PetroScan

PETROSCAN (Monthly e-newsletter) January 2012

CONTENTS: FOREWORD OIL, GAS & ENERGY NEWS GENERAL INTEREST ‘Aftershock’ Book Predicts Economic Disaster Amid Controversy Fossil fuel forecast: a huge role Global Growth Slows to 3.9% as O’Neill Sees BRICs Diminished by Population Self-healing concrete could be formed using bacteria spores Oil is still indispensable India is world's sixth most innovative country: Survey

NEWS LOCAL OVL to resume drilling in South China Sea Crude supplies from West Asia hang in balance HPCL to double Saudi crude imports Indian Oil drops plans to enter merchant power business ONGC gets Rs 3,000 crore royalty from Cairn India ONGC has been able to arrest decline of oil production: CMD

Oil retailers plan to outsource facilities India won't cut Iranian oil imports despite US, EU sanctions: Pranab Mukherjee Ministry refers RIL's marketing margin issue to regulator NEWS GLOBAL Iran Oil Halt to OECD Likely to Raise Price by $30, IMF Says Energy-hungry Asian economies look to keep Iranian oil flowing in wake of US sanctions PetroScan-January 2012

Obama Backs Natural-Gas Fracking to Add 600,000 Jobs, Vows Safe DrillingQ Obama Stance on Fossil Fuel Angers Industry Asia readies to shun Iran oil; India mulls new way to pay Asia to Boost West African Crude Imports on Cheaper Brent, China Demand South Sudan, Kenya Sign Agreement to Build Oil Pipeline to Port of Lamu Kuwait Selects France’s Total as Partner for $9 Billion Chinese Refinery U.S. Seen Being Liquefied Gas Exporter in 2016 on Fracking Gains Colorado emerges as next oil frontier Shell pays $25m to settle up royalty dispute ConocoPhillips seeks partner for oil sands assets NEW & RENEWABLE ENERGY Govt plans offshore facility to tap wind energy Link between fracking and quakes unsure Consumers Increasingly opt for Solar Power Adani Group Commissions country’s largest solar project Solar power from external walls / new material allows for more efficient energy production Offshore solar installation harness power from waves Overcapacity plagues solar industry Minds meet on shale gas, fracking Adobe's 4-Step Path Toward a Net Zero Energy Balance Suzlon Energy bags `2,000 cr orders 19% of new capacity to come through wind energy 140 mw solar power coming up by Feb Shale Gas: US 60m barrel a day waste water story CSR

IOC plans medical facilities at outlets

HSE Chevron: Rig catches fire off Nigeria’s delta Fired BP worker says he was asked to fake spill data 3 hurt in fiery well site explosion near Pearsall SUSTAINABILITY & CLIMATE CHANGE Pollutants key to climate fix

INNOVATION Top Ten Innovations 2011 Gauging Innovation's Pulse PLANT RELIABILITY Port Explosion Report Reveals Tank Corrosion “Easily” Detectable LEADERSHIP The Power of Mentoring GENERAL READING PetroScan-January 2012

Why Students leave the Engineering Track Superman Challenges in the year of science Demand for environmental professionals may grow by 60% this year: Experts INTERVIEW:

Mr. B K CHATURVEDI/PLANNING COMMISSION Subsidy sharing mechanism depends on fiscal situation

REPORT:

Energy imports’ share of demand down almost half by 2035 Industrial energy efficiency vital for sustainable development – UN report

*********************************************************** FOREWARD Dear Patrons of Petrotech, The First month of 2012 is just ended on a festive note of the Festival of Spring – Vasant Panchami of Sarswati Puja.

Saarswati, in the Indian ethos, is the fountain head of knowledge, art, innovation and creativity.

Only knowledge alone instills humility which in turn makes people flexible and ethical. The corporations are lead by people of knowledge. And, in the current state of the world and planetary affairs ( read climate Change, global warming, ever increasing population), the corporate leaders have to ensure ensuring that Innovation, greening of their business, ethics and CSR stays on the companies radar of growth strategy, "Ethics in business must not be a fad that disappears around the next corner of economic resurgence," warns Prof Gurthrie, dean of the George Washington University School of Business. The lesson of the last decade is that when ethics fails to temper economic passions, we all suffer. It was the oversight of ethics and excessive greed that US EU and almost entire globe continue to suffer, in this decade as well.

This issue of PetroScan, besides, its usual feature news and reports, brings to you an article from Forbes, titled “Paying More Than Lip Service to Business Ethics”, which has always been shall remain very relevant for the business for ever.

How do we develop core culture based on ethics and value system among the Gen Next, so that the business in future shall be on stronger footings of ethics and values? Recently I was invited to interact with the students and faculty of the Department of Chemical Engineering, Amrita School of Engineering, Amrita University, Coimbatore. Walking through this highly energized and vibrant campus was a life time experience. The whole environment of campus was created from the commitment of faculty and staff, which has, certainly been one factor for instilling in the students values based culture and deep rooting of ethos and innovation.

I feel, that the people from our industry and other academic institutions must visit to see fro themselves this great experiment in creating a different kind of generation, which is more creative and innovative and yet ethical in their thought and behavior. They are young and energetic, and yet their energies are routed through channels of passion to excel, where emans is more important than the goal.

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Their professors are highly qualified and committed, rather I should say devoted to developing a better generation of young people, who would serve any company, country and the humanity in a better way that their counterparts. The subject knowledge imparted to them may be same and at par with the best in class, but what would differentiate them is their greater understanding of effect of values and ethics on their success that will be lasting and that will give them happiness.

The corporations and companies need people who would be aligned to the vaues and culture of the companies, but then is it also not the responsibility of the corporations to encourage creation of such institutions, which apart from imparting best of knowledge would also instill those values which are universally acceptable? Corporations therefore, as part of their CSR plans, must encourage creating more of such institutions all over the country.

Energy Security The oil prices has been hovering in a band of US$ 100 – 120, but the imbargo and sanctions on Iran, is a real threat for putting the oil prices on boil, which will burn great holes in already empty pockets of developing and emerging economies like ours. This is one more reminder for us to go whole hog for securing our energy needs, do some things serious to harness the potential of Shale gas, Solar and wind energy faster. We have to relook at our Solar energy and wind Energy policies. We may use some of Rural development funds for creating such energy facilities in rural areas which shall generate long term employment besides much need power.

The Petrotech Veterans had strongly felt about faster formulation of India’s Shale Gas policy, and send its recommendations to the Government last year. We hope, an integrated policy, covering all environmental and land related issues, shall be soon announced, for improving the energy security of our country with shale gas, like it has done for US and is on way of doing for Poland, China and Mexico.

We have received many good reviews and suggestions about the PetroScan, and we seek your continuous guidance and demand on us to improve it meet your requirements from this monthly collection of NEWS AND VIEWS RELATED TO THE OIL INDUSTRY. With greetings of the spring season, Anand Kumar Director-Petrotech OIL, GAS & ENERGY NEWS General Interest

‘Aftershock’ Book Predicts Economic Disaster Amid Controversy Robert Wiedemer’s new book, “Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown,” quickly is becoming the survival guide for the 21st century. And Newsmax’s eye-opening Aftershock Survival Summit video, with exclusive interviews and prophetic predictions, already has affected millions around the world — but not without ruffling a few feathers.

Initially screened for a private audience, this gripping video exposed harsh economic truths and garnered an overwhelming amount of feedback. “People were sitting up and taking notice, and they begged us to make the video public so they could easily share it,” said Newsmax Financial Publisher Aaron DeHoog. But that wasn’t as simple as it PetroScan-January 2012

seems. Various online networks repeatedly shut down the controversial video. “People were sending their friends and family to dead links, so we had to create a dedicated home for it,” DeHoog said.

This wasn’t the first time Wiedemer’s predictions hit a nerve. In 2006, he was one of three economists who co-authored a book correctly warning that the real estate boom and Wall Street bull run were about to end. A prediction Federal Reserve Chairman Ben Bernanke andhis predecessor, Alan Greenspan, were not about to support publicly. Realizing that the worst was yet to come, Wiedemer and company quickly penned “Aftershock.” However, just before it was publicly released, the publisher yanked the final chapter, deeming it too controversial for newsstand and online outlets such as Amazon.com.

“We got lucky,” DeHoog said. “I happened to read the original version, which contained this ‘unpublished chapter,’ which I think is the most crucial in the entire book. Wiedemer gave Newsmax permission to share this chapter with our readers.”

With daily economic forecasts projecting doom and gloom and no recovery in sight, people need to learn how to survive economic disaster. During the past quarter alone, unemployment skyrocketed to 9 percent. Inflation continues to soar and the U.S. national debt crisis is still on the fence between raising the debt ceiling or massive budget cuts, with no resolution in sight.

During Newsmax’s Aftershock Survival Summit video, Wiedemer discusses the dire consequences of Washington, D.C.’s, bipartisan, multi-decade “borrow-and-spend” agenda. He also explores the inflation nightmare, the impending plunge in home prices, the looming collapse of the stock and bond markets, a possible historic surge in unemployment, and how to survive what life in America will be like in the days of the “Aftershock.” Despite appearances, Aftershock is not a book with the singular intention of scaring the heck out of people. Although it does provide a harsh outlook for the economic future of America, the true value lies in the wealth of investment tips, analyses, predictions, budget advice, and sound economic guidance that people can act on immediately, offering a ray of recovery hope and an indispensable blueprint for life after shock.

Viewers of Newsmax’s Aftershock Survival Summit video heard detailed advice for handling credit card debt, home and car loans, life insurance, unemployment issues, how to beat inflation, making personal budget cuts and many more recovery tools to survive the economic aftershock. They also took advantage of a special Newsmax offer for a free copy of the new edition of “Aftershock,” which includes the final “unpublished chapter.”

Fossil fuel forecast: a huge role Leaders of BP and ConocoPhillips called Wednesday for greater access to and development of oil and natural gas fields, as a BP report showed fossil fuels will continue to dominate the world’s energy needs for at least the next 20 years.

Renewable energy is growing faster than other sources, at about 8.2 percent annually, but will make up only 6 percent of energy use by 2030, according to the forecast released Wednesday by BP. Oil, natural gas and coal will still account for 80 percent of global energy use.

Separately, ConocoPhillips CEO James Mulva said in Houston that the need and availability of fossil fuels weigh against government policies he said tax oil and natural gas differently than other energy sources and require utilities to use certain levels of renewables. “Past assumptions of oil and gas scarcity that went into business strategic plans, government policies and public attitudes are out of date,” Mulva said, speaking Wednesday at a summit hosted by Rice University’s Baker Institute. BP’s report showed that among fossil fuels, natural gas consumption will grow the fastest, at 2.1 percent per year. Its growth is especially manifest in the U.S., where its share as a power plant fuel has risen while coal’s has steadily declined, from 50 percent in 2005 to 45 percent in 2010.

A glut Technology improvements have allowed drillers to access natural gas in deep, dense shale rock economically for the first time. That has led to a rush on North America’s shale gas fields, leaving a glut of low-priced natural gas in the U.S. PetroScan-January 2012

market. “Our entire understanding of North American energy potential is changing,” Mulva said. “Everyone is having to cast aside some old assumptions, such as the one about domestic fossil fuels being in short supply. They are not.” He said the technology that fueled shale gas production has begun driving a rapid increase in the development of domestic oil fields, too. With natural gas prices low, producers are moving more rigs into fields containing higher-priced crude and natural gas liquids, including the Eagle Ford shale in South Texas and the Bakken shale in North Dakota.

BP said that the increase in world energy demand will occur mostly in emerging nations such as China and India as they look to cheap fossil fuels to power their growth. Slower population growth in developed countries, as well as greater efficiency of appliances, vehicles and machinery, will keep energy consumption stable in the United States and Europe, BP forecast. Developed countries will put more renewables on the electricity grid, BP said. Fuel efficiency in gasolineand diesel-powered vehicles will rise, and electric and hybrid vehicles become more common, BP said.

Still, the forecast noted that oil will account for 87 percent of transportation fuels by 2030. Worldwide, BP projects energy use will grow about 1.6 percent per year, mostly in electricity. “That’s like adding one more China and one more U.S. to the world’s energy demand by 2030,” CEO Bob Dudley said in prepared remarks in London.

Coal share still growing Globally, coal’s share of the fuel market will continue growing for a few more years, but the trend will start to reverse by 2020, as a significant portion of power generation shifts from coal to cleaner-burning natural gas, BP said.

Absent any major policies for tackling emissions linked to climate change – such as an international emissions-trading scheme or carbon tax – the continuing dominance of fossil fuels will mean global greenhouse gas emissions will rise 28 percent from 2010 to 2030, according to BP. BP downgraded its prior projections for growth in nuclear power, as the Fukushima disaster in Japan casts a cloud on the safety of the fuel source.

Global Growth Slows to 3.9% as O’Neill Sees BRICs Diminished by Population

By Bloomberg News - Jan 2, 2012 A year ago, Catherine Liu employed more than 2,000 people at her five Shanghai luggage-making factories. Now, as the dwindling supply of low-paid young workers forces wages and costs higher, she has 1,200 left. “Local workers are getting much older,” said Liu, owner of Shanghai Worldwide Trading Co. “If you want to train them, they must be young. It’s very difficult to survive.”

Aging and shrinking labor pools are also poised to curb expansion across the other so-called BRIC nations that contributed almost half of global growth in the past decade. With fewer youths keeping factories going and more pensioners to support in those markets, the world economy is set to slow, Goldman Sachs Group Inc. (GS) says. The number of people older than 65 in Brazil, Russia, India and China will rise 46 percent to 295 million by 2020 and to 412 million by 2030, according to United Nations projections. The pool of 15 to 24-year-olds, the mainstay for factories like Liu’s that drove China’s boom for three decades, will fall by 61 million by 2030, about the population of Italy.

As the BRICs slow down, global growth probably will peak at about 4.3 percent this decade and fall to 3.9 percent in the 2020s, according a Dec. 7 report by Goldman analysts. That’s prompting fund managers including Mark Mobius to invest in so- called frontier markets such as Nigeria, Vietnam and Argentina, where average annual growth is set to rise to 5.1 percent this decade, from about 4.3 percent in the previous 10 years. One of his holdings, Nigeria’s Zenith Bank Plc (ZENITHBA), has risen 11.9 percent in the past two years, while the MSCI Emerging- Markets Index (MXEF) is down 7.4 percent.

Top Ten Goldman Sachs Asset Management Chairman Jim O’Neill, who coined the BRICs acronym a decade ago, said other emerging economies may now be better investments -- especially Indonesia, Turkey, Egypt and Mexico. “These four countries could be in the top 10 contributors to global GDP this decade, adding well over $2 trillion,” London-based O’Neill said in an e-mailed response to questions on Dec. 29. “With large young populations, these countries could become powerful growth stories.”

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While Goldman started its N-11 fund (GSYIX) in February covering the “Next Eleven” emerging nations to “benefit from superior growth potential,” O’Neill said the size of the BRICs economies means they will remain “the most dominant and positive force in the world economy.” Together, Brazil, Russia, India and China account for about 25 percent of world gross domestic product, according to Goldman.

‘Demographic Realities’ O’Neill’s company predicts that the average annual expansion of the BRIC countries will fall during this decade to 6.9 percent from 7.9 percent in the 10 years to 2009, then drop to 5.3 percent in the 2020s. “In terms of the role of the BRICs in driving global growth, the most dramatic change is behind us,” the Goldman analysts, led by Dominic Wilson in London, wrote in a Dec. 7 note. Already, the demographic volte-face has prompted calls for China to end its one-child policy, which exacerbated the drop in workers since its implementation in 1979; and has forced legislation in Brazil to control the cost of public-service pensions. In Russia, a shortage of qualified middle-aged workers is being blamed for a crisis in its space program after failed exploration and satellite launches.

In India, where the working-age population is projected to rise more than a quarter by 2030 to 972 million, illiteracy among more than one-third of workers is preventing the nation from capitalizing on its demographic fortune.

China Shift “Financial markets, businesses and policy makers have failed to recognize that demographic realities are creating pressures for slower future growth,” said Nicholas Eberstadt, a demographer at the American Enterprise Institute in Washington, who has advised the World Bank. The shift to a society with a dwindling number of employees funding a growing pension bill is most pronounced in China, the world’s biggest growth engine last year.

After expanding 2.5 percent a year over the past three decades, China’s working-age population has almost stopped growing, said Richard Jackson, director of the Global Aging Initiative at the Center for Strategic and International Studies in Washington. That pool will contract almost 1 percent a year by the mid-2020s, he said. The number of 15- to 24-year-olds, who staff the factories that make cheap clothes, toys and electronics, will fall by almost 62 million, to 164 million, in the 15 years through 2025, UN projections show. Meanwhile, those over 65 will rise 78 percent to 195 million.

More Children Needed The positive contribution that came from an expanding workforce in China will turn negative in 2013, wiping at least half a percentage point off the potential annual growth rate, according to Wang Feng, a director of the Brookings-Tsinghua Center for Public Policy in Beijing. “China’s shooting itself in the foot” with the one-child policy, said Wang. “It needs to think of ways to encourage young couples to have more children.”

The shortage of labor has left employers such as Shanghai Worldwide’s Liu with a conundrum. Moving production to a country like Vietnam where wages are lower is “too complicated” for a small company like hers, with $10 million in annual sales. And relocating to lower-cost regions within China may not help, she said. “Young inland workers are not like their parents,” said Liu in an interview. “They want easier jobs in supermarkets or restaurants.” And the surplus of farmers older than 40 don’t want to work in factories or would need months of expensive training, she said.

Life Expectancy In Russia, the number of people aged 65 or more as a proportion of those aged 20 to 64 -- known as the old-age dependency ratio -- will rise to 45 percent by 2050, from about 20 percent in 2000, the Paris-based Organization for Economic Cooperation and Development said in a Dec. 12 report. While that’s in line with the change forecast across OECD economies, the causes are different, the report said. Russia has a declining working-age population because both life expectancy and birth rates are low, rather than because the number of elderly people is increasing.

The country also suffered a brain drain during the 1990s when the economy slumped and public funding stalled for many research programs. There are more than 100,000 Russian-speaking researchers working or studying outside Russia, Kommersant reported in November, citing an estimate from the Russian- Speaking Academic Science Association.

When fragments of a Meridian satellite rained down in Siberia on Dec. 23 after its Soyuz rocket failed, Vladimir Popovkin, director of the Federal Space Agency, blamed it on a workforce hollowed out by the exodus.

‘In Crisis’ “The industry is in crisis,” Popovkin said, according to state-run RIA Novosti. “We need to find a solution and to put more trust in young people. There are basically no middle-aged people.” Debris from Russia’s failed Mars probe, launched in PetroScan-January 2012

November, is expected to fall to earth this month. Russia’s pension fund deficit will double in 2012 to 3 percent of GDP because of a net increase of about 500,000 retirees and tax cuts, Yury Voronin, a deputy health and social development minister, said in October. “Who will pay our pensions?” said Farida Kolyulina, 55, a pensioner selling vacuum flasks outside Moscow’s Belorusskaya metro station. “It’s a complete mess. I shouldn’t be working.”

BRIC funds recorded $15 billion of outflows in 2011 as the MSCI BRIC Index (MXBRIC) trailed the S&P 500 for five straight quarters, EPFR Global data show.

Like the BRICs Frontier markets “are now in the position that emerging- market countries like the BRICs were 20 years ago,” said Mobius, who oversees more than $40 billion as executive chairman of Templeton Emerging Markets Group in Hong Kong. “In many cases frontier markets are now in their take-off stage where self-sustaining development is taking place as a result of high consumer spending,” said Mobius in an e-mail. Templeton is finding “bargains” in Nigeria, Saudi Arabia, Egypt, Kazakhstan, Qatar, Ukraine and Argentina, Mobius said. His focus is on consumer stocks, including banks, automakers, retailers and telecommunications; and producers of oil, iron ore, aluminum, copper, nickel and platinum. Templeton Frontier Markets Fund’s top holdings are Kazakhstan’s KazMunaiGas Exploration Production (RDGZ), Commercial Bank of Qatar (CBQK) as well as Zenith Bank. Since 2009 the S&P Civets 60 Price Return Index, a measure of stocks from Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa, has risen 78 percent while the MSCI BRIC Index gained 52 percent.

African Boom Five of the 20 projected fastest-growing countries last year were in Africa, including Ghana at 13.5 percent; Eritrea at 8.2 percent; Ethiopia at 7.5 percent; and Mozambique at 7.2 percent, the International Monetary Fund said.

O’Neill said non-BRICs emerging markets need to improve performance in economic policy, education and technology to sustain their strong growth. The Goldman Sachs N-11 Equity Fund has lost 10.7 percent since inception on Feb. 28 while the Goldman Sachs BRIC Fund lost 24.3 percent. The Standard and Poor’s 500 Index (SPX) lost 5.3 percent in the same period. Even as the BRICs slow, they may still outpace the developed world over the coming decades, enabling their share of global GDP to rise to almost 40 percent by 2050, Goldman estimates. O’Neill’s book “The Growth Map,” published last month, says the group still has “rosy prospects.” He estimates that even with slower growth, the BRICs economies will collectively be bigger than the U.S. by 2015.

Degree of Influence “In terms of growth rates, other countries will perhaps grow at a similar fast rate as the BRICs, some more,” said O’Neill.

“But they won’t have the same degree of influence on the world economy.” BRICs can soften the impact of aging by liberalizing financial markets and services, raising retirement ages, and boosting productivity, said Eberstadt. “The BRICs have significant scope to offset the intensifying demographic drag,” said Markus Jaeger, an economist with Deutsche Bank AG inNew York. They can increase output via urbanization and greater labor force participation or by moving up the technological ladder, he said. Five of the world’s 10 biggest economies -- Japan, Germany, France, Italy and Canada -have elderly dependency ratios that are among the highest in the world, boosting their own health- care and pension claims.

Pension Bill The growth of Brazil’s working-age population contributed 44 percent of its economic gain in the decade to 2010, according to Amlan Roy, head of global demographics and pension research at Credit Suisse AG in London. That group’s growth is projected to fall to 11.3 percent this decade and 2.7 percent in the 2020s from 16.3 percent in the last decade, according to the UN. Brazilians aged 65 or older will more than double by 2030 to 30.1 million.

Age-related spending in Latin America’s biggest economy will surge to 17 percent of GDP by 2030 from 13.6 percent in 2010 and to almost 26 percent by 2050, according to estimates by rating company Standard & Poor’s. The ballooning cost of paying retirees has made legislation to limit the share of public service pensions a top priority for President Dilma Rousseff’s government. Social Security minister Garibaldi Alves says the nation’s pension deficit is rising at 10 percent a year in a country where civil servants account for almost 20 percent of all jobs. The demographic standout among the BRICs is India. Its working-age population will rise 117 million by 2020 and 98 million more the following decade, according to UN data.

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Literacy Hurdle That may still not be enough for the South Asian nation to emulate the industrial development that transformed China into the world’s second biggest economy. Fewer than half of Indians in their 20s completed secondary education and 37 percent of adults are illiterate, according to Jackson at CSIS. For Vinod Sharma, who runs Deki Electronics Ltd. in Noida, on the outskirts of New Delhi, the growing ranks available for work are of little help. “We are demographically well placed but scratch the surface and you will find 100 million people looking for a job,” said Sharma, who employs about 500 people to make parts for TVs and fluorescent lights. “You have the numbers but not the right skills. I simply can’t find trained people.”

Sharma said government training programs aren’t geared to new industries and his company has to hire unskilled staff and teach them in-house to solder components and wind capacitors.

Shop Floor “It takes about six months for people our company hires to hit the shop floor,” he said. “A guy who learns to wind a capacitor becomes reasonably good only after three years.” For China, the demographic shift is happening faster because of the one-child policy. “Unless China prepares, a retirement crisis of immense proportions looms just over the horizon in the 2020s,” said Jackson. “On the current course, tens of millions of Chinese are on track to reach old age without pensions, without health care, and without family support networks.” The World Bank said a 2005 report that China’s unfunded pension liabilities may be as high as $1.6 trillion. A subsequent lack of action and rising life expectancy mean that liability is “going to be larger now,” said Wang of Brookings.

“Our generation is getting old, but the biggest problem has yet to come,” said Zhao Meidi, 69, as she walked her grandson home from music school in one of Shanghai’s last undeveloped neighborhoods. “Look at the generation born after the establishment of the People’s Republic. Who will take care of them?”

Self-healing concrete could be formed using bacteria spores Materials scientists are experimenting with the possibility of creating self-healing concrete using biomineralisation.

The process would involve putting spores of bacteria — which naturally produce calcium carbonate — in the concrete mix, which would be activated upon the formation of cracks. ‘Concrete is basically weak in tension and strong in compression,’ said collaborator Prof Paramita Mondal of the University of Illinois at Urbana-Champaign. ‘People have tried to deal with the problem over the years in a variety of ways. The most common solution has been to use steel rebar to reinforce concrete, but it still cracks. The team noted that, in nature, bacteria that form calcium carbonate are known to influence the rock-formation process of carbonate rocks and sediments such as limestone. The challenge was finding one that would be active in concrete’s environment of high alkalinity and low oxygen. The team first tested B. pasteurii — a non-pathogenic micro-organism commonly found in soil — in the lab, showing that it could deposit limestone minerals under the right conditions. ‘Then we made a cement specimen and applied the bacteria with food,’ said Mondal. ‘We saw the same kind of deposition. We did a chemical analysis of it, and it is the same calcium carbonate that’s forming.’

