Tom Whipple, Editor
Ray Long, Assistant Editor
Current Developments
Global
Middle East
East Asia
North America
Europe
Association for the Study of Peak Oil & Gas USA
Thursday, April 18, 2013
KERRY DISAPPOINTED BY RECENT
TALKS WITH IRAN
Alternatives
Global Developments
1. BRENT RISES FROM NINE-MONTH LOW ON SPECULATION LOSSES
EXCESSIVE
(Bloomberg, Thursday, April 18, 2013) -- Brent crude rose from a nine-month low and West Texas Intermediate advanced
for the second time in six days, on speculation that losses were exaggerated. The European benchmark climbed as much
as 1.6 percent, reversing an earlier loss of 1 percent. WTI also added as much as 1.6 percent. Brent's 14-day relative
strength index was at 28.1, a sign prices may have fallen too far. European shares rose after the biggest four-day selloff
since July as Italian and Spanish bonds rallied. Brent may slip to a range of $90 to $100, according to Bank of America
Corp. "We do not believe that the timing is there just yet for Brent prices to drop sustainably below $100," said Torbjoern
Kjus, a senior oil analyst at DNB ASA in Oslo. [more]
2. CRUDE RISES FROM FOUR-MONTH LOW ON BOND SALE, U.S. JOBS
(Bloomberg, Thursday, April 18, 2013) -- West Texas Intermediate rose from a four-month low after Spain sold more debt
than planned and U.S. claims for jobless benefits were little changed, signaling the labor market in the biggest oilconsuming nation is stabilizing. Futures in New York climbed as much as 1.7 percent and Brent oil in London rebounded
from a nine-month low. Spain sold 4.71 billion euros ($6.14 billion) of bonds, more than its maximum target of 4.5 billion
euros. Applications for jobless insurance payments increased by 4,000 to 352,000 in the week ended April 13, in line with
the median forecast of economists surveyed by Bloomberg. The WTI 14-day relative-strength index slid to 29.9 yesterday,
a sign prices may have fallen too far. "The success of the Spanish bond auction came as a relief," said John Kilduff, a
partner at Again Capital LLC, a New York energy hedge fund. "The U.S. jobless numbers stabilized, which is a positive
signal." [more]
---------------------------------
3. KERRY DISAPPOINTED BY RECENT TALKS WITH IRAN
AP Photo/Molly Riley
WASHINGTON (AP, Thursday, April 18, 2013) -- Secretary of State John Kerry called for patience
despite widespread frustration with the recent failure of negotiations between six world powers and Iran
over its disputed nuclear program and growing fears of Tehran developing a weapon of mass
destruction. Testifying Thursday before the Senate Foreign Relations Committee, Kerry said he was
disappointed by the inconclusive talks in Kazakhstan earlier this month, but insisted that a diplomatic
resolution is still the best option. The international community fears Tehran is developing a nuclear
weapon; Iran insists its work is for peaceful purposes. Congress has repeatedly pressed for tough
sanctions on Iran, convinced that undermining its economy and oil revenue will thwart its nuclear
program. Kerry, in urging patience, highlighted uncertainty in Tehran, with a power struggle two months
ahead of June elections, and said he did not expect "anything dramatic" in the next few weeks. [more]
Middle East & North Africa
4. OPEC MINDFUL OF SLUMPING OIL PRICES
RIYADH, Saudi Arabia (UPI, Thursday, April 18, 2013) -- The Organization of Petroleum Exporting Countries is going to
have to cut production to keep crude oil prices at a reasonable level, an energy consultant said. Crude oil prices for the
Brent trade classification this week dropped to less than $100 per barrel for the first time since July. The OPEC basket
price, a representation of the cartel's export grades, is less than $100 as well. Ali Aissaoui, a consultant at the Arab
Petroleum Investments Corp., told Bloomberg News that OPEC's top producer, Saudi Arabia, needs prices around $94
per barrel to keep its federal budget in check. Iran, meanwhile, needs a price per barrel of around $125 to keep its budget
balanced. "OPEC will definitely need to cut production to shore up prices as they can't produce at prices close to their
break-even level," he said. [more]
5. SAUDI ARABIA BOOSTS OIL EXPORTS TO 8-MONTH HIGH, JODI DATA SHOW
(Bloomberg, Thursday, April 18, 2013) -- Saudi Arabia boosted crude exports in February to the highest level since June
while it cut oil use at local power plants and refineries to the lowest since March 2011, according to Joint Organizations
Data Initiative. The kingdom, the world's largest crude exporter, increased daily shipments to 7.45 million from 7.09 million
a month earlier, the initiative known as Jodi said on its website today. It produced 9.15 million barrels a day during the
month, the data show. The country burned 294,000 barrels a day of crude at power plants, while processing 1.5 million
barrels at refineries, according to the data. [more]
East Asia
6. JAPAN, RUSSIA JOIN LNG HANDS
MOSCOW (UPI, Thursday, April 18, 2013) -- An agreement with Marubeni Corp. on the implementation of an LNG project
ensures a foothold in the Asian market, Russian company Rosneft said. Both companies signed a memorandum of
cooperation on the implementation of a liquefied natural gas project in Russia's Far East. The measure includes the
possibility for joint exploration and development in oil and natural gas fields held by Rosneft. "Agreements reached today
are aimed, among other things, at ensuring sales market in Japan, which will strengthen Rosneft positions at the
promising Asia-Pacific market," Rosneft President Igor Sechin said in a statement. [more]
North America
7. ALASKA TURNS EYE TO UNCONVENTIONAL ENERGY
HOUSTON (UPI, Thursday, April 18, 2013) -- There's a strong interest to show that developing unconventional energy
resources like methane hydrates makes sense, an Alaskan state commissioner said. The Alaskan Department of Natural
Resources signed a memorandum of understanding with the U.S. Department of Energy to study unconventional
resources in arctic regions. The MOU outlines ways in which technologies could be developed to help the state assess
resource potential and production technologies. Scientists working on the North Slope of Alaska last year injected a
mixture of carbon dioxide and nitrogen into underwater gas crystals to promote the release of natural gas. The Energy
Department said the CO2 method was the first field trial of its kind. "As a state, we want to responsibly develop and
commercialize all of the North Slope's energy resources, which include gas hydrates, shale and viscous oil and other
unconventional energy resources," Alaska DNR Commissioner Dan Sullivan said in a statement. "Simultaneously, the
Department of Energy is strongly interested in demonstrating that these resources can be developed on an economic
scale." Oil exploration in the Chuckchi and Beaufort seas was suspended. Supermajor Shell had a series of equipment
setbacks last year and ConocoPhillips said there was growing regulatory uncertainty surrounding arctic campaigns.
