[Pops]

Somewhere along the line PeakOil.com seems to have turned into PerfectOutcome.com - Mad Max is now the savior that will keep us from boiling in our skin.

[Graeme]

Oil companies do not need to spend that money, because the amount of oil that the world could consume without warming the planet to dangerous levels is available from less expensive places that can be developed for $75 a barrel, the study said.

Where pray tell is that? I guess you haven't been paying attention to the notion of Peak Oil?

On the contrary, you haven't. CT have identified the remaining oil reserves that are expensive to exploit, and also just happen to be carbon intensive. The most notorious of these is the Alberta tar sands.

New Report Names Alberta Oilsands as Highest Cost, Highest Risk Investment in Oil Sector

The research identifies oil reserves in the Arctic, oilsands and in deepwater deposits at the high end of the carbon/capital cost curve. Projects in this category “make neither economic nor climate sense” and won’t fit into a carbon-constrained world looking to limit oil-related emissions, Carbon Tracker states in a press release.

The report highlights the high risk of Alberta oilsands investment, noting the reserves “remain the prime candidate for avoiding high cost projects” due to the region’s landlocked position and limited access to market.

“The isolated nature of the [oilsands] market with uncertainty over export routes and cost inflation brings risk.”

Oilsands major Canadian Natural Resources Limited (CNRL), the company responsible for the mysterious series of leaks at the Cold Lake oilsands deposit, has the largest total exposure to high-cost and high-risk oil investments, valued at a potential of more than $38 billion between now and 2025.

desmog

[rockdoc123]

On the contrary, you haven't. CT have identified the remaining oil reserves that are expensive to exploit, and also just happen to be carbon intensive. The most notorious of these is the Alberta tar sands.

you ignored the question asked which was where is all this oil that is available from less expensive places that can be developed for $75 a barrel?

[ROCKMAN]

Doc - You surprise me such a silly question. Of course the oil patch is ignoring those cheaper oil plays for now. By spending more caped to develop the more expensive projects we get to write off more expenses. And that way we pay even less taxes since the profit margin is so much smaller. Which is, of course, is the primary goal of all oil companies: paying less taxes. And then when we don't have any expensive oil left to develop we can go after the cheaper stuff.

Makes perfect sense to me. LOL.

[Graeme]

On the contrary, you haven't. CT have identified the remaining oil reserves that are expensive to exploit, and also just happen to be carbon intensive. The most notorious of these is the Alberta tar sands.

you ignored the question asked which was where is all this oil that is available from less expensive places that can be developed for $75 a barrel?

You can see where in figure above.

[rockdoc123]

Call me confounded.

myself as well because the areas that are pointed out as being "cheap" are massively overmature for conventional oil. Example the Nequen basin is shown as being really cheap but almost nonone is looking for new conventional oil (that would be the cheap stuff) and they are focussing on the shale stuff.....i.e. expensive. Having worked down there I can tell you there is no way in the world that new unconventional oil /liquids from the Vaca Muerta or Los Mollias is going to be extracted at prices less than $75/bbl. It is pretty clear this study is looking at lifting costs, not at the cost to find new oil and it completely ignores the chance of success element.

Lets see....oil sands..it is all there we know that. New light conventional oil in whatever basin you want to imagine...high risk, chance of success quite low.

It is amazing to me that people actually think oil companies would purposely search for expensive difficult barrels when there are a lot of cheaper easy barrels sitting out there. How stupid can you be to think that is the case?

[Graeme]

Of course they are not stupid enough to exploit tar sands! On the other hand, as far as KXL is concerned, the POTUS may slow said exploitation now that he knows about consequences.

[Graeme]

The elephant in the atmosphere

IN SEPTEMBER 2013 a group of institutional investors with $3 trillion of assets under management asked the 45 biggest quoted oil firms how climate change might affect their business and, in particular, whether any of their oil reserves might become “stranded assets”—unusable if laws to curb emissions of carbon dioxide became really tight. Exxon Mobil and Shell are the most recent to get back with their assessment of the risk: zero. “We do not believe that any of our proven reserves will become ‘stranded’,” says Shell. In many areas of commerce, investors and managers are trying to harness the power of markets for environmental purposes. In oil and gas—the business which causes by far the most carbon emissions—investors and managers seem set on a collision course.

The oil giants make three arguments. First, over the next 40 years, the growth in population and national incomes will boost energy demand, especially in developing countries. Exxon reckons fossil fuels will account for three-quarters of demand in 2040 and renewables (such as solar and windpower) only 5%. Shell puts the fossil-fuel share at two-thirds. This will keep oil prices high.


