Weaker Dollar Causing Changes in Gas Prices

We have been discussing in class how government regulation and laws affect business, but in this case it is a monetary policy which is affecting the oil industry. According to a recent Wall Street Journal article, after the recent recession, the Fed worked to buy Treasurys in order to stimulate the economy. This action weakened the value of the U.S. dollar, causing gas prices to rise shortly. The most recent increase in gas prices will not last long, analysts say. Prices are still far below the record highs in Summer 2008. As crude oil prices lower because China and other investors have come back to using the dollar, the gasoline prices might soon fall as they usually follow the trends of crude oil by a few days. Obviously, an increase in production might decrease the effects of oil prices.
I find it very interesting that the trading of currency and the practices to stimulate the economy had an effect on the oil industry. I think it just goes to show that industries and the economy in general is extremely connected in many ways. The rise in gas prices reminded me of the talk about how due to the higher prices, especially in 2008, people were driving less, reducing pollution. As we have been talking about the government can have effect on an industry through regulations, I am curious as to how purposely raising prices of gas might affect the industry. I am unsure if the U.S. would ever do this though, as the free market economy seems to be a ideal very ingrained in our nation.

http://online.wsj.com/article/BT-CO-20101119-711279.html?mod=WSJ_Energy_middleHeadlines


- Caitlin McGonnigal

Exxon-Mobil

According to Exploration and Development news, on October 27, 2010 Exxon-Mobil, the largest international oil company, successfully drilled the PTU-15 and PTU-16 development wells in Alaska. PT or Point Thomson is a field in Alaska’s North Slope that is expected to have approximately 25% of the gas resources discovered in the North Slope, which is about 8 trillion cubic feet of oil and another 200 million barrels of condensates. A lot of money has been invested into this project, ExxonMobil claimed that it has spent about $1.5 billion in this project.
Exxon-Mobil also claimed that by the end of 2014 this project will allow the company to produce about 10,000 barrels a day of gas condensate.
Currently over 150 oil and gas companies are trying very hard to “advance development of the field in an environmentally responsible manner". This venture has created, and will continue to create many jobs in the field.

http://explorationanddevelopment.energy-business-review.com/news/exxonmobil_completes_drilling_ptu16_well_in_point_thomson_field_alaska_090828

Empire of the Rising Sun

This article talks about innovation in solar energy, an area I have become familiar with after conducting my informational interview with Scott Redd who works in Solar Project development at Sun Edison LLC, the leading supplier for solar energy in North America. In Japan, Solar frontier KK is taking steps to finalizing its solar panel factory, supposedly being able to produce more photovoltaic cells than an other facility in the world. What's interesting about this company's mission to becoming the worlds lead supplier for solar panels is that it's parent company is one of the biggest oil corporations in Japan, Showa Shell Sekiyu. The CEO of Solar Frontier Shigeaki Kamaeda recognizes that the oil industry isn't going anywhere anytime soon, as Scott Redd also stated during the informatonal interview, but both recognize the importance of an early investment in a potential industry changing technology. Yet, Solar frontier claims that it will turn this investment into profits by 2014 accounting for 50% of the company's earning's although this seems a little to optimistic to me, I would like to see them accomplish this. Solar frontier is taking advantage of the current decrease in demand for oil in japan and the decrease of it's oil capabilities by 20% to really focus on pushing solar energy. If Solar Frontier can accomplish the goals they have set out, it will be a milestone in the alternative energy revolution, and prove as an example for future companies that are seeking to do the same.

Jaisukh Samaha


http://online.wsj.com/article/SB10001424052748703957804575603531119514328.html?mod=WSJ_Energy_leftHeadlines

Informational Interview Assignment

Informational Interview Assignment

1.     Contact Name: Steve Haugenes

2.     Contact Title: Director of Wholesale Natural Gas

3.     Method of Contact:

Cell: 732-750-6000

            Email Address: SHaugenes@hess.com

4.     Company: Hess Corporation

5.     Three bullet points with your takeaways from the informational interview:

·      Mr. Haugenes works in the natural gas specialization of the Hess Corporation. He is the person who organizes distribution for the oil, which comes from different refineries and drill sights such as Texas and the Gulf of Mexico. He told me there were multiple ways in which this gasoline can be brought to the consumers. Either it can be delivered gasoline, which is “delivered” to say New York via pipelines, barges, and trucks or it can be bought in New York and transport is not needed. It is much cheaper to purchase gasoline elsewhere and then transport.    

·      The government regulates the pipeline grid that transports the oil. Pipelines can only make a certain amount of money, as it is a highly regulated business. This guarantees them a rate of return and also makes sure that they don’t charge the oil companies too much. Other companies besides Hess use these pipelines as well, as it is a national grid. Everyone uses a part of the capacity of the pipelines and each company rents the space they need for their oil.

·      Problems can arise, as there are the restrictions on pipelines. Maintenance on the lines and technical problems can cause the oil to not arrive at its set location on time and Hess will not be able to deliver when previously thought. They all deal with firm contracts to the buyers. This basically means that they guarantee the oil to be there and there are no negotiations. They are obligated to get them their gas. This means that Hess has to use other methods in order to get the gas to the consumer on time and must have backups for their backups. These other methods can include barges, tucks, and other pipeline systems that may be more expensive and would eat into profits.


-Ryan Parker

Chesapeake energy corporation

Informational Interview:

1. Contact Name: David Griffith

2. Contact Title: Investor Relations Specialist at Chesapeake Energy

3. Method of Contact:
Phone: (405) 848-8000

4. Company: Chesapeake energy corporation

5. A few things I learned from this informational interview include:

· When I asked if there was any major difference in the company’s workforce he believed that it was “diffidently getting younger“- he stated that there was a sharp increase in employees that are under the age of 35. He did not provide me with exact statistics but estimated that workers under the age of 35 make up about 40% of the current work force.

· Working for this company is very time intensive. He started that time requirement is not just 8-5, it is until the work is done, which depending on the day can take many more hours. He also stated that although the compensation is great the job can get very exhausting and stressful.

