preparing for a severe winter storm.

States of emergency have been declared in Georgia, Louisiana, Mississippi, North Carolina and South Carolina.

World: Winter storm brings ‘once in a decade’ ice and snow to southern US

A rare blast of snow, sleet and ice has hit the US South, prompting three states to declare a state of emergency, closing the New Orleans airport and causing chaos on roads for drivers unaccustomed to the dangerously slick conditions.

World: Japan Has Record Trade Deficit as Rising Fuel Bill Hurts Growth

Japan, whose swelling trade surpluses stoked American ire in the 1980s and kept it from deeper stagnation during two decades of deflationary malaise, had a record deficit in 2013 thanks to a surging energy bill.

Three decades of surpluses came to a halt in 2011, when the Fukushima meltdowns shuttered nuclear-power plants. With a 16 percent increase in crude oil shipments, Japan had a trade gap of 11.5 trillion yen ($113 billion) in 2013, almost double the previous year, a finance ministry report showed in Tokyo.

World: Propane shortage has become ‘an absolute emergency’

Propane prices continue to skyrocket across the Midwest and a shortage of the gas commonly used to heat rural homes led Gov. Scott Walker to declare a state of emergency Saturday.

On Monday, Walker announced his administration would set aside $8 million to guarantee propane dealers’ loans for gas purchases to help ensure enough gas reaches customers.

Europe: The Danish Government Nearly Collapsed Today Over A Deal With Goldman Sachs

Denmark’s government is in turmoil after the Socialist People’s Party (SF) quit the ruling coalition over a deal with Goldman Sachs, Lars Eriksen of the Guardian reports.
The deal involves Goldman purchasing a 19% stake in state-owned utility Dong Energy for $1.5 billion. Denmark’s shareholding would fall to about 60%.

UK: Sellafield nuclear site has elevated levels of radioactivity

The Sellafield nuclear site is being operated with a reduced number of staff following the detection overnight of elevated levels of radioactivity.

Non-essential staff are being told not to come to work, although this is described as a precautionary measure, and in a statement the site’s operator said there was “no risk to the general public or workforce”. It is unclear how long the plant will operate with reduced staffing but a few hundred workers are understood to be on the site.

Europe: Nuclear setback as EC attacks Hinkley Point subsidy deal

Britain’s hopes of a nuclear energy renaissance were thrown into fresh doubt on Friday as the European Commission published a damning 70-page critique arguing that a landmark subsidy deal for the first new plant may constitute illegal state aid.
EDF’s proposed £16bn plant, at Hinkley Point C in Somerset, could be profitable even without the consumer-funded subsidies that could total £17.6bn, the EC said.

Hat tip to Roel at The Automatic Earth for the following links:

World: Big Oil Has Big Problems

Some of the world’s largest oil companies are reporting pretty ugly earnings. Profits at Exxon Mobil (XOM), the biggest U.S. oil company, are down 27 percent off its worst fourth-quarter earnings in four years. Royal Dutch Shell (RDS.B), Europe’s biggest oil major, saw its profits tumble 48 percent.

World: Chevron follows Shell, Exxon Mobil profit slide. Is Big Oil in trouble?

Oil and gas production is booming in much of the world, but it’s not boosting Big Oil’s bottom line. As supplies of easily obtainable oil dwindle and prices remain flat, the world’s oil majors are getting less in return for the vast sums they invest on big, risky projects that don’t always pan out. Royal Dutch Shell and Exxon Mobil announced drops in fourth quarter profits Thursday. Chevron announced similar results Friday.

World: A battle roils in oil industry

Last week, famed energy investor T. Boone Pickens made noise at a natural gas conference in Houston when he said he wasn’t all that “keen” on lifting the U.S. ban on exporting crude oil right now.
Soon his phone began ringing with calls from the oil industry, including Pioneer Natural Resources CEO Scott Sheffield. And Pickens explained that his larger point was that the United States needed to develop a strategic policy to get off Middle East oil.

My selection of stories posted by Luis de Sousa At The Edge of Time. Luis’ focus this week is on the poor earnings reported by big oil.

World: Why Turning a Buck Isn’t Easy Anymore for Oil’s Biggest Players

Judging by pump prices, Canadian drivers might think oil companies were rolling in profits that only move higher. Lately, though, the big boys in the global oil industry are finding that earning a buck isn’t as easy as it used to be.

World: Big Oil Companies Struggle to Justify Soaring Project Costs

Chevron Corp. CVX -0.76% , Exxon Mobil Corp. XOM -0.33% and Royal Dutch Shell RDSB.LN +0.49% PLC spent more than $120 billion in 2013 to boost their oil and gas output—about the same cost in today’s dollars as putting a man on the moon.

But the three oil giants have little to show for all their big spending. Oil and gas production are down despite combined capital expenses of a half-trillion dollars in the past five years. Each company is expected to report later this week a profit decline for 2013 compared with 2012, even though oil prices are high.

World: Oil giant Shell in Brazillian oil field sell-off

OIL giant Royal Dutch Shell is selling a £600million stake in a Brazilian offshore oil field as it continues to shake-up its business ­following its recent profits warning.

World: Royal Dutch Shell halts Alaska exploration as profits fall

Oil giant Royal Dutch Shell is stepping up asset disposals as part of a strategy that will see the company “changing emphasis” in 2014.

The changes will involve Shell stopping its exploration programme in Alaska.

World: Iraq says Syria war spillover hinders oilfields, pipelines

Spillover attacks from the civil war in Syria have hindered development of Iraq’s gas and oil reserves and a major pipeline to the Mediterranean has been blown up dozens of times, Iraq’s top energy official said on Tuesday.

Map courtesy of Platts

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4 Responses to Blowout week 5

  1. DaveB says:

    Note that Der Spiegel’s grid instability story is dated August 2012.

  2. Hugh Sharman says:

    Thanks Euan,

    The WSJ story is particularly important because it really must be hurtful for most WSJ readers.

    I particularly remember IEA’s WEO of 2009 when it indicateded the enormous sums of money that would have to be invested in order to expand net oil extraction rates, commonly called “production”. (Let’s not call “extraction”, “production”. They really mean different things altogether).

    So Big Oil’s out-of-control investments are resulting in fairly insignificant increases in the rate of oil extraction, even actually no increase at all?

    It rather looks as if “peak oil” theory is working out, à la TOD, if not in the way we all expected it to (say) ten years ago?

    The (plateau) peak seems to be on time, also, give or take a few years! Hats off to Colin Campbell and Co!

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