Eventually, the team hopes to prove that, after introducing these micro-organisms into concrete during mixing, they will form spores, or hibernate, in the highly alkaline condition inside the concrete. Once a crack occurs, the pH level at the cracked surface will drop owing to the exposure of surface to air. The combination of the pH drop and a flow of oxygen and carbon dioxide at the crack face will activate the micro-organisms and will provide the conditions favourable for growth. The micro-organisms will deposit calcium carbonate and, as the crack fills up, the supply of oxygen and carbon dioxide will be interrupted, causing the micro-organisms to hibernate again, ensuring the continual effectiveness of the micro-organisms in filling up cracks at the same location.

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Oil is still indispensable Indian Express Year 2011 was been a year of records for the oil business. It was a year when despite the sovereign debt tumult in Europe, the consumer “balance sheet”, recession in the US and the general economic slowdown in the BRIC countries, the price, demand, revenues and expenditures related to petroleum have all touched historic highs. The year has reaffirmed the indispensability of oil and the vulnerability of countries that, either for reasons of geology or policy, are stuck in the groove of import dependence. It has provided a touchstone for the Ministry of Petroleum to set its policy priorities for 2012.

Over the past 12 months, the price of the benchmark light Brent crude oil has averaged $110/barrel. This is the highest average price in real and nominal terms since Colonel Drake first struck oil in 1859 in the small timber town of Titusville in North Pennsylvania. Global demand has, during this period, hovered just below 90 million barrels. Here too, the figure has touched a historic high. OPEC has, in consequence, earned over a trillion dollars. Only once before in 2008 has their revenue crossed this mark. On the flip side, oil importing countries and in particular, China and India, have seen a record outflow of foreign exchange on their crude oil account. The general consumer too has spent a record proportion of his income on energy for lighting, heating and transportation. Caught between the pincer of squeezed earnings and high prices, thousands have been pushed into “fuel poverty”, especially in countries that do not subsidise energy.

These records throw into sharp relief the pivotal and enduring significance of petroleum. Sure, the price of oil may slip back into double digits in 2012. For demand is declining and production from countries like Libya and Iraq, which had been convulsed by geopolitics, is now re-entering the market. But such a slip, if it did occur, must not be grounds for complacency — at least not in economies like India that are moving into their next, more energy-intensive, phase of development and where their emergent, urbanising middle class is looking to trade up from a cycle to a two-wheeler to a Nano equivalent. For there are few, if any, immediately available commercial alternatives to oil, especially as a transport fuel. CNG (compressed natural gas) for example which has been mandated by the Supreme Court as the fuel for our buses, taxis and 2-wheelers in major cities has a low energy density and cannot therefore be a substitute for the diesel used by the heavy duty long haul transporters. LNG (liquefied natural gas) on the other hand, which has a higher energy density and could, therefore, be the substitute, cannot be used without the development of expensive infrastructure and the redesign and retrofitting of existing engines. The fundamentals of demand and supply do not in short provide a solid base for assuming a prolonged downward shift in prices.

It is with this backdrop of 2011 that the petroleum ministry should review its policy towards exploration and production (EP) of hydrocarbons. It should do so also because of the worsening imbalance between demand and supply. Today India imports more than 80 per cent of its crude oil requirements. EP has long been a policy priority for the ministry. To reiterate that it should occupy pole position in its agenda is not therefore an original thought. But in recent months the signals emanating from the ministry have suggested that there is a gap between rhetoric and practice.

The rhetoric encourages the involvement of private capital. It accepts that EP is an inherently risky and uncertain activity involving not just the challenge of locating hydrocarbons but also, once located, the challenge of developing and producing the hydrocarbons on a commercially sustainable basis. It also accepts that to harness its hydrocarbon potential, India must bring to bear the optimum combination of capital, technology and operational expertise into EP and create a policy framework that attracts the broadest spectrum of petroleum companies from both the public and private sector.

Unfortunately, in practice, things are different. The industry is concerned at the reinterpretation of the contractual clauses related to tax, marketing and prices. They are questioning the rationale behind the continual debate over operating practices. Their foreheads are creased with worry about what they regard as rigidity and lassitude in decision making.

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Whether warranted or not, this perception has cast a somewhat ambivalent pallor on the EP environment. It is a situation that the country can ill afford. For with the end of the “era of easy oil” and the reality that new discoveries will most likely be found in harsh terrain and geologically complex structures, the private sector is a necessary factor for EP success.

This is not to dilute the role of the public sector. In fact, some of the major EP breakthroughs in recent years have been spearheaded by state-owned companies. The unlocking of billions of barrels by PetroBras — the Brazilian PSU — in the presalt reservoirs of the Santos basin in Brazil is a case in point. It is merely to emphasise that private companies must not be deterred. Their contribution to the production of hydrocarbons in India is already material. In 2010-11, for instance, they produced 10.67 mt and 25.5 bcm of oil and gas respectively up from 5.07 mt and 7.72 bcm in 2006-07.

Those of us who have followed the corruption scandals that have bedevilled governance can appreciate the pressures imposed on officials by the sword of Damocles wielded by the CBI, CVC and CAG. We can understand why, under such circumstances, “acts of omission” are deemed safer than “acts of commission”. But this cannot justify ignoring the underlying message of 2011. EP policy must be reinvigorated and if not done the country will pay a huge and enduring price in terms of energy security and economic growth. The writer is chairman of the Shell Group in India.

CSE questions auto lobby estimates on car diesel usage Livemint.com The Centre for Science and Environment (CSE) has challenged estimates by an expert group and the auto lobby that the share of diesel used by cars in the country is negligible, and has recommended additional levies on such vehicles. In a letter to the finance minister, the group has suggested an additional levy of `81,000 on die- sel cars with engine sizes of up to 1,400cc, as recommended in the Kirit Parikh committee report. For diesel cars with larger engines, it suggested an additional duty of `1.62 lakh.

“We support this estimation (by the Parikh group), but believe that there is a need for an increased duty on diesel cars in the large segment (which are luxury cars as well),“ Sunita Narain, director-general, CSE, wrote to finance minister Pranab Mukherjee on 20 January. Mint has seen a copy of the letter.

This comes after Parikh admit- ted flaws in his report, as Mint reported on 9 January. Based on a report of the working group on petroleum sector (WGP) for the 12th Plan, the So- ciety of Indian Automobile Manufacturers (Siam) estimated that passenger cars accounted for just 0.6% of diesel consumption in the country, and sports utility vehicles (SUVs) and taxis only 5%.

That conflicts with the 15% figure the Parikh committee cited in 2008. The panel's recommendations provided the basis for the government's decision in June 2010 on linking retail petrol prices to market rates. The panel had recommended the same for diesel.

Reacting to CSE's letter, Vishnu Mathur, director-general, Siam, said the environment body does not have the expertise to come up with data on diesel use.

“We are the only body which can give such data. Even the government is asking us for the data,“ he said.

“If they have the expertise, then they should find out the actual data. They are an environment body and they should stick to that.“ CSE said the auto industry is desperate to prove that cars use negligible diesel. “This is a ploy to avoid higher taxation on diesel cars,“ said Anumita Roychowdhury, executive director-research and advocacy, CSE. “The auto- mobile industry is trying hard to prove that cars and SUVs are very small users of diesel, so that it can block the growing demand to put higher taxes on diesel cars to offset the revenue losses and cut public health risk.“ CSE said Siam and the working group have in their estimates reduced the share of diesel use by all key sectors of the economy. Siam has “created a mysterious category called `others' that uses up more diesel than the power and industry sectors put together“, said Roychowdhury.

“This undefined category `others'--which is said to be eating up 12% of the total diesel used in the country--has not been ac- counted for by Siam/WGP.“ Mathur said the category comprised diesel used by industries to generate captive power. “You have millions of telecom towers across the country which run on power that is generated by diesel gensets,“ he said.

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The government subsidizes diesel for use by farmers in pump sets. That has led to a rising demand for cars powered by the fuel as it is around `30 cheaper than petrol.

According to Siam, the share of diesel cars sold in India rose 6 percentage points to 25% in the past nine months as the difference between petrol and diesel prices widened to `30 a litre. India's biggest car maker Maruti Suzuki India Ltd has four models--Ritz, Swift, DZire and SX4--that run on diesel as well as petrol. Of these, the diesel versions have accounted for 80% of its sales this fiscal. Luxury sedans built by Mercedes, BMW and Audi, among others, also run on diesel.

“Cheap diesel is pushing the car market towards bigger cars that guzzle more fuel. While 87% of petrol cars have an engine size less than 1,200cc, about 40% of diesel cars sold are above 1,500cc,“ said Roychowdhury of CSE. “If this trend continues, then by 2020, we will have as many diesel cars as total number of cars sold today. In that case, imagine the public revenue loss- es and public health costs.“ About 40% of diesel cars sold in the country have engine sizes above 1,500cc. So far in 2011-12, cars above 2,000cc, including SUVs, have clocked 41% growth in sales, according to CSE. Roychowdhury said with each litre of petrol replaced by diesel to run a car, excise earnings of the government drop seven times. Also, according to CSE, diesel engines emit seven times more particulates and five times more nitrogen oxide than petrol engines.

Siam agrees with CSE on this charge. Nitrogen oxide is a gas that pollutes the atmosphere. This gas is a by-product of combustion, like in an engine, and is formed from the reaction between nitrogen and oxygen gases during combustion, especially at high temperatures.

“Petrol is better on some ac- counts, while diesel is good for the other. It all depends upon the quality of fuel, which has improved with Bharat Stage IV (emission) norms,“ said Mathur. And in any case, all the vehicles meet the government's emission norms.“

India is world's sixth most innovative country: Survey The author has posted comments on this articleJan 19, 2012, 03.28PM IST NEW DELHI: India has been ranked the sixth most "innovative" country in the world in multinational conglomerate GE's Annual Global Innovation Barometer, driven by financial support from public authorities and long-term support from investors.

The report, based on a survey of 2,800 senior business executives in 22 countries, including 200 respondents in India, identifies the top enablers for innovation in the country as talent ('creative' talent and people with technical expertise), financial support from public authorities and long-term support from investors.

When asked to identify the three countries they consider "innovation champions", 65 per cent of the global respondents identified the US, followed by Germany (48 per cent), Japan (45 per cent), China (38 per cent), Korea (13 per cent) and India (12 per cent).

"Creating conditions for meaningful innovation requires the right blend of internal and external factors that can readily be adapted to meet individual market and customer needs," GE senior VP and chief marketing officer Beth Comstock said.

Only 12 per cent of the global respondents identified India as one of the top three innovation champions, compared to 23 per cent of Indian respondents. The report indicates a 'balanced' perception of the environment for innovation in the country, with respondents more satisfied with private investment and government support for innovation.

However, intellectual property protection and research and development partnerships with academic universities were cited as the key challenges to creating an innovation-friendly environment in the country. The report said that 36 per cent of the Indian respondents in the survey expected 'large business' to drive most of the innovation over the next decade -compared to 27 per cent in an earlier survey -- while 35 per cent believed small and medium enterprises would be the PetroScan-January 2012

most innovative. In terms of sectors, energy, followed by healthcare, telecommunication and FMCG, were the areas with the most innovation-driven growth potential, according to the survey.

A resounding 83 per cent of the Indian respondents believed that innovation must meet local market requirements. While India respondents to the survey shared their global peers' view that "great" innovation would address human needs -rather than reaping profits -- only 78 per cent of them said that great innovation brings value to society as a whole, compared to 84 per cent globally. Furthermore, only 17 per cent of the Indian respondents agreed that a combination of players partnering together would drive innovation in the next decade, against the global average of 38 per cent. ****************************************** NEWS LOCAL

OVL to resume drilling in South China Sea New Delhi: As part of its efforts to assert India’s presence in the South China Sea, state-owned ONGC Videsh Ltd (OVL) will resume drilling in the disputed hydrocarbon block No. 128. “We are going ahead with our drilling plan,” said a top executive at Oil and Natural Gas Corp. Ltd, who declined to be named. OVL is the overseas arm of the Indian explorer.

The drilling was suspended last year after the exploration team was unable to tether the drill. China, which disputes sovereignty over the waters with Vietnam, had earlier objected to the presence of an Indian vessel surveying the area.

OVL has now identified a suitable technology to anchor the rig to the seabed. “We are scouting for a rig for the same to drill one well in the block that will require a window of 45 days,” an OVL executive said, requesting anonymity. OVL’s presence in Vietnam is through 45% and 100% stakes in blocks 06.1 and 128, respectively. It was also earlier present in block 127 after acquiring a 100% participating interest and operatorship, but later decided to relinquish it to PetroVietnam after it detected no hydrocarbon presence. While the firm has made an investment of $68 million in block 127, it has invested around $46 million in block 128.

OVL’s earlier plans for drilling couldn’t fructify as the deployed rig Hakuryu-V couldn’t be anchored to well B 128-RV-1X. The anchor was successfully tested around one-and-a-half months ago. “The Chinese had earlier threatened our survey vessel. We had then asked the government of Vietnam and PetroVietnam for clarification and were told that the area was in their territorial waters. We had also asked MEA (ministry of external affairs), who told us that there was no reason to worry,” said the OVL executive. “The rig for block 128 started drifting as the sea bed was hard and the anchor didn’t settle.” With India importing more than 80% of its energy needs, state-owned firms have been scouting overseas for securing assets and have invested Rs 64,832.35 crore in the effort. This push has pitted the country against China in a geopolitical race to sew up as much of the world’s resources as it can.

Despite Chinese objections to India-Vietnam energy cooperation in the disputed South China Sea, the latter two nations had in October signed a pact to expand their partnership in oil and gas exploration, refining, transportation and supply during Vietnamese President Truong Tan Sang’s visit to India. “Before we signed the MoU (memorandum of understanding), there were media reports on the growing tension in the area,” said the OVL executive.

Questions emailed to the embassies of China and Vietnam in New Delhi and the MEA on Wednesday remained unanswered. China and Vietnam are among many countries that hold competing claims over the South China Sea and the islands in its waters.

In June, tension flared between China and Vietnam over the Spratly and Paracel islands, following clashes between Chinese and Vietnamese boats. India was also looking to bid for more oil and gas blocks off the coast of Vietnam, which is seeking bids for nine blocks, but has dropped the plans as there was “nothing much of interest”. Similarly, OVL also doesn’t plan to bid for Myanmar blocks.

According to the oil ministry, India’s energy demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalents today to around 1,500 million tonnes of oil equivalents. livemint.com PetroScan-January 2012

Crude supplies from West Asia hang in balance RIL, Essar Oil better placed than public sector refiners Private refiners Reliance Industries (RIL) and Essar Oil seem to have cushioned themsel-ves against possible disruption in crude oil supplies from Iran, which has threatened to shut the Hormuz Strait through which much of West Asia’s oil is shipped. But state-run refiner MRPL, owned by ONGC, may be in trouble if the supplies do get disrupted.

RIL is better positioned: it has not contracted any Iranian crude in the current year. Essar Oil seems to have tapped other supply sources in Iraq and the UAE. It will also seek greater supplies from South American crude once the up-gradation of its Vadinar refinery is completed. If Iran really shuts the strait, supplies to several countries, not just India, will be impacted. Two other government-run refiners, IOC and HPCL, also uses Iranian crude but not to the extent others do. But that does not mean they wil not face a supply crunch. BPCL is not buying Iranian crude till a permanent payment mechanism is in place.

A Hormuz blockade is sure to push up Brent crude oil prices, acting as a double whammy for both the Indian government and its oil companies. The negative impact will show up in the balance sheets of IOC, BPCL and HPCL that sell diesel, kerosene and domestic cooking gas at subsidized, regulated prices. The government’s fuel subsidy bill will rise manifold, upsetting the budget balance. “New problems are no doubt arising with the US sanctions. However, I would like to assure everybody there would be no supply problems of oil and oil products for the consumer. We are trying to solve the problem of payments to Iran,” oil minister S Jaipal Reddy said on Monday in Hyderabad. Iran is the second largest crude oil supplier to India after Saudi Arabia. It has threatened to block Hormuz, a sea route for nearly a fifth of the world’s oil.

India and other countries are facing problems in paying Iran for oil supplies due to US sanctions. Quoting chairman of the US joint chiefs of staff General Martin Dempsey, Bloomberg hinted at US action to reopen Hormuz if Iran blocks it.

“It is a question of payment route. Currently we have no disruption in crude supply or payments. As long as payments are cleared, we do not see a major problem,” said an official of a state-run refiner that buys Iranian crude. India buys crude 18.499 million tonnes of crude worth $12 billion in a year from Iran, which supplies 12 per cent of our requirement.

Currently, payments are made through Turkey’s Halkbank. Indian oil imports from Iran offers discounts and credit that no other country offers, said A K Prabhakar, senior vice- president and research head of Anand Rathi. The finance ministry and the RBI have been continuously exploring alternative safer routes to make payments to Iran. There are apprehensions that the US sanctions may force Turkey to deny routing these payments.

“Essar is not impacted by the Iranian situation. At our Vadinar refinery we continue to be able to source the crude we require from Iran. Our Stanlow refinery does not process Iranian crude,” Essar said in a statement. “The route (Hormuz strait) is never closed. So far there is no supply disruption. Moreover, sourcing of crude oil is trade sensitive information and we cannot reveal it,” IOC director of refineries RK Ghosh told FC. HPCL and ONGC echoed similar views.

BPCL is awaiting a permanent mechanism for payments before buying in a bigger way from Iran, according to chairman R K Singh. B K Datta, director of refineries, said, “We have our contracts running with Iran and there are no supply side issues.” “Iran supplies heavy crude Oil. But complex refineries such as that of RIL can afford to process cheaper extraheavy sour crude from South America or Africa. Once the Essar refinery is upgraded, it will also start processing heavier and sour crude,” said an oil industry official.

RIL spokesperson said a blockade of Hormuz might have some impact on the company which bought some from that region. “That too will depend on the number of days Iran can keep up a blockade. Every company has an inventory of at least seven days, and it takes at least four to five days for oil to reach the refineries. Till then there will not be any issue,” the spokesperson said.

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RIL’s Jamnagar refinery has a Nelson complexity index of 11.3, whereas its refinery in the special economic zone has an index of 14. This makes it the most complex refinery globally. A complex refinery is able to process heavy and sour crude.Essar is increasing its refinery capacity to 18 million tonnes which will increase the complexity index from 6.1 to 11.8. The index at India’s largest state-run refiner IOC is 9.

“Most of the oil and gas companies are now trying to diversify their sourcing to other countries to reduce dependence on Iran. Three options are Saudi Arabia, Libya and Russia,” said Deepak Pareek, senior analyst at Prabhudas Lilladher.

Brent crude for February delivery was $112.67 a barrel on Monday evening. It touched an intra-day high of $113.42.

Crude prices have gained in the past 15 trading sessions. In one month Brent has gained 3.87 per cent. In AprilNovember, India imported crude worth $89.6 billion. In 2010-11, the oil import bill was over $100 billion.

“If the contracts are not honoured, then the price of oil for Indian companies is expected to increase by around 7 per cent.

Officially, the price is around $113 per barrel, which for Indian companies would be around $ 130- $ 132 per barrel taking into account around 20 per cent depreciation of the rupee,” Prabhakar said.

A supply disruption is likely to push up the fiscal deficit projected to be 5.5 per cent (the budget estimate is lower at 4.6 per cent). This may again have a negative impact on the government’s resources, forcing it to borrow more money from the market.

HPCL to double Saudi crude imports By :Reuters, Jan 09 2012 The state-run Hindustan Petroleum Corp (HPCL.NS) will double the volume of Saudi crude it imports in an annual deal beginning in April, two industry sources with direct knowledge of the matter said on Monday, in a move that could replace some of its Iranian supplies. Indian refiners are looking for ways to gradually replace their imports of Iranian oil, given that global sanctions could shut a mechanism through Turkey's Halkbank that allows them to make payments to Tehran.

India is Iran's second-biggest oil client after China, buying 350,000-400,000 barrels per day.

Tighter U.S. sanctions require buyers of Iranian oil to reduce imports from the Islamic Republic or face the threat of financial penalties in the United States. Halkbank has already refused to open an account for state-run refiner Bharat Petroleum Corp (BPCL.NS) for oil from Iran. For this month, Saudi Aramco, the national oil company of Saudi Arabia, has agreed to supply extra 4 million barrels of oil, or about 129,000 bpd, to India, industry officials said. The Kingdom will supply 2 million barrels to Indian Oil Corp (IOC.NS) and 1 million barrels each to BPCL and Hindustan Mittal Energy Ltd HMEL.L, a joint venture of HPCL and steel tycoon Lakshmi Mittal. HMEL, which owns an 180,000 bpd Bathinda refinery in northern India, does not have an annual deal with Saudi Aramco. "BPCL's additional purchase for January could be due to Iran as they have not been to open an account with Turkey's Halkbank for payment to Iran," said one of the sources.

The Saudis will also in February supply 1 million barrels to BPCL for its 120,000 bpd Bina refinery in central India. A senior BPCL official said the company has not purchased Iranian oil since November due to payment problems. "Unless the payment issue is resolved, how can we buy oil from Iran?" the official said. Indian refiners and petroleum ministry officials earlier on Monday held a meeting to explore alternatives way to pay for Iranian oil imports. HPCL is the second Indian refiner after Mangalore Refinery and Petrochemicals Ltd (MRPL.NS) to increase supplies under an annual deal with Saudi Arabia.

The new deal with HPCL will be for 60,000 barrels per day (bpd) from April to the following March, said the sources, versus around 30,000 bpd this year. HPCL is keen to continue its term deal of 70,000 bpd with Iran if the Islamic republic continues to offer 90 days of credit and if global sanctions do not hit supplies and the existing payment mechanism, said one of the sources.

HPCL operates a 130,000 bpd refinery at Mumbai on the west coast and a 166,000 bpd plant in southern India. Iran has so far not cut supplies to India, the chairman of Mangalore Refinery, the biggest Indian client of Iran, said last week.

PetroScan-January 2012

Financial sanctions signed into law by President Barack Obama on New Year's Eve make it difficult for pay for Iranian oil.

The European Union is expected to announce tough measures of its own at the end of the month. Washington and its allies are imposing the measures to force Iran to abandon a nuclear programme, which they say is aimed at producing an atomic bomb. Iran says the programme is peaceful.

Indian Oil drops plans to enter merchant power business Livemint.com, Jan 11, 2012 New Delhi: In an indication of the waning interest in the Indian power sector, state-owned Indian Oil Corp. Ltd has dropped plans to enter the merchant power business. Merchant power is electricity that’s sold not to pre-identified customers under long-term agreements, but as a commodity at market price.

As part of its diversification drive, India’s largest refiner, which has a captive demand of 1,200 megawatts, wanted to enter the power business and use the pet coke from its refineries as fuel. Pet coke is a residue left after the refining of crude with a high calorific value and high in sulphur. Instead, it now plans to use the fuel for its chemical business. “We had plans earlier to use pet coke as a fuel for setting up merchant power capacity as part of our bottom of the barrel approach. We now plan to use it for our chemical stream,” said a top Indian Oil executive requesting anonymity.

Indian Oil has a present refining capacity of 65.7 million tonnes per annum (mtpa) through its 10 refineries and has plans to reach a capacity of 123 mtpa by 2021. The annual demand for pet coke in India is presently about 8 million tonnes, with Gujarat and Rajasthan accounting for about 75% of the domestic demand. The decline in merchant power prices has added to the growing woes of the Indian power sector. According to the India Energy Exchange (IEE), the monthly average merchant power tariffs are currently at around Rs3 per unit from a high of Rs10.78 per unit in April 2009.

“While there is competition on the supply side, there are no buyers competing to buy the power. This has led to power producers losing charm in the sector. The same might be the case with Indian Oil,” said Jayant Deo, managing director and chief executive officer, IEE. State electricity boards (SEBs) across India are saddled with losses because of power theft, technical losses during transmission and distribution, and billing inefficiencies, and having failed to revise tariffs for many years, adding to the losses. The political compulsion of providing free power to farmers has also had an impact on SEBs. The poor financial health is also on account of non-payment of subsidy amounts by state governments. The cumulative losses of the distribution utilities are around Rs75,000 crore, and if the presenttrend continues, projected losses in 201415 will be Rs1.16 trillion, according to a study conducted by energy consulting firm Mercados EMI Asia for the 13th Finance Commission. Indian Oil is also cash-starved for losses incurred on the sale of petroleum products at less than market price. Even after the government reimburses Rs30,000 crore of the Rs64,900 crore registered as underrecoveries—the difference between market price and fuel retail rates—by the oil refiners in the first half of 2011-12, Rs13,267 crore would have to be absorbed by the refiners. Of this, Rs7,300 crore is Indian Oil’s share.

