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Tuesday, 11 September 2007 02:54

Power Plays: Shell May Use Nuclear Reactor for Power to Mine Oil from Canadian Sands

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WORLD ENERGY WATCH
edited by Gloria Lalumia

The World Energy Watch presents recent news and analysis highlighting the activities of the players involved in the power struggle for the world's remaining energy resources

SHELL COULD TAKE NUCLEAR OPTION TO MINE OIL FROM CANADIAN TAR SANDS
(The Independent, UK)

Shell is considering using nuclear power to operate its controversial tar sands programme in Canada. Tar sands extraction - mining oil from a mixture of sand or clay, water and very heavy crude oil - uses a huge amount of energy and water. Environmentalists say it results in more than three times as many emissions of carbon dioxide compared to conventional oil production. Now Canadian firms AECL and Energy Alberta have proposed building a nuclear reactor near the site of Shell's vast Athabasca tar sands development. The boss of Energy Alberta has said the C$6bn (£2.8bn) reactor has the backing of a large unnamed company that would take 70 per cent of the reactor's energy. A spokeswoman for Shell Canada refused to confirm that the company would take electricity from the reactor but said: "We have had a number of power options presented to us. Yes, it includes nuclear. "If a nuclear facility proceeds, we would look at it based on a wide range of factors such as economics, sustainability and the energy [required]." She added that the company was also looking at building biomass, renewable or co-generation plants. Analysts estimate that Canada's huge tar sands give it the world's second-largest oil reserves after Saudi Arabia. However, Walt Patterson, associate fellow at think-tank Chatham House, said: "Extracting oil from tar scares the pants off me. The whole idea is fundamentally perverse in the context of our present environmental situation. To then power it with nuclear, it seems to be the worst of all worlds." ... Shell and its Athabasca partners currently pump over 155,000 barrels of oil per day from the tar sands but want to increase this by five times over the next 20 years. This would need more than an extra 1,000MW of generating capacity. Most of the project's existing power comes from a gas-fired plant, but gas production in North America is declining.

US INVESTORS CAN'T UNDERSTAND RUSSIAN ENVIRONMENTALISTS
(Kommersant/Russia)

The Russian Natural Resources Ministry announced the visit late August, saying that Oleg Mitvol would go to the United States to meet with the largest U.S. funds. Mr. Mitvol was accompanied by Igor Maidanov, director of the ministry's international cooperation department and presser Rinat Gizatulin. The Natural Resources Ministry reported that the officials had met investors from Fidelity, Legg Mason, Julius Baer Investments, Capital Research, Old Lane, Newgate, Black River, Red Star, MCI, American Century, State Street, UBS and Wells Capital Management. The deputy head of the environment watchdog said he held "15 meetings a day." Russia's Alfa Bank was the one to send out invitations to the investors, Mr. Mitvol said noting that the bank did it voluntarily. Despite his relatively inferior position in the government, Oleg Mitvol is one of Russia's most high-profile officials. Last year, his Natural Resources Oversight Agency launched a highly public attack on the Sakhalin-2 project. Oleg Mitvol blamed foreign companies in the project for environmental violations and estimated damage to the environment at $30 billion. Foreign investors ended up selling control in Sakhalin-2 to Gazprom in late 2006. Ahead of Mr. Mitvol's U.S. trip, his agency lashed out at several small public companies for drastically over-reporting the reserves that they show to investors compared to those recorded by Russian officials. The environmental regulator had quite a tough dialogue with American investors. Mr. Mitvol told a meeting of U.S. investors that the days of "the Banana Republic" in Russia are "a thing of the past," and said that Shell "was hurt by its own arrogance." "The company failed to understand the changes that have taken place" in Russia, Bloomberg news agency reported quoting Mr. Mitvol. Some investors viewed Oleg Mitvol's words as a sign for further crackdown on foreign capital on the Russian market. A Kommersant source in Washington says the meeting with Mitvol "dumbfounded UBS people." "They said that he was very aggressive," the source noted. UBS press service in New York would not comment on the reports. UBS analysts said in their daily review that "the meeting may have a negative effect on the market's attractiveness for foreigners who invest in Russian oil and gas markets (including independent and major companies)." ... Mr. Mitvol did not fail to notice the investors' somewhat hostile reaction. "It's funny that people who make billions of dollars in Russia feel very negative about ours state," the official says. "They must be grateful to the country where they have been investing and gaining profits for the past ten years." Oleg Mitvol hopes to make amends for the "misunderstanding" by more meetings with investors.