· When I asked about their advertising method-he said that they seldom advertise- they take a PR stance- because the company sells natural resource, they are not really trying to build a consumer base but advertise the merits of using natural gas as energy source. Mr. Griffith strongly believed ,and claimed, that we need to decrease out dependence on foreign oil and start exploiting natural American resources. By doing so, he believed that, we can avoid the detrimental effects of oil.

Sun Edison LLC

1.     Contact Name: Scott Redd

2.     Contact Title: Solar Project Development

3.     Method of Contact (i.e. phone number and/or email address):

An email at sreed@sunedison.com then a follow up interview at (443) 909-7200

4.     Company: Sun Edison LLC

5.     Three bullet points with your takeaways from the informational interview:

·      Mr.Redd talked a lot about how renewable energy is not really taking a hold in the United States as quickly as he predicated, due to the high costs in research and the immediate needs for energy in everyday life. That’s why the majority of people continue to use “old” energy forms. When the technologies that encompass “new” energy forms becomes cheaper to produce and easier to use he feels that people will slowly transfer over.

·      Mr.Redd also stated the solar energy is one of the most cost effective ways of generating renewable energy. Generally a person will have an initial investment for the solar panels and installation then be able to generate stable amounts of energy depending on how many and where the panels are located.

·      As far as investment goes, Scott believes that the time to invest in renewable energy is now while new companies are entering the industry with innovative ideas there stock prices remain relatively low, and people will begin to look towards these companies as a means to lower dependence on overpriced foreign oil. Although, he recognizes that oil and coal continue to be the main sources of generating energy a slow shift to renewable energy is and has been taking place. A total shift he said may take years or decades depending on technology and effectiveness but eventually it will happen, and Sun Edison will be a the forefront of this change.

Mexico's Pemex Crude Output Figures Down Briefly On Bad Weather

Mexico's state oil company Pemex interrupted the transport of some of its crude oil production in early november due to bad weather in the Gulf of Mexico. This originally effected the output numbers but now the company says that with the weather going back to normal nothing was actually lost. The numbers that were posted by Pemex's exploration and production devision stated that there was an average daily output of 843,000 barrels and over november 1-7 they only produced 632,000 barrels daily. The violent winds and wave action disrupted shipments but it should not have an overall effect on the average production. 


 This company should be staying on track after this late shipment and still is a good option to invest in. Pemex's output is continuing to stay stable even after these late shipments. This company should continue to being invested in. 


http://online.wsj.com/article/BT-CO-20101110-722330.html?mod=WSJ_Energy_middleHeadlines


-Ryan Parker  

Alcoa Informational Interview

1. Donald R. Smith
2. Senior Technical Specialist
3. I first contacted Dr. Smith through email to ask when he’s be available and then I contacted him by phone and had a phone interview for about 20 minutes.
4. Alcoa Inc., a sector of Dow Jones
5. Takeaways:

• I learned that in creating a new product for a company or client, the marketing employees act as the “voice of the customer” and work closely with the research and development employees, which know about the industry very well, to create a new product.
• That government incentives to switch over to renewable energy will not really affect the transition all that much. If companies find renewable energy for cost effective than the transition will happen without the government’s help. Sometimes the incentives to switch will end up hurting companies more because non-renewable energy may be less costly than renewable ones for companies.
• The oil industry will not really disappear, the time for oil is right now, but a slow transition to renewable energy will occur if companies use it more as it becomes more cost effective. That is the major dependent in the switch to renewable energy.
I really learned quite a lot from Dr. Smith. Alcoa is diving into technology for the energy industry including lighter equipment for underwater oil drilling and also in renewable energy, such as the brand new design for a solar panel. To look at the solar panel (it is really cool), go to this website http://www.alcoa.com/global/en/innovation/info_page/home.asp and click on the "Bright Ideas" picture and look at the pictures on the side of the page. Look at how big it is, the second picture has people standing next to it. It's ridiculous. - Caitlin McGonnigal

Exxon leaves Australia

According to a wall street journal article, Exxon is in the process of selling its fuel terminal in Queensland to Caltex, which is an Australian oil company. Although this may seem like a small or minor transaction it shows another sign of Exxon Mobil’s exit from Australia(first sign was when it sold many of its filling stations to 7-11 in May of 2009). Although it claims other wise, many believe that Mobil will subsequently sell its Altona oil refinery, which is located in Victoria. Their motives is not yet clear but I am sure it will be in the next few days.

This was a really interesting yet awkward article, I initially thought it was irreverent until of course I read about The Exxon Valdez spill in Australia. The incident consisted of an 11 million gallons crude spill occurred in an area that was highly ecologically sensitive. This left me wondering if Exxons' reputation really recovered and whether their exit from Australia is somehow tied to this event that occurred many years ago. The same may be said for BP years down the line.

http://online.wsj.com/article/BT-CO-20101104-700336.html?mod=WSJ_Energy_middleHeadlines

What a newly elected congress means for energy and the enviroment

This article talks about the shift of power in congress as the november 2nd elections are turning out results. If the Republicans win the house it could mean major problems for the Obamas administrations long list of proposals and projects on energy and the environment. Republican House leaders are determined to fight and if need be deprive funds to the effort by Lisa Jackson (Environmental Protection Agency administrator) to regulate green house gas. Even after the BP oil spill republicans are expected to try and speed up the approval of permits that allow oil companies to drill in deep water area of the gulf of mexico.

I think we can see that the Obama administration is already feeling pressure from  the republicans by terminating the funds to construct solar and wind energy farms as Ryan talked about. Also it will be a major political move if Obama allows the republicans to approve permits for offshore drilling right after his administration was faced with the BP oil spill.


http://online.wsj.com/article/SB10001424052748704506404575592462788545960.html

- Jaisukh Samaha

China Making Sales in Renewable Energy

According to a recent Wall Street Journal article, two Chinese companies, Datang Corp. and Hongqiao Group, are participating in new sales for sites of renewable energy. The companies will make about $1 billion and $1.5 billion respectively. As China seems to be increasing their developments into renewable energy, the U.S. seems to be decreasing their interest in new energy. Another article describes how a fund meant for wind and solar energy research and development might be used in a different way, as Obama's top advisers believe that citizen's tax dollars can be used in a better way.
Although I do understand the recent economic crisis and the media hype on the cost of taxes to Americans, I also find it discerning that the U.S. is once again behind China in something concerning economics. If the move is political, which it probably is, I also find flaws in that renewable energy research was something Obama promised, and the newer energy has potential to bring new jobs and according the soon-to-be profits for these two Chinese companies, it obviously has the potential for a lot of money. There is a delicate balance between risk and the need to keep the money Americans and the government does have safe however. What do you guys think? If the need to ween ourselves from oil important enough to raise taxes and put precious tax money to?