[more]
8. BP MANAGER CITES RIG'S SAFETY-SYSTEM DELAY AS TRIAL ENDS
(Bloomberg, Thursday, April 18, 2013) -- A BP Plc (BP/) executive testified the captain of the oil rig that exploded and sent
millions of barrels of oil pouring into the Gulf of Mexico delayed activating the installation's safety systems after the blast
as a trial over the disaster ended. Patrick O'Bryan, BP's former vice president of Gulf drilling operations, told a judge in
New Orleans yesterday Transocean Ltd. employee Curt Kuchta, captain of the Deepwater Horizon rig, told crew members
not to initiate safety systems without permission from the installation's top drilling manager. That meant the safety systems
weren't activated until minutes after the explosion ignited the rig's drilling floor and knocked out power, said O'Bryan, one
of BP's last witnesses in the case. U.S. District Judge Carl Barbier, who heard eight weeks of testimony in the non-jury
trial, said he would decide fault for the disaster later. [more]
9. EXXON OFFERS TO BUY HOMES NEAR ARKANSAS OIL SPILL SITE
(Wall Street Journal, Thursday, April 18, 2013) -- Exxon Mobil Corp. (XOM) has offered to buy the homes of residents of a
Mayflower, Ark., neighborhood where a pipeline ruptured last month spilling thousands of barrels of oil. The offer is part of
a compensation package that includes a $10,000 payment for each household to cover "disruption and inconvenience,"
as well as payment of cleaning and landscaping costs, moving expenses and rent. The move is part of Exxon's response
to the rupture of the Pegasus pipeline, which on March 29 spilled an estimated 5,000 barrels of oil into streets and yards
of this tranquil community. Crews were still at work this week cleaning some areas and the Arkansas Department of
Health said Wednesday that none of the residents of 22 evacuated homes have yet returned. [more]
10. US NATURAL GAS SUPPLIES GREW LAST WEEK
NEW YORK (AP) -- The nation's natural gas supplies rose last week, the government said Thursday. The Energy
Department's Energy Information Administration reported that natural gas in storage grew by 31 billion cubic feet to 1.704
trillion cubic feet for the week ended April 12. Analysts expected a rise of 33 billion to 37 billion cubic feet, according to a
survey by Platts, the energy information arm of McGraw-Hill Cos. The inventory level was 4.2 percent below the five-year
average of 1.778 trillion cubic feet, and 31.8 percent below last year's level of 2.498 trillion cubic feet, according to the
government data. Natural gas futures rose 10 cents, or 2.4 percent, to $4.31 per 1,000 cubic feet in New York.
[more]
11. STATE DEPARTMENT SAID TO POST ALL KEYSTONE COMMENTS
(Bloomberg, Thursday, April 18, 2013) -- The State Department will post all public comments on its review of the proposed
Keystone XL pipeline on a website, reversing a position disclosed in March, according to a person familiar with the
decision. The department, which said in March that it wouldn't release comments, also will provide additional chances for
comment during the National Interest Determination period, according to a State Department official who spoke on
condition of anonymity. A new public-comment period would begin after a final environmental impact statement is
released. It wasn't immediately clear whether that would extend the process. [more]
12. API: KEYSTONE XL MORE THAN AN ENERGY ISSUE
WASHINGTON (UPI, Thursday, April 18, 2013) -- The Keystone XL pipeline represents economic vitality just as much as
it does energy security, American Petroleum Institute President Jack Gerard said. The U.S. State Department scheduled
a meeting in Nebraska to hearing public comments on its draft assessment of TransCanada's planned cross-border
pipeline. Supporters of the pipeline say it will ensure North American energy independence while providing long-term
economic and employment opportunities. "The Keystone XL pipeline is more than a choice about energy. It's a choice
about growing our economy and increasing our energy security," Gerard said. [more]
13. SILVER LINING IN KIOBEL-SHELL LEGAL ACTION
WASHINGTON (UPI, Thursday, April 18, 2013) -- The U.S. Supreme Court left the door open on rights issues overseas
despite a disappointing ruling against Royal Dutch Shell, Earthrights International said. In Kiobel vs. Royal Dutch
Petroleum, the Supreme Court said the Alien Tort Statue doesn't give Nigerian nationals the right to sue the oil company
for alleged rights abuses overseas. Esther Kiobel filed the case in U.S. courts under the Alien Tort Statute, a 1789 law,
saying her husband Barinem Kiobel was executed by the Nigerian military with the alleged backing of Shell. Shell argued
the issue shouldn't be considered in U.S. courts because it's a foreign company facing claims for actions outside the
United States. Kiobel is a Nigerian national, though the Alien Tort Statute gives foreign nationals the right to sue in U.S.
federal courts for alleged violations of international law or treaties signed by the United States with foreign countries.