The total under-recoveries to be borne by the refiners this fiscal are expected to be around Rs1.32 trillion compared with Rs78,190 crore last year, according to the petroleum ministry. The current borrowings of the oil refiners amount to Rs1.3 trillion. The depreciation of the rupee has further affected the profitability of oil refiners as India imports around 80% of its energy needs. The rupee slumped to a record low in December against the dollar and was the worst performing Asian currency in 2011.

ONGC gets Rs 3,000 crore royalty from Cairn India Jan 31 2012, Financial Chronicle Vedanta Group company Cairn India has paid Rs 3,000 crore to ONGC towards its share of royalty till September 2011 for the Barmer oilfield in Rajasthan. Earlier, the PSU explorer was paying royalty on Cairn India’s behalf till the government put a rider on Cairn to pay its own share of royalty after its parent Cairn Energy sold the majority stake in the explorer to London-based NRI Anil Agarwal-promoted Vedanta Resources.

“We have received Rs 3,000 crore (from Cairn India). This will be reflected in the third quarter accounts,” said an ONGC official, who did not wish to be named. “We (ONGC) will pay 30 per cent plus service tax on these income,” he added.

PetroScan-January 2012

Cairn India has settled its royalty bills with ONGC till September 2011. According to the production-sharing contract, ONGC will first pay the royalty. Later, Cairn India will reimburse its share to the government-run explorer. Hence the three-month gap, the official explained.airn India agreeing to pay its own royalty has come as a big relief for ONGC, which would save nearly Rs 12,000 crore over the next 15 years. Cairn India is the operator of Barmer asset with 70 per cent participating interest, while ONGC holds the remaining 30 per cent.

According to earlier calculations, Cairn will have to fork out Rs 12,600 crore as royalty over the lifetime of the oilfield. After apportionment, ONGC will have to pay Rs 5,400 crore over 15 years as royalty. The total royalty at current rates will thus work out to Rs 18,000 crore, payable by Cairn and ONGC, which have ownership of the asset. In June last year, the cabinet committee of economic affairs (CCEA) had given its nod to the Cairn-Vedanta deal with two principal riders. First, it asked both Vedanta Resources and Cairn Energy to provide relief to ONGC on royalty. And secondly, Cairn India will have to withdraw the arbitration petition in international courts against the payment of a cess.

ONGC has been able to arrest decline of oil production: CMD PTI Jan 26, 2012 ONGC CMD Sudhir Vasudeva today said the company has been able to arrest the decline in its oil production, maintaining it at the level of 1 to 1.5 per cent, and asserted that it was for the government to decide on its proposed 5 per cent follow-on public offer. Addressing newsmen here, Vasudeva said the world-over, the decline in oil companies' production is 4 per cent to 5 per cent, but ONGC has maintained the decline in oil production at the rate of 1 per cent to 1.5 per cent.

"To maintain the oil production at the current level is itself a big challenge," he said. In this regard, he said 70 per cent of ONGC's oil production comes from 15 major fields out of the total 110 fields the company has, and on average, all of them are 30-35 years old. "So concerted efforts are being made to maintain the production as well as improve recovery from them," he said.

On 5 per cent disinvestment in ONGC, Vasudava said it was for the government to take a decision on the proposed issue. "It is still on the cards. Earlier market conditions were bad. But these conditions have started looking up," he said.

During the previous fiscal, the company registered a record production of 62.05 million tonnes of oil and oil-equivalent gas from domestic and overseas assets. ONGC accounts for 73 per cent of oil and 48 per cent of gas production in India.

To a question, Vasudeva said hydrocarbon reserves are not going to run out in the next 40 years, but said ONGC is focused on tapping the potential of new sources of energy like coal bed methane, underground coal gasification and shale gas. Regarding alternative sources of energy, he said ONGC is setting up another 102-MW wind farm in Rajasthan at an investment of Rs 800 crore after successful commissioning of a 50-MW wind farm in Gujarat. In this regard, he said wind energy has a potential of nearly 40,000 MW in the country.

To a question on the payment problem with Iran, the CMD said till date, the company has not faced any problem in getting oil supply from the Gulf country due to the issue of payment. He said the matter is being discussed at the government of India level and would be sorted out by them.

Oil retailers plan to outsource facilities Retailers jointly evaluating options on infrastructure such as bottling plants, depots and terminals Mumbai: Three state-run oil marketing companies (OMCs) in India are working together to outsource the creation and maintenance of logistics infrastructure that can be used to cut expenses in a challenging business environment. All the three OMCs—Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL)—refine and market petroleum products, and require common infrastructure such as bottling plants, depots and terminals. Most of these facilities are currently built and operated by the companies themselves.

Bloomberg PetroScan-January 2012

The heads of the three OMCs have agreed in principle to follow this “common user facilities” approach, said R.K. Singh, chairman and managing director of BPCL. “This can be one of the ways in which we can bring down costs. We can follow a BOT (build, operate and transfer) or BOOT (build, own, operate and transfer) model. The operations and maintenance of some of our existing facilities can also be outsourced.” Some such common user facilities were already in place, albeit in a “small and scattered way”, and the idea is to widen the initiative and make it meaningful, Singh said.

The companies are jointly evaluating factors such as the locations at which these facilities can be set up and managed by a third party, said a senior official in charge of logistics at one of them. He did not want his company or himself to be identified. “Wherever the scale of operations is large enough to justify economy of scale, we may decide to run these facilities ourselves,” this official said. “But in many areas, where the operations are on a smaller scale, it may make sense for the three companies to jointly utilize these facilities.”

Ratings firm Crisil Ltd, one of the agencies appointed as a transaction advisory partner, is drafting a paper outlining the opportunities and challenges of such an arrangement, the official said. An email sent to Crisil on Friday didn’t elicit any response. The oil ministry is “extremely concerned” about how OMCs can minimize costs and improve margins, said another official with one of these firms on condition of anonymity. “There are discussions on a case-to-case basis to see where we can strategically share resources, but the matter is at a very nascent stage.” An email sent to IOC on Friday remained unanswered. HPCL chairman S. Roy Choudhury wasn’t immediately available for comment.

Singh and the official cited above said OMCs will first need to empanel a set of firms on their technical ability and then call for bids from among them to execute specific projects. The Indian Express reported in March that due to the high prices of crude prevailing at that time, the oil ministry had directed state-run fuel retailers to share each other’s storage facilities to reduce expenses by improving utilization. An arrangement to outsource the infrastructure and then share it can work well for OMCs, analysts said.

“It will help decapitalize their balance sheets and turn a large portion of the fixed costs into variable,” said Arvind Mahajan, executive director with international audit and consulting firm KPMG in India. “There is huge pressure on OMCs to reduce costs as oil prices have been ruling high and are likely to be so for some time. Also, the subsidy received from the government doesn’t cover their costs entirely and products like diesel are still under price control.”

BPCL’s Singh estimates the proposed creation of outsourced common user facilities will pare operating expenses to onethird. OMCs have been battling high crude prices and, till recently, a depreciating rupee was eating into their margins. In the last one year, the price of Brent crude has risen 9.58%, while the rupee has lost 7.82% against the dollar.

Public sector OMCs purchase crude mostly from international markets in dollars and sell finished petroleum products such as diesel, kerosene and liquefied petroleum gas at government-regulated prices below cost to keep inflation in check. In the nine months ended December, the total under-recoveries of the three OMCs stood at Rs 97,313 crore, according to data from the government’s petroleum planning and analysis cell. In the same period, the total expenditure incurred by them ballooned to Rs 5.48 trillion, 34% higher than the year-ago period. This expenditure was almost 102% of their collective revenue.

Though the government usually subsidizes a significant portion of such under-recoveries incurred on account of selling fuel below market price, helping OMCs report a profit for the full fiscal, a large portion of these has to be absorbed by the OMCs. Kalpana Jain, senior director at international audit and consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd, finds similarities between the proposed creation of common user facilities and sharing of telecom towers by mobile phone operators that began some years back. “When these telecom companies started operations, they built their own towers, but now they are managed by separate firms and are being used in common,” Jain said. The use of common facilities by OMCs “will prove to be a cost-effective solution over time and will help firms focus on their core business”.

India won't cut Iranian oil imports despite US, EU sanctions: Pranab Mukherjee CHIGAGO: India, the world's fourth-largest oil consumer, will not take steps to cut petroleum imports from Iran despite US and European sanctions against Tehran, finance minister Pranab Mukherjee said on Sunday during a visit to Chicago.

The United States wants buyers in Asia, Iran's biggest oil market, to cut imports to put further pressure on Tehran to rein in its nuclear ambitions. Washington suspects Iran of trying to make nuclear weapons, but Tehran says its nuclear program is for peaceful means.

PetroScan-January 2012

India, which imports 12 percent of its oil from the Islamic Republic, cannot do without Iranian oil, Mukherjee said. "It is not possible for India to take any decision to reduce the imports from Iran drastically, because among the countries which can provide the requirement of the emerging economies, Iran is an important country amongst them," Mukherjee told reporters in Chicago at the end of a two-day visit aimed at wooing US investment.

New US sanctions, authorized on December 31 and which penalize any financial institutions dealing with Iran's central bank, could make it more difficult for India to pay Iran for oil imports. The European Union banned oil imports from Iran earlier this month. Mukherjee said he projects India to return to its path of high economic growth, despite an expected slowdown to a 7 percent pace this year from 8.5 percent last year. The Indian fiscal year ends in March.

"This year, because of the European debt crisis and the slowing of developed economies, there has been a slowdown" in India's growth, he said. "It will be possible to make it up in a year or two." The Reserve Bank of India ( RBI) last week held its policy rate steady and signaled its next move could be a rate cut, after signs that outsized price pressures may be ebbing. Inflation, as measured by wholesale prices, rose 7.47 percent in December, its slowest pace in two years, and Mukherjee said he expected further declines.

"If this trend continues, I am optimistic (India will see inflation of) 6.5 percent to 7 percent by end of the year," he said. But a possible move by the US Federal Reserve to ease monetary policy further could reverse that outlook, he said. Fed Chairman Ben Bernanke last week opened the door to a third round of quantitative easing, suggesting that a continued decline in inflation and ongoing economic weakness could justify new bond buying. The Fed's last round of bond-buying drew loud criticism from emerging economies who said it sparked inflation and hurt their exports. Mukherjee repeated that criticism on Sunday, saying US quantitative easing creates "inflationary impacts" in emerging economies and boosts uncertainty.

Ministry refers RIL's marketing margin issue to regulator Moneycontrol Bureau The Petroleum Ministry has rejected Reliance Industries (RIL) contention that charging of marketing margin on gas was an issue between the buyer and the seller and has said that the Petroleum and Natural Gas Regulatory Board (PNGRB) will take a final call on the issue. In a letter to RIL executive director P. M. S. Prasad, on Thursday, the Ministry wrote that the question of the quantum of marketing margin applicable on sale of gas by any marketer has since been considered in the Ministry and a decision has been taken to refer the matter to the PNGRB. Earlier the petroleum ministry, which had long held that the marketing margin was a bilateral issue between the buyer and seller of gas, referred it to the PNGRB after user industries like fertilisers sought a clarification on the legality of the levy.

The ministry's technical arm, the Directorate General of Hydrocarbons (DGH), too, is of the opinion that RIL should share a part of these earnings with the government. It wants the marketing margin to be added to the gas sales price of $4.20 per mmBtu and profit-sharing between the contractor and the government to happen at the combined rate of $4.335 per mmBtu. At present, RIL and the government split profits at the gas sales price of $4.20 per mmBtu after deducting the project cost. However, according to sources, in a letter written to the ministry on December 20, RIL has said that even gas utility GAIL India charges up to $0.18 per mmBtu as a marketing margin on gas it transports and none of it is shared with the government. RIL, while defending its decision to impose a marketing margin over-and-above the government-approved sale price for KG-D6 gas has said that the levy was to cover for the risk and cost associated with marketing of gas.

The Mukesh Ambani-controlled company has also contested DGH's view, saying the marketing margin was a cost levied beyond the gas delivery flange and as such, was not regulated by the Production Sharing Contract (PSC). The PSC provides for fixation of the gas price at the delivery point-- the point at which an upstream operator transfers custody of gas to a marketing and transportation agency. That point for the eastern offshore KG-D6 gas is Kakinada, in Andhra Pradesh, and the government had in 2007 approved a gas price of $4.205 per mmBtu at the delivery point.

PetroScan-January 2012

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Iran Oil Halt to OECD Likely to Raise Price by $30, IMF Says

By Moming Zhou - Jan 25, 2012 A halt of Iran’s oil exports to countries in the Organization of Economic Cooperation and Development would likely lead to a crude price increase of as much as $30 a barrel, the International Monetary Fund said. The blockade of Iranian oil “without offset from other sources” would trigger an initial gain of around 20 to 30 percent, or about $20 to $30 a barrel at current prices, the IMF said in a document released today. The closure of the Strait of Hormuz could trigger a much larger rally, according to the IMF. Iran has threatened to close the Strait, the transit point for about a fifth of global oil supply, if an embargo against its oil exports is implemented. The European Union announced Jan. 23 that it would ban oil imports from Iran starting July 1 to pressure Iran over its nuclear program, which Western nations say is aimed at producing weapons.

Financial sanctions imposed by some OECD countries against Iran may “be tantamount to an oil embargo” that would reduce supply by 1.5 million barrels a day, the IMF said in the document prepared for a Jan. 19 meeting of Group of 20 deputy finance ministers in Mexico. Oil for March delivery gained 45 cents, or 0.5 percent, to settle at $99.40 a barrel on the New York Mercantile Exchange. Prices have risen 15 percent in the past year.

Energy-hungry Asian economies look to keep Iranian oil flowing in wake of US sanctions

By Associated Press, Published: January 6 BEIJING — China, the biggest buyer of Iran’s oil, has publicly rejected U.S. sanctions aimed at Tehran’s energy industry while American allies Japan and South Korea are scrambling to find a compromise to keep critical supplies flowing.

Beijing is buying less Iranian crude this month, but analysts say China is unlikely to support an oil embargo. Instead, they say, the smaller purchases might be a tactic aimed at obtaining lower prices as the West squeezes Tehran.

The sanctions approved by President Barack Obama on New Year’s Eve have highlighted the importance of Iranian oil supplies to East Asia’s energy-hungry economies. They have led to a clash of interests between Washington and key commercial and strategic partners over efforts to stop Iran’s nuclear program. “We are considering our response and are closely discussing the matter with the U.S.,” a Japanese Foreign Ministry official, Kazuhiro Kawase, said Friday.

A South Korean foreign ministry spokesman said this week Seoul is in talks with Washington aimed at “minimizing the negative impacts” of sanctions. South Korea imports 97 percent of its oil and depends on Iran for up to 10 percent of its supplies. China’s foreign ministry rejected the sanctions this week and called for negotiations, leaving unclear whether Beijing might defy Washington, straining relations between the world’s biggest and second-biggest economies.

“Sanctioning is not the correct approach to easing tensions,” said a ministry spokesman, Hong Lei. “China opposes the placing of one’s domestic law above international law and imposing unilateral sanctions on other countries.”

U.S. Treasury Secretary Timothy Geithner is due to visit Beijing and Tokyo next week for talks that officials say will include the sanctions. China could be the toughest part of Washington’s thorny diplomatic challenge as it tries to enforce the sanctions. The fast-growing Chinese economy is the world’s biggest energy consumer and imports half its oil. The sanctions target financial institutions that do business with Iran’s central bank by barring them from opening or maintaining correspondent operations in the United States. It would apply to foreign central banks only for transactions that involve the sale or purchase of petroleum or petroleum products.

Japanese and South Korean institutions, with a bigger U.S. presence, would be more exposed to such penalties. But Chinese institutions also do business in the United States and Beijing might see such restrictions as interference in its foreign affairs. About 11 percent of China’s oil imports in 2011 came from Iran, or about 560,000 barrels per day, a flow that increased in the latter half of the year, according to oil industry analysts Argus Media. The daily average for November was 617,000 barrels, close to a third of Iran’s total oil exports of 2.2 million barrels a day, Argus said. Analysts PetroScan-January 2012

say China would have a tough time replacing that supply. “China is the biggest buyer of the Iranian oil. How could China stop buying just because of the sanctions?” said Zhu Feng, a Peking University specialist in international relations.

This month, Chinese buyers have reduced daily purchases of Iranian crude, though that apparently stems from price negotiations and a payment dispute that began last year, according to a Singapore-based trader. The two Chinese stateowned companies that buy Iranian oil reduced purchases by about 5,000 to 15,000 barrels per day, the trader said. He spoke on condition of anonymity because he is not authorized to speak publicly for his company. It is “within the realm of possibility” that a small reduction in Chinese purchases might be “a shrewd attempt to squeeze the Iranians on pricing,” said Victor Shum, an energy analyst for Purvin & Gertz in Singapore.

“As the pressure gets more intense on Iran and Iran wants to ensure its oil revenue, I’m sure Iran will be eager to keep China as a customer and China will be in a good position to negotiate a good price,” Shum said. Associated Press researchers Yu Bing and Zhao Liang in Beijing and writers Alex Kennedy in Singapore and Malcolm Foster in Tokyo contributed to this report.

Obama Backs Natural-Gas Fracking to Add 600,000 Jobs, Vows Safe DrillingQ U.S. President Barack Obama, front center, delivers the State of the Union address to a joint session of Congress with U.S. Vice President Joseph "Joe" Biden, back left, and House Speaker John Boehner at the Capitol in Washington.

Photographer: Joshua Roberts/Bloomberg President Barack Obama pushed drilling for gas in shale rock and support for cleaner energy sources to boost the economy in his final State of the Union address before facing U.S. voters in November. Hydraulic fracturing, the process of injecting water, sand and chemicals underground to free gas trapped in rock, could create more than 600,000 jobs by the end of the decade, Obama said yesterday. The process, called fracking, is among a list of energy policies Obama said would fuel economic growth.

“We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy,” Obama said. Obama reiterated support for conservation and cleaner sources of power and pledged more oil drilling as part of an ‘all-out, all-of-the-above’’ policy “that’s cleaner, cheaper, and full of new jobs.” He said domestic energy production is at an eight-year high and imports of foreign oil were declining, prompting criticism from Republicans. “It’s just a blind accident, if in fact we are producing more oil or natural gas than in previous years, because it’s not because of any of his efforts,” Representative Darrell Issa, a California Republican and head of the House Oversight and Government Reform Committee, said after the speech. Republicans also sought to contrast Obama’s pledge to use energy policy to create jobs with his denial of a permit to TransCanada Corp. (TRP)’s Keystone XL pipeline to connect Canada’s oil sands to refineries on the Gulf coast.

Republicans, Keystone Indiana Governor Mitch Daniels, delivering the Republican response to a nationwide television audience, called Keystone a “perfectly safe pipeline that would employ tens of thousands” and said that Obama has sought to stifle energy production in the U.S. Keystone would “have done more than any other project to increase our energy security and revive our economy,” Senator James Inhofe, an Oklahoma Republican, said in a statement after the speech.

Obama announced incentives to make industries more energy efficient, and again urged Congress to require that a larger percentage of the nation’s power come from low-pollution sources. He directed his administration to open up more than 75 percent of potential offshore oil and gas resources for production.

Eight-Year High “Right now, American oil production is the highest that it’s been in eight years,” Obama said. “Not only that - last year, we relied less on foreign oil than in any of the past 16 years.” U.S. natural-gas production averaged 1.89 trillion cubic feet a month through October, 13 percent higher than the average during President George W. Bush’s two terms, according to Energy Department data. Crude oil production is 2 percent higher, the department said. While the U.S. has abundant natural-gas resources, it lacks regulations that would ensure safe production, Frances Beinecke, president of the New York-based Natural Resources Defense Council, told reporters in Washington today. She said the group “will be as aggressive as it can be” to close that gap.

PetroScan-January 2012

Obama said the drive for new drilling would be accompanied by regulations to ensure safe drilling practices. Those would include a requirement that companies operating on public lands disclose the chemicals used in the fracking fluid.

‘Tip of Iceberg’ “That’s very, very important, but that’s only the tip of the iceberg,” Beinecke said. “There are huge air quality impacts.

These huge industrial operations are coming to small towns.” As Obama backed more domestic oil and gas production, he also pledged support for renewable sources of power, urging Congress to pass clean energy tax credits and a mandate for more electricity to come for cleaner sources of power. An energy efficiency initiative he’s backing would cut $100 billion from the nation’s energy bills, he said. Obama also pledged that the Defense Department would make the largest renewable energy purchases in history. Senator Jeff Bingaman, a New Mexico Democrat and chairman of the Energy and Natural Resources Committee, said in a statement that the priorities Obama laid out were a “very good blueprint for how we can accelerate economic growth in our country.”

‘A Path’ Dave Foster, executive director of the BlueGreen Alliance, a group that represents labor and environmental groups, said in an interview that Obama was “showing us a path” to how clean energy can increase manufacturing jobs. Obama also repeated his call from last year to repeal tax credits for the oil and gas industry. That effort failed to win broad support in Congress, after producers said the measures would push more production and jobs outside the U.S. “Advocating greater energy production but penalizing those who provide that energy is not a sound energy policy, but a contradiction,” Jack Gerard, chief executive officer of theAmerican Petroleum Institute, said in a statement.

Obama Stance on Fossil Fuel Angers Industry

By Jim Efstathiou Jr. and Aaron Clark - Jan 24, 2012 President Barack Obama is taking credit for higher U.S. oil and gas production and lower imports, angering industry groups and Republicans who say he is working against domestic energy production. American energy will be a major theme of Obama’s State of the Union address to Congress tonight, Jay Carney, the White House spokesman, said in a briefing yesterday. In his first campaign ad this year, Obama boasts that U.S. dependence on foreign oil is below 50 percent for the first time in 13 years. Since Obama took office, U.S. natural gas production averaged 1.89 trillion cubic feet a month through October, 13 percent higher than the average during President George W. Bush’s two terms, according to Energy Department data. Crude oil production is 2 percent higher, the department said.

“To be sure that is not because the White House meant for that to happen,” said Pavel Molchanov, an analyst at Raymond James & Associates Inc. Republicans say the numbers are misleading. Onshore oil and gas production on federal lands directly under Obama’s control is down 40 percent compared to 10 years ago, according to Spencer Pederson, a spokesman for Representative Doc Hastings, a Washington Republican and chairman of the House Natural Resources Committee. In 2010, the U.S. signed the fewest number of offshore drilling leases since 1984.

‘Drill Baby Drill’ “The president is responding to what America’s gut feeling is, that we should be less dependent on foreign oil, and he’s trying to take credit for it,” Hastings said in an interview. “His policies are exactly the opposite.”

Four years ago, Obama campaigned against Republican vice presidential nominee Sarah Palin’s rally to “Drill Baby Drill.”

Today he is highlighting fossil fuel gains to blunt charges that his policies are contributing to higher energy costs, according to Tyson Slocum, energy program director for Public Citizen, a Washington-based consumer advocacy group, said in an interview. “The Republican narrative is that Obama is shoveling huge amounts of money to his cronies in the renewable industry, and blocking the real energy that American needs,” Slocum said in an interview. “It’s a false narrative. The administration has been focused on green energy, but they haven’t been against fossil fuels.”

PetroScan-January 2012

Federal Leases In a January report, the American Petroleum Institute in Washington said that in two years the number of new leases to drill on federal lands declined 44 percent to 1,053 in 2010. The report blamed “new rules, policies and administrative actions that are not conducive to oil and natural gas production.” Lower imports are the result of lower demand, and increasing production has come despite Obama’s policies, according to Jack Gerard, American Petroleum Institute President. The U.S. needs a “course correction” on energy policy that includes faster permitting on federal lands in the West and in the Gulf of Mexico, he said. The group, whose members include Exxon Mobil Corp., the largest U.S. oil company, convened a conference call with reporters today to comment on what Obama is expected to say on domestic energy in tonight’s address. “We hope that the actions match the words,” Gerard said on the call. “The truth is that the administration has sometimes paid lip service to more domestic energy development, including more oil and natural gas development.”

Offshore Drilling The American Enterprise Institute, a Washington group that supports free markets, called Obama’s Jan. 18 decision to deny a permit forTransCanada Corp. (TRP)’s $7 billion Keystone XL oil pipeline, part of his “crusade against fossil fuels.”

“The losses due to the Obama administration’s death-grip on offshore drilling and its unwillingness to open federal lands or issue timely permits for exploration far outweigh any energy gains that the White House may tout this week,” Thomas Pyle, president of the Washington-based Institute for Energy Research, said in a statement. Obama last year called on Congress to eliminate “billions in taxpayer” subsidies for oil companies and to invest instead in renewable sources of power. In 2010, he proposed drilling for oil and natural gas off the U.S. East Coast, weeks before BP Plc (BP/)’s Macondo well in the Gulf of Mexico failed, spewing 4.9 million barrels of oil and triggering a temporary administration ban on offshore exploration.