The oil firms are almost certainly correct that governments will not do enough to keep the rise in global temperatures below 2°C. This is still official policy almost everywhere, though it is only a matter of time before someone breaks ranks and says it cannot be achieved. But the investors may be correct that managers are betting their firms on high oil prices, that this is a gamble and that applying a discount to the value of their investments may make sense. Of course, if the oil bosses are right, especially if the climate does not warm as much as scientists fear, then investors will want to put their money into productive oil assets. But if Carbon Tracker is right, then they will dump oil shares—which is what should happen if the firms are making a huge gamble that will misfire.

economist

[Graeme]

Not on My Balance Sheet: Climate Change, Fossil Fuels, and Stranded Assets

This week is shaping up to be rough for the US coal industry. The EPA is holding hearings on plans to dramatically cut carbon-dioxide emissions released from US power plants and the Obama administration just published a report on the economic consequences of waiting to act on climate change. It’s enough to make one wonder if the US might get serious about climate change. But whether these actions are enough for a group of investors to win the argument over “stranded assets” is another question.

Don’t Put That on My Balance Sheet

A growing number of investors worry that action needed to cap the increase in global temperatures at 2 degrees Celsius will strand assets at oil, gas, coal and utility companies. This is because that 2 degree threshold means keeping two-thirds of proven reserves of fossil fuels in the ground, according to the International Energy Agency (IEA). In other words, it will force fossil fuel companies to take a loss on their balance sheets for untapped assets.

“Investors are wondering if oil and gas companies and coal companies are overvalued because they might not be able to burn some of their reserves in the future,” according to Rob Berridge, director of shareholder engagement at Ceres, a nonprofit organization that tracks shareholder resolutions. These concerns have led some shareholders to divest, while others are pressuring companies to disclose their strategies to deal with the potential for stranded assets.

According to Berridge, there were 11 shareholder resolutions dealing with the threat of stranded assets this year up from 2 the year before, as well as dozens of other resolutions dealing more broadly with business risks associated with climate change (see quick facts on shareholder resolutions).


Coal First, Others to Follow?

ExxonMobil may have been the first company to publish a report on the topic, but coal is likely to strand first. After all, coal’s major competitor in electricity generation, natural gas, has seen prices fall rapidly with the proliferation of advanced well completion technology like fracking. As of April 2012, natural gas and coal produced the same amount of electricity in the US. Beyond that, electricity production from renewables is growing at a fast clip and some are predicting a death spiral for the utilities. Government initiatives are already making the coal business a tough one and further regulations could tip the scales.


Upcoming Season

With the financial reporting season for 2013 long over, investors are analyzing what unresolved issues could hurt their investments in 2015. Next year, investors are likely to ask fossil fuel extraction companies to avoid investing in new projects with the highest production costs and the highest carbon content (in other words, assets likely to strand first. Examples would include the oil sands and very deep ocean drilling).

theenergycollective

[StarvingLion]

And who are these "investors" that want to get rid of coal, tar sands, and deep water drilling? Why, its none other than the Bums of the Beltway who always give themselves copious amounts of free cash. In the Inverted World of the Beltway, stuff that has value (coal, tar sands, deep drilling) is worthless, and all the shit that has no value, The Scientist hordes and every other ponzi racket and insidious marxist agenda needs protection.

BANKRUPT.

[vtsnowedin]

The press release of XOM's quarterly report is interesting reading. About page 13 you find CAPX expenditures broken down by region. Steady in North America but declining elsewhere. They are placing their bets carefully.
http://cdn.exxonmobil.com/~/media/Datas ... s_2q14.pdf
Shells report is similar but with increased production not a decline. They also are reducing CAPX and even selling assets in fields they now judge to be unlikely to yield future profits.
Again it looks like both are taking a long hard look on where to explore for new production.
http://www.shell.com/global/aboutshell/ ... atest.html

[ROCKMAN]

When you study those reports you have to sort out exactly what those budget expenditures are for. As an example XOM likes to brag about how they replace produced reserves every year. But the details can be very different than your assumptions. You might take the XOM numbers to mean they’re out there developing a lot of new reserves by drilling…especially in the US. But some years ago when XOM bought XTO more than 80% of their reserve gain that year came from that acquisition and not by drilling. They added significantly to their reserve base. Not so much so to the reserve base of the US.