- Caitlin McGonnigal

U.S. Weighs Funding for Renewable Energy Projects

Today President Obama's top advisers recommended cutting off funding for a federal fund program which is ment to spur the growth and construction of wind, solar farms, and other renewable energy. They stated that they believe taxpayers dollars could be better spend elsewhere. However there is a fear by Obama and his advisors that pulling money out of this program will antagonize some powerful allies in congress and would signify the failure of the recovery act.


Many sights have already begun construction assuming that they will have help from this federal fund program. A large wind farm in Oregon has already begun construction and brings up the question if this and other projects like it will be able to survive without the federal program. 


In my opinion I do not think it is a good idea to pull this program. For one it goes against Obama's promises and will look bad to the public. Also building these new sites takes away our need for foreign oil and creates many job in the area. I do not think that the government should pull the program. 


http://online.wsj.com/article/SB10001424052748703506904575592843603174132.html?mod=WSJ_Energy_leftHeadlines


Ryan Parker 

Halliburton to Blame for the Oil Spill?

In a recent Wall Street Journal article, information was given about how the tests for the cement formula, which was supposed to seal the natural gas, were done incorrectly, and some never done at all. Their were four tests, the first three were either done incorrectly or were tested on a different cement formula than the one used. The last test showed that the cement formula was fine. However, BP asked Halliburton, a leading cement contractor, to change the formula once more, and Halliburton never took a final test of the new formula. This is a major reason why the oil spill occurred, and more investigations are underway to figure out how the spill happened and what went wrong. Halliburton still blames BP for changing the formula in the first place and for not running their own tests after pumping.
I find this article really interesting because it just shows how different companies have to work together and trust each other not to make mistakes. Blame is now being thrown around and it is unclear whose fault it really is. This obviously shows some protocol was not handled correctly and that better measures need to put in place, as mentioned many times about the incident. At the end of the article, Halliburton states that legally they are fine because their contract with BP protects the company from liability. I thought this was very interesting, it shows how complicated the contracting process is and what sacrifices companies have to make in order to contract with a company, BP had to place their trust in Halliburton. I think it is slightly unfair that they are protected however, if investigations come out saying that the improper cement formula was the cause then it will be hard to get justice over what happened due to their contract.

- Caitlin McGonnigal

Conoco's Earnings Double as Prices Rise

ConocoPhilips said that it will try and ramp up its sales for next year and also will put its refineries on a two year plan to shore up finances. Initially Conoco did not wish to sell its refining properties in order to avoid selling their assets at deep discounts because of the recession. But now the company is changing track after a rebound in fuel demand pushed prices higher for refineries. It reported that in its third quarter earnings more than doubled benefiting from higher oil and gas prices and improved margins for refined products.

The sale of their assets marks a new shift from their debt fueled acquisition spree when commodity prices were soaring. However there is also a good chance that this corporation will spend billions next year on assets. They also have some stakes in the political world as they hope republicans will take over in the congress so that taxes will be lowered and regulations will be reduced. Overall Conoco has been doing very well as their earning have doubled.

In my own personal opinion this would be a great company to invest in as gasoline prices are continuing to rise and thus will continue to increase their earnings.

http://online.wsj.com/article/SB10001424052702304173704575578031256512428.html?mod=WSJ_Energy_leftHeadlines

Ryan Parker

oil consumption

Exponential improvement in an economy entails an exponential need and demand for oil. This is current situation with China, according to an article of the Wall Street Journal, since late 2008, demand for oil had risen dramatically. As a result Petrochina, one of the largest oil companies in China, enjoyed 5.21 billion increase in profit just in the past year. The high demand for oil, and thus the increase level of profit, is attributed to the allocation of Chinese government stimulus spending to “energy-intensive” endeavors. As a result of this high demand, the oil company raised its crude-oil production by 1.3% and the average selling price rose by 46%. China is now the world’s largest energy consumer, following the United States, and, according to recent statistics, accounts for 40% of the increase in the global oil demand this year.

Let us follow the chain of events: improving economy means higher energy demand or higher energy consumption (people have more money to spend on electronic appliance and other things of that sort)which means more oil production(because oil companies must rise to meet the level of demand), until of course, all our oil is gone. As I said in my last blog-we keep forgetting that oil is a finite resource.

http://online.wsj.com/article/SB10001424052702304173704575578103834060866.html?mod=WSJ_Energy_leftHeadlines

Google to Fund Offshore Power Project

Google and two other companies promised to invest tens of millions of dollars in a new offshore wind energy project that will provide power to 1.9 million homes. This project would start with the building of a wind atlantic transmission line which would transmit the power created offshore to the mainland. This project is estimated to take about 10 years. It would stretch from the coast of New Jersey to Virginia. A Japanese trading company will provide the start up financing and helping out with logistical issues. This transmission line could cost up to 5 billion dollars said a senior executive, which means that the companies investment would only be financing a small portion of the total costs. 


Also as of now there are no wind turbines operating in the Atlantic Ocean and this is an important stepping stone to pave that way for more. This project is also expected to spur the creation of more wind farms throughout the northeast. As this transmission line will allow cost of wind farms to cut down 20%  of their expenses as they will not have to build their own transmission lines. Overall this project is going to benefit everyone involved as it will spur more wind farms and support renewable energy. I am fully behind this project and every impressed by google to initiate this.   




http://online.wsj.com/article/SB10001424052748703440004575547381873787098.html?mod=WSJ_Energy_leftHeadlines


Ryan Parker 

E(85) Greater Ethanol in Fuel Mixture

My blog is based on a short article I read in the wall street journal. Although it does not have a lot of information I think it addresses an important movement in the oil and gas industry. According to this article the EPA(Environmental Protection Agency) recently approved an increase in the ethanol level in gasoline for news cars(those manufactured after the year 2007). It will, from now on, allow ethanol to make up about 15% of fuel mixture (a 5% increase from before). In addition, the EPA has also issued a “labeling program” where gasoline stations are expected to label the amount of ethanol included in the fuel they provide and a list of automobiles for which the fuel is approved for. This new decision has caused a lot of confusion and doubt among auto makers, many equipment makers and the petroleum industry. Many who oppose this decision feel that the “EPA [should] postpone [their] decision until more testing [is] done." However, the director of EPA’s clean-air agency believes that sufficient amount of testing has been done for the increase of ethanol in fuel to be approved.