Oil Production Higher production of oil, gas and renewable fuels will reduce the share of net imports in total U.S. energy consumption to 13 percent by 2035 from 22 percent in 2010, the Energy Department said yesterday. Much of the growth has come from North Dakota, where oil producers have spurred a fivefold increase in output by using intensive drilling practices in the Bakken, a geologic formation that stretches from southern Alberta to the northern U.S. Great Plains. “If you’re in the White House when it happens, you should get the credit or the blame for it,” Joshua Freed, vice president for clean energy for Third Way, a Washington-based group that says it advocates policies that appeal to the political center, said in an interview.

U.S. oil production increased to 5.5 million barrels a day in 2010 from 5.1 million in 2007, according to the Energy Department. Over the next 10 years, gains in oil-shale and Gulf of Mexico output will lift domestic production to 6.7 million barrels a day, a level not seen since 1994. To contact the reporters on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net; Aaron Clark in New York ataclark27@bloomberg.net

Asia readies to shun Iran oil; India mulls new way to pay

By Keith Bradsher, Clifford Krauss Jan 08 2012 Under pressure from the US, some of the top Asian economies are reluctantly looking for options to reduce the amount of oil they buy from Iran, an action that could further tighten the economic vise on an increasingly defiant nation that announced plans for a new round of naval drills in the Strait of Hormuz.

The decision by South Korea and Japan to try to accommodate Washington's demands followed reports that China had already reduced its purchase of Iranian crude in the past month in a pricing dispute with Tehran. Whatever the motives, the combined loss of sales threatens an Iranian economy already reeling, where the currency has plummeted in value, inflation has surged and the general public has expressed growing anxiety about the prospect of war.

PetroScan-January 2012

China, Japan, India and South Korea together import more than 60 per cent of Iranian oil exports, and they all depend on Iran and other Gulf producers for the preponderance of their oil and natural gas needs. As tensions in the Gulf have increased and alarmed Asian governments and businesses, companies and traders from those countries have been putting out feelers to places like Russia, Vietnam, West Africa, Iraq and especially Saudi Arabia to export more oil to them, according to oil experts.

For Tehran, which relies heavily on oil revenues to prop up an economy battered by years of sanctions, the potential cutbacks by Asian customers follow a decision by the European Union to move toward a ban on the import of Iranian oil.

Taken together, the Western efforts represent the most serious economic pressure yet on Iran after years of conflict over a nuclear programme that the West charges is aimed at building weapons. But if the goal is to force Iran to relent, the campaign has so far had an opposite effect: Iranian officials have equated the focus on their oil market with economic war and threatened to block the Strait of Hormuz, where about one-fifth of the world’s oil passes to get to market. The Iranian military, fresh from 10 days of naval exercises near the strait that ended last week, vowed to hold a new round of war games soon. The defense minister, Brig Gen Ahmad Vahidi, in comments reported by the semiofficial Fars News Agency on Thursday, said the military’s exercises would be "its greatest naval war games" and would occur "in the same region in the near future."

The US, however, is keeping the pressure on. Treasury secretary Timothy F Geithner is scheduled to visit Beijing and Tokyo this week, and the tightening sanctions on Iran will be high on his agenda. US officials said Geithner would press China to reduce its purchases of Iranian oil. The trip is part of a concerted effort by Western diplomats to persuade Asian countries to go along with new European sanctions, US and European officials say.

“It’s a global chess game," said Daniel Yergin, an energy historian. "The major buyers are prudently beginning to make alternative plans to reduce their reliance on Iranian oil.” The Asian efforts to wean themselves from Iranian crude are in response to legislation enacted by the US Congress last month requiring the administration to phase in sanctions in stages by late June that would make it very difficult for others to buy Iranian oil, by barring transactions with Iran’s central bank.

The sanctions exempt food, medicine and other humanitarian trade and include a presidential waiver for any country or company in cases in which the effects would harm the national security interests of the US. More significantly, the legislation exempts from sanctions countries that "significantly reduce" imports from Iran. The legislation does not define this term, leaving it to the administration, according to officials.

Asia to Boost West African Crude Imports on Cheaper Brent, China Demand

By Sherry Su - Jan 25, 2012 Asian refineries will boost their imports of West African crude oil for loading in February to the highest in at least seven months amid cheaper Atlantic Basin grades and rising demand in China. Shipments totaling 62.4 million barrels, or 2.15 million barrels a day, will be exported from Angola, Nigeria, the Republic of Congo, theDemocratic Republic of Congo, Equatorial Guinea and Gabon, according to a survey of six traders and an analysis of loading programs obtained

by Bloomberg News. That’s 18 percent more than the revised 1.83 million barrels a day scheduled for this month.

Refiners in Asia can buy Middle Eastern crude or West African grades and their choice normally depends on the value of the lighter, low-sulfur, or sweet, blends from Angola and Nigeria versus heavier, high-sulfur, or sour, grades from Saudi Arabia and Iran. Lighter crude yields more lucrative products such as diesel and gasoline. The spread between European and Middle East grades has been narrowing over the past month after the U.S. and European Union imposed tougher sanctions on Iran. The moves came at a time when supply of sweet crude increased in the Atlantic Basin with the resumption of Libyan exports.

PetroScan-January 2012

“With the return of Libya crude and the closure of refineries in the U.S. and Europe, the Atlantic Basin has to push some barrels out and that is seen through the weaker Brent- Dubai spread,” Olivier Jakob, managing director of the research group Petromatrix GmbH in the Zug., Switzerland said on Jan. 20 in an e-mail.

Brent-Dubai Spread Libya will be pumping 1.2 million barrels a day more of oil than a year ago by the middle of the year and refinery halts will remove 1.8 million barrels of crude processing capacity in Europe and the U.S., according to Petromatrix. The BrentDubai exchange for swaps, which measures the European benchmark against the Persian Gulf grade, reached a 14month low of $2.32 a barrel on Jan. 16, according to data from PVM Oil Associates. It was at $2.62 today. Traders make more profit from shipping West African crude to Asia when the spread between the two contracts shrinks. Chinese refiners will import 37 cargoes, the most in at least seven months, compared with 30 for January, the survey showed. ChinaInternational United Petroleum & Chemical Corp., known as Unipec, bought 28 lots, eight more than this month. China’s imports of crude may accelerate to a record this year as the world’s second-biggest oil user bolsters emergency stockpiles and expands refining capacity even as the pace of economic growth slows. The nation may buy 9 percent more crude from overseas in 2012, according to the median estimate of seven traders and analysts in a Bloomberg News poll on Jan. 5. China’s refining capacity may expand by 600,000 barrels a day this year, the survey showed.

Indian Purchases Indian companies bought 19 shipments for February loading, unchanged from this month, according to the survey. Indian Oil Corp., the nation’s largest refiner, maintained its purchases at 12 cargoes for February, including eight shipments of Nigerian crude, the survey showed. Asia’s imports for January were revised up by six cargoes to 61, after JX Nippon Oil & Energy Corp., Japan’s largest refiner, bought two shipments of Gabon’s Rabi Light, while three consignments of Rabi Blend and one Equatorial Guinea’s Aseng will also be shipped to Asia this month, the survey showed. Nigeria benchmark Qua Iboe (AFCSQUA1) was at a premium of $2.51 a barrel to North Sea Dated Brent today, compared with an average of $2.27 in December, according to data compiled by Bloomberg.

Nigeria, Africa’s largest oil producer, plans to export 2.14 million barrels a day of crude next month while Angola will ship 1.82 million barrels, Bloomberg calculations based on loading programs showed. The following tables show details of planned Asian imports. Most cargoes are for 950,000 to 1 million barrels.

--------------------------------------------------------------Countries Number of Cargoes Total Volume (B/D) Feb. Jan. Feb. Jan. China 37 30 1,223,448 919,355 India 19 19 618,966 574,194 Taiwan 5 5 163,793 155,968 Indonesia 2 1 67,241 32,258 Japan 0 2 0 41,935 Others* 3 4 77,586 103,226 --------------------------------------------------------------Month Cargoes Volume (B/D) February 2012 66 2,151,034 January 2012 61 1,826,935 December 2011 47 1,433,387 November 2011 49 1,554,500 October 2011 49 1,507,742 September 2011 42 1,344,333 August 2011 50 1,536,613 ---------------------------------------------------------------Note: *Final destinations are not available.

PetroScan-January 2012

South Sudan, Kenya Sign Agreement to Build Oil Pipeline to Port of Lamu South Sudan and Kenya signed a memorandum of understanding to build an oil pipeline to the Kenyan port of Lamu, said Barnaba Marial Benjamin, a spokesman for South Sudan’s government. Construction of the pipeline will begin “as soon as sources of funding are made available,” which should take about a month, Benjamin said in a phone interview today from the capital, Juba. The accord was signed yesterday.

Benjamin said the need for a new pipeline has taken on added urgency since South Sudan started on Jan. 22 to shut down oil production because Khartoum is confiscating its crude and demanding a transportation fee of $32 a barrel. Juba has offered $1 a barrel. South Sudanese President Salva Kiir said Jan. 23 that Sudan has “looted” $815 million worth of his country’s oil. South Sudan took control of about three-quarters of Sudan’s output of 490,000 barrels a day when it gained independence in July. The crude is pumped mainly by China National Petroleum Corp (CNPZ)., Malaysia’s Petroliam Nasional Bhd. and India’s ONGC Videsh Ltd. Benjamin said Kenya and South Sudan have been discussing plans for a new pipeline over the past few years and have identified possible investors, including Toyota East Africa. Negotiations between the two countries in Addis Ababa, the Ethiopian capital, have been extended until “some kind of agreement” is reached on how much landlocked South Sudan will pay to transport its oil across Sudan to the Red Sea, Benjamin said. South Sudan says Sudan is seizing exports that pass through its territory to an export terminal on the Red Sea. Sudan says it is diverting the crude to cover unpaid bills.

Kuwait Selects France’s Total as Partner for $9 Billion Chinese Refinery Kuwait chose Total (FP) SA as the third partner to build a $9 billion oil refinery in China, the head of Kuwait Petroleum Corp. said, as the Gulf state seeks a foothold in Asia’s biggest consumer of refined products. “We are negotiating now with Total, and hopefully we will reach an agreement based on a memorandum of understanding,” Chief Executive Officer Farouk Al-Zanki said in a telephone interview today from Kuwait City. “We’d like to sign it in February.”

Total would take part of Kuwait’s 50 percent stake in the refining and chemical venture, with the Paris-based company’s share “still to be decided,” Al-Zanki said. China Petroleum & Chemical Corp. holds the remaining 50 percent. The complex, scheduled to start operating in 2015, will include a refinery with an oil-processing capacity of 15 million metric tons a year, or about 300,000 barrels a day, as well as a 1 million ton-a-year ethylene plant, China Petroleum said in November. Kuwait Petroleum is pushing ahead with the joint venture in southern China’s Guangdong province and a 200,000 barrel-a-day refinery in neighboring Vietnam as part of a strategy to expand abroad, according to Al-Zanki.

Kuwait is the fourth-biggest producer in the Organization of Petroleum Exporting Countries, and Asia is its biggest market, accounting for 84 percent of the Gulf state’s crude exports in 2010, according to OPEC data.

Saudis in Asia Other Persian Gulf crude producers are making similar efforts in Asia. Saudi Arabian Oil Co., known as Saudi Aramco, plans to build refineries in China and Indonesia as part of a $200 billion spending program during the next decade, Aramco Chief Executive Officer Khalid al-Falih said in a Jan. 14 interview in Dhahran. Refined products can fetch higher prices than oil, and China, Vietnam and Indonesia are among Asia’s fastest-growing economies. State-run Kuwait Petroleum and Japanese refiner Idemitsu Kosan Co. (5019) each has a 35.1 percent stake in the Nghi Son refinery in Vietnam. State-controlled Vietnam Oil & Gas Group holds 25.1 percent of the venture, and Mitsui Chemicals Inc. (4183) has the rest.

The partners have yet to agree on currency exchange rates to be used for the Vietnamese project, Al-Zanki said. “There’s a team looking closely at ways and means to secure the foreign exchange, while other financial issues are being resolved.”

Resolving Issues Al-Zanki expects the partners in Nghi Son to resolve their remaining issues by the end of February, while Kuwait Petroleum and China Petroleum are “committed” to their joint venture and have formed a team to determine how best to proceed. The Kuwaiti company also plans to build an oil refinery at home, at a cost of at least 4 billion dinars ($14.4 billion), to help meet domestic demand. The 615,000 barrel-a-day Al-Zour plant is still awaiting final approval from the PetroScan-January 2012

Supreme Petroleum Council, the country’s highest decision-making body for oil policy. Kuwait National Petroleum Co., the state-run refiner, is seeking foreign companies to work as consultants on the Al-Zour project, which stalled three years ago amid political opposition.

U.S. Seen Being Liquefied Gas Exporter in 2016 on Fracking Gains The U.S. will become a net exporter of liquefied natural gas in 2016 as hydraulic fracturing boosts domestic supplies, the Energy Information Administration said. U.S. will sell abroad 1.1 billion cubic feet of LNG (LNG) a day in 2016, and add 1.1 billion cubic feet three years later, the agency said today in its annual forecast. The U.S. will also sell more natural gas to Mexico via pipelines, according to the agency, a part of the Energy Department. “With supply growing faster than consumption over the next decade, natural-gas production exceeds domestic consumption,” Howard Gruenspecht, acting administrator for the Energy Information Administration, said during a conference in Washington. The surplus will be exported “primarily to Mexico and overseas,” he said. Cheniere Energy Inc. in May won Energy Department approval to export natural gas as a liquid using ships. Sempra Energy (SRE), and Freeport LNG in partnership with Macquarie Group Ltd. (MQG) are seeking similar export permits.

Manufacturers using natural gas, supported by Democrats including Representative Edward Markey of Massachusetts and Senator Ron Wyden of Oregon, oppose exports, citing concerns it would raise prices at home. Hydraulic fracturing, or fracking, is a process of extracting natural gas from shale rock by injecting millions of gallons of water mixed with chemicals. Fracking will boost gas supply 20 percent to 26.1 trillion cubic feet in 2025, from 21.7 trillion cubic feet in 2010, according to the report.

Keystone XL : Seeking pipeline common sense Only an idiot would dare to predict the course of the epic battle over the Northern Gateway pipeline that officially begins on Tuesday. I’m not that idiot. But I can predict it will make the fight over Keystone XL look like a skirmish in a sandbox.

Environmental groups argue that the pipeline, which will carry heavy oil from the oil/tar sands of Alberta to the Pacific coast, will imperil vast tracts of pristine wilderness as well as the traditional way of life of indigenous peoples. The reality is far more interesting.

Neither Kitimat, B.C., the coastal town where the pipeline would end, nor the Haisla people, whose ancestral land it is, are strangers to development. The town is home to a giant aluminum smelter and a deep-sea port. Billions of dollars are flowing in to build a new liquid natural gas terminal. The 1,500 Haisla (only 700 of whom live in the town) will soon collect more money in rents and royalties than they receive from the federal government. They are dead set against the pipeline – for now. And the rat’s nest of aboriginal title issues in B.C. means the deal could be tied up in the courts for years.

More than 700,000 kilometres of oil and gas pipelines already criss-cross Canada. But for the worldwide environmental movement, any pipelines that carry heavy oil from Alberta are the embodiment of hydrocarbon-spewing evil. They could be nuclear-bomb-proof and it wouldn’t matter. What many pipeline opponents really want is to shut down the oil/tar sands altogether.

Prime Minister Stephen Harper has taken to calling these opponents “radical groups” funded by foreign money. It’s true that Canadian groups do get money – lots of it – from well-heeled foreign backers. And they’ve used it well. For years, they’ve run rings around the even better-heeled oil and pipeline giants, who’ve been pretty good at extracting bitumen but pretty bad at making their case with the public.

Somewhere between these two rhetorical extremes is the voice of common sense, which is barely audible in all the din.

Unfortunately, the two-year-long public hearings into the Northern Gateway pipeline are unlikely to enlighten citizens who really want Canada to strike a sensible balance between economic and legitimate environmental interests. The National Energy Board will hear from no fewer than 4,000 intervenors, most of whom will be repeating the same objections over and over. Then it will make its recommendation to the cabinet, which is free to overrule it.

Unlike Barack Obama, Mr. Harper won’t let domestic opposition influence his decision. No prime minister would. The economic case is so compelling that any government in power would support it. A thirsty world wants our oil, and the more efficiently we can get it to them, the better. And better access to markets could add $131-billion to Canada’s economy by 2030, according to a study by the University of Calgary’s School of Public Policy. That includes more than PetroScan-January 2012

$27-billion that would go to governments in taxes and royalties. “The rewards of additional pipelines for all of Canada are too great to ignore,” says the institute’s Michal Moore. “Pipelines must be a national priority.”

Canada is hardly unique in the battles over new and unconventional forms of energy. Discoveries of shale oil are fuelling an energy boom in job-hungry states across the U.S. – and also a firestorm of controversy. The truth is, no form of energy extraction is risk-free. The trick is to find the level of risk that’s politically acceptable, and hope to avoid nasty surprises.

No one wants a tanker spill. But all that money could help improve a lot of native schools.

Published on Tuesday, Jan. 10, 2012 2:00AM EST

Euro-III fuel to be phased out in 7 cities from March 31 The Economic Times Environment-friendly Euro-IV quality petrol and diesel will be sold in seven more cities by March 31, government and industry officials said. The seven cities where fuel of Euro-III specifications will be phased out are: Puducherry, Mathura, Vapi, Jamnagar, Ankaleshwar, Hissar and Bharatpur. The oil ministry has also directed state-run IndianOil, Bharat Petroleum and Hindustan Petroleum to phase-out sale of Euro-III petrol and diesel in their pumps in 50 cities by 2015, officials said. "The decision will require simultaneous improvement in engine technology in new vehicles to reduce emission levels and deliver higher fuel efficiency," a government official said. "Automobile manufacturers have told us that they are prepared to meet the new fuel norms, and are waiting for assured supply of upgraded fuel in these cities," the official said. A senior executive of an automobile company said availability of higher-grade fuel was the only concern.

"Automobile companies are exporting higher grade Euro V-compliant vehicles to Europe. These standards exceed India's statutory emission requirements," said the executive who did not wish to be named.

An oil ministry official said oil firms had invested about 36,000 crore to upgrade their refineries to produce the highergrade fuels. "Today, about 17% of the total diesel and 27% of total petrol consumption in the country is of Euro-IV grades," the official said. Government agencies are also ready to simultaneously monitor and enforce measures like retrofitment of devices in old vehicles, phasing out of old vehicles, mandatory periodical inspections and maintenance requirements, government officials said.

Euro-IV, which is also known as Bharat stage-IV, is already sold in 13 major cities including Mumbai, Kolkata, Chennai, Bangalore, Delhi and National Capital Region comprising 17 towns. Higher-grade fuel reduces emission of pollutants such as sulphur. The government is under pressure from environmentalists and environment watchdog, the Central Pollution Control Board (CPCB) to reduce vehicular emission by upgrading fuels sold in pumps. Officials in the board said the vehicular emission was the lesser evil for environment pollution. A recent study of six cities conducted by CPCB has found that vehicular emission is not the major contributor to overall pollution, one official said.

Dust, construction activities, domestic combustion, use of diesel generation sets and biomass burning contribute significantly to pollution levels, the official said quoting the study. "It is, therefore, imperative that policy prescriptions related to other sectors are also adequately enforced," the official said requesting anonymity. CPCB is a statutory body, constituted in 1974 under the Water (Prevention and Control of Pollution) Act, 1974. Later, the board was entrusted with powers under the Air (Prevention and Control of Pollution) Act, 1981. It monitors the National Air Monitoring Programme (NAMP), established to determine air quality status and trends to control and regulate pollution from industries and other sources.

Colorado emerges as next oil frontier As energy players size up potential of Niobrara formation, citizens and state officials weigh prospect of boom against environmental concerns The Davis family has owned ranchland on the high-desert prairie of El Paso County in Colorado for the past century.

Family lore recalls a prophecy of wealth from the Depression years. A geologist came through the desolate region, nestled on the Front Range of the Rocky Mountains, and told the family there might be oil CL-FT under their land.

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In the seven decades since the 1930s, there hasn't been a single successful oil well on the Davis land - or anywhere else in all of El Paso County, a mostly rural region located south of Denver.

Now, however, subsurface fracturing - or fracking - technology so widely used in natural gas drilling is beginning to unlock oil reserves long considered impossible to tap successfully, like the suddenly prolific Bakken play in North Dakota. In Colorado, the target is the tight oil of the Niobrara formation. Houston-based Ultra Petroleum Corp. is on the fringe of the formation in El Paso County and believes it can unearth 150 million barrels of oil. North of Denver, where oil and gas drilling are common, Anadarko Petroleum Corp. recently said fracking is the key to tapping as many as 1.5 billion barrels of crude the company thinks it is sitting on.

Rick Davis, whose grandfather was long ago told of the oil by the geologist, works in the county assessor's office. Like others in the region, he has been pushed to answer a difficult question - the same faced by people in other new energy epicentres such as the Marcellus gas field in Pennsylvania. The possibility that fracking might imperil water is a huge concern in dry Colorado. But the economic bonanza, especially in an era of recession, is too appealing to many to ignore.

Mr. Davis decided his family should make a deal, advising his 88-year-old mother to sign a contract in late 2010 with an oil land broker, who then sold a package of mineral rights to Ultra. Ms. Davis inked a contract for mineral rights beneath about 400 acres of land, receiving cash for five years of leasing rights up front, some $12,000 (U.S.). The big money will come if a successful oil well is drilled. Her 12.5-per-cent royalty could generate several thousand dollars a day - which could add up to $1-million a year.

"It was a difficult decision to make," Mr. Davis says. "Do we really want to see oil wells all over the place in eastern El Paso County? We're a rural ranching community. It came down to a matter of economics. My mom lives on my dad's pension. It was a bonus to get some extra money in her bank." El Paso County is one of the new frontiers of the American shale oil revolution, one that has the potential to radically redraw the supply of oil to still-hungry United States consumers.

Driven by high oil prices, and new technology, domestic oil production has jumped more than 40 per cent to 5.6 million barrels a day in September from 3.9 million barrels in the same month in 2008 - the lowest level since 1943, according to figures compiled by the U.S. Energy Information Agency. The increase has happened after U.S. oil demand peaked in the summer of 2005 at nearly 22 million barrels a day, with current demand down 10 per cent from there.

All this has squeezed imports, particularly from OPEC countries, whose supply to the U.S. peaked in January, 2008, and has plummeted by one-third to less than five million barrels a day. Canada, which eclipsed Saudi Arabia as the No. 1 U.S. supplier in 2004, has gained steadily. In September, Canada sent a record 69,722,000 barrels of oil to the U.S., 2.3 million a day, up 20 per cent from a year earlier.

The trends - increased U.S. supply, reduced demand because of laws and technology - will continue to squeeze OPEC, so much so analysts believe imports from such countries will eventually not be necessary. Some forecasts even predict the U.S. could become self-sufficient. Even if it's not the case, Canadian oil producers face a big challenge, as the market gets tougher and high-cost oil sands output, far from the market, competes in the shifting milieu.

Companies are piling in. Oil lease permits have doubled in the past two years and just this week Chinese giant Sinopec entered a $2.2-billion joint venture with Devon Energy of Oklahoma City, whose holdings include the Niobrara. However, as in places such as the Marcellus in Pennsylvania, the predicted motherlode of energy below the ground in Colorado's Niobrara battles raises fears of the environmental catastrophe of destroyed aquifers and poisoned drinking water. El Paso County is so new to drilling that local officials did not even know how to pronounce Niobrara (ny-o-brair-ra). County commissioners - all five of them Republican - worried about how they would pay to maintain rural roads torn up by the heavy traffic of trucks, drilling rigs and fracking equipment, and imposed a brief moratorium on drilling last fall.

Such episodes are indicative of the challenges the United States faces on the local level in its quest to wean itself from foreign oil. The El Paso moratorium was quickly eased to allow Ultra to drill three test wells. There is palpable "fear" about water, says Mr. Davis's boss, county assessor Mark Lowderman, who explains that there are four overlapping aquifers that oil wells would need to drill through. But money is a bigger and bigger lure, especially as some people sign seemingly lucrative deals. "Our economy is in the dumper here, here's an industry that's ready to go, and we can bring in some jobs and some money," says Mr. Lowderman in his office in Colorado Springs, the county seat. "If you look up at North Dakota it can bring a lot of money quickly."

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With oil around $100 a barrel, the conversation is evolving: "'You know, how much money are we talking here?'" In El Paso County, the issue will play out through the election year of 2012, where three of the five commissioners face voters, as well as Mr. Lowderman's friend, State Rep. Marsha Looper, who comes from a ranching family, resolutely worries about water, and whose district east of Colorado Springs covers some of the newly prospective oil territory. It is parched land, a high-mountain desert, and every drop of water is gold to ranchers and people outside Colorado Springs, who depend on well water.

The eastern edge of Colorado Springs had long been seen by developers as a future suburb. Ultra sees certain wealth below ground. "If we have what we think we have in the Niobrara, we'll do really well in terms of making money, even at more modest oil prices," Ultra chairman and chief executive officer Michael Watford told investors in November.

