CarbonTracker: “The world’s biggest publicly listed oil companies plan to develop the projects, which will put nearly $91 billion of investor cash at risk over the next decade.”
“Following the publication of CTI’s oil cost curve, there has been demand for further detailed information on the breakeven cost prices of the projects the oil companies are considering.
Engagement by investors through the Carbon Asset Risk programme and conversations with oil analysts have indicated limited specific information on project specific economics is made available.
To assist further engagement with companies, today CTI releases a new series of capex factsheets, starting with the majors. These provide a breakdown by the stage of project development for the largest projects being considered by these companies. This enables investors to identify the projects that are still seeking approval or have not started development which require high oil prices to breakeven.
The series of documents consists of a summary overview which compares the 7 companies, followed by individual factsheets for each company.
CTI welcomes feedback on the content and coverage of these outputs for future research.
The factsheets are intended to be a tool to focus discussion on projects which are prime candidates for cancellation in order to reduce capital expenditure at the high end of the cost curve.
The analysis is based on the Rystad database of oil project economics, which has been cross-referenced with company announcements on the status of projects.”
The capex factsheets are available here:
www.carbontracker.org/site/capex-factsheets-oil-majors
TreeAlerts (no url): “With known, lower cost, conventional oil sources alone threatening to push the world over the internationally agreed danger-threshold of 2C of warming, there is no room for riskier, unconventional projects. Yet, oil companies are considering investing $357 billion over the next decade to develop new production in costly and technically challenging operations, including oil sands in Alberta, Canada, deep water drilling in the Gulf of Mexico and Arctic exploration. Such projects will never see a return in a carbon constrained world, leaving companies and investors exposed to potentially stranded assets.
Today’s report – a follow up to CTI’s cost curve analysis earlier this year – ranks the largest oil firms according to their exposure and reveals the 20 highest risk projects worldwide, which it warns could result in $91 billion in wasted investor capital. BP and Total have particularly high exposure to deepwater and ultra-deepwater drilling, according to CTI, while ConocoPhillips is unusually exposed to risky Arctic projects and – along with Shell – high carbon emitting oil sands.”
Reuters: “More than half a trillion dollars of investments in major oil projects over the next decade are at risk from high costs and low crude oil prices, an environmental think tank said on Friday, warning that shareholders’ returns could suffer.
….”The majors have a potential capital spend of $548 billion (328 billion pounds) over the period 2014-2025 on projects that require a market price of $95/barrel,” CTI said, adding that $357 billion of this is earmarked for as yet undeveloped, high-cost ventures.
“(Cancellation or deferral) is becoming increasingly necessary as near term cash flows are not sufficient to maintain both dividends and capital expenditure plans.”
CTI works to highlight to shareholders how investment in fossil fuel resources based on expectations of growing demand might be affected by the global drive to curb climate change by cutting carbon emissions.
….CTI identified in the report 20 major oil projects forecast to cost a total $90.7 billion that it said are candidates for cancellation due to most of them needing a crude price of at least $110/barrel to break even.
Sixteen of the projects involve extraction by drilling deepwater wells or through processing oil sands.
….CTI said Conoco Phillips (COP.N) and Royal Dutch Shell (RDSa.L) have the most production potentially at risk from low prices, while Total (TOTF.PA) and Exxon Mobil (XOM.N) were found to have the largest percentage of their capital expenditures that are dependent on high crude prices.
CTI urged investors to ask the firms to forecast how lower prices would impact the projects and future profits.”
Future Today
