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Graeme wrote:BP says biofuels growth will outpace oil in 2011-2030 period

What happens to the amount of ethanol consumed by Americans when the federal government simultaneously mandates that an ever-increasing percentage of ethanol be added to gasoline while also subsidizing its production?
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The dividing line is 1993, following the Energy Policy Act of 1992, which required specified car fleets to purchase alternative fuel vehicles capable of operating with E-85, an 85%/15% blend of ethanol and gasoline. In addition, the Clean Air Act amendments of 1990 required the wintertime use of ethanol in 39 major metropolitan areas and full-year use in 9 others that had not satisfied the Environmental Protection Agency's imposed standards for carbon monoxide.

After that, it was off to the races for the ethanol-government industrial complex! Simply projecting a straight line from the trend between 1981 and 1993 would place 2010's ethanol consumption level below 5,000 thousand barrels per month. Instead, thanks to the federal government's subsidies and mandates benefiting ethanol producers, it has risen to be over 25,000 thousand barrels per month.

AirlinePilot wrote:The dumbest thing in the world we can do is spend money, time, and energy to figure out how to turn food into fuel.
This assumption seals it for me. Its a giant game and they are trying to figure out how to keep BAU going for as long as possible. Those who dont understand what that kind of biofuel increase mean think its all going to be ok. Go back to your TV's and stop worrying. This is where all the shortfall in oil is planned to come from once decline sets in? I just cant wait to see how this all is going to play out.

We got front row seats though!

Graeme wrote:BP says biofuels growth will outpace oil in 2011-2030 period

In the UK, BP published for the first time a summary of its forward-looking analyses. In Energy Outlook 2030, BP projects that primary energy use will grow by nearly 40% over the next twenty years, with 93% of the growth coming from non-OECD (Organisation of Economic Co-operation and Development) countries. Non-OECD countries are seen to rapidly increase their share of overall energy demand from just over half currently to two-thirds. The report projects that, between 2010 to 2030, the contribution to energy growth of renewables (solar, wind, geothermal and biofuels) is seen to increase from 5% to 18%.

Global liquids demand is forecast to reach 102.4 million barrels per day (mmbpd) in 2030. The net growth of 16.5 mmbpd over the next 20 years comes exclusively from the emerging economies of the non-OECD. Biofuels production is expected to reach 6.7 mmbpd by 2030 from 1.8 mmbpd in 2010 and will contribute 125% of net non-OPEC supply growth over the next 20 years. Continued policy support, high oil prices, and continued technological innovations all contribute to the rapid expansion. The US and Brazil will continue to dominate biofuel production with 76% of total output in 2010 but falling to 68% in 2030 as output from Asia-Pacific begins to rise.

The complete BP Energy Outlook 2030 can be downloaded here.

biofuelsdigest

Quinny wrote:deep water exploration and drilling.

LONDON (Reuters) - BP Plc filed a lawsuit for more than $42 billion (25 billion pounds) against Halliburton (NYSE: HAL - news) , which cemented the blown-out well which caused the Gulf of Mexico oil spill, after claiming a similar sum from rig owner Transocean (NYSE: RIG - news) .
Analysts said BP had little chance of winning the cases and was more likely trying to force the companies to settle. Management experts said pursuing the lawsuits could further damaged BP's already battered reputation as well as reveal yet more embarrassing details of the way the disaster was handled.

The UK group filed a lawsuit in New Orleans against Transocean, which owned and operated the rig that exploded in the Gulf of Mexico on 20 April last year, killing 11 people and causing an ecological catastrophe, as 4.9m barrels of oil gushed from the ruptured well before it was sealed in September.

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In hard-hitting language, the Transocean lawsuit alleges that the company "materially breached its contractual duties in its actions and inactions leading to the loss of well control, the explosion and the loss of life and injuries onboard the Deepwater Horizon, as well as the resulting oil spill".

Echoing the findings of a US presidential commission that investigated the disaster, BP accuses Transocean of missing clear signs that gas was rising up the drill pipe – ultimately flowing to the rig and triggering an explosion. BP is seeking the reimbursement of the $40.9bn charge it took in its 2010 accounts to cover clean-up costs and the formation of a $20bn compensation fund.

BP production down but profits up
Andrew Hobbs / Upstream Online / July 26, 2011

... Oil and gas production in the second quarter was 11% lower than during the same period in 2010, falling to 3.43 million barrels of oil a day on the back of a suspension of drilling in the Gulf of Mexico as well as BP’s continuing divestment programme. ...

The improvement in profits came despite a 1 per cent dip in production volumes for the period to 117.1m barrels of oil equivalent (boe). Volumes were held back by a poor first quarter in which BG cut its full-year growth targets citing civil unrest in north Africa and flooding in Australia. Overall revenues were up 17 per cent to $9.9bn

BG may still be predominantly a gas company but its growth story is increasingly about oil. Sir Frank said that Brazil, where BG recently doubled its mean resources estimate to 6bn boe, will make the company “an oilier” one over the next decade or so. According to Bank of America Merrill Lynch the revision means Brazil now accounts for more than 40 per cent of BG’s net asset value. BG now thinks it can produce the new found oil using equipment it has already priced in for existing discoveries. That could lower potential costs significantly and increase profit per barrel. Trading at 15 times forecast earnings for 2012, BG doesn’t come cheap but it could yet prove good value.

Oil giant Royal Dutch Shell has reported a 77% jump in second-quarter profit, thanks to higher energy prices.