While El Paso County is an extreme frontier of oil development in the U.S., Weld County north of Denver is a traditional home for energy exploration in the state. Anadarko, a large Houston company that produces more oil and gas, by comparison, than Suncor Energy, had been active in the Wattenberg field for a decade when it cracked the Niobrara.

Unlike other shale plays in Texas and Pennsylvania, Anadarko hit on the right formula quickly. Its production from the area could be doubled to 140,000 barrels a day, drilling as many as 2,700 wells, with 160 planned in 2012.

"This thing is off to a roaring start," Chuck Meloy, senior vice-president of worldwide operations at Anadarko, told investors at a conference in early December, and invoked the success of the Bakken in North Dakota.

The Niobrara "is going to be a Bakken-ish type resource," Mr. Melroy declares.

Shell pays $25m to settle up royalty dispute Shell has paid out a $25 million settlement in connection with a dispute with federal regulators over royalties paid between 2000 and 2008, US authorities said today.

The Office of Natural Resources Revenue, the branch of government now responsible for dealing with government proceeds from oil and gas leasing, said past accounting discrepancies with the supermajor were unearthed in audits.

They related to payments made by Shell deepwater production under the now-defunct “royalty-in-kind” program, which allowed operators to pay their government take in oil and gas production instead of cash. “This resolution demonstrates ONRR’s commitment to pursue all revenues due from energy production that occurs on federal onshore and offshore lands,” said Greg Gould, an acting deputy assistant secretary with the agency.

Following involved negotiations, Shell spokeswoman Kelly op de Weegh said the agreement “provides clarity” and called the payment “fair and appropriate.” “Shell’s policy is to pay all royalty correctly,” she said in an email. “Should issues arise, we seek to clarify matters through consultation and compromise.” The RIK programme was canned in 2009 amid a tightening budget environment and following a 2008 government investigation that turned up examples of gift giving, drug use and sexual improprieties between government employees and oil company personnel.

ConocoPhillips seeks partner for oil sands assets Mon, Jan 16 2012

By Jeffrey Jones CALGARY, Alberta (Reuters) - ConocoPhillips (COP.N: Quote, Profile, Research, Stock Buzz) is seeking a buyer for 50 percent of a large portion of its Canadian oil sands holdings, assets that could eventually produce more than half a million barrels a day, the U.S. oil major said on Monday. ConocoPhillips has retained Scotia Waterous to run the offering of a share in six Alberta properties that currently produce 12,000 barrels a day from an estimated 30 billion barrels of bitumen in place. It is doing so as interest in Canadian energy assets booms, especially from Asian buyers.

Tim Bryant, vice-president of ConocoPhillips' Canadian division, declined to say how much the company wants for the holdings, other than to say it would be in the billions of dollars rather than millions. "It's substantial. These are world-class trophy assets," he said. The one producing project in the package is Surmont, run in a joint venture with France's Total SA (TOTF.PA: Quote, Profile, Research, Stock Buzz). Located south of the oil sands hub of Fort McMurray, Alberta, the steam-driven development pumps about 25,000 barrels a day. The partners are working to boost that to 136,000 bpd, starting in 2015. The other properties are the Thornbury, Clyden, Saleski, Crow Lake, McMillan Lake assets. The land totals 715,000 acres.

PetroScan-January 2012

It is difficult to put a potential value on a deal with the information currently available, CIBC World Markets analyst Andrew Potter said. "They give a bitumen-in-place number, but you have no idea how that's attributed by different property," Potter said. The Houston-based company, in the process of splitting its worldwide production and refining assets into separate companies, is offering the assets at a time when investments in oil sands are piling up, especially from Chinese and other Asian companies. In the latest deal two weeks ago, PetroChina (601857.SS: Quote, Profile, Research, Stock Buzz) agreed to buy out its partner in a newly approved tar sands development for C$680 million ($674 million). Chinese enterprises have spent nearly $5.5 billion on Canadian energy assets in the past six months. ConocoPhillips is no stranger to such dealmaking, having sold its interest in the Syncrude Canada oil sands mining venture to Sinopec (600028.SS: Quote, Profile, Research, Stock Buzz) for $4.7 billion in 2010.

"I think you can presume that Asian buyers will be looking at it. There might also be some good opportunities for other operators to tuck in around some existing properties," Potter said. The company also has a major oil sands and oil refining joint venture with Calgary-based Cenovus Energy Inc (CVE.TO: Quote, Profile, Research, Stock Buzz), under which the pair are developing the Foster Creek and Christina Lake projects. The sale of the other interests would be part of a three-year, $20 billion asset disposition the company is in the midst of, Bryant said. "And it's common to go out and seek partners to try to move some of these bigger projects, he said. *******************************************

NEW & RENEWABLE ENERGY

Govt plans offshore facility to tap wind energy The Centre for Wind Energy Technology (CWET) plans to conduct a feasibility study in Dhanushkodi near Rameswaram to set up offshore windmills, following problems of land acquisition for onshore wind power projects. Sources said wind velocity at 100 metres from ground level would be measured and data collected. "It will be set up in a lagoon. If there is enough wind flow, we will set up a wind farm and start power generation," said a CWET source.

A machine will be installed at the erected tower and the velocity, direction and duration of wind recorded. The data will then be sent to the CWET. "At least one acre of land will be required to erect the tower in Dhanushkodi," the source said.

It would take at least two years to study and gather data on the potential for offshore wind energy. The study will take some years to complete. "We conducted a study in Rameswaram too, but that was not for offshore windmills. We studied the velocity at 20 metres from ground level," said the source. Many countries have started opting for offshore windmills.

Many European countries, the US and China have started setting up such windmills. But in India the concept is yet to catch on.

The country's wind energy generation capacity is around 14,000MW, of which Tamil Nadu accounts for 6,547MW. Between April and October last year, nearly 660MW was added. However, a major problem in both onshore and offshore windmills is the evacuation problem. "There is a need for proper evacuation facilities. The ministry of new and renewable energy (MNRE) said an exclusive corridor for renewable energy will be set up soon," said Tamil Nadu Energy Development Agency (TEDA) chairman and managing director Sudeep Jain. He said there were no offshore windmills in the country. "Tamil Nadu has a huge potential and it would be good if some are set up in the state," said Jain. TNEB officials on the other hand said laying transmission lines for evacuating wind power would not happen in a short time.

"Wind energy producers claim the state has a capacity to produce an additional 10,000MW. This would need a strong transmission network," said a TNEB official. He said they sought funds from the MNRE for an exclusive corridor for evacuating wind energy. "We will need at least Rs 5,000 crore," said the official.

Link between fracking and quakes unsure PetroScan-January 2012

A 4.0 magnitude earthquake near a Youngstown, Ohio, natural gas well on New Year’s Eve has invigorated the public debate on the safety of hydraulic fracturing. Activists there and elsewhere, such as in the United Kingdom, have called for a moratorium on the fracking process, increasingly widely used to extract gas from shale rock. In response, energy company officials have said their wells may not be to blame for nearby earthquakes.

So is fracking a dangerous source of earthquakes that should be halted? Or is it harmless when it comes to quakes?

Scientists say the truth is somewhere in between, but generally believe fracking poses manageable earthquake risks.

Scientists began to understand that humans could cause small earthquakes in the 1960s, when the U.S. Army drilled a 12,000-foot well at the Rocky Mountain Arsenal, near Denver, to dispose of waste fluids. This created a series of unusual earthquakes in the area. Later that decade, at an oil field in Rangely, Colo., tests were done and seismologists found that changes in the number of earthquakes recorded per year correlated with changes in the quantity of fluid injected into the ground.

“It’s important to recognize that the association between injection and triggered earthquakes has been known about for about 40 years,” said Mark Zoback, a Stanford University geophysicist. But that doesn’t necessarily mean that hydraulic fracturing poses a significant public threat. There are, after all, about 50,000 injection wells in the state of Texas, and only a handful of earthquakes a year. There are four steps to the fracking process, which energy companies use to extract natural gas from shale rock formations that are thousands of feet beneath the surface.

First the well is drilled, and then highly pressurized fluid is injected to break up the rock. This increases the rate at which natural gas can be produced from the well.

At that point something must be done with the wastewater used to frack the well. To avoid contaminating nearby groundwater, it often is injected back, deep into the well. It is this step, scientists believe, that can trigger earthquakes.

Although the world’s strongest earthquakes occur along the major fault lines, there are smaller, pre-existing faults all over. The injection of water can change the pressure along these faults, causing them to slip and triggering small earthquakes, scientists say. Fracking, then, might cause an earthquake sooner than it would have occurred naturally. But the process seems unlikely to amplify a tremor. “My preliminary studies suggest you almost never get induced earthquakes that are bigger than the natural earthquakes in an area,” said Cliff Frohlich, a researcher at the University of Texas at Austin’s Institute for Geophysics. That was the case even with the Youngstown quake. As recently as 1998, there was a magnitude 4.5 earthquake near the city, according to the U.S. Geological Survey.

Although scientists say they have a basic understanding of fracking and earthquakes, more research is needed to put further limits on the risk posed by the process. “I think it’s a manageable problem,” Frohlich said. “To me it seems that, especially if more research were done, it’s possible to establish some areas of the country where you could do almost any amount of injection.” And in those areas where wastewater injection might be a seismological threat, he said, there may be other disposal options. For now, then, it’s probably the safest practice to carefully monitor large injection wells in tectonic regions, scientists say. Researchers hope to identify and prevent a situation in which fracking might cause severe seismicity problems.

This can be done through better imaging technologies to look at subsurface rock formations, as well as other monitoring of fracking wells, said Robert Stewart, a University of Houston geophysicist. “Experience, research and case histories are required to try to find any rare and possibly untoward circumstances where hydrofracking could be undesirable,” he said.

Consumers increasingly opt for Solar Power

By Imran Rana Published: January 5, 2012 FAISALABAD: The demand for solar panels has increased considerably, thanks to extensive power and gas outages and high tariffs that have not only hurt industrial activities but have also disturbed the monthly household budgets.

Importers of solar energy panels told The Express Tribune that unbearable energy outages, high tariffs and heavy expenses on generators and Uninterruptible Power Supply (UPS) had left consumers with no option but to turn to alternative energy, particularly solar panels. They said Chinese solar panels were much cheaper compared to panels PetroScan-January 2012

imported from Germany which were very expensive and did not come within the range of consumers. In a bid to promote alternative energy, the government has scrapped duty on import of solar energy systems.

According to Nurani Solar Private Limited chairman Tariq Nurani, solar products being imported into the country include solar street lights, solar garden lights, solar generators, solar heaters, solar water heaters and solar water collectors for industry.

“Sales of solar energy panels have increased about 40 per cent compared to winter of last year. Sunshine in Pakistan remains for approximately 10 hours a day, which is enough to produce 1,000 watts per square metre. Producing electricity from the sun is very easy,” said Nurani, who deals in solar products.

However, he pointed to corruption as a major hurdle, saying dry port authorities did not clear consignments until they were paid. “If the government controls this mafia, then the cost of solar panels will come down by up to 30 per cent.”

Solar-powered tube wells, water pumps and vacuum tube collectors of Germany can be installed with an investment of Rs400,000 to Rs500,000, said Dr Anjum Muneer, Assistant Professor at the University of Agriculture Faisalabad, which is running a programme in assistance with Germany to promote solar energy.

He said the government should subsidise solar energy products for their promotion, adding the technology might be costly and unaffordable for the consumers, but it would give life-time savings and benefits to them.

Khawaja Cotton Industries Chief Executive Officer Muhammad Amjad Khawaja said he invested Rs5 million to install solar water boilers, but after this the gas bill dropped 40 per cent. He also installed solar energy panels at his home at a cost of Rs90,000 and his electricity bill fell almost 60 per cent.

Khawaja said the rising cost of electricity and energy shortages had ruined the textile sector but solar water boilers almost resolved the problem.

Nadeem Ali Rizvi, a solar energy consumer, said two types of solar panels were being sold in the market, one was large solar panel and the other was a smaller one to power lights and fans. He spent Rs22,000 on home lights, garden lights and street lights, which needed no wiring.

“My electricity bill has dropped 60%. Though the panel was costly, but my monthly savings will help me easily recover the money,” said Rizvi.

Bilal Ahmad, another solar energy consumer said that solar panels, especially small panels, were very economical. “They are cheaper than spending on a UPS or a generator.”

UPS increased the electricity bill by up to 40 per cent per month by charging batteries, he said, adding rising prices of fuel and electricity and load-shedding forced him to install solar panels.

Published in The Express Tribune, January 5th, 2012.

Adani Group commissions country's largest solar project Mitul Thakkar, ET Bureau Jan 5, 2012, Diversified Adani Group announced the commissioning of country's largest 40 mw solar power plant in Kutch district Gujarat. For India's largest private thermal power producer, the Solar Power Plant marks Adani's first big foray in the renewable energy sector. Going forward, Adani Group is planning to expand the capacity of this plant to 100 mw. The group is claiming to have commissioned country's largest solar power plant in record time of 150 days starting from foundation stone laying to electricity generation.

"We are pleased to dedicate country's largest solar plant to Nation today. We, at Adani, are committed to protect and encourage better use of natural resources of our country by implementing better technologies. The Solar plant and uses of Super Critical Technology in all of our Thermal Power Plants is a testimony of our commitment towards the environment," said Adani Group chairman Gautam Adani. The solar power plant is using solar PV technology and has over 400,000 solar PV modules mounted on 21,600 structures, which are erected on 130,000 foundations.

Solar power from external walls / New material allows for more efficient energy production The Yomiuri Shimbun Mitsubishi Chemical Holdings Corp. plans to sell a new type of external building material that generates power from sunlight beginning in fiscal 2013, it has been learned. Unlike conventional solar panels, whose installation sites are PetroScan-January 2012

limited to roofs and other specific places, the new material can be used for walls of buildings and other structures in sunny locations.

The new material will likely boost the spread of renewable energy. If the material is used for skyscraper walls, just one or two buildings could produce electricity equal to that generated at a large-scale solar power plant, according to experts. The new material has been developed thanks to the company's creation of solar cells that use organic semiconductors made from petroleum and other materials instead of the silicon semiconductors currently in use. The new cell is thinner and lighter than current panel-type cells.

The cells' power generation capability is about 80 watts per square meter, and their efficiency in converting solar energy to electricity is about 11 percent, a level sufficient for practical use. For comparison, conventional solar panels have an efficiency of 14 percent to 15 percent. Organic solar cells are easier to manufacture than current solar panels that use heavy base materials such as glass. Experts said the production cost of the new cells could be as low as one-tenth of the panels. The new cells can be used not only for walls but also on small roofs or parking lots where large conventional panels are difficult to install. The new cells also have strong earthquake resistance.

The company also plans to use the cells in the bodies of electric vehicles and in curtains. Conventional external wall materials that generate power using silicon semiconductors are costly and their efficiency in converting solar energy to electricity is low. As Mitsubishi Chemical sells wall materials in more than 100 countries and territories, the company expects the new material to promote the broad use of solar power.

(Jan. 4, 2012, http://www.yomiuri.co.jp/dy/business/T120103002965.htm)

Offshore Solar Installation Harnesses Power From Waves Jan 04, 2012 2:52 PM EST http://goodcleantech.pcmag.com/solar-energy/

By Andrew Webster

A new solar panel design from design Phil Pauley looks to generate energy from both the sun and waves. Dubbed Marine Solar Cells, the design is essentially an off-shore solar installation that also generates energy from waves. And in addition to producing energy from two sources, Pauley also explained that the design would increase the efficiency of the solar panels. Due to the reflections off of the water, Pauley believes that the panels will be able to capture 20 percent more solar power. "These hybrid marine generators would be an effective way of capturing more energy per square metre," he said. "The design means they could be largely constructed from recycled materials too."No word yet on any plans for the Marine Solar Cells to be used in a commercial application.

PetroScan-January 2012

Via TechCrunch

Overcapacity plagues solar industry

By Institute for Energy Research Wednesday, January 4, 2012 Solar power has hit an all time high in the United States, but it is now plagued by over capacity, declining prices, dwindling subsidies and bankrupt companies. That is because its product is uneconomic without massive subsidies, needs the sun to shine in order to produce power, must be backed-up with other power sources for reliability, and has steep competition from China where labor rates are low and solar manufacturers are subsidized. Led by China, global production of solar panels tripled over the last three years.

U.S. Solar Activity Solar installations are skyrocketing in the U.S., driven by subsidies and State mandates. In 2011, more than 1,000 megawatts of solar panels were installed through the third quarter and a total of 1,700 megawatts are expected to be installed by year’s end. This is an increase of 89 percent over last year. One of the drivers of this boom has been the Obama administration’s Section 1603 Treasury grant program. To date, this program has given $1.5 billion to more than 22,000 solar projects and 3,600 grants in 47 states through November 2011.[ii] The 1603 program, which also covers wind, is expected to cost $9.6 billion by the end of 2011—more than 3 times what Congress had expected. Without further authorization, the program expires at the end of this year.[iii] And when the taxpayer-funded subsidies end, things will get rougher for U.S. manufacturers. They are already feeling the squeeze.

For instance, California’s largest utility, PG&E Corp. has been using a provision in the tax code to reduce its tax liability by providing equity for solar energy projects. By spending the capital to install home solar arrays through 2 companies, SolarCity and SunRun Inc., PG&E has doled out $160 million, receiving payments from those customers and local, state, and federal subsidies, including the 1603 program.[iv] But the company is halting putting equity in these projects to focus on its own equipment that needs repair.[v] PG&E will continue to buy solar and wind power to achieve California’s mandate of getting one-third of its electricity from renewable power by 2020.

As companies like PG&E pull back on solar investments because of the expiration of the 1603 grant program and fulfillment of state solar mandates, things will get tougher for U.S. solar manufacturers. While a 30 percent rebate on investment in solar power provided by the U.S. government spurred growth in solar power in the United States, U.S. solar manufacturers are being pushed out of the market by low-cost and government-subsidized Chinese manufacturers. In California, for instance, the Chinese solar panel manufacturers held 29 percent of the market at the beginning of the year, but their share grew to 40 percent in the third quarter of 2011, while U.S. solar manufacturers’ share fell from 37 percent to 29 percent.

With the Chinese flooding the market with cheap solar panels, prices for solar panels in 2011 fell by about 40 percent.

Black and Veatch, an engineering firm, note that manufacturing costs may not be covered at this lower price level. Prices for solar panels started 2011 at $1.60 per watt, but started to drop by the end of the second quarter and now are around $1.00 per watt. The CEO of SolarCity, a U.S. solar installer, feels the price will decline further next year with the floor at $0.85 per watt. [vi] This decrease in prices has led to bankruptcies by U.S. solar companies. Three U.S. solar companies filed for bankruptcy in 2011, and recently two more U.S. solar companies announced staff cut backs. MEMC Materials Inc. will be cutting staff by a fifth and closing some facilities to stay in competition. First Solar cut staff saying they expected their 2012 profits to be up to 50 percent lower than Wall Street forecasts. The federal government provided $3 billion in loan guarantees to First Solar, the most of any recipient, helping the company to develop 3 solar farms in Arizona and California. According to government records, since 2007, First Solar spent $2.2 million on lobbying in Washington and the company’s representatives met Obama administration officials before receiving the federal loan guarantee. The company is eliminating 60 jobs in California where it received $3.43 million in state sales tax credits.[vii] The most notable solar bankruptcy in 2011 was the Fremont, California-based Solyndra LLC. The company went bankrupt despite receiving a loan guarantee of $535 million from the U.S. government. This bankruptcy occurred despite increased demand for solar panels in the United States due to state mandates for solar energy. Once those mandates PetroScan-January 2012

are filled, however, U.S. solar expansion will be stalled due to higher costs of solar power compared to onshore wind power, which meets most state renewable mandates, and to natural gas-fired generation.[viii] Solar in the Global Market Global demand for solar power has grown in 2011 but is expected to be level in 2012. In 2011, about 8 percent more solar panels are expected to be installed compared with 2010, according to Jefferies Group analysis. At least seven solar-panel manufacturers have filed for bankruptcy or insolvency recently, including two German companies, Solar Millennium AG and Solon SE. For years, Germany was the world’s largest market for solar, doubling its solar installations in 2010 alone. But the Jeffries Group expects a 29 percent decline in demand in 2011 compared to 2010.

One of the reasons for this decline in demand is a reduction in solar subsidies. According to Citigroup Global Markets, there is now “a very hostile political environment” for renewables in Europe.[ix] These analysts chronicle 27 political interventions in the utility industry, most of which are reductions in subsidies to the solar sector which will cost utilities 200 billion Euros. Without lavish subsidies, more solar companies will struggle.

Another factor in the bankruptcies of European solar firms is the rise of Chinese low-cost solar firms, helped out by government aid. The Chinese government directed its banks to lend freely to new manufacturers and according to Bloomberg New Energy Finance, Chinese banks have offered at least $43 billion in credit to Chinese renewable-energy companies since 2009. Easy access to capital during the height of the global credit crunch allowed Chinese companies to build factories and start production, forcing competitors in Europe and the United States to do the same. “The industry simply cannot support 300-plus cell and modular manufacturers, so the companies left will capitulate and exit the industry,” said Zhengrong Shi, chief executive of Chinese solar-panel manufacturer Suntech Power Holdings Company.

Suntech is planning to cut its operating expenses by at least 20 percent next year.

Factors in the Over Supply of Solar Panels While China is a significant reason for the glut in solar manufacturers, other factors include governments’ encouraging clean technology through subsidization, venture capitalists pouring into the solar sector, and investors buying into IPO issues of solar companies. In the United States, records show that the Obama Administration gave easy access to venture capitalists with stakes in some of the companies backed by the loan guarantees of the administration. For instance, documents show that senior Administration officials pushed career DOE bureaucrats to rush their decision on the Solyndra loan so Vice President Biden could announce it during a trip to California.[x] A noted contributor to the Obama campaign, George Kaiser, complained to the president about Chinese manufacturers dumping cheap solar panels on the U.S. market and pressed the need for a “Buy American Act” for federal agencies.

Solyndra wanted to make the federal government a major customer, which it called the “Uncle Sam” strategy. The George Kaiser Family Foundation, a nonprofit organization, owned a third of Solyndra.

Conclusion The plentiful production of solar panels resulted in cut-throat pricing competition. A year ago, distributors of solar panels and project developers could buy solar panels for $1.60 per watt, on average. Now the price is between 90 cents to $1.05 per watt, according to investment bank Jefferies. China, with its subsidization and low labor costs, is overtaking the market and putting U.S. and European companies out of business. Of the 1,100 Solyndra workers who lost their jobs, an estimated 90 percent remain unemployed. It does not seem like Obama’s green job strategy is working!

Minds Meet on Shale Gas, Fracking

by Bill Chameides | Jan 10, 2012 posted by Erica Rowell (Editor) Yesterday, a packed auditorium at Duke heard from experts on fracking. Among them, from left to right, Cornell’s Robert Howarth, Carnegie Mellon’s Kelvin Gregory, and Duke University professors Avner Vengosh and Robert B. Jackson.

(Duke Photography) Crossposted with National Geographic's Great Energy Challenge blog.

Highlights from a workshop on the environmental and social implications of fracking.

A group of the nation’s leading experts on energy and the environment are at Duke this week attending a workshop to try to ferret out the facts (and tamp down the hype) around shale gas and fracking, the controversial method for extracting PetroScan-January 2012

natural gas trapped in shale deposits. With yesterday’s sessions held as a public forum and today’s held in private, the two-day workshop aims to find agreement on next steps to better understand the impacts and how they might best be mitigated.

For a topic that has elicited much emotion and passion from environmentalists and energy industry representatives alike, yesterday’s session was remarkably tame, even by scientific workshop standards. Speakers dispassionately presented their data and interpretation of same, and any disagreements were aired in the most collegial of terms. Anticlimactic, I imagine for those who were hoping for drama, but as one who was hoping to get a better sense of the state of the science, I found it to be quite informative.

Video will be available online Wednesday. In the meantime, here are a few highlights.

ExxonMobil: Fracking Is a Big Part of the Future Michael Parker of ExxonMobil opened the session with a summary of the company’s most recent energy outlook, projecting national, regional and global energy demands out to 2040. ExxonMobil projects that: global demand will, not surprisingly, rise — by about 30 percent by 2040; the largest part of that growth will come from natural gas, with demand to increase by 60 percent; a good deal of that increase will come from unconventional gas reserves (i.e., shale gas via fracking); and most of the increased production of natural gas in the United States will be from unconventional sources like shale gas from fracking.

Interestingly, worldwide demand for coal is expected to peak and begin a gradual decline.

In the United States, ExxonMobil expects that natural gas will overtake coal by 2025 as the second most-used fuel next to oil — the uptick in use will come from electricity generation as natural gas continues to erode the use of coal. Driving the switch from coal to natural gas will be economics — since its advent, fracking has helped make gas-powered power plants a better economic bet than coal-fired ones. (ExxonMobil also expects that “policies that impose costs on highercarbon fuels” will encourage the shift to natural gas.)