[more]
Europe
14. EU REVIEWS ITS STRATEGY IN THE ARCTIC
BRUSSELS (UPI, Thursday, April 18, 2013) -- The European Union wants to take advantage of energy and shipping
opportunities in the arctic but in a way that is environmentally sound, a commissioner said. Neighborhood Policy
Commissioner Stefan Fule said the European Union was ready to work with arctic countries as it bids for observer status
in the Arctic Council, an intergovernmental panel focused on the region. "We want to work with our arctic partners and
with the private sector to develop environmentally-friendly, low-risk technologies that could be used by the extractive
industries and the shipping industry," Fule said at the European Parliament. [more]
Alternatives
15. SUPER-POWERED BATTERY BREAKTHROUGH CLAIMED BY US TEAM
(BBC, Thursday, April 18, 2013) -- A new type of battery has been developed that, its creators say, could revolutionise the
way we power consumer electronics and vehicles. The University of Illinois team says its use of 3D-electrodes allows it to
build "microbatteries" that are many times smaller than commercially available options, or the same size and many times
more powerful. It adds they can be recharged 1,000 times faster than competing tech. [more]
Full Stories
---------------------------------
1. BRENT RISES FROM NINE-MONTH LOW ON SPECULATION LOSSES
EXCESSIVE
(Bloomberg, Thursday, April 18, 2013) -- Brent crude rose from a nine-month low and West Texas Intermediate advanced
for the second time in six days, on speculation that losses were exaggerated.
The European benchmark climbed as much as 1.6 percent, reversing an earlier loss of 1 percent. WTI also added as
much as 1.6 percent. Brent's 14-day relative strength index was at 28.1, a sign prices may have fallen too far. European
shares rose after the biggest four-day selloff since July as Italian and Spanish bonds rallied. Brent may slip to a range of
$90 to $100, according to Bank of America Corp.
"We do not believe that the timing is there just yet for Brent prices to drop sustainably below $100," said Torbjoern Kjus, a
senior oil analyst at DNB ASA in Oslo.
Brent for June settlement on the London-based ICE Futures Europe exchange increased as much as $1.58 to $99.27 a
barrel, and traded for $98.87 at 12:59 p.m. local time. Brent settled at $97.69 yesterday, the lowest close since July 2,
after dropping below $100 a barrel this week for the first time in more than eight months. The volume of all futures traded
today was 39 percent higher than the 100-day average.
WTI for May delivery was at $87.87 a barrel, up $1.19, in electronic trading on the New York Mercantile Exchange after
falling earlier as much as $1.07 to $85.61. It slid 2.3 percent to $86.68 yesterday, the lowest closing price since Dec. 13.
The volume of all futures traded was 63 percent larger than the 100- day average.
Brent Premium
The front-month European benchmark grade was at a premium of $10.74 to WTI for the same month. The spread closed
at $10.72 yesterday, the narrowest closing level since Jan. 25, 2012.
The Stoxx Europe 600 Index (SXXP) advanced 0.6 percent at 7:20 a.m. in New York, while Standard & Poor's 500 Index
futures added 0.4 percent. Spain's 10-year bond yield dropped seven basis points to 4.61 percent, and Italy's fell six basis
points to 4.19 percent.
Brent's 14-day relative strength index fell to 22 yesterday, its lowest since June 21. A reading of 30 or below typically
indicates that a market has fallen excessively and is interpreted by traders as an opportunity to buy.
Brent may fall below $95 a barrel in the "near term" if the global recovery stalls and may slide into a lower trading range of
$90 to $100 if world economic growth weakens to 3 percent from 4 percent, Francisco Blanch, New York-based head of
commodities research at Bank of America, said in an e-mailed report.
The Organization of Petroleum Exporting Countries has no plans for special talks, two OPEC delegates said, asking not to
be identified because such discussions are private. An official at OPEC's Vienna headquarters declined to comment when
contacted by phone today. The group's next scheduled meeting is on May 31.
Brent may decline as low as $90 if OPEC doesn't signal its readiness to defend prices by restraining supply, said Carsten
Fritsch, an analyst at Commerzbank AG in Frankfurt.
"Market sentiment has clearly worsened," he said.
---------------------------------
2. CRUDE RISES FROM FOUR-MONTH LOW ON BOND SALE, U.S. JOBS
(Bloomberg, Thursday, April 18, 2013) -- West Texas Intermediate rose from a four-month low after Spain sold more debt
than planned and U.S. claims for jobless benefits were little changed, signaling the labor market in the biggest oilconsuming nation is stabilizing.
Futures in New York climbed as much as 1.7 percent and Brent oil in London rebounded from a nine-month low. Spain
sold 4.71 billion euros ($6.14 billion) of bonds, more than its maximum target of 4.5 billion euros. Applications for jobless
insurance payments increased by 4,000 to 352,000 in the week ended April 13, in line with the median forecast of
economists surveyed by Bloomberg. The WTI 14-day relative-strength index slid to 29.9 yesterday, a sign prices may
have fallen too far.
"The success of the Spanish bond auction came as a relief," said John Kilduff, a partner at Again Capital LLC, a New York
energy hedge fund. "The U.S. jobless numbers stabilized, which is a positive signal."
WTI crude oil for May delivery gained 82 cents, or 0.9 percent, to $87.50 a barrel at 11:21 a.m. on the New York
Mercantile Exchange. It dropped 2.3 percent to $86.68 yesterday, the lowest closing price since Dec. 13. The volume of
all futures traded was 51 percent above the 100-day average for the time of day.
Brent oil for June settlement rose 95 cents, or 1 percent, to $98.64 a barrel on the London-based ICE Futures Europe
exchange. Brent settled at $97.69 yesterday, the lowest close since July 2. The volume of all futures traded today was 38
percent higher than the 100-day average.
