In the Pipeline: 2/22/11

The Obama Administration says that we don’t need new production in the Gulf because and can just get more oil from OPEC—but that assumes OPEC countries, like Libya are producing oil: Wall Street Journal (2/22/11) reports: The head of the International Energy Agency said Tuesday that any small disruption in oil production as a result of unrest in Libya could cause a rise in the price of oil, but that there are strategic stockpiles and the organization of Petroleum Exporting Countries is ready to use its spare capacity…”The market is tight, so certainly if small disruption happens it may create a spike in the price, ” Nabuo Tanaka told reporters on the sidelines of an oil ministers meeting in the Saudi Arabian capital. “If physical disruption happens, and if it’s significant, we have to mobilize, ” he added. “We have strategic stockpiles of 1.6 billion barrels and I know that OPEC has a good spare capacity and they need to work.”…Mr. Tanaka said Tuesday he had received reassurances from OPEC’s secretary general that the organization would use its spare capacity in the case of a supply disruption. “I talked with Secretary General El Badri and he said he is very much committed if disruption happens, he will use it, the spare capacity,” Tanaka said. “The message to the market is, ‘Don’t panic. We have enough stockpiles.'” He also said the IEA’s forecast “at this moment, is if OPEC produced current level the market will be very well provided.”

Continued: Obama Administration bets on Middle East oil over Gulf of Mexico Reuters (2/21/11) reports: U.S. oil prices led the rally to jump by more than $5, the most in over two years, as traders also rushed to cover short positions in the key Brent/WTI spread, which had blown out to a record $16 a barrel. The April spread narrowed to $10 during the day, but widened to over $12 in after-hours trade…The focus was on deadly clashes in Libya, where one oil firm was shutting down some 100,000 barrels per day (bpd) of production and others evacuated staff. The leader of the Al-Zuwayya tribe threatened oil exports to the West would be cut off unless authorities stopped violence…”The market is on edge about the potential for Middle East and North Africa supply disruptions,” said Mike Wittner, head of commodities research, Americas, at Societe Generale…”If you’ve got reports that actual disruptions are starting to occur, it’s going to have a supportive impact. A lot of it is high-quality crude and that is important as well.”…The increasingly violent protests that appeared to put Muammar Gaddafi’s four decades of rule in jeopardy were the realization of weeks of mounting concerns that Egypt-inspired unrest would seep into nearby oil producers.

The New Kyoto Protocol — stop losing trillions of yen on biomass. Japan Times (2/22/11) reports: None of the government’s 214 biomass promotion projects — with public funding coming to ¥6.55 trillion — over the past six years has produced effective results in the struggle against global warming, according to an official report released Tuesday…The Internal Affairs and Communications Ministry, which evaluates public works projects, urged the agriculture and five other ministries conducting biomass projects using sewage sludge, garbage and wood, to take corrective action…The Administrative Evaluation Bureau found in a study of biomass projects through March 2009 that the cumulative budget totaled about ¥6.55 trillion…The six ministries taking part in such projects, however, have yet to confirm the financial results for 92, or 44 percent, of the 214 projects, with one bureau official saying: “The figures tell everything. The ministries need to produce certain results because they are using taxpayers’ money.”

What’s the main difference between Al Gore and Bernie Madoff? One is in jail and the other is still peddling his scheme to investors Securities and Exchange Commission (2/18/11) reports: The Securities and Exchange Commission today charged a group of seven individuals who perpetrated a fraudulent pump-and-dump scheme in the stock of a sham company that purported to provide products and services to fight global warming…The SEC alleges that the group included stock promoters, traders, and a lawyer who wrote a fraudulent opinion letter. The scheme resulted in more than $7 million in illicit profits from sales of stock in CO2 Tech Ltd. at artificially inflated prices. Despite touting impressive business relationships and anti-global warming technology innovations, CO2 Tech did not have any significant assets or operations. The company was purportedly based in London, and its stock prices were quoted in the Pink Sheets…According to the SEC’s complaint filed in U.S. District Court for the Southern District of Florida, the scheme was perpetrated through Red Sea Management Ltd., a Costa Rican asset protection company that laundered millions of dollars in illicit trading proceeds out of the United States on behalf of its clients. The U.S. Department of Justice today announced related criminal charges against six of the individuals.

Winning the Future: China plans to build rail link across Columbia as alternative to Panama Canal so they can quickly receive coal shipments New York Times (2/21/11) reports: Many experts agree that for the world to rein in rising greenhouse gas emissions, the galloping economies of China and India would have to figure out how to base their future economic expansion on technologies and fuels that are “cleaner” than the fossil fuels the United States and Europe used in their own industrial revolutions long ago…We hear a lot about how China and India are becoming world leaders in clean technology, producing and installing solar factories and wind farms at a breakneck pace. Problem solved? Well, no…A couple of developments this week underscored why we should not sleep easy: burgeoning economic growth in China and India requires tons of energy in whatever form it is available. So, yes, while China and India have become bold pioneers in clean technology, they are also enthusiastically developing new sources of the oldest, most polluting fuels. The investments in the latter often dwarf the new clean-tech commitments in terms of dollars and ambition…The Financial Times reported this week that China and Colombia are discussing a plan to build a rail link across Colombia that could serve as an alternative to the Panama Canal. One major reason that China is pursuing the project, the newspaper notes, is that China has become a major importer of Colombian coal, and a rail link carrying it from the eastern coast to the western coast for export to Asia would remove a logistical barrier.

Will the peak oilers please stand up? We’re looking at you T. Boone — Brazil to become top 5 oil producer with Lula discovery Houston Chronicle (2/20/11) reports: Brazil’s quest to remake itself into a global oil superpower is gaining momentum on this giant ship anchored about 200 miles south of Rio de Janeiro in the deep waters of the Atlantic Ocean…Crews on this tanker-like vessel recently began extracting the first barrels of oil from a giant field known as Lula, more than three miles below, that has been called the biggest oil discovery in the Americas in three decades…Production is still at a trickle as the project ramps up. But lessons learned here will be critical in developing a vast network of nearby “pre-salt” reservoirs that are estimated to hold 50 billion to 100 billion barrels of oil — enough to turn Brazil into one of the world’s top five producers of crude…“The challenges to develop this area are very big,” acknowledged Humberto Americano Romanus, a senior engineer with Petrobras, Brazil’s state-owned oil company, as he stood on the Cidade de Angra Dos Reis on a hot, clear February day in the Southern Hemisphere’s summer.

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