I was a little skeptical at first but now I am starting to think that it is a good decision. For example, using more ethanol may lower the cost of fuel, increase income for farmers that produce corn, reduce harmful emissions, and possibly create more jobs.
The only problem, in my opinion, is that E85(fuel with 15% ethanol) cannot to be used with existing engines- they have to somewhat be modified (which is why many automaker have issues with this decision). I think the government should offer these automobile production companies with greater incentives so they can make engines that is compatible with increase level of ethanol in the fuel.

http://online.wsj.com/article/SB10001424052748703673604575550261503126190.html?mod=WSJ_Energy_leftHeadlines

Where the BP Oil Spill All Started

In a recent Wall Street Journal article, the author remarks on how WSJ has done some research into how the drilling in the Gulf began and why the BP oil spill may have been inevitable due to issues started way before. Shell was the company to initiate the Gulf of Mexico drilling, as they found oil there in 1989. This entrepreneurship led to a focus on the Gulf of Mexico, from oil companies, politicians, society, and even environmentalists who wanted to detract attention from the shores of California. The boom for oil in the Gulf was too fast for regulation and safety codes to catch up. As we all know, one of the major issues in the BP oil spill was the fact that regulation was not followed correctly and safety procedures were not upheld. So, this initial boom which was too quick of the evolution of better safety procedures may have caused the spill.  The article also relates the way America was headstrong towards off-shore drilling in the Gulf to the way America was towards changing aspects of the economy, eventually leading to this recession. It is interesting to view it in this light. Maybe America has a tendency to act too quickly. In the upcoming years, as new energy becomes more developed, it will be very important to make sure the safety and security develops as well. Nuclear energy is one the most feared, so the safety and regulations for this source of energy will be extremely important.
I also found in very interesting that Shell was the one to initiate the Gulf of Mexico drilling. On the subway yesterday, I noticed that Shell has advertisements all over the metro train stating them as innovative and reliable. Including statements such as, "Let's think around the corners," it gives an image of Shell being innovative and a group of entrepreneurs. But it is also saying that they will not "cut corners." Which is a statement that they'll be reliable, unlike BP. Shell is using a symbol of change and development, and I found it interesting that they were the ones to find off-shore drilling in the Gulf, proving their past as entrepreneurs.

- Caitlin McGonnigal
http://online.wsj.com/article/SB10001424052748704657304575540063579696700.html?mod=djkeyword

California to Get Two Solar Plants on U.S. Public Land

A bill was passed which approved construction of two solar plants on California land. These two new projects are the first solar panel plants approved for U.S public federal lands. They are also the first of many solar plants to be approved later this year and will hopefully more than double the U.S's solar power production. These projects were said to be milestones as they are the first and show the U.S's increased interest in renewable energy. This technology that they are putting in is called thermal solar energy. It consists of concave mirrors which focus heat on a pipe in order to heat the water in the pipe to steam and thus turn a generator. This will also positively effect the economy as it brings 1 billion dollars to California, creates 950 jobs and also supplies electricity to 500,000 homes.

Personally I believe that this is the best thing that could of happened for both the U.S government and the state of California. Renewable energy is the way of the future and it is about time that the U.S starts implementing these types of plants. Along with the renewable energy it also helps the current recession by providing jobs and income. Overall this is a great thing!

http://online.wsj.com/article/SB10001424052748703843804575534392249151072.html?mod=WSJ_Energy_leftHeadlines

Ryan Parker  

Effects of Oil Spill

Deep Water, Deep Trouble, an article from the wall street journal, clearly illustrates the consequences that many players in this industry are facing as a result of BP’s “oil disaster”. First off, as a result of this oil spill many shareholders are challenging management to minimize the risk in deep water offshore drilling in every way possible. For instance, soon after the incident in the Gulf of Mexico about 50 global investors sent messages to many oil companies asking how they will responded if an offshore accident is to occur with their company. Andrew Logan, director of oil industry program at CERES, believes that investors are looking deeper into oil companies then they had in times past; currently before they make any investments they look for things such as that a “robust spill contingency plans and clear guidelines for contractor selection and oversight.” Investors are also looking deeper into the reward system at these companies to make sure that “compensation and incentive packages for senior management include specific links to environmental, health and safety targets.”
In addition to the rise in concern from investors, The U.S. Senate is working towards a bill that could potentially make oil companies liable for unlimited damages if another incident is to occur in the Gulf of Mexico. It is getting increasingly difficult for oil companies to survive when they have to balance sufficient production, focusing on the environment, and giving greater attention to safety, and if this bill is passed, becoming self-insured.


Through this article we can also see how a bad decision or complacency of one company can effect so many others in that industry. I completely agree with investors decisions to look deeper into the companies operational system before they make an investment but I think the bill the senate is trying to pass a bit questionable. If this bill is passed and oil companies have unlimited liability, it would make it almost impossible for them to be insured which will definitely create another problem.

http://online.wsj.com/article/SB10001424052748703453804575479643629599782.html?mod=WSJ_Energy_leftHeadlines

Milestones in Renewable energy

The Unites States Government approved the construction of two solar power facilities by the Chevron Corporation and NTR PLC an Irish renewable energy developer in california this tuesday. The solar facilities will use an arrangement of large dishes lined with mirrors to capture the sun's energy and convert it into solar power. One will be built in the imperial valley by NTR PLC and the other is to built outside of San Bernardino by Chevron Energy Solutions. Gov. Arnold Schwarz stated that together both facilities are projected to bring more than $1 billion into California's economy create about 950 jobs and provide electricity for up to 500,000 homes. These two facilities are just the first of many and the state of California is likely to approve the construction of several others by the end of the year.