WTI-Brent Spread
The front-month European benchmark grade was at a premium of $10.92 to WTI for the same month. The spread ended
yesterday at $10.72, the narrowest closing level since Jan. 25, 2012.
WTI's 14-day relative strength index fell to 27.33 yesterday, its lowest level since June. A reading of 30 or below typically
indicates that a market has fallen excessively and is interpreted by traders as an opportunity to buy.
The Organization of Petroleum Exporting Countries has no plans for an emergency meeting, two OPEC delegates said,
asking not to be identified because such discussions are private. An official at OPEC's Vienna headquarters declined to
comment when contacted by phone today. The group's next scheduled meeting is on May 31.
Brent may decline as low as $90 if OPEC doesn't signal its readiness to defend prices by restraining supply, said Carsten
Fritsch, an analyst at Commerzbank AG in Frankfurt.
---------------------------------
3. KERRY DISAPPOINTED BY RECENT TALKS WITH IRAN
AP Photo/Molly Riley
WASHINGTON (AP, Thursday, April 18, 2013) -- Secretary of State John Kerry called for patience
despite widespread frustration with the recent failure of negotiations between six world powers and Iran
over its disputed nuclear program and growing fears of Tehran developing a weapon of mass
destruction.
Testifying Thursday before the Senate Foreign Relations Committee, Kerry said he was disappointed by
the inconclusive talks in Kazakhstan earlier this month, but insisted that a diplomatic resolution is still
the best option. The international community fears Tehran is developing a nuclear weapon; Iran insists
its work is for peaceful purposes.
Congress has repeatedly pressed for tough sanctions on Iran, convinced that undermining its economy
and oil revenue will thwart its nuclear program. Kerry, in urging patience, highlighted uncertainty in
Tehran, with a power struggle two months ahead of June elections, and said he did not expect
"anything dramatic" in the next few weeks.
"We don't need to spin this up at this point in time," Kerry told the panel.
The secretary reiterated President Barack Obama's past statements that the United States will ensure
that Iran does not get a nuclear weapon.
Committee Chairman Bob Menendez, D-N.J., and other lawmakers have succeeded in securing several
rounds of penalties on Iran's banking and energy sectors.
Sen. Mark Kirk, R-Ill., a top sponsor of sanctions legislation since his arrival in the Senate in January
2011, is crafting a bill that would target regime officials who violate human rights with travel bans and
seizure of assets, and essentially impose a commercial and financial embargo on Iran.
It also would basically impose a tough arms embargo on Iran, its proxies in Gaza and southern
Lebanon, as well as North Korea, Syria and Sudan. The measure would close loopholes in current law
related to Iran's access to foreign exchange reserves.
Current sanctions have undercut the Iranian economy, causing high unemployment and inflation, while
daily oil production and the value of the country's currency, the rial, have dropped.
Kirk's latest effort would mark the fifth time since June 2010 that Congress has slapped penalties on
Iran.
Any penalties are certain to draw strong bipartisan support as lawmakers, fearful of Iran's ambitions and
worried about its threat to Israel, have overwhelmingly embraced past sanctions legislation.
Menendez reminded Kerry that the diplomatic window with Iran is closing, giving impetus to the
congressional moves for more sanctions.
Kerry said the State Department would like to work with Congress on the timing of any new initiatives.
Kerry, the former Massachusetts senator, was testifying for the first time since his confirmation before
the panel that he once chaired. He described sitting on the other side of the dais as surreal.
---------------------------------
4. OPEC MINDFUL OF SLUMPING OIL PRICES
RIYADH, Saudi Arabia (UPI, Thursday, April 18, 2013) -- The Organization of Petroleum Exporting Countries is going to
have to cut production to keep crude oil prices at a reasonable level, an energy consultant said.
Crude oil prices for the Brent trade classification this week dropped to less than $100 per barrel for the first time since
July. The OPEC basket price, a representation of the cartel's export grades, is less than $100 as well.
Ali Aissaoui, a consultant at the Arab Petroleum Investments Corp., told Bloomberg News that OPEC's top producer,
Saudi Arabia, needs prices around $94 per barrel to keep its federal budget in check. Iran, meanwhile, needs a price per
barrel of around $125 to keep its budget balanced.
"OPEC will definitely need to cut production to shore up prices as they can't produce at prices close to their break-even
level," he said.
Ibrahim al-Muhanna, an adviser to Saudi Oil Minister Ali al-Naimi, in January fended off concerns that lower oil production
was an attempt by Riyadh to influence oil prices. He said the kingdom was "strongly committed to a stable oil market."
OPEC, in its monthly report for April, said it revised its oil demand forecast for 2013 downward by 40,000 barrels per day
to around 800,000 bpd but that's still higher than estimates from last year and indicates growth.
---------------------------------
5. SAUDI ARABIA BOOSTS OIL EXPORTS TO 8-MONTH HIGH, JODI DATA SHOW
(Bloomberg, Thursday, April 18, 2013) -- Saudi Arabia boosted crude exports in February to the highest level since June
while it cut oil use at local power plants and refineries to the lowest since March 2011, according to Joint Organizations
Data Initiative.
The kingdom, the world's largest crude exporter, increased daily shipments to 7.45 million from 7.09 million a month
earlier, the initiative known as Jodi said on its website today. It produced 9.15 million barrels a day during the month, the
data show.
The country burned 294,000 barrels a day of crude at power plants, while processing 1.5 million barrels at refineries,
according to the data.