Another interesting part of Parker’s presentation was the national perspectives. Again not surprisingly, driving most of the rise in global energy demand will be China’s and India’s economies. But I was surprised by U.S. projections: While U.S. population is expected to grow at an annual rate of about 0.7 percent out to 2040, and gross domestic product by 2.4 percent, energy demand is projected to decrease annually by about 0.2 percent, thanks largely to improved efficiency in our energy use.

Does Fracking Undermine Drinking Water?

This is a huge question with only a tiny bit of data — enough to raise some questions, but not enough to provide definitive answers.

At yesterday’s workshop, Duke University’s Avner Vengoshsummarized his data from Pennsylvania and New York that provide circumstantial but not yet slam-dunk evidence of methane contamination of some wells in the vicinity of fracking.

The Environmental Protection Agency’s David Jewett described a new national study on “”Hydraulic Fracturing and Its Potential Impact on Drinking Water Resources,” which the agency launched in hopes of resolving this question.

(See here for details.)

Of special note in Jewett’s presentation was his announcement at the outset that he would not discuss the socalled Pavillion groundwater study, a study carried out by EPA scientists who found evidence of compounds associated with shale gas drilling and fracking in drinking water wells in Wyoming. The report is undergoing peer review, and until that's completed, EPA is not talking about it (in the meantime a draft report [pdf] is available).

Shale Gas: A Global Warming Goodie or a Baddie?

The accepted wisdom is that natural gas is a winner compared to the other fossil fuels. The reason is simple: On an energy-unit-to-energy-unit basis, burning natural gas emits less carbon dioxide (CO2) than does coal or, to a lesser extent, oil. But Cornell University’s Bob Howarth and colleagues challenged this contention based on the following: The key hydrocarbon in natural gas is methane; Methane is a much more effective greenhouse gas in its own right than CO2; and so

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If enough methane is lost throughout the system, from losses at the wellhead to leaks from pipes and storage facilities during transport and delivery (collectively referred to as fugitive emissions), then, from a global warming point of view, natural gas may not be such a great choice.

Whether that last point is correct or not depends upon the size of the fugitive emissions. In their April 2011 paper, Howarth and colleagues argued that fugitive emissions from shale gas extraction are quite large and so, jumping on the fracking bandwagon would be a poor choice for our energy future.

Since last April, several new papers on the issue have been published — the most recent by a Cornell colleague disputing Howarth et al's fugitive emissions numbers. Yesterday, Howarth defended his numbers and reiterated his conclusion. The bottom line here is: The dearth of data on fugitive emissions means we need to get busy getting these data to resolve this issue.

Driving home the importance of getting a better handle on fugitive emissions was a really interesting set of statistics Howarth presented at the end of his talk: 40 percent of U.S. methane emissions come from natural gas systems andaccount for 19 to 44 percent of our total greenhouse gas emissions.

The Takeaway: We Gotta Get Natural Gas Right After yesterday’s session, a small group of us retired to the Faculty Commons for a glass of wine, dinner, and conversation. We were treated to a short talk by Richard Newell, a Duke professor and the director of Duke’s Energy Initiative, who returned last fall from a stint in the Obama administration as the head of the Energy Information Administration. Richard provided a fascinating overview of the issue from the perspective of someone who has spent the last two years trying to make sense of the nation’s long-term energy future.

Some relevant history: Hydraulic fracturing is as old as … well if not quite the hills, let’s just say it’s not new. A kind of hydraulic fracturing was first done in the late 19th century using nitroglycerin (see here, here and here [pdf]). Horizontal drilling is also not all that new, dating back to the 1950s. It wasn't until the 1990s that the two were put together, and the application of the process to extract shale gas didn't really begin until the middle part of the last decade, but since then, it's become a game changer — initially responsible for a percent or two of all natural gas production, it’s now producing about 30 percent of U.S. supply.

The economic impact has been huge. For instance, in 2006, the federal government was discussing ways to accelerate the construction of billion-dollar port facilities for processing imported liquified natural gas because it was believed we faced an imminent natural gas shortage that would put our electricity supply at risk. Today we have an overabundance of natural gas, prices are down and few are lining up to invest in such a facility.

Another point Richard made: The global shale gas resource is huge, so large that exploiting it will dominate supply and therefore set natural gas prices at least for the next decade. So from today’s perspective, shale gas is here to stay, a resource that will be exploited. So we’d better get it right.

Comments: US methane emissions "40 percent of U.S. methane emissions come from natural gas systems and account for 19 to 44 percent of our total greenhouse gas emissions." One: this sentence is confusing: does the 19 to 44 percent refer to methane emissions broadly, or methane emissions just from natural gas systems? (presumably the former).

Two: Howarth can only get up to 44 percent by using 20 year GWPs. If he's going to report the contribution of methane in 20 year GWPs, then the lower end of his range should be 500 year GWPs. Otherwise, just stick to 100 year GWPs (which is presumably where the 19 percent number: see http://epa.gov/[…]/US-GHG-Inventory-2011-ExecutiveSummary.pdfpg. 6, which shows about 10 percent but for a 100 year GWP of 21 which is admittedly out of date).

Adobe's 4-Step Path Toward a Net Zero Energy Balance

By Leslie Guevarra, 2012-01-30 Adobe's office goes green with Bloom's Fuel Cell Adobe Systems will take another step toward becoming a net-zero energy user by installing two 200-kilowatt Bloom Energy fuel cells at its San Francisco offices. The generated energy will provide Adobe with 35% of the power it needs to PetroScan-January 2012

run the building. Adobe has been pushing to green its headquarters, turning its offices into LEED-Platinum buildings and installing 20 wind turbines Adobe Systems, the maker of Photoshop and Acrobat software, didn't set out to become a net zero company, one that generates or offsets as much energy as it uses. To hear Michael Bangs tell it, the company happened upon a path of energy efficiency and grew increasingly more aggressive in the pursuit until achieving net zero became one of the firm's central sustainability goals.

'We're trying to get to net zero -- we're not there yet, but we're trying," Bangs told the audience at the GreenBiz Forum today in San Francisco. "We realize that sustainability is more than just our product, it's really how we operate our business." Bangs, Adobe's director of global facilities operations, described the company's net zero strategy during a "One Great Idea" presentation at the forum. He also announced the firm's latest move toward that goal: the installation of two 200-kilowatt Bloom Energy fuel cells at Adobe's San Francisco offices.

The fuel cells, which can run independently from the grid and produce no carbon emissions, are expected to provide 35 percent of the power used at the site, he said. Adobe has a dozen other Bloom boxes -- each of them 100-KW fuel cells -at its headquarters in San Jose, where the technology supplies about 30 percent of the energy for the site.

They are just a few of the sustainable design features at the property, whose three office towers were certified and then re-certified at LEED-Platinum level, the highest certification possible from the U.S. Green Building Council. The headquarters complex also has 20 vertical wind turbines, whirling spires that are so eye-catching that they have been mistaken for art sculptures. Bangs ran down a list of the green building elements in San Jose and at other Adobe properties when we chatted last spring about the company's facility initiatives.

He recapped those features and more in his talk today. Adobe's property portfolio covers roughly 3 million square feet of space worldwide. The headquarters in San Jose account for about 1 million square feet; that site and the San Francisco property make up 37 percent of the total square footage. By the close of fiscal year 2010, about 45 percent of the company's square footage was certified as green building space under the LEED standard. And as of today, 10 company facilities are certified as LEED-platinum green buildings. The company's work toward net zero started more than a decade ago during the energy crisis of 1999-2000, Bangs said. In California, then-Governor Gray Davis called on utility customers to cut their usage by 2 to 3 percent. At the time, Adobe found it could achieve that savings by switching off lights when they weren't needed, said Bangs. Soon after, the company decided to place lights on a single switch to yield further savings, and from there the efforts snowballed as the firm devised increasingly more ambitious energy efficiency goals. In setting its sights on net zero, the company identified four major steps to achieve its goal: 1. Measuring and Managing -- "You can't manage what you can't measure," said Bangs, pointing out that Adobe facilities have measurement systems that keep tabs on thousands of data points. In San Jose, alone, information is collected from 30,000 data points.

2. Reducing Demand -- Companies can reap huge savings by turning off lights, switching to higher efficiency lights, and changing the way heating, ventilation and air conditioning systems work, Bangs said.

For example, the company had been running the ventilation system in its million-square-foot parking garage in San Jose 24/7. But after monitoring air quality in the facility, the firm decided to run its ventilation fans for an hour in the morning and an hour in the evening, and installed a timer that cost about $250. "Right off the bat, we saved $50,000 a year," Bangs said.

3. Generating Energy on Site -- The wind spires in San Jose and the company's investment in Bloom boxes are some PetroScan-January 2012

of the more visible renewable energy projects at company facilities, Bangs said. The company is looking to build on those efforts, he said.

4. Investing in Offsets -- "I know this is a matter of great debate in this community -- is this really helping to achieve carbon neutrality? We're not going to enter in that debate, but we feel it's the right thing to do, so we're purchasing renewable energy credits and verifiable emission reduction credits, for our operations in San Jose," he said.

Bangs also praised Adobe employees for their ideas and efforts to make company operations more environmentally responsible. The firm decided to stop providing water in plastic bottles in response to some criticism about the practice.

The day after sending out a notice about the ban to 8,000 employees in North America, Bangs braced for a flood of email.

He received just 25 and all of them praised or thanked the company for its decision. "Employees have made sustainability work at Adobe," he said. "They make net zero possible."

Suzlon Energy bags `2,000 cr orders Jan 31 2012, Financial Chronicle Suzlon Energy, the wor-ld’s fifth and India’s largest wind turbine maker, has bagged contracts worth over $403 million (approximately Rs 2,000 crore) for supply of wind turbines to Indian, American and Brazilian companies.

“The cumulative orders which will be delivered in the financial year 2012-13 are valued at approximately Rs 2,000 crore,” a Suzlon Energy spokesperson told Financial Chronicle. He said Suzlon group had received a total of 269 mw project orders over the past one month, excluding the orders announced separately. The company bagged 80 mw worth of orders in India and a total of 189 mw worth of orders in Brazil and the US. The spokesperson said the order size ranges from 0.6 mw to 121 mw and comprises turbines from Suzlon’s latest S9X suite, among other S-series models. “These orders reiterate not only the dynamic and rapidly growing Indian wind sector, but also Suzlon's presence in emerging economies and competitive markets such as Brazil and the US,” Suzlon Energy founder, chairman and managing director Tulsi Tanti said in a statement. He said Brazil was an important market for the company under its focus on emerging economies.

“Over the past few months, the company has been receiving strong and regular orders, which will increase its global wind business,” Alex Mathew, research head at Geojit BNP Paribas Financial Services, told FC.

19% of new capacity to come through wind energy Mydigitalfc.com, Jan 10 2012 The present financial year will see about 19 per cent increase in annual power capacity addition through wind sources, compared with last year’s addition. Annual energy capacity addition through wind sources, which leads country’s renewable energy growth, for the FY 2011-12, is forecast at about 2,800 mw when compared with the annual capacity addition of 2,350 mw in FY 2011. The annual capacity addition by wind sources is expected to grow at an annual rate of about 15 per cent, supported by growing demand from independent power producer (IPP) segment besides policy push.

Wind power is the fastest growing renewable energy option in the country. As of August 2011, India’s cumulative gridinteractive wind capacity stood at about 15,000 mw, while the total renewable energy capacity through different sources was 21,125 mw.

“The commencement of trading of renewable energy certificates (REC) on power exchanges since March 2011 as well as long-term certainty over the floor/cap pricing mechanism of REC are key positive developments for the renewable energy sector. Further, the spiralling international cost of conventional energy sources and persistent domestic fuel shortages make wind energy more cost-competitive, according to a report of Icra. The new wind-based projects/IPPs to prefer the REC route against the preferential tariff route, and within the REC route, many IPPs would prefer to sign their power purchase agreements (PPAs) with power distribution companies at their average power purchase cost (APPC) instead of selling on merchant or short-term basis.

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This is due to open access and banking facility constraints and volatility in merchant tariffs, although the merchant option under the REC route is the most remunerative option available. Notwithstanding the favourable long-term demand outlook for wind energy sector aided by regulatory and fiscal support, certain key issues may affect capacity addition in the sector. Those would include implementation issues in complying with renewable energy portfolio obligation (RPO) norms due to lack of consistency and a wide divergence in RPO norms across states; execution risks associated with strengthening of the intra-state transmission network and uncertainties in implementation of wind-zone specific tariffs and variation in preferential tariffs across the states, among others, the report pointed out.

While private sector inv-estments continue to be higher in the wind power segment, the country saw Rs 1,830 crore FDI in wind energy as of September 2011.

140 mw solar power coming up by Feb Mydigitalfc.com, Jan 10 2012 Ministry of new and renewable energy said around 80-90 mega watt of solar power projects from the first batch of Jawaharlal Nehru National Solar Mission (JNNSM) phase-I are being commissioned in this month and the remaining projects of the targeted 150 mw would get commissioned by next month. Joint secretary ministry of new and renewable energy, Tarun Kapoor, told Financial Chronicle that now India has more than 250 mw of operational solar power and in next two mon-ths, another few hundred mega watt of projects, inclu-ding the ones outside the national solar mission, would be added to the landscape.

The first phase of the mission aims to commission 1,000 mw of grid-connected solar power projects by 2013. “Even as we speak, companies are commissioning their projects across India. If you asked me two months back, the solar landscape was different. Things are much different now,” he said. Kapoor said all issues of financing and higher cost of raw material like solar panels and modules are being looked at, paving way for Indian banks to fund the projects. “The banks are now more willing after the government convened a national level meeting of bankers a few months back. We continue to address their concerns,” Kapoor said.

AK Maggu, general manager, business development at NTPC Vidyut Vyapar Nigam, told Financial Chronicle that domestic bankers are now participating to fund the projects. “Most of the private companies like Mahindra’s and even smaller companies like Jakson Power are getting their funds from domestic banks.” In the past, most solar power producers had banked on foreign debt. Farooq Abdullah, union minister for new and renewable energy, said on Monday in Mumbai that international banks globally have a plan to spend around $48 billion on energy excesses.

“I am meeting these bankers from Europe, Asia and America this month in Abu Dhabi, and I plan to convince them to invest in India’s energy sector, which would include renewables including solar,” said the minister.

NTPC Vidyut Vyapar Nigam (NVVN), a subsidiary of National Thermal Power Corporation, the largest power producer in India, is handling the implementation of the first phase of the national solar mission.

Shale Gas : US 60m Barrel a Day Waste Water Story The Economic Times, New Delhi, January 18, 2012 The biggest output of the US oil and gas industry is not oil or gas but dirty water.Everyday,US oil and gas producers bring to the surface 60 million barrels of waste water,with a salt content up to 20 times higher than sea water and laced with hazardous chemicals. For the most part,they dispose it safely,as required by federal and state laws.Most of it is reinjected into oil and gas bearing formations to maintain pressure,or into disposal formations far below the freshwater aquifers.

Safe disposal of so much hazardous water should put into perspective some of the recent concerns about water management raised by opponents of hydraulic fracturing.Environmentalists and policymakers have raised concerns about PetroScan-January 2012

the massive amount of water used for fracturing oil and gas wells,and the resulting strain on local water supplies,as well as the safe disposal of fracking fluids and briny salt water brought to the surface from fracked wells.

Risks to freshwater aquifers are often cited as a key reason to restrict fracking or subject it to strict new federal regulations.But the challenges of disposing of waste water contaminated with hazardous chemicals are not unique to fracked wells,and there is already a comprehensive framework of federal and state rules governing safe disposal designed to protect drinking water supplies.Environmentalists have zeroed in on the huge amount of water injected into oil and gas wells to fracture rock formations,and the exotic chemicals added to help carry the frack sand into the cracks,reduce corrosion and remove excess drilling mud.

Fracturing a multi-stage well can involve injecting millions of gallons of water under intense pressure,with 3-12 chemicals typically added to reduce friction and address site specific problems,according to the US Department of Energy.But the problem of disposing of fracking fluids pales beside the challenge of disposing of all the briny water produced alongside the oil and gas,from conventional wells as much as fracked ones.The average oil well produces 7.6 barrels of water for every barrel of crude.The water/oil ratio can rise to as much as 24:1 or even 42:1 in states like Florida and Illinois.On average,88% of the material brought to the surface from an oil well is water,rising to 98% for wells nearing the end of their productive lives.

For gas wells,260 barrels of water are produced for every million cubic feet of natural gas.In 2007,the daily output of the US oil and gas industry was 4.8 million barrels of crude,66 billion cubic feet of natural gas,and 58 million barrels of waste water,according to a study by the Argonne National Laboratory's Environmental Science.

CSR

IOC plans medical facilities at outlets Even as the Union Government grapples with its own proposal to provide free medical facilities to the poor, oil major IndianOil (IOC) is busy drawing up a scheme to provide the services of doctors and ambulances at its rural outlets in the country'.Sources in the Health Ministry said that the corporation is in talks with Mum-bai-based pharmaceutical company which also runs a chain of hospitals in the city to provide the ambulances and the services of doctors holding a graduate degree at the-pumps.

The sources said that Petroleum Minister, Jaipal Reddy recently told senior IOC officials that as a part of their corporate responsibility they should think in terms of organising medical camps at its rural outlets where it could provide certain medical facilities to the rural poor.Picking up from the minister's proposal, the OC top brass is understood to have decided to go further than just organising medical camps and instead providing for doctors and ambulances at its rural outlets and also at Kisan Sewa Kendras.The corporation has decided to begin with Uttar Pradesh and Andhra Pradesh as a pilot project and depending on its success expand to various other states in a phased manner. At the IOC outlet and the Kisan Sewa Kendras basic generic drugs will be available along with the services of a doctor and an ambulance to take more serious patients to the closest hospital from the IOC outlet. There are around 25,000 petrol pumps in the country and close to 15,000 are run by IOC alone. Of these, a very small percentage is located in rural areas aside from 3,500 Kisan Sewa Kendras which function in the rural areas.

HSE

Chevron: Rig catches fire off Nigeria’s delta LAGOS, Nigeria —Two contractors are still missing after a Chevron drilling rig caught fire Monday off Nigeria’s coast, the Houston-based oil company said today. Two of the 154 workers on the KS Endeavor, a jack-up rig, are missing today after the offshore rig caught fire as it explored possible deep-water oil and gas fields off Nigeria’s coast. Chevron said it was still investigating the cause of the fire, which has not been contained, but it did not appear to be sabotage.

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The fire occurred near its North Apoi oil platform, and the blaze forced it to shut down. “We do not know what caused the incident. We are working diligently to contain the fire, which is restricted to the rig,” Andrew Fawthrop, managing director of Chevron’s Nigeria/Middle East strategic business unit, told Upstreamonline.com. “Substantial resources have been deployed including well control specialists and drilling experts. We continue to work in full cooperation with Nigerian authorities and are committed to providing additional information as it becomes known.”

The rig is run on Chevron’s behalf by contractor Fode Drilling Co., Walker said. Officials with Fode, which has offices in London and Jenkintown, Pennsylvania, could not be immediately reached for comment Monday. Nnimmo Bassey, who runs an environmental watchdog group in Nigeria, said he had received reports from locals nearby that the fire was an industrial incident. “Workers were trying to contain the gas pressure and they didn’t succeed,” Bassey said.

Nigeria is the fifth-largest crude oil exporter to the U.S. It produces about 2.4 million barrels of crude oil a day. However, more than 50 years of oil production has seen environmental damage through delta’s maze of muddy creeks and mangroves. Chevron, based in San Ramon, California, produced an average of 524,000 barrels of crude oil a day from Nigeria in 2010. The company has exploration rights to about 2.2 million acres across Nigeria’s delta and offshore.

Fired BP worker says he was asked to fake spill data A man who supervised the BP cleaning efforts along the Mississippi shores claims he was fired after alerting federal officials that the company was falsifying data to make the shores look cleaner than they were, according to court records.

August Walter Jr. filed a whistleblower lawsuit against BP America in federal court in New Orleans last week. The Louisiana man claims the company refused to pick up oil debris from beaches and islands and then misrepresented data to mislead Coast Guard officials into thinking the cleanup was complete.

BP spokesman Tom Mueller told The New Orleans Times-Picayune that the company did not believe Walter’s complaint had merit: The company promised to “investigate the allegations contained in his complaint, consistent with our personnel policies and code of conduct. We believe we have demonstrated good faith in meeting our obligations in the Gulf and are committed to treating our employees fairly.”

Walter worked as a state planning lead for BP’s cleanup operations until he was fired on Dec. 9, 2011. While working for BP, Walter claims BP was taking shortcuts and not following the environmental standards required. “BP refused to follow the plan by picking and choosing what oil to pick up resulted in leaving oil behind,” according to court documents. Walter said the company was leaving smaller tar balls along Mississippi beaches and islands. In the lawsuit, he claims he was reprimanded by BP supervisors when he tried to report the correct status of the beaches. The lawsuit also alleges Carla Fontenot, vice president of BP’s Gulf Coast Restoration Organization, said Walter’s support was necessary because “it would have an upward impact on BP stock prices.”

BP Operations Section Chief Mike Harrison demanded that Walter misrepresent data, according to court documents.

When Walter refused, Harrison changed the data himself. Lt. William D. Spoon told The Times-Picuyane that the Coast Guard hasn’t opened a formal investigation into Walter’s allegations but is concerned about them.

3 hurt in fiery well site explosion near Pearsall Associated Press PEARSALL, Texas — Authorities say three workers have been injured in a fiery explosion at a South Texas well site that destroyed an oil tank. The fire about three miles south of Pearsall burned for several hours before being extinguished around 9 p.m. Thursday.

Pearsall Volunteer Fire Department Chief Placido Aguilar said Friday that authorities are trying to determine what started the fire on a fracking tank, as three workers were on top. He says the fire then spread to a 30-foot tall oil tank, leading to an explosion that blew off the lid. Aguilar says nobody was seriously hurt. He had no further details on conditions of the workers, who were transported to hospitals to be checked. Pearsall is 50 miles southwest of San Antonio.

SUSTAINABILITY & CLIMATE CHANGE PetroScan-January 2012

Pollutants key to climate fix •

Governments look to reduce methane and black carbon as a way to slow warming.

Jeff Tollefson 17 January 2012 Soot emissions from sources such as this brick kiln in Karkhla, Pakistan, absorb sunlight and contribute directly to global warming.

J. STANMEYER/VII/CORBIS Buses spew clouds of black exhaust fumes in Mexico City while, in India, wood burnt in rudimentary stoves fills houses with sooty smoke. Methane leaks from gas pipelines in Russia and rice paddies in China, eventually breaking down in sunlight and contributing to the production of smog and ozone. In each of these cases, simple steps to curb air pollution would promote public health; scaled up, they may offer the only realistic way to tame global warming over the next few decades.

Rapid measures to reduce emissions of black carbon, which soaks up solar energy, and methane, a greenhouse gas that is 25 times more potent than carbon dioxide, could cut the rate of global warming in half between now and 2050, according to an analysis published last week (D. Shindell et al. Science 335, 183–189; 2012). Such numbers have spurred political interest, and next month a small coalition of countries is aiming to launch an initiative that would target these ‘short-lived climate forcers’. If successful, the effort could have an immediate impact on global temperatures while countries grapple with efforts to regulate emissions of carbon dioxide, the most important greenhouse gas.

“We’re in a gridlock over carbon dioxide, and we’re losing time,” says Veerabhadran Ramanathan, an atmospheric scientist at the Scripps Institution of Oceanography in La Jolla, California, and a co-author on theScienceanalysis. “This is one way to buy back some of that time, and the co-benefits are huge.” By 2030, these reduction measures could prevent anywhere from 700,000 to 4.7 million premature deaths from air pollution annually, the study found. And because ozone is toxic to plants, such measures could boost global crop production by 1–4%.

The United Nations Environment Programme explored the potential gains in a detailed assessmentlast June (see go.nature.com/4wcwxf). Chaired by Drew Shindell of the NASA Goddard Institute for Space Studies in New York, the assessment ranked hundreds of options for reducing black carbon and ozone pollution according to their potential to reduce warming. A follow-up report, released in November and funded by the Swedish government, further analysed opportunities and impacts at national and regional levels. This work served as the basis for the Sciencestudy.

For methane, the study identified 14 control measures that would target leakage from coal mining and oil and gas operations, emissions from landfills, wastewater systems, livestock manure and rice paddies. Black-carbon reduction would focus on cleaning up diesel vehicle emissions, biomass stoves, brick kilns and coke ovens. Other measures would reduce the burning of agricultural waste and provide alternatives to wood, dung and charcoal for cooking and heating in poor countries.

It could take decades to slow global warming through reductions in carbon dioxide emissions, whereas cutting soot and methane would have immediate climate payoffs because they are quickly purged from the atmosphere. Modelling suggests that, together, a 75% reduction in black carbon and a 40% reduction in methane emissions over the next two decades would lower projected warming by about 0.5 °C by 2050. However, aggressive mitigation of carbon dioxide would still be needed to keep the atmosphere from warming more than 2 °C, the current target of international climate negotiations (see ‘Rapid response’).