I think that these two facilities are a milestone in renewable energy revolution, and it is important for other states to follow in california footsteps as it leads the surge in solar energy. Not only are emission being cut significantly by each factory being out into commission but a new economy and jobs are also being created. California was greatly affected by the recession,but with developments and projects that are taking place in the states energy industry this may no longer be the case as new market for energy is created.


-Jaisukh Samaha


http://online.wsj.com/article/SB10001424052748703843804575534392249151072.html?mod=WSJ_Energy_leftHeadlines

Importance of Cleaner Energy

This article from the Wall Street Journal describes Obama restating the importance of cleaner energy. Not only does this eliminate our dependence on foreign oil, but it will create new jobs. Similar to my last post, where I discussed new jobs in the research and development of cleaner fuels, this article relates to the topic of new jobs stemming from new energy. Obama brings up ideas of new jobs for contractors, factory workers, and engineers. With our failing economy, there has been a focus on creating new jobs for those who are currently unemployed or for creating a new market entirely out of new energy.

I found it very interesting that last class when the speaker asked our class what we thought the most pressing issues were, the first few people who answered all spoke about the need for cleaner fuel and new energy. I feel that this is a feeling that many people across the U.S. have. It is such a pressing issue and the opportunities and benefits that cleaner energy holds make it very appealing.

- Caitlin McGonnigal

http://online.wsj.com/article/SB10001424052748703465504575527500687839806.html?mod=djkeyword

Price fixing for profit

Gazprom a major Russian energy corp is looking to finalize a 30 year gas contract with China that entitles  it to buy one billion cubic meters of Russian gas a year.China is looking to buy gas cheaper than other countries that Gazprom sells to since it offers an entrance into the Asian markets. Furthermore, Gazprom would be willing to sell gas at a lower price because the demand has fallen in europe while China is quickly becoming one of the world biggest consumers. Export of the Russian Gas to Chinese soil will begin in 2015 once the deal is finalized.

I'm glad to see how a company like Gazprom is taking advantage of a new market by offering lower prices to gain access. Once this deal is finalized the amount of Russian gas that China will consume will be higher of than those of Gazprom's other markets, so instead of selling gas at a higher price to fewer consumers they are selling at a lower price to a much wider consumer range. I think this move is one that is necessary for businesses of this magnitude to develop and continue to make profit. China will soon come to par with the United States in gas and energy consumption and Gazprom will be there to supply its energy needs.

-Jaisukh Samaha

http://online.wsj.com/article/SB10001424052748704116004575521433569135028.html?mod=WSJ_Energy_leftHeadlines

Tehran Touts Its Exports of Gasoline

On Tuesday Iran said that they were starting to export domestically produced oil. This is strange as even though Iran is one of the worlds largest oil producers it has imported about 40% of its oil, because of its lack of refining capabilities, to fuel its country and its nuclear program. This was seen as a week spot to the U.S who tried to put sanctions on it to stop some of the trade in order to slow down the iranian nuclear program. 


Because of these U.S sanctions and the dropping import of gasoline the Iranian government converted two plants into oil refineries and this increased the capabilities of the iranian government to refine crude oil. Ali Ashgar Arshi, the international affairs director at the National Iranian Oil Co. said "Iran has achieved self-sufficiency in production of gasoline." And by exporting oil it is a demonstration to the countries that have put sanctions on Iran by saying that they are now self efficient and stronger. Iranian officials privately acknowledge the sanctions are hurting the country's energy sector.


In my own opinion I believe that this is sort of a kick in the face of the countries which have put sanctions on Iran as they have become even stronger because of it. 


http://online.wsj.com/article/SB10001424052748704791004575520072670809284.html?mod=WSJ_Energy_leftHeadlines


-Ryan Parker 

Importance of a Good Image

According to the article New CEO Shakes Up Management at BP on the Wall Street Journal, BP is administrating several changes with hopes of improving its currently reputation in society. The company is first starting with a change in management where current CEO Tony Hayward, who was the center of all blame and accusation during the oil spill incident, is being replaced by Chief Executive Bob Dudley and the head of the Gulf of Mexico operation during the oil spill is being fired. In addition to a change in management the company, led my Mr. Dudley, is pushing for a new safety division which will be called Safety and Operational Risk function. This newly formed organization will oversee and examine all of BP's domestic or offshore operations. Also as a part of its recovery plan BP says that it will change its reward strategy within the company; instead of issuing rewards to those that succeed in boosting production or efficiency, Bp will reward those that boost safety of its operations. All of this is being administrated to regain "the trust of [their] customers, of governments, of [their] employees and of the world at large."


BP is going to great measure to regain its former place in society. In the previous unit we learned a lot about business ethics and how a particular business or company can recover from previous unethical conducts. As I was reading this article I realized that BP is following the same plan our text book suggested-things such as changing the face of the companyand administrating a new form of reward system(which will encourage employees to make ethical decisions). For a company being, or at least seeming, ethical means a good public reputation, and good public reputation means better business and ultimately greater profit.

Though I am a bit skeptical about a lot of Bp operations I do believe that the company is taking the right steps to improve its image. Also it is important to note that the newly formed division (Safety and Operational Risk function) will, in addition to bettering BP's reputation, create new jobs opportunities within the company.

http://online.wsj.com/article/SB10001424052748704116004575521394170919842.html?mod=djemalertNEWS

Important Jobs in Energy Industry

According to a Wall Street Journal article, one of the innovations that seems eligible for an award in the next few years or decade is that of finding new fuel technologies. In the energy industry, one of the main issues is the horror of oil running out. The fear of this natural resource becoming obsolete is a very real problem. The new trend in energy is the push for alternative energies or better technology to make existing ideas for energy happen. As the article explains, some companies such as Sun Catalytix Corp. and Amyris Inc. have developed quite unique sources of energy and the young men and women who could take those ideas to the next level or help in creating the technology to make those energy resources accessible are a new asset to companies. I expect that jobs in research and development are increasing as companies fight for the title of the most innovative and powerful company in energy. New college students or grad students who have spent time on new energies and understand more about the science behind the machines needed to produce new energy forms are an asset to companies now.
I believe that the largest issue that is preventing corporations from breaking into new energy sources is technology. Nuclear energy has been known about for quite some time but the technology to properly store the waste is preventing many nations, such as the United States, from switching over to it, although parts of Europe are already ahead of us in nuclear energy. This is the same issue with other ideas, with more backing from having the proper technology then people might have more faith in new energy. Jobs for engineers and researchers are a major aspect of the energy industry as companies need to keep up with new and more productive technology and practices.