Saudi Arabia's Petroleum Ministry expects a bigger gain in oil demand this year than forecast by groups such as the
Organization of Petroleum Exporting Countries and the International Energy Agency. It estimates world demand will
increase by about 1 million barrels a day this year and exceed 90 million barrels "for the first time in history," Ibrahim alMuhanna, an adviser to Saudi Oil Minister Ali al-Naimi, said on April 10 in Kuwait.
JODI, supervised by Riyadh-based International Energy Forum, uses statistics supplied by national governments to
compile data on production, imports and exports for oil- producing and consuming nations. Its data include crude and
condensates, exclude natural gas liquids.
---------------------------------
6. JAPAN, RUSSIA JOIN LNG HANDS
MOSCOW (UPI, Thursday, April 18, 2013) -- An agreement with Marubeni Corp. on the implementation of an LNG project
ensures a foothold in the Asian market, Russian company Rosneft said.
Both companies signed a memorandum of cooperation on the implementation of a liquefied natural gas project in Russia's
Far East. The measure includes the possibility for joint exploration and development in oil and natural gas fields held by
Rosneft.
"Agreements reached today are aimed, among other things, at ensuring sales market in Japan, which will strengthen
Rosneft positions at the promising Asia-Pacific market," Rosneft President Igor Sechin said in a statement.
Japan relies on LNG to meet its natural gas demands. Demand for natural gas has surged in response to nuclear power
shortages that followed the Fukushima Daiichi meltdown in 2011.
Neither side offered an expected reserve potential of the eventual deliveries and exploration.
Russian natural gas company Gazprom in 2007 adopted a program to get more natural gas to Asian markets. Gazprom
delegates met this week with Japanese officials to discuss the Vladivostok LNG project planned for Russia's eastern
shores.
---------------------------------
7. ALASKA TURNS EYE TO UNCONVENTIONAL ENERGY
HOUSTON (UPI, Thursday, April 18, 2013) -- There's a strong interest to show that developing unconventional energy
resources like methane hydrates makes sense, an Alaskan state commissioner said.
The Alaskan Department of Natural Resources signed a memorandum of understanding with the U.S. Department of
Energy to study unconventional resources in arctic regions.
The MOU outlines ways in which technologies could be developed to help the state assess resource potential and
production technologies.
Scientists working on the North Slope of Alaska last year injected a mixture of carbon dioxide and nitrogen into
underwater gas crystals to promote the release of natural gas. The Energy Department said the CO2 method was the first
field trial of its kind.
"As a state, we want to responsibly develop and commercialize all of the North Slope's energy resources, which include
gas hydrates, shale and viscous oil and other unconventional energy resources," Alaska DNR Commissioner Dan Sullivan
said in a statement. "Simultaneously, the Department of Energy is strongly interested in demonstrating that these
resources can be developed on an economic scale."
Oil exploration in the Chuckchi and Beaufort seas was suspended. Supermajor Shell had a series of equipment setbacks
last year and ConocoPhillips said there was growing regulatory uncertainty surrounding arctic campaigns.
---------------------------------
8. BP MANAGER CITES RIG'S SAFETY-SYSTEM DELAY AS TRIAL ENDS
(Bloomberg, Thursday, April 18, 2013) -- A BP Plc (BP/) executive testified the captain of the oil rig that exploded and sent
millions of barrels of oil pouring into the Gulf of Mexico delayed activating the installation's safety systems after the blast
as a trial over the disaster ended.
Patrick O'Bryan, BP's former vice president of Gulf drilling operations, told a judge in New Orleans yesterday Transocean
Ltd. employee Curt Kuchta, captain of the Deepwater Horizon rig, told crew members not to initiate safety systems without
permission from the installation's top drilling manager.
That meant the safety systems weren't activated until minutes after the explosion ignited the rig's drilling floor and
knocked out power, said O'Bryan, one of BP's last witnesses in the case. U.S. District Judge Carl Barbier, who heard
eight weeks of testimony in the non-jury trial, said he would decide fault for the disaster later.
"So after you see the fire, you recall somebody asking Captain Kuchta about" activating the blowout preventer and other
safety systems, BP lawyer Hariklia "Carrie" Karis asked O'Bryan yesterday in a liability trial over the spill.
Kuchta was "pretty emphatic" that he needed the drilling specialist's permission to implement the systems, O'Bryan
recalled. Several minutes passed before another crew member acted, he added.
Safety Sacrificed?
Lawyers for the federal government and spill victims contend in the nonjury trial that BP was over budget and behind
schedule on the Macondo well off the Louisiana coast, prompting the company to cut corners and ignore safety tests
showing the well was unstable.
The April 20, 2010, blast killed 11 workers and sent waves of oil into the Gulf, killing fish and waterfowl. The accident,
which created the worst offshore oil spill in U.S. history, sparked hundreds of lawsuits against well owner BP; Houstonbased Halliburton Co. (HAL); and Vernier, Switzerland-based Transocean, the Deepwater Horizon's owner.
The liability trial began Feb. 25. Barbier must decide whether one or more of the companies acted with willful or wanton
misconduct or reckless indifference -- the legal requirement for establishing gross negligence.
For BP, a finding of gross negligence would mean the company might be liable to the U.S. for more than $17 billion in
Clean Water Act fines, as well as unspecified punitive damages to claimants who weren't part of the $8.5 billion settlement
the company reached with most private-party plaintiffs last year.
Rig Contractors
Transocean (RIG) and Halliburton could be held liable for punitive damages for all plaintiffs if the companies are found to
have handled their duties on the rig in a grossly negligent manner. Both were hired as contractors by BP to work on the
Macondo well project.
The government and spill victims also allege that Halliburton's cement job was defective and that Transocean employees
made a series of missteps, including disabling safety systems, failing to maintain the installation properly and not
adequately training its crew to handle crisis situations.