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Expand SOURCE: D. SHINDELL ET AL. SCIENCE 335, 183–189 (2012) The assessment shows that the benefits of such reductions far outweigh the costs, with premature deaths from pollution predicted to fall the most in India and China. Cuts to black carbon would yield the biggest reduction in warming in Africa, south Asia and the Arctic, where the temperature rise would be reduced by two-thirds during the next three decades.

Kevin Trenberth, a climate scientist at the National Center for Atmospheric Research in Boulder, Colorado, credits the study with building scientific consensus on the issue, but warns that it should not detract from the main agenda on carbon dioxide. “The fundamental problem with long-term climate change is CO2, and anything that takes us away from addressing that doesn’t really solve the problem,” he says. “It just puts it off.”

Advocates concede as much but argue that both tracks are necessary. They point out that the agenda for short-term forcers can move forward now without a global climate treaty, which remains a distant prospect after last month’s climate talks in Durban, South Africa, delayed setting new targets for emissions reductions (see Nature 480, 299–300; 2011).

Bilateral or multilateral agreements can help to pay for cleaner fuels and filters for diesel engines or promote policies that ban the burning of agricultural waste and promote aeration of rice paddies to decrease methane production. “It doesn’t require 150 nations to sign a document,” says Ramanathan. “It requires regional partnerships.”

In fact, countries exploring methane and black-carbon mitigation are intentionally keeping the agenda separate from the UN climate negotiations. Following initial meetings last year hosted by the United States, Mexico and Bangladesh, these countries, as well as Sweden, Canada and Ghana, are hoping to work out some of the details of an initiative to promote mitigation steps at a diplomatic meeting in Montreal, Canada, next week. The initiative could involve a funding mechanism, a clearing house for projects or even a dedicated organization. “Sweden, Canada and the United States can be expected to put funds into the platform initially,” says Caroline Dickson, who heads climate issues at the Swedish environment ministry. “Once we have launched this initiative other countries will be able to join.” The goal is to unveil the initiative in Washington DC next month, Dickson says.

“This is one of the most important climate agendas for the world right now.”

The initiative may seek to build on existing efforts. In October 2010, a group of 41 governments and international agencies created the Global Methane Initiative to help poor countries finance profitable methane-capture projects at landfills and other sites. Similarly, last year, various countries and companies launched the Global Alliance for Clean Cookstoves to help improve the quality of stoves in the developing world.

Although the measures under consideration are technically feasible today, aggressive implementation will require highlevel political support and broader consideration at international forums such as the G8 and G20 talks, says Durwood Zaelke, who heads the Institute for Governance and Sustainable Development in Washington DC. “My worry is that they are going to undersell it,” he says. “This is one of the most important climate agendas for the world right now, but it is not fully appreciated at the highest political levels what it can deliver.”

INNOVATION Top Ten Innovations 2011 Our list of the best and brightest products that 2011 had to offer the life scientist

By The Scientist Staff | January 1, 2012 In its brief, 4-year history, The Scientist’s annual Top 10 Innovations contest has become a showcase of the coolest life science tools to emerge in the previous year. This year’s installment is no exception. We received more than 65 entries describing exciting new technologies and intriguing methodologies that made their way into labs in 2011.

Our panel of expert judges sifted through the submissions, and the cream of all these innovative products rose to the top.

Björn Brembs, from the Freie Universität in Berlin, Medical University of Vienna neuronal cell biologist Michael Kiebler, Pacific Northwest National Laboratory biologist H. Steven Wiley, and Aris Persidis, president of Biovista, a pharmaceutical services company, combined forces to see that the very best of the entries were awarded this year’s prizes.

The Top 10 Innovations of 2011 include a number of the latest advances in microscopy—from a pocket microscope that can be connected to a cell phone’s optics to tools that smash the resolution limitations of traditional scopes, a neat tool to PetroScan-January 2012

measure light exposure and circadian rhythms, and a first-of-its-kind 360-degree optical imager. Congratulations to all the winners of 2011’s Top 10 Innovations contest, and here’s to the researchers who will use these tools to break new scientific ground and expand our understanding of biology in the months and years to come.

Pocket Microscope LUCAS Diagnosing malaria or other blood-borne illnesses used to require analyzing cell slides under a bulky, costly light microscope—which can be difficult to find in impoverished, remote locations. Enter LUCAS (Lensless, Ultra-wide-field Cell monitoring Array platform based on Shadow imaging), an easy-to-use, pocket-size holographic microscope that weighs less than 50g, uses inexpensive, off-the-shelf parts, and can be attached to a cell phone’s camera, making it ideal for diagnosing disease in isolated, developing countries.

“In resource-poor areas, you don’t have a hospital or any other infrastructure to conduct all these tests, so if you could simplify all this microscopy you could really have a huge impact,” says the microscope’s inventor, Aydogan Ozcan, an electrical engineer at the University of California, Los Angeles (UCLA).

LUCAS, which could cost as little as $10, illuminates cells with an inexpensive light-emitting diode, captures the shadows they cast, and then processes and recreates the image using an algorithm run on a remote computer. The translucent cells cast “textured” shadows that can reveal internal cell features such as malaria parasites. The microscope has submicrometer resolution but can image very large areas, Ozcan says. And because cell phone networks are ubiquitous, “even in an African village you can connect to a supercomputer in LA” to process the images, he adds.

Next year, Karin Nielsen, an infectious disease pediatrician at UCLA, will venture deep into the Amazon to compare the portable microscope’s ability to diagnose malaria with that of old-fashioned microscopy. Nielsen is also testing the microscope’s ability to diagnose anemia, low white blood cell count, and intestinal parasites in stool.

Persidis: This is an exciting new technology that showcases ingenuity away from preconceived ideas.

Brembs: It is a cheap way of doing something that usually requires a microscope.

All Around the Mouse BioFLECT The life science community, particularly the drug-development world, has embraced in vivo optical imaging as an important research tool. But optical imagers have traditionally used a light source on only one side of the animal and a single camera or detector on the other, limiting the quantification and localization of fluorescent tags. This past September, Bioscan introduced BioFLECT, the first 360-degree optical imager, which uses a rotating ring of 48 detectors to generate a full 3-D scan of fluorescent markers.

“If I use the commercial optical imaging systems that are available right now, I have the problem that these images are only taken from one side of the animal,” says Alex Klose, a physicist at Columbia University who helped develop the software that accompanies BioFLECT. “[BioFLECT] is a system that scans the entire animal from [all sides], which gives me far more data for optical imagery reconstruction.”

The standard package, the BioFLECT 400, sells for $295,000 and includes four lasers (to activate the fluorescent molecules) and four filters (to measure only the desired wavelength of emission), but the machine can be equipped with up to 12 different lasers and 16 different filters. “You may want to label some cancer cells at one wavelength, and then inject some kind of therapy that you’ve colabeled at another wavelength,” says James Masciotti, Bioscan’s lead imaging scientist on the project.

Kiebler: The promised range of resolution would be a clear improvement and very desired in the field to detect signals in living specimens. It would be fantastic to bring this as a routine system into standard imaging labs dealing with animals.

Wiley: This instrument should greatly enhance the sensitivity and accuracy of locating fluorescently labeled cells and compounds in live animals, enabling a whole range of in vivo experiments.

PCR in a Pouch FilmArray system PetroScan-January 2012

When Mark Poritz, director of biochemistry at Idaho Technology Inc., wanted to demonstrate how simple it was to use the company’s FilmArray system for identifying pathogenic strains in patient specimens, he had his 9-year-old son man the machine. His son successfully rehydrated the PCR reaction pouch and injected a prepared sample of the specimen before sliding the pouch into the $50,000 machine and starting the reaction. One hour later, the results were ready.

The FilmArray system was designed to make pathogen detection simple, accurate, and fast. According to Ray Widen, director of molecular diagnostics at Tampa General Hospital, it does just that. Widen’s facility, which tests bronchial and nasal swab samples from patients before and after organ transplantation, was running separate PCR reactions for flu, respiratory syncytial virus (RSV), and parainfluenza virus, and it cost “$340 to do that whole panel,” he says. Because there are multiple nested PCR reactions within each FilmArray pouch, one run can detect all of these pathogens, and others, at a cost of less than $150, explains Widen. Plus, the FilmArray reaction does not require a trained technician and only takes an hour rather than the 5–6 hours needed for a traditional, real-time PCR reaction. All of the sample preparation and DNA purification steps are contained within separate chambers in the FilmArray pouch.

Currently, Idaho Technology has FDA approval for the diagnostic use of only one FilmArray test—its respiratory panel, which detects 15 respiratory pathogens, including RSV, rhinovirus, and several strains of influenza. But the company is also developing panels for detecting blood-borne bacteria and common fungal pathogens, as well as one for gastrointestinal pathogens, including enterohemorrhagic strains of E. coli (EHEC); a sexually transmitted diseases panel; and a biothreat panel.

Wiley: Incredibly easy one-step multiplexed PCR. Anyone could operate this instrument.

Persidis: PCR detection at essentially a point-of-care scenario is an important advance and this technology sets the stage.

Single-Cell Mass Cytometry CyTOF When Scott Tanner, chief technology officer of DVS Sciences, first approached Stanford University geneticist Garry Nolan to discuss the new mass spectrometer he had designed, Nolan thought it was going to be yet another sales pitch.

But soon Nolan was rapt. “If he’s right, this is groundbreaking,” he recalls thinking. Hearing Tanner’s idea was the kind of thing where “the hairs on the back of your neck stand on end.”

CyTOF, the instrument that Tanner described, is a mass spectrometer that can feed researchers data about molecules within and on the surface of individual cells, revealing not only the cell’s identity but also some of its functions. By attaching mass-spec-detectable stable isotopes to antibodies specific to a biomolecule of choice, researchers can harness the speed and specificity of mass-spec analysis, giving what approaches an “omics” view of individual cells. Most omics analyses take an average reading from a large population of cells, obscuring subtle differences in individual cells or subpopulations of cells. “I saw us being able to look at the whole immune system at once and all of the biology it could do,” Nolan says.

Nolan used the machine, which costs about $600,000, to better elucidate a broad range of immune-cell developmental stages and signaling responses, providing a mineable resource for immunologists studying those cell types. The results, including some revealing new findings, were published in a recent Science paper (332:687-96, 2011). Nolan plans to use the other two machines he bought to hunt for weaknesses in individual cancer stem cells, with the hope of developing drugs that could target this small subpopulation. “A lot of very good drugs have been thrown out with the bathwater,” says Nolan, because they were applied to a broader population of cells.

Wiley: Revolutionary instrument allowing the analysis of potentially over a hundred different antibodies binding to thousands of cells. It will enable a new generation of systems analysis at the single-cell level that can be directly applied to clinical samples.

Illuminating Microscopy N-SIM Super Resolution Microscope The invention of structured illumination microscopy (SIM) in 2000 by University of California, San Francisco, researchers revolutionized high-resolution optical imaging by breaking through the diffraction barrier that limits conventional microscopes to a resolution no finer than 200–250 nm. The technology, which involves shining patterned light on a PetroScan-January 2012

subject from different angles and then using computer algorithms to extract information from the resulting fringe patterns to produce a high-resolution image, doubled the resolution possible using conventional optics.

Nikon took notice of this achievement and incorporated SIM technology into its flagship inverted microscope to produce the N-SIM Super Resolution Microscope—one of the fastest and most powerful high-resolution optical microscopes on the market. Announced in the spring of 2010 and delivered in 2011, the N-SIM microscope can achieve a spatial resolution between 85 and 110 nm and a temporal resolution of 600 milliseconds per frame, which allows for dynamic, live-cell imaging.

“N-SIM technology provides researchers with the ability to combine the molecular specificity of fluorescently tagged proteins with a significant improvement in resolution,” explains Christopher O’Connell, super-resolution systems product manager at Nikon, “allowing them to observe fine structural details which were previously obscured by diffraction.”

A total of $600,000 will buy you “everything you need to have the system fully operational,” O’Connell says. This includes software, lenses, filters, a highly sensitive camera, two lasers (upgradable to five) for fluorescence microscopy, and “the table that the microscope sits on.” However, the system is highly modular, O’Connell adds, allowing for the combination of other technologies—such as confocal microscopy and Nikon’s STochastic Optical Reconstruction Microscopy (NSTORM) system—with the same microscope.

Kiebler: Structured illumination has been shown to improve imaging in the nm range. It would be fantastic to bring this as a routine system into standard imaging labs.

DNA Deluge ThunderStorm System RainDance Technologies’ ThunderStorm System for DNA sequencing is the newest iteration of the company’s popular next-generation RDT1000 model. While other PCR enrichment systems allow researchers to process fewer than 100 gene regions, the ThunderStorm allows researchers to sequence up to 20,000 regions per sample.

The ThunderStorm isolates DNA in tiny droplets “several millionfold smaller than the volume of reactions that you’d use in typical PCR,” says RainDance Chief Marketing Officer Andy Watson. This enables the Thunderstorm to process 96 samples at once using a fraction of the reagents needed for traditional PCR. As an added advantage, “it’s a load-andwalk-away system” that is completely automated. Because it doesn’t have the user-induced variability of manual PCR, says Rob Kirkpatrick, project manager at the British Columbia Cancer Agency, “that gives you confidence you’ll get the same result each time.”

The product is ideal for large genome-wide association studies with thousands of samples where researchers want to target regions of interest for more complete sequencing, Watson says. The ThunderStorm also has a “deep-sequencing mode,” Watson adds, which allows researchers, like those at the BC Cancer Agency, to identify dozens of cancercausing mutations in tumor cells—whether the mutations are present in 1 or 100 percent of the cells.

The system costs about $295,000 and each sample consumes about $100 to $200 in supplies. Watson won’t disclose how many have been sold, but the product is aimed at pharmaceutical companies and centers that do large amounts of genetic screening, he says.

Wiley: This is an extremely elegant, fully automated, high-throughput, targeted resequencing system based on a unique approach for creating and merging millions of individual microdroplets of reactants.

Mini MRI Owning a magnetic resonance imaging (MRI) machine generally requires a lead-lined room, a plumbed-in cooling system, expert operators, and a few million dollars. Now, all you need is about one square meter of space and $500,000.

“We’ve taken the Rolls-Royce and tried to simplify it as much as possible,” says Rob Sandler of Aspect Imaging, which makes the new M2 Compact MRI System. “It doesn’t require a special room . . . it doesn’t require cooling,” says Sandler.

“You plug it in, and it starts to work.”

Having its own lead-lined housing means the M2 can be used in a standard laboratory and avoids the credit card– erasing, watch-destroying, and medical instrument–damaging effects of large-scale MRI machines. “You can actually put your iPhone and your wallet right on top of the machine and there’s no effect,” says Bob Lenkinski of UT Southwestern PetroScan-January 2012

Medical Center in Dallas. Lenkinski uses one of 20 M2s sold so far to image prostate tumors in mice. “That makes a big difference—you don’t have to worry about safety or anything.”

Lenkinski superimposes the images he generates with images taken by a positron emission tomography machine. Before getting the M2, this proved difficult, because the MRI machine he used was several floors away. Now both machines are next to each other in his lab.

The M2 uses a highly efficient one-tesla magnet. Full-size MRIs use stronger magnets—between seven and eleven tesla.

Although for some imaging techniques larger MRI machines will generate higher-resolution images, Sandler says that for 70–80 percent of applications the M2’s resolution is comparable, at “a fraction of the cost and complexity.”

Persidis: A portable MRI instrument that can be used in a non-expert dedicated lab represents a significant advance for this important technique.

The Circadian Watch Wear it as a wristband, badge, pendant, or pin it to your shirt or hat—the Dimesimeter isn’t the latest fashion statement, but it may offer researchers insights into how disrupting circadian rhythms affects human physiology, behavior, and disease. Developed by scientists at the Lighting Research Center at Rensselaer Polytechnic Institute, the batterypowered, dime-sized Dimesimeter contains optical sensors and accelerometers that measure both the light exposure and activity of the person wearing it. The device then transmits data wirelessly to a docking station, which can be linked to a computer.

“Biology is driven by circadian rhythms at every level,” says Mark Rea, director of the Lighting Research Center and one of the developers of the device, which costs $100. “By quantifying the amount of light that people are exposed to, we’re getting new insights into a lot of diseases.” Rea and Mariana Figueiro, Light and Health Program director at the Lighting Research Center, employed the Dimesimeter in a study that determined optimal home lighting conditions to improve sleep efficiency in Alzheimer’s patients.

The Dimesimeter’s optical setup consists of red, green, and blue light detectors that measure light exposure of the subject. Through post processing, researchers can determine the amount circadian light (the light that modulates the biological clock) entering the eye. “It is the first and only of its kind that measures light as it impacts the visual system and light as it impacts the circadian system,” says Figueiro.

Since the device was first introduced in June 2011, more than 300 units have been deployed around the world. Onboard memory capacity allows data to be continuously recorded for up to 33 days, depending on the logging interval. Because the devices are sealed with an epoxy coat, battery life limits the device’s lifetime to at least 10 weeks of operating time and a year on standby.

Brembs: This seems to be an easy way to trace the circadian habits of many people over quite long time scales.

One-Step Sample Prep LAESI To prepare material for analysis by mass spectrometry, chemist Akos Vertes of George Washington University developed Protea Biosciences, Inc.’s LAESI (Laser Ablation Electrospray Ionization) DP-1000 System, which can handle any type of biological sample that contains water—either naturally, as in animal or plant tissues, or water added by the experimenter.

The sample is first subjected to a mid-infrared laser exactly 2,940 nm in wavelength, which corresponds to the frequency at which the O—H bond in water vibrates. As a result, the laser creates “a little volcanic explosion,” says Protea Chief Science Officer Matthew Powell, “and everything within that crater is thrown up into the air,” instantaneously converted into a gas. The vaporized biomolecules intersect with a high-voltage electrospray plume, which adds a charge to the components and dissolves them in water droplets so they can be identified using traditional mass spectrometers.

Brent Reschke, senior scientist at Protea, has already put the technology to work identifying the chemical signatures of plant leaves, flower petals, and frozen organ tissue samples from mice. Now he’s collaborating with West Virginia University (WVU) researchers to examine frozen samples of human skin “with the ultimate goal of being able to go through and map out skin cancer,” he says.

Callee Walsh, another Protea senior scientist, is also collaborating with WVU to identify biomarkers in leukemia cells that correlate with resistance to chemotherapy—results that she’s planning to present at the upcoming American Association PetroScan-January 2012

for Cancer Research meeting in Chicago in April. “With the LAESI, there’s very little sample preparation involved,” she says. “[With] traditional methods, experiments such as these could take several days, whereas [with] LAESI, it takes a few hours.”

So far, the technology is compatible with mass spectrometers from two vendors, Thermo and Waters, and Protea is working with AB Sciex to develop an integration kit for its mass spectrometer as well. The unit, including the software and integration kit, costs $240,000. Protea plans to send its first shipment of the technology to buyers this quarter.

Wiley: A new way of doing imaging mass spectrometry that gets away from some of the extensive sample preparation previously needed. Should make MS-imaging more reproducible and accessible.

Super-Resolution Solution SR GSD Microscopy System A few years ago, a new super-resolution technique increased fluorescence microscopy resolution tenfold by effectively breaking the 200–250 nm diffraction limit—the minimum spacing at which two objects could be seen separately. But, says Chris Vega of Leica Microsystems, the method had two shortcomings: the need for specialized fluorescent labels and the occurrence of drift during image acquisition. Both of these have been addressed in the new Leica SR GSD microscopy system, which rounds out our list of this year’s top innovations.

It’s impossible for a standard fluorescent microscope to resolve objects less than 200 nm apart because their emitted light waves overlap. Super-resolution microscopy gets around this hurdle by illuminating only a few random molecules in the field of view at a time, taking a picture, and then repeating the process thousands of times until all the molecules have been illuminated and imaged. Neighboring objects are unlikely to be illuminated at the same time and thus can be visually separated.

The random-illumination strategy has traditionally required specialized photoactivatable labels, but the SR GSD approach involves high-powered laser excitation of standard fluorescent labels, which causes them to randomly switch to a temporary dark state. “The GSD allows us to use the set of fluorescent ALEXA dyes and antibodies that we are also using for classical epifluorescence,” says Ralf Jacob of Philipps-Universität in Marburg, Germany, who owns one of the systems. “This is a great advantage,” he says.

To address the second problem—drift—Leica developed the SuMo stage, which stands for Suppressed Motion. “The stage actually mounts to the objective, which keeps the two spatially aligned,” explains Vega. The stage also has a motorized self-correcting mechanism.

Both solutions are aimed at “making super resolution accessible and easy to use for the researcher,” says Vega. He declined to reveal how much the system costs.

Kiebler: Many people consider improvement in imaging as one of the most exciting fields in light microscopy. It would be fantastic to improve imaging in the nm range.

Gauging Innovation's Pulse The GE Global Innovation Barometer 2012, a worldwide survey of around 3,000 senior executives in 22 countries, suggests that business leaders in developed economies such as the US, Germany and the UK believe their nations aren't as innovative as they should be. Indian business leaders are largely tepid about the state of innovation in the country.

For instance, in a countrywide ranking of satisfaction, India was placed 10th among the 22 countries with a consistently ambivalent perception of intellectual property security and government and university support for innovation. Interestingly, however, while respondents in most countries favoured the inclusion of more creative people for improving their organizations' innovative abilities, Indian executives felt greater business partnerships and infusion of capital were more important for innovation. On a positive note, business leaders largely agreed that innovative practices, especially in energy, healthcare and consumer goods industries, could significantly improve the daily lives of people and were not just profit drivers.

The survey sought to gauge the impressions of business executives about the scale, impact and government encouragement of innovation in their countries.

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PLANT RELIABILITY

Port Explosion Report Reveals Tank Corrosion “Easily” Detectable An investigation into the cause of a Gibraltar port explosion last May has uncovered a litany of alleged physical faults and management shortfalls at the sullage plant operated byNature Port Reception Facilities [Nature], including claims that storage tanks were heavily corroded and badly maintained.

The investigation found evidence of serious flaws in the way the plant was operated Investigators from specialist company Capita Symonds attributed the explosion to holes in the roof of tanks used to store petroleum products, which allowed highly flammable vapor to escape.

The tank rooftops were dotted with 60 perforations caused by long term corrosion, the investigation found.

Two men welding on top of one of the tanks caused the vapor to ignite, resulting in the explosion.

The investigators also found evidence that, in their view, suggested serious flaws in the way the plant was operated.

They described “significant departures” from good health and safety procedures in a facility of this type, with management policies and procedures lacking sufficient detail.

“In the light of these findings, the suspension of Nature Port’s licence will not be lifted until a final decision is taken with regard to that licence after due process has been followed and all the material facts and issues considered,” the Gibraltar Government, which commissioned the investigation, said in a statement.

“The deficiencies, failings and shortcomings found in the report, and the extent to which they may have been remedied or be capable of remedy are material factors.”

The investigations undertaken by Capita Symonds examined the causes of the incident, the adequacy of the plant operator’s management systems and health and safety and accident management procedures and plans, and the condition of the tanks and plant.

STRUCTURAL INTEGRITY The investigation found evidence that although the poor physical condition of the tanks was noted in 2008 during a survey by a local structural and engineering company, repairs had not been carried out.

The 2008 inspection also recommended annual surveys to ensure the structural integrity of the tanks but the investigators said they found no evidence that Nature had acted on the advice.

David Hughes, a health and safety consultant who formed part of the Capita Symonds team, wrote that “…, from routine inspection by a competent surveyor, any potentially affected areas should be easily detected and repaired by suitable means.”

“The areas on the two tank roofs will have been affected by corrosion and perforations which would have been visible many years prior to the incident of 31 May 2011, and thus readily discoverable by routine survey.”

Mr Hughes also noted that the plant was licensed to operate by the Environment Agency but that there was no evidence that the agency regularly inspected the facility.

The investigator found that even though the repairs to the tanks recommended in 2008 had not been carried out, Nature was granted a petroleum licence in November 2009 allowing it to handle products with a very low flashpoint.

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Read More – SOURCE: http://www.chronicle.gi/headlines_details.php?id=23266

Radiation, rust seen in tsunami-hit Japan reactor January 19, 2012 Concrete, Corrosion, Infrastructure, Nuclear

The first look inside one of Japan’s tsunami-hit nuclear reactors showed radiation, steam and rusty metal surfaces scarred by 10 months’ exposure to high temperatures and humidity.

The steam-blurred photos taken by remote control Thursday found none of the reactor’s melted fuel but confirmed stable reactor temperature and showed no major damage or ruptures caused by the earthquake last March, said Junichi Matsumoto, spokesman for the plant operator, Tokyo Electric Power Co. TEPCO workers inserted the endoscope — an industrial version of the kind of endoscope doctors use —through a hole in the beaker-shaped containment vessel at the Fukushima Dai-ichi plant’s No. 2 reactor, hoping the first look inside since the crisis would help them better assess reactor conditions and make repairs.