- Caitlin McGonnigal

NOC's are becoming more international

According to a document, Oil & Gas Industry Consulting many National oil companies (NOC) are expanding and maturing into multinational oil companies (MNOC). These companies that were once confined or limited by state or national borders are no longer operating solely in the domestic market-they have become multinational. Though they continue to be linked to “sovereign” states, they are no longer forced to stay within that border. If you think about it, they are looking and sounding more like International Oil companies (IOC). This of course is causing alarm and great concern from the IOC who now has to face greater competition. NOC (or MNOC) were motivated to expand or “mature” because of the change in the market. They no longer wanted to be dependent on domestic business- whose demand for oil is continually lowering. Conversely, according to this document, “global oil consumption has increased by 30% and by 50% outside of the OPEC.” The increase in oil consumption is attributed to the high economic development in the region (which corresponds to greater energy needs).
Also, in past years IOC’s had advantages that NOC’s did not have, such as global access, access to capital (NOC were state backed),innovative technology(NOCs had standard technologies), and global partnership(NOC had only local partnership) but no all is changing. The distinction between IOC and NOC is becoming blurred. NOC is gaining increasing access to capital, is developing alliances, and is continually upgrade from standard technologies.
Distinctions between the two forms of oil companies are becoming more unnoticeable. As this happens IOC will undoubtedly face greater competition and will need to work even harder to maintain its standing.
Although this document did not provide specific examples it shows us a trend that I think is very important in the Energy(oil and gas) industry.

http://www.bain.com/bainweb/PDFs/cms/Public/INDUSTRY_BRIEF_Multinational_NOCs.pdf

~Mimi Tekeste

Fuel Pellets

American Pellet Supply is a company based out of Indiana that opened in 2008, its primary purpose as an energy company is to become a major supplier of fuel pellets. Fuel pellets are a green alternative used to heat homes and according to this press release more than 50% of European house holds and businesses use them. Only in the last few years fuel pellet use has doubled within the United States. With American Pellet supply becoming one of the first to enter this niche market it will have a strong hold on what is predicted to be a billion dollar energy sector in the next 10 years. With this company being based in Indiana many investors are hopeful it will become a major manufacturing center and a leader in alternative energy resources. The norm for household and business heating is changing and A.P.S will more than likely be at the forefront of this “green” change.

- Jaisukh Samaha

http://www.insideindianabusiness.com/newsitem.asp?ID=43362

Quantum Energy to Form New Company

The  firm Quantum Energy Partners launched a new company in order to purchase certain American power plants to get into a long term. In order to launch this company Quantum Energy Partners are putting almost a billion dollars for start up prices and purchasing power plants. 

This new company will be entering a strong market for power plant asset deal. This is because many sellers are trying to get out of the industry and selling plant for cheap while many buys are looking to pick up these cheaply sold utilities. In this particular case Quantum Energy wants to focus much more on the long term rather than the short term. A quote from their new president Mr. Kellerman shows this " "It is the right assets, in the right locations linked in with the right utility market where we can find undervalued generation that truly makes sense as a long-term resource." Quantum Energy wishes to get into natural gas, wind power, and solar power technologies because they believe that these are the new up incoming products this will be demanded highly in the future and Quantum Energy wants take advantage of this. 

In my opinion I think that this new company in the market will add competition and possibly make it possible to buy cheaper solar and wind power because more companies will be competeing for customers. Overall this will create a more competitive market which is better for the economy and the consumers. 

http://online.wsj.com/article/SB10001424052748704129204575506000363635496.html?mod=WSJ_Energy_leftHeadlines

Ryan Parker 

DONG Energy in Denmark

The DONG Energy A/S company is Denmark’s leading energy company. It was formerly only involved in oil and natural gas, but in the 2000s, it expanded to include the electricity market. DONG acquired electrical power producers Elsam and Energi E2 and utility companies NESA, Københavns Energi and Frederiksberg Forsyning. This merger was approved by the EU in 2006. Being Denmark’s largest energy company, it must have a great deal of effect on the oil and energy market in Denmark, and have most of the control over prices. Also, Sweden, Germany, The Netherlands, and other markets that it involves itself in must also feel the effects of Denmark’s largest company. According to Companies and Markets, it is also involved in heat and the operation of power plants. It is also involved in the generation of heat and other energy by harnessing wind. The company still remains involved in natural gas and oil as well as crude oil. It maintains 75 natural gas and oil exploration licenses and production assets, and it is said to have over a million customers (http://www.companiesandmarkets.com/Summary-Company-Profile/dong-energy-a-s-strategic-analysis-review-312321.asp?prk=f9ec5118565014b93b58133bb09a32b5).
In my opinion, the fact that DONG Energy A/S is so involved with different energy resources makes it a fierce competitor. It seems to be dappling in many of Denmark and other countries’ basic energy needs, so it is hard to find something that DONG is not involved with in that region. Other companies in the region may be struggling to keep up with DONG simply because it is involved in so many areas of energy.