O'Bryan testified he decided to travel to the Deepwater Horizon in April 2010 -- his first-ever visit to an offshore oil rig -because the installation "was one of the better rigs in Transocean's fleet" in terms of its safety record.
After touring the rig, O'Bryan was standing with Kuchta on the rig's bridge when the installation was rocked by two
explosions, the executive recalled.
'Shaking Violently'
"All of a sudden, the rig started shaking violently," O'Bryan said. Shortly afterward, the installation was shaken by the
explosions, the executive said. "You could actually hear a hissing noise and then there was an explosion."
Some injured crew members came to the bridge and said the rig was on fire, he recalled. At that point, he donned a life
vest, O'Bryan said.
After crew members asked whether the Deepwater Horizon's blowout preventer and emergency disconnect system had
been activated, Kuchta said they couldn't throw the safety switches without a direct order from the rig's top drilling
manager.
That manager, Jimmy Harrell, was injured in the blast and didn't get to bridge until several minutes after the explosion
sparked a fire and left the rig without power, according to earlier testimony in the case.
Captain's Inaction
"In those few minutes, however many minutes they were before Mr. Harrell got there, did Captain Kuchta at any time
indicate that anybody should take any action to activate the blowout preventer?" Karis, BP's lawyer, asked O'Bryan. "Did
he in fact say the exact opposite?"
"Yes," O'Bryan told Barbier. The executive said when Harrell finally arrived on the bridge, Harrell's first words were to ask
whether the safety systems had been activated.
"Jimmy asked had the emergency disconnect system been activated, and Captain Kuchta said no," said O'Bryan, who
was on the Deepwater Horizon bridge at the time of the disaster. "He said, 'we need to activate it,' and somebody reached
over and hit the button."
O'Bryan added that Kuchta was surprised when the rig lost power after the explosions and seemed at a loss about how to
address the crisis. "I heard him say, this can't be happening, we've lost power," the executive recalled. "It just appeared to
me that he wasn't quite sure what to do."
Not Fit
Andrew Mitchell, a veteran ship's captain who testified for BP as the final witness in the case, told Barbier Kuchta's
inability to respond quickly to the blowout squandered precious seconds that limited the crew's options in dealing with the
fallout from the blast.
"Isn't it true that every second wasted by the captain of this vessel not reacting to this serious emergency made that
emergency more difficult to manage?" asked Conrad "Duke" Williams, a lawyer for spill victims. Mitchell agreed with
Williams's description of Kuchta's actions.
"In your opinion, Captain Mitchell, was Captain Kuchta fit to be master of the Deepwater Horizon?" the attorney asked.
Mitchell replied Kuchta wasn't fit to be the rig's commander.
Kuchta, along with Harrell, the rig's top drilling supervisor, refused to testify in the case. Both men invoked their
constitutional right against self-incrimination, as did more than a dozen other BP and Transocean employees associated
with the Macondo project.
Second Phase
Barbier said after testimony in the case ended yesterday that he'll study post-trial briefs submitted by both sides before
ruling on the liability issues.
In September, Barbier is scheduled to hear testimony in a second phase of the litigation to determine how much oil
gushed into the Gulf during the spill. Coupled with the judge's liability findings, that spilled-oil calculation will determine the
size of any federal pollution fine BP and its contractors may have to pay.
BP and the federal government have offered different calculations on the size of the spill, which regulators peg at more
than 4.1 million barrels. The court has already approved BP's request to be credited with having collected and disposed of
about 810,000 barrels that spewed from the well. That could reduce the maximum $17 billion fine BP may face by as
much as $3.4 billion.
The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S.
District Court, Eastern District of Louisiana (New Orleans).
---------------------------------
9. EXXON OFFERS TO BUY HOMES NEAR ARKANSAS OIL SPILL SITE
(Wall Street Journal, Thursday, April 18, 2013) -- Exxon Mobil Corp. (XOM) has offered to buy the homes of residents of a
Mayflower, Ark., neighborhood where a pipeline ruptured last month spilling thousands of barrels of oil.
The offer is part of a compensation package that includes a $10,000 payment for each household to cover "disruption and
inconvenience," as well as payment of cleaning and landscaping costs, moving expenses and rent.
The move is part of Exxon's response to the rupture of the Pegasus pipeline, which on March 29 spilled an estimated
5,000 barrels of oil into streets and yards of this tranquil community. Crews were still at work this week cleaning some
areas and the Arkansas Department of Health said Wednesday that none of the residents of 22 evacuated homes have
yet returned.
Under the deal put forward by Exxon Tuesday, owners of the 11 homes "directly impacted" by the spill can sell their
property to Exxon within the next three years at prices determined by appraisers approved by the U.S. Department of
Housing and Urban Development. The company also agreed to buy other homes in the neighborhood if no buyers come
forward or of the spill affects the sale price.
For residents who decide to stay in the neighborhood, Exxon said it would make a one-time payment for any reduction in
property value in the next three years.
The company said accepting the compensation offer won't affect a person's rights to make claims against Exxon.
"Exxon Mobil will continue to work with you to resolve such claims," the letter stated. Exxon said Tuesday that 246 claims
have been made to a hotline number it set up after the spill.
Exxon's bid to placate homeowners comes in the midst of increased awareness of the fragility of the nation's pipeline
network. It also comes in the wake of the BP PLC (BP.LN, BP) 2010 U.S. Gulf of Mexico spill, in which the U.K.-based oil
giant spent billions compensating individuals and businesses affected by the disaster.
Jim Finton, who lives in the Northwoods neighborhood but did not have to evacuate, said he thinks Exxon's offer is fair,
but he hasn't decided whether he will stay or go.
"A lot goes into that," he said. "If I do stay and they buy some of the homes, what will happen with those homes? Will this
subdivision degenerate into low-rent rental-property type situation?"
