Chevron cuts production growth target in face of rising costs.

FT: “Chevron, the US oil group, has raised sharply its expectation of future oil prices and cut its target for production growth, as it highlighted the steep rise in costs in the industry.”
“John Watson, the chief executive, told analysts at a meeting in New York that the company was “bullish on oil” because of output declines at mature fields, political constraints on production in many parts of the world, and the rising cost of finding and developing new oilfields.
Chevron has raised the price assumption it uses when setting out its projections for investors from $79 per barrel for internationally traded Brent crude to $110 per barrel, its average over the past three years.
That is significantly higher than is implied by the futures market, which shows that the price of oil is expected to fall.
….Mr Watson said the reasons for the weaker outlook included a slowdown in investment in shale gas production in the US, which has been hit by the slump in North American gas prices, higher volumes of oil going to the countries where Chevron operates under production-sharing contracts, and some “project slippage”.
….The company is also stepping up its asset sales, and now plans to raise $10bn from disposals over the next three years, up from a previous target of $7bn, mostly from selling oil and gasfields.
The moves follow a similar announcement last week from ExxonMobil, the largest US oil group, which also cut sharply its projection of future production and said it was scaling back its capital spending.
….Mr Watson also raised again the concerns about rising costs in the oil industry that he had highlighted at the IHS Cera Week conference in Houston last week.
Break-even prices for new oil developments could be over $100 per barrel, he said, after industry costs had doubled in the past decade.The company showed a slide indicating break-even Brent crude prices for different types of oil, suggesting that US shale oil production needed about $65-$85 per barrel, while projects in Canada’s oil sands could need up to $100 and in deep water up to $110 per barrel to break even.”

Posted in Chronicle, Gas, Oil Tagged with: ,

Scenes from The Winning of the Carbon War

Parliament Square, London, October 24th and 25th, 2014

Young people anguished about the future can protest. So long as they keep off the grass.
Young people anguished about the future can protest. So long as they keep off the grass.

“Modern capitalism is broken. I say this as a nominally successful capitalist. My experience has shown me that the system is suicidally dysfuntional. It is on course to destroy both itself, and more importantly the viable civilisation people of my generation have a moral duty to handover to our children and grandchildren. ….But it can be changed. It can be fixed.”


Moscow, October 14th, 2014

A gas pipeline carries Russian gas through Ukraine - for the time being
A gas pipeline carries Russian gas through Ukraine - for the time being

“’Let us be frank, in a comradely and hopefully constructive way’, I say with a smile. ‘Most of Europe is desperate to escape having to pay so much for Russian oil and gas exports, or even having to buy any Russian oil and gas’.”


New York, 21-26 September 21st – 26th, 2014

The NYPD find a novel way to deflate the carbon bubble on Wall Street
The NYPD find a novel way to deflate the carbon bubble on Wall Street

“I am often tempted to write ‘life, stranger than art’, in the pages of this chronicle. I can only get away with that cliché maybe once. Let it be here. The NYPD has found a way to deflate the carbon bubble. I mean the one twenty feet across, carried by protestors above their heads as they poured into Wall Street. The police popped it on one of the horns of the Merrill Lynch bull.”


Riyadh, Saudi Arabia, September 18th, 2014

Riyadh at night. By day, no solar panel-plus-storage to be seen. Yet.
Riyadh at night. By day, no solar panel-plus-storage to be seen. Yet.

“I arrive at night, and am driven from the airport into a city lit up like a fireworks display. Six million people live here. They are burning oil in power plants to provide electricity with few constraints on waste. It is akin to shovelling their national income into a furnace, at an accelerating rate every day.”


Somewhere in London, September 15th, 2014

An EV charged by leftover solar from a fully solar-powered home in cloudy Britain
An EV charged by leftover solar from a fully solar-powered home in cloudy Britain

“The world’s largest private bank predicts that by 2020 it will be possible to have a solar roof, an electric vehicle and a domestic battery bank, powering everything you need in a home, with mouth-watering economics. That energy-trio purchase will be able to pay for itself within six to eight years, while giving a 7% pre-tax annual return on investment. Such household economics, UBS concludes, will change the face of the energy industry.”


Online somewhere, July 10th, 2014

Some of the most strident warnings have been in the Conservative party's favourite paper
Some of the most strident warnings have been in the Conservative party's favourite paper

“A momentous article has appeared in the Telegraph. It argues that fossil fuels are the new subprime threat to the global economy ….(and that) a solar revolution is rushing up on society under the radar, the standard bearer of a transformative green industrial revolution that can no longer be avoided.” Some wag, unknown to me, has written on Twitter: “What world are we living in when the Telegraph starts sounding like Jeremy Leggett?”


No 10 Downing Street, London, July 7th, 2014

Delivering a letter from 150 companies to the UK PM
Delivering a letter from 150 companies to the UK PM

“Obama took personal charge of the pushback. ‘Science is science’, he said in an interview with the New York Times. ‘And there is no doubt that if we burned all the fossil fuel that’s in the ground right now that the planet’s going to get too hot and the consequences could be dire’.”


The Houses of Parliament, London, July 2nd, 2014

Juliet Davenport, Good Energy CEO: "solar is a fantastic technology"
Juliet Davenport, Good Energy CEO: "solar is a fantastic technology"

“A journalist from the Wall Street Journal seems impatient with all the British reserve on offer, and the morass of technical detail on subsidies that masks what is clearly the most fundamental of disputes. What is it, exactly, that you are worried about, she asks me. A repeat of 2011, I tell her. The government launched an ambush on the solar industry back then: a savage subsidy cut with only 6 weeks notice, aiming to decimate us. The gas industry was behind it.”


Mayfair, London, June 12th, 2014

Shell strands an asset on rocks en route to explore for Arctic oil
Shell strands an asset on rocks en route to explore for Arctic oil

“The whole concept (of the carbon bubble and stranded assets) is ‘fundamentally flawed’, Shell concludes. And worse, ‘there is a danger that some interest groups use it to trivialize the important societal issue of rising levels of C02 in the atmosphere’. …. I have been accused of many things by the incumbency over the years. Trivializing global warming is a first.”


Stockholm, May 13th, 2014

Larson ice shelf collapse, 2002: lots more to come
Larson ice shelf collapse, 2002: lots more to come

“Two teams of scientists have concluded that the melting of the vast West Antarctic ice sheet appears now to be unstoppable: that it will collapse piece by piece until the entire sheet has slid off the continent into the ocean. This would cause global sea-level to rise ten feet over the next few centuries. The generations to come will need an awful lot of zeroes when they count the cost of that.”