- Caitlin McGonnigal

Oil industry had become complacent

Tony Hayward soon to be ex-ceo of BP sat before British parliament today, and was quizzed on the companies past safety record relating the Gulf spill to events such as a an explosion in a Texas refinery that killed 15 people in 2005. He claims that the oil industry had become complacent in their practices and procedures due to a 20 year period without a major incident. He also claims that no once company could have been prepared to deal with a 5,000 foot deep underwater explosion. The fact that companies were willing to bear such risk in order to gain high profit is understandable, but the mere fact that the entire industry was complacent for that period of time astounds me. I hope that other companies in the energy field will look at this ethical issue of profit vs risk and learn from Bp's mistakes. It is now a real danger that other disasters of this scale could occur and all companies should have the resources set aside.
-Jaisukh Samaha


http://online.wsj.com/article/SB10001424052748703743504575493701684202916.html?mod=WSJ_Energy_leftHeadlines

Offshore-Drilling Regulations Snagged by Climate Fight

According to the Wall Street Journal the Obama ministrations attempt to regulate offshore drilling after the oil spill in the gulf might be side tracked due to new problems involving climate change policy and monetary issues. The vote on whither or not to fund offshore drilling regulations and the operations of the environmental protection agency was canceled after the committee realized that they needed more time to look over the budget increase from 184 to 250 million dollars. Also along with this some democrats have asked for the EPA to take a break in regulating greenhouse gases as they feel that this will help the economy and unemployment. Many people believe that if they do not get the money needed the job will not be done effectively enough. A company called mineral management service has also been attacked here because they only had 55 inspectors for 3000 oil and gas facilities. The company said that they will have new regulations coming out soon.
In my own personal opinion the new budget increase will be needed in order to regulate offshore drilling properly. This is a necessity as regulations are needed to prevent more oil rig disasters. This shows good ethics on the part of the Obama administration and on the part of mineral management service. Overall i feel this increase must happen and that regulations must be implemented in order to prevent another disaster.            
-Ryan Parker

California Gas Line Had Unusual Construction

According to a Wall Street article, California Gas Line Had Unusual Construction, a natural gas pipeline, owned by PG&E Corporation, exploded in San Bruno on Thursday September, 9, 2010. This disaster took the lives of more than four individuals and destroyed 58 homes. Though the cause of the explosion is not yet verified, many believe that it may be attributed to the configuration of the pipeline. The pipeline contained numerous welds which NTSB Vice Chairman, Christopher Hart, believes “could have weakened the pipe” thus making it more susceptible to rupture. It could also be attributed to the manual shutoff valves, despite the recommendation of many researchers to install automatic shutoff valves. Automatic shutoff valves would have stopped the continual flow of gas thus preventing gas from further fueling the fire.

Federal investigators continue to investigate for other factors such as, pre-existing leaks-as claimed by the members of the community, heavy excavation done in the vicinity, and the kind of affect having too much welds could have on the strength of the gas pipeline.

PG&E, who supplies gas and electricity to millions of families in California, may be put into a tight situation due to this explosion. The unusual configuration of the pipelines, PG&E’s refusal to report dates of last inspection or last repairment, and their lack of action when some members of the community placed complaints of a possible gas leak before the explosion, is unethical and may as a result cause PG&E their reputation.

~Mimi Tekeste

http://online.wsj.com/article/SB10001424052748704644404575482634243573338.html?mod=djemalertNEWS

Drilling Regulations Halt in U.S.

This article from the Wall Street Journal discusses the new ideas being brought up in the U.S. government to better regulate off-shore drilling. These regulations would be in response to the BP PLC oil spill that affected the face of the industry overwhelmingly. Michael Bromwich, the head of the agency that regulates off-shore drilling, states that the industry has already made changes to its regulations and has responded to the spills. Although it is uncertain whether the government will step in with new regulation due to political schemes and issues with the economy, Mr. Bromwich claims that the agency is planning to create new regulations by the end of this month.
I believe that off-shore drilling should be restructured and regulated more, to prevent the types of issues that caused the BP oil spill. Regulation can help make the drilling practices safer and business techniques more structured so issues like this don’t happen again. After the BP oil spill, the conversation has risen over how BP dealt with their technical issues and how they dealtt, or if they dealt, with the spill after it happened. Other companies should be looking to increase their regulations just as BP is attempting to do, in order to appear ethically sound. The oil industry is losing its reputation politically and in people's minds, and only agreeing to greater regulation and implementing this regulation will people put more trust in the industry.

- Caitlin McGonnigal
http://online.wsj.com/article/SB10001424052748704285104575492301373764356.html?mod=djkeyword

Steps to prevent future oil spills

BP has released a 200 page report on what could have lead to the explosion of the underwater well and with it 25 recommendations for preventing future crisis. Most of these recommendations involve technical support and better maintenance of oil rigs. As lawmakers continue to overview offshore drilling standards its important to note that regulation will be the key to preventing a future disaster whether it be an oil spill or explosion. Regulation of building companies,personnel and company policies will be most vital aspect of future control.This article coincides with my first blog post on the importance of creating a new standard for equipment thats durable and also creating departments within global energy corporations  solely geared to emergency response and clean up.- Jaisukh

http://online.wsj.com/article/SB10001424052748703453804575479752398200726.html?mod=WSJ_Energy_leftHeadlines

China's Tighter Regulation Affecting Natural Gas

This Wall Street Journal article explains the new threat of greater regulation on natural gas companies operating in their country. The regulations have started in Hebei and may spread throughout the rest of the nation, or elsewhere. The switch to natural gas is one that the Chinese government has been attempting to achieve with as little problems as possible. The article states that Beijing wants to increase its now 4% use of natural gas to 10% by 2020. Natural gas companies, such as ENN Energy Holdings Ltd. and China Resource Gas Group Ltd., are seeing increases in their stocks, up 74% and 53% respectively. Part of the increasing wealth in the natural gas market is the increased use of natural gas, but it is also partially due to the higher prices the companies are using. These higher gas prices are inhibiting the nation’s switch to natural gas, as they want consumers to be able to purchase natural gas in their own homes and social stability.




China’s eagerness to switch over to natural gas has been initiated partially due to the fact that they now hold the title as the world’s biggest user of energy. They want to decrease pollution, improve efficiency, and most likely prove to be more innovative than other nations. Should other nations pay attention to how the Chinese government is using regulation in order to make a switch of energy? It is an interesting approach, instead of simply demanding or encouraging natural gas use, they just make it more appealing to consumers by keeping a check on the pricing. The switch to natural gas energy could easily sweep the globe, and it will be important to notice how countries are accomplishing this task. While these regulations may hurt the natural gas energy companies right now, the benefit of encouraging a switch to natural gas will help them overall.
 
http://online.wsj.com/article/SB10001424052748703713504575476740661162412.html?mod=WSJ_Energy_leftHeadlines
 
- Caitlin McGonnigal

Chevron to Explore for Oil off Liberia

In response to Mimi's article about offshore drilling in China by the Chevron corporation, Chevron is also beginning to explore for oil in deep water of the shore of Liberia. This deal will grant the Chevron corporation 3,700 square miles of offshore drilling and will also hold 70% interest in concessions. This is actually a very interesting endeavor as the nation of Liberia has yet to produce crude oil and this is also the first time that a large integrated oil company has ever gotten involved with Liberia, as this country is still healing with from its years of civil war and political unrest. Many people including myself believe that if oil is discovered there than this is what Liberia needs to get off its feet, rebuild its nation, and than possibly put it in the status of the up and coming African nations. Even if oil is not found, however, this involvement by Chevron will still help to boost the economy of this small nation. This deal is good for Liberia but it is great for Chevron as well as it is a country still open to foreign investment, has a high possibility of producing large amount of crude oil, and Chevron could have a monopoly on this nation easily.

