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Big Oil

 

 

Time and time again environmentalists resort to attacks on Big Oil or claim those opposing their tenet are funded by the ‘evil’ oil industry.  More recently these same activists are claiming that even Big Oil has given up the fight and is now on their side.  It is certainly true that the oil industry has not retaliated as one might expect.  So what has happened?

 

Well it is actually quite simple and as the cliché says, “follow the money!”  The oil industry comprises many of the best minds in the world.  They are far from being foolish and can see business opportunities when they appear.  Furthermore they have the ready cash allowing rapid acquisitions and investments.

 

All the majors are not solely oil companies but energy enterprises.  They have portfolios and these include so called ‘sustainable’ or ‘alternative’ energy branches.  Rather than stating examples, I suggest that interested parties do their own research.  It will take about a minute on one of the main Internet search engines.

 

One important thing to remember is that governments across the world are providing what can only be described as huge financial rewards to ‘green’ energy providers.  This is something that any company would relish and chase.  Of course, the oil industry sees this and realises it can play the same cards, and essentially recover some of the gross taxation they have been landed with over the years.

Anyway, rather than rattle on with endless commentary, it is easier and more useful to point out and summarise the major issues generally missed by others.

 

The oil companies (majors at least) have recognised that there is profit to be made from AGW paranoia in just the same way as any other industry.  Without going into details, here are a few bullet points to consider: 

  1. It is seen as good PR to placate both the public and shareholders by flying the green banner.  No surprise there!

  2. Most oil companies have a portfolio of energy subsidiaries including electricity generation, refining, distribution , etc.  Shell has recently shed much of its renewable holding, apparently only retaining the biofuel section on the generation side.

  3. To capture carbon dioxide and sequester it uses energy.  Estimates are often around 30% extra.  So there we have 30% profit immediately.

  4. The reservoirs where it is to be sequestered are essentially owned by these companies.  They will charge for injection and storage.  This will no doubt be some kind of arrangement requiring an on-going rental with additional costs for monitoring.

  5. Licensing of the technology for CO2 separation and sequestration will raise funds.  Essentially this is oilfield technology and no doubt well patented.  CO2 has been routinely removed from gas for many years in order to ‘sweeten’ it.  The technology is relatively mature and commercialised.

  6. In some cases the CO2 can be used to aid the flow of oil from the reservoir thereby reducing the costs of extraction. 

  7. Gas and oil are generally found together.  Natural gas contains CO2 in small concentrations, but typically much higher than atmospheric levels ,  http://www.naturalgas.org/overview/background.asp.  When CO2 is used to aid extraction it may return to the surface in the gas/oil and will not be readily discernible from the natural so will most likely be ignored.

  8. Estimates of leakage appear to be about 1% per year.  Therefore it can only be regarded as a delaying action, not a permanent fix.  Thus, even if it did work and had a benefit, the oil companies have a perpetual motion machine to milk.

  9. There is a large and very lucrative industry supporting the oil companies and this is gearing up to ride the AGW bandwagon too.  The largest is Schlumberger.  You will get the idea from this link:  http://www.slb.com/content/careers/working/global/climate.asp

  10. High oil prices are good for oil companies, but politically not so.  However, it is largely politics and futures speculation that keep the price of oil high.  Reducing the amount going to market increases the price, as is the case with any commodity.  Here are a couple of examples of factors affecting the oil price:

    • Supply controls by the likes of OPEC.

    • Restrictions on drilling/exploration, often as a result of environmental concerns.

    • Instability in the Middle East.

  1. High prices increase investment in technology and exploration which leads to more production and lowers price.  Oil companies strive for a balance but politics and market forcing tend to cause  disturbances with a time lag and thus cyclic variations result.

There are probably other points that I have missed, but I think the list gives an idea of the scale and reasons why Big Oil is not complaining too loudly.

 

 

 

 


 


 


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