Results of the 70-minute operation were mixed.

Some parts that were photographed were not identifable, and experts are still trying to identify what the photos show, Matsumoto said. Radiation was apparent as it interferred with the electronic device and was visible as static on the images.

The photos also showed inner wall of the container heavily deteriorated after 10 months of exposure to high temperature and humidity, he said.

‘Given the harsh environment that we had to operate, we did quite well. It’s a first step,’ Matsumoto said. ‘But we could not spot any signs of fuel, unfortunately.’

He said it would take more time and a better technology to get to the melted fuel, most of which has fallen straight down into the area that the endoscope could not reach. TEPCO hopes to use the endoscope to look inside the two other reactors that had meltdowns but that also would require customization of the equipment and further reduction of radiation levels.

Better assessment will help workers know how best to plug holes and cracks in the containment vessel — a protective chamber outside the core — to contain radiation leaks and gradually work toward dismantling the reactors.

Three of six reactors at the Fukushima plant melted down after the March 11 earthquake and tsunami knocked out the plant’s cooling systems and set off the world’s worst nuclear accident since Chernobyl.

TEPCO and nuclear officials have said that melted fuel probably fell to the bottom of the core in each unit, most likely breaching the bottom of the core and falling into the primary containment vessel, some dropping to its concrete floor.

Experts have said those are simulation results and that exact location and condition of the fuel could not be known until they have a first-hand observation inside.

The probe Thursday successfully recorded the temperature inside the containment vessel at 44.7 Celsius (112 F), confirming it stayed below the boiling point and qualifying a ‘cold shutdown state,’ the stable condition that the government had declared in December despite skepticism from experts.

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The probe failed to find the water surface, which indicate the water sits at lower-than-expected levels inside the primary containment vessel and questions the accuracy of the current water monitors, Matsumoto said.

The government has said that it would take 40 years until the Fukushima plant is fully decommissioned.

SOURCE: http://www.khaleejtimes.com/displayarticle.asp?xfile=data/international/2012/January/international_January71 5.xml&section=internatio Leadership

The Power of Mentoring

By GERALD CHERTAVIAN Gerald Chertavian is the chief executive of Year Up, a training program for young adults.

I WAS born in Lowell, Mass., where my father, a child of Armenian immigrants, was a dentist. He went to dental school on the G.I. Bill and later met my mother when she was working as a dental hygienist. Starting at around age 13, I had a series of weekend and summer jobs — everything from scooping ice cream, making doughnuts and pumping gas to working at the local golf course, where I had to line up carts for the players by 5 a.m.

One of my high school teachers recruited my older brother, then me, to attend his alma mater, Bowdoin College, in Maine. I volunteered for the Big Brothers Big Sisters program and was matched with a local student. The experience opened my eyes to the joys of mentoring. After I graduated with an economics degree in 1987, I moved to New York as a trainee at Chemical Bank. I signed up again as a Big Brother, and was matched with David Heredia, a 10-year-old Dominican who lived with his mother and brothers on the Lower East Side. I spent every Saturday with David, who had a gift for drawing, and I saw how hard it was for him to realize his dreams without outside support. That experience planted the idea that I wanted to create a program to equip talented and motivated youth with support, training and job opportunities. I remain close to this day with David, who now has a career in animation.

I decided to get an M.B.A., and in my application to Harvard Business School, I outlined my vision for a youth program.

That same year, I met my future wife, Kate, who is English, at a party. We married in October 1992, after I graduated, and we moved to London. My first job was with an affinity credit card company. Then, a year later, I was a co-founder of a technology and software company, Conduit Communications. In 1999, we sold the company, and the next year, we moved to the United States with our two children — a third was born in 2003 — so I could pursue my idea of helping lowincome, at-risk youth.

In 2000, we started Year Up in Boston. It’s been a family project. Kate, who has returned to her profession as an art dealer, volunteered in the office in the early years, and she continues to mentor students. Many nights, we have young adults around our dinner table. By July 2001, we had enrolled 22 young people for our yearlong program, which includes six months of training and six months in an internship. Our students, who are from 18 to 24 years old, learn middle-skill jobs like desktop and help-desk support. With companies like Bain & Company and Fidelity as partners, the first internships began in January 2002. Later that year, our program received its first big grant, $1 million, and in May 2005, we expanded to Providence, R.I. The next year, we opened an office in the Washington area, then in New York and, over time, seven more cities.

Despite our expansion, we have had our ups and downs. When the financial crisis hit, Wall Street firms were among our largest clients, so we had to scramble to help our interns find new jobs. And sometimes our students “fire themselves.”

They sign a contract with us and expect consequences if they don’t fulfill their end of the deal. We help them work on their confidence, voice and identity, but we are not in the business of accepting excuses. They are capable of owning their futures. We provide them a year to move up in their lives, and so far, about 5,000 have taken advantage of it. For me, this is a matter of social justice. I believe that young adults deserve opportunity — and that the country needs to better utilize its human capital. This has been my dream for decades, and I feel lucky to be able to help it come true.

As told to Elizabeth Olson.

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Why Students Leave the Engineering Track

By CATHERINE RAMPELL Amid broader discussions about the future of the American work force, the National Science Foundation has just released a comprehensive report on the state of engineering and science in America. There’s a lot of meat in the report, but I found this chart to be particularly striking:

Perhaps swayed by statistics about the shortage (and correspondingly high wages) of engineers and scientists in the United States, in the last decade nearly one incoming freshman in 10 have said they expected to major in engineering.

(Over all, about a third of incoming freshmen said they planned to major in any of the science and engineering fields.)

But the share who actually complete degrees in engineering has been about half that. Certain demographic groups planning to major in the natural sciences also had relatively high dropout rates.

What accounts for the high attrition rates? Maybe some of it has to do with aptitude, or encouragement, or good role models and mentors. But Philip Babcock, an economist at the University of California, Santa Barbara, suggests that a lot of it has to do with homework. Professor Babcock has written extensively about college students’ evolving study habits (or lack thereof) over the last 50 years. He found that in 1961, full-time students spent about 40 hours each week in class and studying. By 2003, they were investing about 27 hours a week. The time spent studying has fallen across the board, but especially in non-engineering majors:

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Source: Philip Babcock and Mindy Marks, “The Falling Time Cost of College: Evidence from Half a Century of Time Use Data.”

The typical engineering major today spends 18.5 hours per week studying. The typical social sciences major, by contrast, spends about 14.6 hours. As my colleague Christopher Drew wrote in an article in November, STEM fields (science, technology, engineering, mathematics) have also had less grade inflation than the humanities and social sciences have in the last several decades. Given the study habits shown above, this probably isn’t surprising; courses with higher grading standards will often require students to study harder to get an A. So maybe students intending to major in STEM fields are changing their minds because those curriculums require more work, or because they’re scared off by the lower grades, or a combination of the two. Either way, it’s sort of discouraging when you consider that these requirements are intimidating enough to persuade students to forgo the additional earningsthey are likely to get as engineers.

There’s another way to read these findings, though. Perhaps the higher wages earned by engineers reflect not only what they learn but also which students are likely to choose those majors in the first place and stay with them. Generally speaking, the students who study engineering are willing to work hard and abide by higher standards — traits that are useful in the labor market. Additionally, because these students worked harder in college, they also learned more, about engineering or any other subject. That would imply that humanities majors could have similar earnings potential if only they studied more, which may or may not be true.

This post has been revised to reflect the following correction: Correction: January 22, 2012 An earlier version of this post misidentified the University of California campus where Professor Babcock is on the faculty.

It is Santa Barbara, not Davis.

SUPERMAN Financial Chronicle Jan 09 2012 Prof Stephen Hawking turned 70 this Sunday, beating the odds of a daunting diagnosis by nearly half a century. The famous theoretical physicist has helped to bring his ideas about black holes and quantum gravity to a broad public audience. For much of his time in the public eye, though, he has been confined to a wheelchair by a form of the motorneuron disease, amyotrophic lateral sclerosis (or ALS). And since 1985 he has had to speak through his trademark computer system, which he operates with his cheek, and have around-the-clock care. He became wheelchair-bound about 40 years ago and lost his voice in 1985 after he caught pneumonia and had to be given a tracheotomy.

While it is true that Hawking is a living tribute to human spirit and human body’s miraculous immune system, without which he wouldn’t have outlived the diagnosis, it is also equally true that technology aided him to a greater extent.

Without his computer system, he wouldn’t have been able to communicate and we would have missed out on his incredible sense of humour, for instance.

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The ALS disease has not affected Prof Hawking’s intellectual capacity, but it has robbed him of many physical abilities.

The ALS causes a progressive decay of the nerves, and now his facial muscles are the only ones he can control reasonably well. Unfortunately, even that, as years progress is beginning to fail him.

Until a few years ago, he could only move two fingers on his right hand while still being unable to speak. This made a computer with a voice synthesiser programme essential for his communication. Hawking has had a computer screen mounted on the arm of his wheel chair, which runs a communicator software. All he had to do was press a switch in his hand to create words and sentences. Once he had built up a sentence, he could send it to the voice synthesiser programme, which would then turn it into speech. The technology enabled Hawking to communicate, write scientific books and papers, and give lectures. But Hawking’s condition deteriorated further. These days he writes on his computer by twitching a muscle on his cheek. The twitches are detected by an optical sensor in his glasses, allowing him to select words and letters on a computer screen. When he first started operating his system, he could write about 15 words a minute. Nowadays, he has been slowed to no more than a few sentences per hour.

Most recently, according to The Australian, the ALS, the condition that has increasingly disabled Hawking, is making even that muscle hard to use. So now a team from Intel, one of the world’s leading microprocessor manufacturers, will be working with Hawking to find a solution. One of the proposals is brainwave scanning where a headset or other device could be used to measure the electrical activity in the brain. Such devices have already been successfully used to help people with severe disabilities to communicate. Eyeball-tracking and facial recognition are the other solutions offered in case Hawking’s muscles deteriorate with time. The team, led by Justin Rattner, Intel’s chief technology officer, will start work this week, once the physicist has recovered from this weekend’s illness that spoilt the celebrations to mark his 70th birthday.

In an interview with The Australian, Rattner mentioned: “We fitted an Intel computer to his computer back in 1997 and since then we have continued to provide support. The key aim is obviously communication. As his disease has progressed, his needs have changed. Now it's at the point where something new is critical to let him work. We are beginning the research into how that might be done.” According to Rattner, one problem is that Hawking tires easily and thus he might find it hard to retrain to use a newer system, especially if it were too complex.

Interestingly, Hawking's voice is itself contingent to the 1980’s moment in technology; he might easily shift his voice to something less robotic sounding, but he has come to be identified with the voice we all know well. According to Sam Blackburn, the man who has been in charge of Hawking’s voice for the last five years, “It wouldn't be Stephen's voice any more if he were to update it.” The reason why Hawking is particularly circumspect about altering his voice technology is that it could open a sort of vicious cycle; as Blackburn puts it, “incremental improvement is much easier for him to accept than a radical new system, because the learning curve associated with that is very steep. Stephen wouldn't be able to ask for help because the very thing he wouldn't be able to use would be the speech system.”

Challenges in the year of science

By M S Swaminathan Jan 19 2012 Tags: Op-ed The year 2012-13 represents the centenary year of the Indian Science Congress Association (ISCA). Prime minister Manmohan Singh will be chairing the centenary meeting of the ISCA in Kolkata on January 2013. The focal theme will be ‘Science and Shaping India’s Future’. The only other prime minister who has so far served as the general president of the Indian Science Congress is Jawaharlal Nehru. This historic session was held in 1947 and Nehru then made the oftquoted statement, “The future belongs to science and to those who make friendship with science.” It is a good augury that the year of science has started with global recognition given to tribal families of the Koraput district of Odisha for the sustainable and climate resilient farming systems they had developed over the centuries. These families were recognised through the selection of their traditional agricultural system for inclusion under the globally important agricultural heritage systems of the Food and Agricultural Organisation (FAO) of the United Nations.

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Knowledge is a continuum and therefore we should respect both indigenous knowledge and frontier science. The future of food security will depend on a combination of the ecological prudence of the past and the technological advances of today and tomorrow. A second area, which deserves attention during the international year of science, is harnessing transformational genes and technologies. A good example of a transformational gene is the Norin 10 dwarfing gene in wheat, identified at the Norin Experiment Station, Japan, which enabled the breeding of semi-dwarf varieties like Kalyansona and Sonalika, capable of responding to good soil fertility and moisture content. These varieties helped to usher in the wheat revolution in the 1960s. Similar transformational genes have been identified and used in rice, maize and other crops. More recently, the genetic engineering technology has helped to identify and introduce transformational genes conferring tolerance to salinity, drought and floods.

A recent example of transformational technology is mobile telephony. Artisanal fishery is getting transformed through the application of mobile telephony. Small-scale fishermen going in catamarans can now leave the shore with information on wave heights at different distances and the location of fish shoals. Earlier they used to spend over ten hours in the sea but they now come back within two hours with good fish catch. Also, the fear of the sea, which they developed after the tsunami of December 26, 2004, has disappeared since they know what the wave heights will be at different distances from the shoreline. Transformational technologies also carry risks and hence we should establish autonomous regulatory mechanisms to assess risks and benefits.

A third important area is pro-active action to checkmate the adverse impact of potential changes in temperature, precipitation and sea level, caused by global warming. The recently held conference (COP 17) at Durban in South Africa has reiterated that the expected rise in mean temperature can be limited to 2 degree centigrade. Also, it was agreed to set up a Durban Platform for Enhanced Action and to deliver a climate agreement covering all parties by the year 2015. It was also decided to establish a green climate fund and a climate technology centre and network. However, as pointed out by the British Science Journal, Nature (Dec15, 2011), “The Durban meeting shows that climate policy and climate science inhabit parallel worlds”. The political will to shift to a low carbon pathway of development is yet to emerge in industrialised nations. Unfortunately, poor nations and the poor in all nations will suffer most because of their limited coping capacity. Proactive action will be needed for implementing the legal food entitlements proposed under the National Food Security Act. In a crop like wheat, which occupies an important place in our public distribution system, we will have to develop new varieties capable of higher per day productivity. Vector borne diseases will become more important. For each 1 degree Celsius rise in mean temperature, wheat yield losses in India are likely to be around 6 million tonnes per year. Natural rubber (NR) will suffer in latex yield with a rise in temperature and we will have to increase the NR area in the Northeast. Climate refugees may become important in coastal areas as a result of a rise in sea level and we will have to put in place contingency plans for their resettlement. All along our coast we will have to develop methods of insulating both fishing and farming communities from the impact of sea level rise.

A fourth area is the development of strategies to combat the widely prevalent child malnutrition. The prime minister has rightly referred to the incidence of undernutrition among 42 per cent of India’s children as “a national shame”. Outpouring of grief and shame alone will not be enough. In a lecture delivered in 1966, I drew attention to the threat of intellectual dwarfism in our country as a result of maternal and foetal undernutrition and child malnutrition. This is where a community designed and implemented nutritional security system will help. The programme initiated by MSSRF in the Koraput district for developing a cadre of Community Hunger Fighters well versed in the science and art of eliminating malnutrition among children and adults may help to create synergy among national and local initiatives.

Thus, the year of science presents technical challenges in every area of human endeavour relating to safeguarding lives and livelihoods. It is to be hoped that all the Science Academies of our country will help to convert potential calamities into opportunities.

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Demand for environmental professionals may grow by 60% this year: Experts With ‘global warming’ becoming a major concern world over, hiring of green professionals is likely to grow by up to 60 per cent this year, say experts. “Companies are today taking steps to become environment-friendly and are hiring green professionals, who can help them reduce energy consumption. “The demand for environmental professionals is expected to go up by 55-60 per cent this year, as firms are raising their spending on creating clean technology, reducing emissions and wastage and regulating the use of natural resources,” Elixir Consulting Executive Director, Ms Kanika Vaswani, told PTI. Green job is mainly defined as work in agricultural, manufacturing, research and development, administrative and service activities that contribute substantially to preserving or restoring environmental quality, she said. An environmental professional reviews the direct and indirect impact of products on the ecology and devise strategies to protect the atmosphere, she added.

Green jobs Green jobs can either be white or blue-collar in sectors like agriculture, manufacturing, R&D, administration and service activities like IT and finance. With growing demand for green buildings, the real estate sector is likely to emerge as one of the biggest recruiters of green professionals, she said.

Hiring trend Elixir has observed a trend of hiring environment professionals in the FMCG and retail sector as well. Companies are offering attractive salaries to green professionals, which vary, Ms Vaswani said, adding that at middle-level, the package is usually at Rs 12 lakh and Rs 35-40 lakh at senior positions. Echoing the view, executive search firm GlobalHunt Director, Mr Sunil Goel, said the hiring of green professionals began a decade ago, but paced up 5-6 years back, when many industries faced mandatory regulations to have environment experts and green department to manage waste and hazard. In 2012, he said, hiring will increase by 30-40 per cent for green professionals and this growth is likely to remain consistent for next five years.

Salary package “With attractive salary packages, interest towards this profession is growing constantly,” he said. Generally, these professionals are hired at all levels and get compensation between Rs 5-7 lakh, depending on experience, he pointed out. Executive search firm Symbiosis Management Consultants CEO, Mr Vinay Grover, opined that usually these professionals hold masters degree (M.Sc, M.Tech) in Environmental Engineering by IITs, state-owned universities and other couple of AICTE approved colleges as well. People with Civil and Chemical Engineering background also become environment professionals, he said. Power, oil and gas, and chemical sectors, he said, are the traditional employers for the environmental professionals, however, with the growing concern towards ecology, the trend is also visible in FMCG and IT. “In India, there aren’t many green professionals available in the market and seeing it as coveted career, more and more people are likely to pursue it as a career option,” he said. This year, he opined that the hiring for such professionals would see a phenomenal increase to the tune of 35-40 per cent, since the base is very low.

INTERVIEW

Mr BK CHATURVEDI/PLANNING COMMISSION - Subsidy sharing mechanism depends on fiscal situation

BY BLOOMBERG UTV B. K. Chaturvedi, planning commission member (energy), spoke in an interview on the policy framework for the energy sector and the road ahead. Edited excerpts: For future UMPPs (ultra mega power projects), especially based on imported coal, would you now, in hindsight, include this (fuel) cost escalation clause emanating from international policy changes?

I think future UMPPs have to take into consideration the fact that this method of inviting bids for 25 years and assuming that the fuel will be at a certain rate, I think this needs to be looked into so that we have a more reasonable method of assessing people's bids. This method, I find, has serious flaws because the international situation first of all keeps on changing.

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When the developers took on these risks, did you think that there was some foresight missing in anticipating these kind of inter national policy changes in a very fluid energy environment global ly?

I think, yes, many of them, I am sure, must have thought that they had hedged the risk but perhaps it would have been bet- ter if they had a clause on the international environment or some such clause, which they feel that if there was a dramatic change then it would require negotiations or at least a question of resolution; I think they didn't really perhaps do that due diligence at that point of time.

There were talks of a wealth fund or an energy fund. Where has that gone? Has the Reserve Bank of In dia dropped its objections to using foreign exchange reserves for seeding those funds?

Well, it is because of the concept, the way it is made, the question is that when (do) you use these reserves.

So the question is that where do you want to use this and is there a shortage with the companies for investments abroad.

So as of now, therefore, we said that let us move forward on the existing methods of acquisitions.

So on the question of oil, a lot of these companies, the upstream companies like ONGC have repeatedly said that they need clarity on the subsidy sharing mechanism.

What is the subsidy sharing mechanism looking like at this time?

Well, I think it depends on the overall fiscal situation of the government; I don't see at this juncture, any further improvement in the contribution. In fact the contribution may be more or somewhat at least it will remain on same levels from the upstream oil companies.

Report: Energy imports’ share of demand down almost half by 2035

Energy Information Administration's natural gas projections from the 2011 Annual Energy Outlook.

Increases in domestic oil and gas production, efficiency and use of renewables will cut the share of U.S. energy demand fulfilled by imports nearly in half by 2035, a federal agency said. Net imports will satisfy 13 percent of energy demand in 2035, down from 22 percent in 2010 and 29 percent in 2007, according to an analysis from the U.S. Energy Information Administration, an agency of the Department of Energy that prepares studies and compiles data on energy. Additionally U.S. emissions of greenhouse gases will remain below 2005 levels by 2035, according to the agency.

“These projections reflect increased energy efficiency throughout the economy, updated assessments of energy technologies and domestic energy resources, the influence of evolving consumer preferences, and projected slow economic growth,” Howard Gruenspecht, the EIA’s acting administrator, said in a statement. Domestic oil production will rise 20 percent by 2020 to 6.7 million barrels a day, the highest level since 1994, as shale oil production continues and more Gulf of Mexico resources are developed, according to the agency. That rise will help reduce oil imports, the report added. Also U.S. natural gas production will exceed consumption by early in the 2020s, according to the agency, as continuing shale-gas development boosts domestic output, pipeline imports drop and pipeline exports rise. Natural-gas prices should remain low in the U.S. relative to other markets, the agency projected.

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But recoverable shale gas resources may not be as high as once thought, the agency said. The analysis estimated total recoverable shale-gas resources at 482 trillion cubic feet, down from 827 trillion in 2011′s outlook. Fossil fuels will continue to dominate, absent a major policy shift, the report said, echoing another more globally oriented outlook from BP. Their share of U.S. energy demand will fall from 83 percent in 2010 to 77 percent in 2035, according to the agency’s report. Use of renewable energy sources will increase, primarily on the electricity grid, according to the report, which found the share of renewable power generation will increase from 10 percent in 2010 to 16 percent by 2035. But that share could rise further if the U.S. extends renewable-energy tax credits and other incentives that are due to expire in the coming years, the report said.

Coal, which now provides almost half the nation’s electricity, will decline significantly as tougher pollution regulations go into effect, power demand ticks down and competition from renewable sources and natural gas take their toll, the report said. Coal’s share of generation, already down from 50 percent in 2005 to 45 percent in 2010, will decrease to 39 percent in 2035, the agency said. But the Sierra Club, an environmental group, noting that last year’s outlook forecast coal’s share in 2035 four points higher than this year’s outlook, said the actual percentage could be lower. “Even today’s EIA projections remain far too rosy for coal,” Bruce Nilles, senior director of the group’s Beyond Coal Campaign, said in a statement.

Although greenhouse-gas emissions will rise 3 percent from 2010 to 2035, they nonetheless will stay below 2005 levels thanks largely to coal’s decline, improved efficiency and state-level renewable-power mandates, the agency said. Energy use and climate-warming emissions fell from 2005 levels as a result of the recession. The agency added that greenhouse-gas emissions and net oil imports will fall further than projected if the U.S. finalizes proposed fuel-economy standards for cars, minivans and pickup trucks. Last fall two federal agencies proposed standards for model years 2017 to 2025 that would roughly double mileage from current levels by the end of that period.

Upcoming fuel-efficiency standards could prevent 6 billion metric tons of greenhouse gases — almost what the U.S. emitted in all of 2009 — from entering the atmosphere over the lifetimes of the vehicles covered, according to the White House. They also would cut oil use by 2.2 million barrels per day by 2025, roughly one-fourth of current levels, the White House says.

Industrial energy efficiency vital for sustainable development – UN report 17 January 2012 –A new United Nations report launched today urges investment in energy-efficient technologies to help achieve sustainable growth and tackle a host of global challenges from climate change to poverty reduction. The Industrial Development Report, the flagship publication of the UN Industrial Development Organization (UNIDO), states that industrial energy efficiency is key to sustainable development.

Sustainable energy production is also essential to overcome the major challenges the world faces today, according to the report, which was launched at the World Future Energy Summit in Abu Dhabi, United Arab Emirates. “A world that has just reached a population of seven billion must take into account industrial energy efficiency if it wants to address such challenges as green growth, employment generation, security, climate change, food production and poverty reduction,” UNIDO Director-General Kandeh K. Yumkella said as he presented the report.

“Industrial energy efficiency is essential for strengthening economies, protecting ecosystems and achieving social benefits,” he added. Mr. Yumkella noted that improving industrial energy efficiency is key to sustainable industrial development worldwide but especially in the rapidly developing countries of the Global South. “It will help realize the global green economy and green industries. Investing in energy-efficient technologies, systems, processes, training and upgrading of skills must underpin low-carbon green growth,” he stated.

The report is UNIDO’s main contribution to the Sustainable Energy for All initiative launched by Secretary-General Ban Ki-moon last year. The initiative seeks to ensure universal access to modern energy services, double the rate of improvement in energy efficiency and double the share of renewable energy in the global energy mix, all by 2030.

Addressing the summit in Abu Dhabi yesterday, Mr. Ban called on governments, the private sector and civil society to help expand energy access, improve efficiency and increase the use of renewables to help build a “new energy future.”

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The UNIDO report has a special focus on developing countries, backed by a set of unique statistics on Manufacturing Value Added (MVA), manufacturing export trends, and other key indicators.

It states that energy consumption could grow even faster as developing countries reduce the income gap and grapple with growing populations demanding more manufactured products. This makes it imperative to remove barriers that currently impede energy efficiency investments.

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