Shell's profit for the three months to June came in at $8bn (£4.9bn) on a current cost of supplies basis, up from $4.5bn in the same period last year.

Though oil and gas production was 2% lower than the same quarter in 2010, the company said it had benefited from asset sales in the first half of 2011.

But the company said it had started three large-scale projects this year that would add to its oil production by over 400,000 barrels per day.

These are a Canadian oil sands venture and two gas plants in Qatar, in which it has invested $30bn.

Exxon reported a 58% surge in capital spending to $10.3 billion for the quarter, of which 43% was spent in U.S. operations. About $2 billion were spent buying two companies with assets in the natural gas-rich Marcellus Shale in Pennsylvania. Exxon's domestic spending is remarkably high for a company that once preferred to tap giant oilfields in exotic locations than in North America. But a technological revolution in U.S. onshore oil and gas production, combined with diminished opportunities abroad, caused a major shift in Exxon's strategy, which began in 2009 with the announcement of the $25 billion purchase of Fort Worth-based XTO Energy Inc.

The XTO deal and other purchases helped ExxonMobil's second-quarter production to rise 10% to 4.4 million barrels of oil equivalent from the same quarter a year earlier. Some analysts said that the increase in domestic production and spending is coming at the expense of profitability, as U.S. natural gas generates less returns than oil. But Exxon's spending pace makes it seem unflinching.

"In buying XTO, Exxon made a bet in North America, primarily on natural gas," says Pavel Molchanov, an analyst at Raymond James. "For better or for worse, after having acquired those assets, Exxon is drilling them out."

Exclusive: BP poised to sell 'stranded assets' even if oil prices rally

LONDON (Reuters) - BP (BP.L) is preparing to sell a large chunk of its oil and gas assets even if crude prices bounce back from the COVID-19 crash because it wants to invest more in renewable energy, three sources familiar with BP’s thinking said.

The strategy was discussed at a BP executives meeting in July, the sources said, soon after the oil major lowered its long-term oil price forecast to $55 a barrel, meaning that $17.5 billion worth of its assets are no longer economically viable.

But even if crude prices bounce back to $65-$70 a barrel, BP is unlikely to put those assets back into its exploration plans and would instead use the better market conditions as an opportunity to sell them, the three sources said.

Major oil companies typically hold assets for the long term, even when crude prices plunge, with a view to start bringing more marginal production online when market conditions improve.

However, BP’s new divestment strategy, which has not previously been reported, means there will be no way back for the British energy company once it has offloaded its so-called stranded oil and gas assets.

BP did not respond to requests for comment.

The new strategy also sheds more light on chief executive Bernard Looney’s plan to reduce BP’s oil and gas production by 40%, or at least 1 million barrels per day, by 2030 while expanding into renewable energy.

“It is a simple calculation of natural production decline and planned divestment,” said a BP source, explaining how BP became the first big oil company to pledge a large cut in its oil output.

For decades, BP and rivals such as Royal Dutch Shell (RDSa.L) and Exxon Mobil (XOM.N) have promised investors that production would continue to rise.

But as climate activists, investors, banks and some governments raise pressure on the industry to reduce emissions to help cool the planet, European oil firms are changing tack and pledging to invest more in renewable energy sources.

U.S. rivals are under less government pressure and have not made similar commitments on renewables.

“As we look at the outlook for BP over the next few years and as we see production declining by 40% it is clear we no longer need exploration to fund new growth,” Looney said this week. “We will not enter new countries to explore.”

He said BP would continue to explore for oil near its existing production infrastructure as those barrels would be low cost - and help boost BP’s cash flow to fund its transition to cleaner energy.
FROM CANADA TO ANGOLA

BP also raised its target this week for returns from asset sales to $25 billion between 2020 and 2025, of which about $12 billion has already been lined up.

It has yet to name the other assets it wants to sell.

Sources have previously told Reuters that BP has identified Canadian oil sands assets and projects in deep water off Angola as being uneconomical under its new oil price scenario.

For a graphic of BP's stranded assets, click on tmsnrt.rs/3fNShQX

One of the three sources said BP’s divestment targets could easily be exceeded if it sells most of its assets currently viewed as stranded.

Parul Chopra, analyst at Rystad Energy, said in addition to Angola, he expected BP to move out of Azerbaijan, Oman, the United Arab Emirates and Iraq.

“In Iraq, the rates of returns are quite low. That fits into that profile, with high greenhouse gas emissions, they would want to exit that,” he said.

BP is planning a 10-fold increase in investment in low carbon energy sources to about $5 billion per year by 2030 and wants to deliver a 20-fold increase in renewables capacity to generate 50 gigawatts through new projects and acquisitions.

But with debt of close to $50 billion, BP will essentially be moving from one capital intensive business - oil - to another capital intensive business with lower margins - renewables.

At the moment, such a shift might be attractive to BP investors demanding the company move away from fossil fuels, but analysts say they should be prepared for lower margins.

Oil majors generally target a 12% to 15% return on their investments in oil. BP has said it is aiming for a return of 8% to 12% for renewables.

“Investors are pushing for a faster transition, but weak balance sheets mean the pivot is a challenge, leading companies to dismantle core businesses in order to facilitate the ramp up in capex (capital spending),” said Biraj Borkhataria at RBC Capital Markets.

Borkhataria said he expected BP to divest as much as 500,000 barrels a day of production while losing a similar amount through the natural decline in output from oilfields.