BEIRUT WANTS MAJORS TO HELP PRODUCE OIL AND GAS
(The Daily Star, Lebanon)

Public Works and Transport Minister Mohammad Safadi said on Thursday that seismic survey for oil in Lebanon has reached advanced stages, adding that the government prefers to give the exploration contracts to companies with long experience. Safadi, who is acting energy and water minister, denied any hindrances exist which are blocking oil and gas explorations. Several European companies were awarded contracts to carry out seismic surveys along the Lebanese coast to determine if there are commercial quantities of natural gas and oil. Early surveys confirmed the existence of substantial amount of natural gas off the Lebanese coast.

However, the government did not award any contract to international firms to explore for gas and oil. The government signed a agreement with Cyprus last year to demarcate the sea border in order to pave the way for oil exploration. Safadi said that a committee was formed to draft a report on the best ways to explore for oil along the Lebanese coast. ... "We want leading oil companies like BP, Exxon, Chevron and Mobil to explore for oil in Lebanon," Safadi said.

The minister noted that oil exploration is very expensive. "Drilling one oil well in the sea can cost as much as $50 million or more," Safadi said. He added that if everything goes according to plan, Lebanon can start producing oil and gas after seven to eight years.

LIBYA APPROVES 35 FIRMS TO CHASE GAS CONTRACTS
(Middle East Times, Cyprus)

Thirty-five companies, including major Western firms, have been preselected to tender for a dozen contracts to prospect 41 gas blocks in Libya, the North African country's National Oil Corporation (NOC) said Friday. The tender process, which began in July, is the fourth hydrocarbon offer by Tripoli, but the first for gas. Results of the tenders are due to be announced December 9. The exploration blocks cover a total of 72,000 square kilometers (28,800 square miles), including offshore basins near Sirte, in north Libya, and southern Ghadames and Marzuq, and the eastern Cyrenaica region. Among the companies competing are Gaz de France, Britain's BP, ExxonMobil, Shell, Total, Eni (Italy), Russia's Gazprom, LUKOIL, and NOVATEK, and the US Chevron and Pan American Energy LLC. ... Libya's gas reserves are estimated at 1,314 billion cubic meters, while the Organization of the Petroleum Exporting Countries puts the country's proven oil reserves at 36 billion barrels. Libya currently produces 1.7 million barrels a day.

IRAN-INDIA FINAL TALKS OVER GAS PIPELINE
(South Asian Media Net, Pakistan)

Tehran-New Delhi peace pipeline talks are in final level. Previously Iran and Pakistan have also held their expert level bilateral meeting in Islamabad and agreed on 30 articles. That is while the Indian and the Pakistani sides' disagreement on gas transit fee have caused the talks' other levels to face a delay. Iran's oil ministry caretaker Gholam Hussein Nozari noted "the talks are time-consuming because it is a long-term agreement and the three countries try to best serve their own interests, I believe the two other sides are also determined to reach a conclusion soon."

The Iran-India-Pakistan gas pipeline, also known as the Peace pipeline, is a proposed 2,775 km gas pipeline project to deliver natural gas from Iran to Pakistan and India. The project is expected to take three to five years to complete and would cost $ 7 billion. The project is expected to greatly benefit both India and Pakistan which do not have sufficient natural gas to meet their rapidly increasing domestic demand for energy. India is predicted to require 400 million cubic meters of gas per day by 2025, up from 90 million cubic meters per day in 2005. The pipeline is proposed to start from Asalouyeh stretching over 1100 kilometers in Iran itself. In Pakistan, it will pass through Baluchistan and Sind. The total cost of the project was estimated to be over $ 7 billion in 2006. The 2,600-kilometer pipeline from Iran's giant South Pars gas field will initially carry around 60 million standard cubic meters per day of gas.

Copyright 2007, Gloria R. Lalumia

WORLD ENERGY WATCH