The Arkansas Department of Health has approved a plan to allow residents of 10 of the 22 evacuated homes to return.
Department spokesman Ed Barham said the air quality in the area is not dangerous, but other measures, such as earth
moving, will need to be finished before residents can go home.
Exxon spokesman David Eglinton said some work, such as replacing part of the storm-drainage system, is still being done
in the neighborhood.
"While the Arkansas Department of Health has indicated there should be no impact on the health of Northwoods
neighborhood residents, some residents may not decide to return until all work involving heavy equipment within the
neighborhood has been completed," Mr. Eglinton said Wednesday.
Earlier this week Exxon cut out a 52-foot-long section of pipe and sent it to a metallurgical lab for testing. On Tuesday the
company replaced that section of pipe, but repair and testing plans must be approved by federal regulators before the
95,000-barrel-a-day pipeline can be restarted, a spokesman said.
Central Arkansas Water, a major public utility in the region, has asked Exxon to make certain repairs to the line before
getting it up and running again. The system wants Exxon to eventually move the line out of the Lake Maumelle
Watershed, where it runs for 13 miles.
U.S. Rep. Tim Griffin, whose district includes Little Rock and Mayflower, seconded that request, asking Exxon to find a
way to move the pipeline.
"I am especially concerned that the steepness of the shoreline at Lake Maumelle could exacerbate contamination of the
water supply in the event of an oil spill and make cleanup more difficult," Mr. Griffin said in a press release.
A spokesman for Exxon said the company is reviewing the request.
---------------------------------
10. US NATURAL GAS SUPPLIES GREW LAST WEEK
NEW YORK (AP) -- The nation's natural gas supplies rose last week, the government said Thursday.
The Energy Department's Energy Information Administration reported that natural gas in storage grew by 31 billion cubic
feet to 1.704 trillion cubic feet for the week ended April 12.
Analysts expected a rise of 33 billion to 37 billion cubic feet, according to a survey by Platts, the energy information arm of
McGraw-Hill Cos.
The inventory level was 4.2 percent below the five-year average of 1.778 trillion cubic feet, and 31.8 percent below last
year's level of 2.498 trillion cubic feet, according to the government data.
Natural gas futures rose 10 cents, or 2.4 percent, to $4.31 per 1,000 cubic feet in New York.
---------------------------------
11. STATE DEPARTMENT SAID TO POST ALL KEYSTONE COMMENTS
(Bloomberg, Thursday, April 18, 2013) -- The State Department will post all public comments on its review of the proposed
Keystone XL pipeline on a website, reversing a position disclosed in March, according to a person familiar with the
decision.
The department, which said in March that it wouldn't release comments, also will provide additional chances for comment
during the National Interest Determination period, according to a State Department official who spoke on condition of
anonymity.
A new public-comment period would begin after a final environmental impact statement is released. It wasn't immediately
clear whether that would extend the process.
TransCanada Corp. (TRP) wants to build the pipeline to bring Alberta's oil sands to refineries on the U.S. Gulf Coast.
The official said the mechanics and timing of the changes are being still worked out. The decision was made to maximize
transparency, the official said, even as the department is aware the volume of comments will be extremely high.
The State Department, which will hold a hearing in Grand Island, Nebraska, today to collect comments on the pipeline,
has come under fire for the lack of transparency on Keystone.
---------------------------------
12. API: KEYSTONE XL MORE THAN AN ENERGY ISSUE
WASHINGTON (UPI, Thursday, April 18, 2013) -- The Keystone XL pipeline represents economic vitality just as much as
it does energy security, American Petroleum Institute President Jack Gerard said.
The U.S. State Department scheduled a meeting in Nebraska to hearing public comments on its draft assessment of
TransCanada's planned cross-border pipeline.
Supporters of the pipeline say it will ensure North American energy independence while providing long-term economic
and employment opportunities.
"The Keystone XL pipeline is more than a choice about energy. It's a choice about growing our economy and increasing
our energy security," Gerard said.
The House Energy and Commerce Committee approved a measure from U.S. Rep. Lee Terry, R-Neb. The Northern
Route Approval Act would make it easier for TransCanada to get approval to build the pipeline.
Oil Change International, a group opposing the project, said House members who voted in favor of Terry's measure
received, on average, $265,000 in contributions for oil companies versus $44,000 for those opposed.
Opponents of Keystone XL said heavy crude oil for Alberta, the type designated for the pipeline, is more of an
environmental threat than conventional oil.
---------------------------------
13. SILVER LINING IN KIOBEL-SHELL LEGAL ACTION
WASHINGTON (UPI, Thursday, April 18, 2013) -- The U.S. Supreme Court left the door open on rights issues overseas
despite a disappointing ruling against Royal Dutch Shell, Earthrights International said.
In Kiobel vs. Royal Dutch Petroleum, the Supreme Court said the Alien Tort Statue doesn't give Nigerian nationals the
right to sue the oil company for alleged rights abuses overseas.
Esther Kiobel filed the case in U.S. courts under the Alien Tort Statute, a 1789 law, saying her husband Barinem Kiobel
was executed by the Nigerian military with the alleged backing of Shell.
Shell argued the issue shouldn't be considered in U.S. courts because it's a foreign company facing claims for actions
outside the United States. Kiobel is a Nigerian national, though the Alien Tort Statute gives foreign nationals the right to
sue in U.S. federal courts for alleged violations of international law or treaties signed by the United States with foreign
countries.
Kiobel filed the lawsuit in 2002 before becoming a U.S. citizen.
Supreme Court Chief Justice John Roberts said the 1789 law doesn't reach to violations outside the United States,
dismissing the suit against Shell. While all of the justices agreed on dismissal, some members of the court said lawsuits
may be permissible if U.S. nationals or national interests are harmed.