In my own personal opinion this is great for both the corporation and for Liberia. It will strengthen a nation while at the same time strengthening a cooperation. This deal will be one of the best that Chevron has made in quite a while as it is rare to find an amount of pay this large now and days. Overall I fell this deal will help everyone involved and is a great endeavor.

Ryan Parker

http://online.wsj.com/article/SB10001424052748703453804575479981224884048.html?mod=WSJ_Energy_leftHeadlines     
 

Chevron, Devon in Deal

The need for oil as an energy source continues to grow daily; to satisfy this need or appetite, large oil companies such as Chevron and BP are becoming increasingly reliant on offshore drilling. According to this article Chevron is seeking offshore drilling in South China Sea, a body of water located about 150 miles from Hong Kong. This body of water was abandoned for many years until June 2006 when Husky Energy, an oil company in Canada, discovered about four to six trillion cubic feet of attainable gas beneath the surface (equivalent to 22 billion barrels of oil). In addition to Chevron, BP was also given approval by the Chinese government to take part in the offshore drilling, despite the huge oil spill in the Gulf of Mexico. In this project Chevron will act as an operator, taking the majority stake in the block, and BP will take the remaining. These companies are also required to sign production sharing contracts with Cnooc(China National Offshore Oil Corp ) that says that China has the right to take a majority interest for any amount of oil or gas that is discovered by Chevron. According to the article Devon, a North American oil company, sold its assets (24.5% interest) in the South China Sea for about 515 million dollars. As companies such as Chevron and BP move even deeper in offshore drilling Devon reverts back to domestic drilling.

        I find it very interesting how companies such as BP and chevron are free to participate in offshore drilling after the accidents that took place in the Gulf of Mexico. I think it would be better if oil companies follow Devon in moving toward domestic drilling.

~Mimi Tekeste

http://online.wsj.com/article/SB10001424052748704358904575477250932405706.html?mod=WSJ_Energy_leftHeadlines#articleTabs%3Darticle

Offshore Drilling

According to Blaze Shakes Oil Industry, an accident was reported at 9:00AM today, Thursday September 2, 2010, in the Gulf of Mexico off Louisiana. The cause of this accident is unknown at the time but it is under intensive investigation. Fortunately no casualties were reported and according to the article, only about one gallon of oil was spilled. Although this incident seems minor, it is of great significance due to the previous oil spill in April. It also gives environmentalist groups and politicians, those that are skeptical about offshore drilling, more reasons to push toward a “drilling moratorium”. This incident further proves the Oil industry’s incapability of safely monitoring offshore drilling.
In an attempt to solve this issue or prevent another accident from occurring, The Obama administration is aiming to place stricter regulation on oil industries and cease drilling in waters deeper than 500 feet. Although this may seem like a quick and obvious fix, one must consider those that may lose their jobs as a result.

~Mimi Tekeste
 
http://online.wsj.com/article/SB10001424052748704206804575467600528128386.html?mod=WSJ_hpp_MIDDLETopStories

Crude Oil Situation More Optimistic

http://online.wsj.com/article/SB10001424052748704206804575467272980323924.html?mod=WSJ_Energy_leftHeadlines

This article from the Wall Street Journal explains how the prices for crude-oil has increased, and what this means for the off-shore drilling market in the U.S. Due to globalization and communication with other nations, the United States became more and more tangled in deals for oil in the past. As it became apparent that the U.S. was becoming too dependent on other nations for the resource, one solution was to focus more on our own drilling for oil, especially around the Gulf of Mexico. Crude-oil became one way to ease the pressure caused by our dependence on foreign oil. Some optimism about crude-oil has been found through data research.



Globalization has increased our communication with other nations. As the world became a smaller place, the U.S. struck deals for oil. Through globalization, our country has gained access to oil , making it a staple natural resource for the country. So important in fact, that it is now ruling our foreign relations. Our attachment to oil markets has controlled which nations we try to please, and which we can afford to ignore, based on the threat of losing oil through embargos or other means. Globalization changed the face of our energy resources, and now our need for energy is shaping our global outlook. More and more people agree that our foreign relations should not be totally based on our need for oil. Relations between nations in which we trade heavily with for oil may shift and change now and these nations might push us away entirely after we have detached ourselves somewhat from the oil they have. But what solutions are out there to detach ourselves from foreign oil? After the BP oil spill fiasco, opinions have changed heavily as to how the nation should do this. Crude-oil may be becoming more economically sound though, as the article suggests, but how long can off-shoring continue?

- Caitlin McGonnigal

Greenpeace Ends Greenland Oil Protest

In recent news for our topic on Energy (oil and gas) 4 members of group called Greenpeace tied themselves to the bottom of an oil rig just offshore of the coast of greenland. Greenpeace is a group which is again oil drilling and anything which could hurt the environment like the burning of fossil fuels. These protesters went in because Greenpeace stated that Arctic oil and drilling is unsafe. In result of these protesters the drilling process was halted for about 40 hours. This in turn put them behind schedule in which they will have to catch up. The protesters were removed from the rig only after freezing and windy weather conditions. 


This is just a small showing of how there is a large debate going on around the world whither or not it is right to start offshore drilling and after the BP incident I cant really blame Greenpeace for putting on this display. Personally I support offshore drilling until a new energy source can be found or the existing ones improved on, as we have to start moving away from our dependance on oil. But more domestic oil options is not a bad idea as well until these other options can be found. 

 But what do you think? Should we continue to offshore drill or should we look more into alternative energies more?   


Ryan Parker