Earthrights Co-founder Katie Redford said there's a silver lining in the ruling.
"The Kiobel opinion suggests that other cases involving human rights abuses abroad may still go forward," she said in a
statement. "Corporations operating in the U.S. still must think twice before they cut corners and curb human rights
standards to improve their bottom line."
---------------------------------
14. EU REVIEWS ITS STRATEGY IN THE ARCTIC
BRUSSELS (UPI, Thursday, April 18, 2013) -- The European Union wants to take advantage of energy and shipping
opportunities in the arctic but in a way that is environmentally sound, a commissioner said.
Neighborhood Policy Commissioner Stefan Fule said the European Union was ready to work with arctic countries as it
bids for observer status in the Arctic Council, an intergovernmental panel focused on the region.
"We want to work with our arctic partners and with the private sector to develop environmentally-friendly, low-risk
technologies that could be used by the extractive industries and the shipping industry," Fule said at the European
Parliament.
A U.S. report says changes in arctic sea ice cover is sparking interest of offshore developers looking at unexplored
reserves of oil and natural gas. This has implications in the way in which the government monitors activity in the region.
A reduction in sea ice brought on by warmer temperature trends has opened new shipping lanes as well.
Fule said that, whatever happens in the arctic, interested parties need to keep the environment in mind.
The Arctic Council in May is to consider an observer status application from the European Union, which was rejected in
2009. Some EU members are council members.
---------------------------------
15. SUPER-POWERED BATTERY BREAKTHROUGH CLAIMED BY US TEAM
(BBC, Thursday, April 18, 2013) -- A new type of battery has been developed that, its creators say, could revolutionise the
way we power consumer electronics and vehicles.
The University of Illinois team says its use of 3D-electrodes allows it to build "microbatteries" that are many times smaller
than commercially available options, or the same size and many times more powerful.
It adds they can be recharged 1,000 times faster than competing tech.
However, safety issues still remain.
Details of the research are published in the journal Nature Communications.
Battery breakthrough
The researchers said their innovation should help address the issue that while smartphones and other gadgets have
benefited from miniaturised electronics, battery advances have failed to keep pace.
Batteries work by having two components - called electrodes - where chemical reactions occur.
In simple terms, the anode is the electrode which releases electrons as a result of a process called oxidation when the
battery is being used as a power source.
The cathode is the electrode on the other side of the battery to which the electrons want to flow and be absorbed - but a
third element, the electrolyte, blocks them from travelling directly.
When the battery is plugged into a device the electrons can flow through its circuits making the journey from one electrode
to the other.
Meanwhile ions - electrically charged particles involved in the anode's oxidation process - do travel through the electrolyte.
When they reach the cathode they react with the electrons that travelled via the other route.
The scientists' "breakthrough" involved finding a new way to integrate the anode and cathode at the microscale.
"The battery electrodes have small intertwined fingers that reach into each other," project leader Prof William King told the
BBC.
"That does a couple of things. It allows us to make the battery have a very high surface area even though the overall
battery volume is extremely small.
"And it gets the two halves of the battery very close together so the ions and electrons do not have far to flow.
"Because we've reduced the flowing distance of the ions and electrons we can get the energy out much faster."
Repeatable technique
The battery cells were fabricated by adapting a process developed by another team at the university which is designed to
make it faster to recharge the batteries than lithium ion (Li-on) and nickel metal hydride (NiMH) equivalents.
It involves creating a lattice made out of tiny polystyrene spheres and then filling the space in and around the structure
with metal.
The spheres are then dissolved to leave a 3D-metal scaffold onto which a nickel-tin alloy is added to form the anode, and
a mineral called manganese oxyhydroxide to form the cathode.
Finally the glass surface onto which the apparatus was attached was immersed into a liquid heated to 300C (572F).
"Today we're making small numbers of these things in a boutique fabrication process, but while that's reliable and we can
repeat it we need to be able to make large numbers of these things over large areas," said Prof King.
"But in principle our technology is scalable all the way up to electronics and vehicles.
"You could replace your car battery with one of our batteries and it would be 10 times smaller, or 10 times more powerful.
With that in mind you could jumpstart a car with the battery in your cell phone."
Safety fear
Other battery experts welcomed the team's efforts but said it could prove hard to bring the technology to market.
"The challenge is to make a microbattery array that is robust enough and that does not have a single short circuit in the
whole array via a process that can be scaled up cheaply," said Prof Clare Grey from the University of Cambridge's
chemistry department.
University of Oxford's Prof Peter Edwards - an expert in inorganic chemistry and energy - also expressed doubts.
"This is a very exciting development which demonstrates that high power densities are achievable by such innovations,"
he said.
"The challenges are: scaling this up to manufacturing levels; developing a simpler fabrication route; and addressing safety
issues.
"I'd want to know if these microbatteries would be more prone to the self-combustion issues that plagued lithium-cobalt
oxide batteries which we've seen become an issue of concern with Boeing's Dreamliner jets."
Prof King acknowledged that safety was an issue due to the fact the current electrolyte was a combustible liquid.
He said that in the test equipment only a microscopic amount of the liquid was used, making the risk of an explosion
negligible - but if it were scaled up to large sizes the danger could become "significant".
However, he added that he soon planned to switch to a safer polymer-based electrolyte to address the issue.
Prof King added that he hoped to have the technology ready to be trialled as a power source for electronic equipment
before the end of the year.
The University of Illinois at Urbana-Champaign team is one of several groups attempting to overhaul the way we power
gadgets.
Researchers in Texas are working on a kind of battery that can be spray-painted onto any surface while engineers at the
University of Bedfordshire are exploring the idea of using radio waves as an energy source.
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