EU Bans Syrian Oil Imports
On-going violence in Syria has sparked a ban on Syrian crude imports by the EU to put economic pressure on the oppressive regime. (image: washingtontimes.com)
The European Union has banned imports of crude oil from Syria in response to President Bashar al-Assad’s deadly crackdown on pro-democracy protestors, Bloomberg.com reported.
The oil embargo was approved Friday by EU governments in Brussels and expands existing sanctions against the Syrian regime.
The ban affects Syrian exports valued at $4.5 billion in 2010, according to the European Commission, the 27-nation bloc’s executive arm. Crude oil accounted for 88 percent of total EU imports from Syria last year, according to commission data.
“The prohibition concerns the purchase, import and transport of oil and other petroleum products from Syria,” the EU said in a statement. “No financial or insurance services may be provided for such transactions.”
EU foreign policy chief Catherine Ashton announced the planned embargo two weeks ago, when she cited “intensifying large-scale use of indiscriminate military force” in Syria and joined leaders in Europe and the US in calling on Assad to step down. Assad rejected the demands and pledged to schedule parliamentary elections by February. The EU import ban follows a similar step by the US in mid-August.
A loading program obtained by Bloomberg shows about 160,000 barrels crude a day were due to be shipped from Syria this month by oil companies, refiners and traders.
It is unclear what the effect the embargo could have on global crude, gasoline and heating oil prices. The loss of Libya’s 1.3 million barrels due to civil war sent world oil prices skyrocketing earlier this year to 30-month highs.
HeatingOil.com reported in July accusations that the US had breached the Iran Sanctions Act by selling part of a 30-million-barrel draw-down of reserve oil stocks to an energy trading company with links to the Iranian regime.
The EU is widening sanctions against Syria that include an arms embargo as well as an asset freeze and a travel ban on 50 people and nine entities deemed “responsible for the violent repression against the civilian population.” The United Nations puts the death toll at more than 2200.
Assad has deployed tanks, armored vehicles, artillery and helicopters to crush an uprising that began in March after “Arab Spring” revolts ousted the leaders of Tunisia and Egypt and sparked the Libyan conflict.
Libyan Production Set to Recover, but OPEC Waiting to Adjust Output
When Libya’s oil output slowed to a trickle several months go, OPEC’s Gulf members went far and beyond filling in the gaps, actually boosting production to its highest levels all years – around 30 million barrels per day in July. (image: electionsmeter.com)
Libyan rebels took control of Tripoli today, further solidifying beliefs that the country’s oil production will soon return to levels seen before the violent civil war began in February. However, OPEC’s Gulf members probably won’t reduce oil output for some time, since relying on Libya too early could be a mistake, Reuters reported.
Before political upheaval disrupted production, Libya pumped out more than 1.3 million barrels a day, nearly 2% of the world’s supply. Since that’s been out of commission, other Gulf members (mostly Saudi Arabia) have stepped in to make up the loss.
While strategists remain confident the Libyan rebels will successfully oust bizarre leader Moammar Gadhafi, restoring oil output and a more peaceful government, OPEC officials said there’s no reason to rush into anything.
“Let’s see when they completely come back with their output before the crisis. And then, OPEC will see whether it affects prices or stocks, and then it will take the right direction,” one Gulf delegate commented. “We can’t say now what OPEC will do. Are they going to take one month, three months, a year?”
In fact, the group likely won’t make a solid decision until their next meeting in December. The delegate noted any decision to slash output will depend on varying factors like oil prices and demand levels.
Shell Spills Major Oil off Coast of Scotland
Shell has only recently taken responsibility for its last oil spill in 2008, which leaked 11 million gallons of crude into the Niger Delta, nearly wiping out entire communities in Nigeria. A class action lawsuit finally prompted Shell to admit they’d spilled approximately 275 times the amount of oil than they’d originally reported. The U.N. estimates the spill will likely take 30 years and $1 billion to clean up. (image: inhabitat.com)
Oil giant Shell has contaminated at least 48 square miles of ocean in the North Sea from its Gannet Alpha platform, DigitalJournal.com reported. The latest estimates put the leak around 100 metric tons or 730 barrels worth. Though Shell operates the Gannet Alpha platform, Exxon Mobil Corp. is also a partner.
Echoing the dishonest rhetoric surrounding the BP Gulf spill, Shell was aware of the spill since last Wednesday but didn’t report it publicly until Friday.
Yesterday BBC Breakfast news reported “a thin film” of oil now covers a “mere” 48 miles of seawater, prompting questions about what constitutes a thin film. Sadly, until now Scotland has been a leader in industries involving eco-conscious, renewable energy sources. Regional scientists recently wrote of their work attempting to change the shape of the world energy map, saying Scotland “can become a world leader in the field of renewable energy, just as Aberdeen has with oil.”
Shell tried to downplay the leak, stating in a press release it is “under control…the flowline on the seabed is now isolated and depressurized. Leakage of oil has been considerably reduced.”
“We have deployed a Remote-Operated Vehicle (ROV) to do inspection checks and monitor the subsea leak which is on a flow line on the sea bed,” Shell spokespeople wrote. “A stand-by vessel remains on station with oil spill response equipment and dispersant.”
However, dispersants themselves are controversial since they’re nonbiodegradable and often comprised of toxic chemicals. While they can effectively dissolve oil slicks, they don’t actually reduce the amount of oil entering the sea and only work when applied within 12-48 hours of an accident. Dispersants also negatively affect marine life and ecosystems.
On Sunday evening, Shell spokesman Bill Tanner offered an update in an email, stating, “Our current expectation is it will be naturally dispersed through wave action and will not reach shore.”
Venezuela to Increase Oil Production
Last year, a U.S. Geological Survey determined Venezuela’s Orinoco Oil Belt holds an estimated 513 billion barrels of recoverable heavy crude. (image: topnews.in)
Venezuela’s leading energy officials announced the government is hammering out long-term plans to drastically boost oil output while diversifying its struggling economy, according to an Associated Press report.
Last month, OPEC’s latest study revealed Venezuela had overtaken Saudi Arabia as the country with the most proven crude oil reserves – yet it doesn’t even rank on the list of the world’s top ten oil producing and exporting countries. However, according to Venezuela’s Energy Minister Rafael Ramirez, that may be about to change. Last Friday Ramirez announced the country’s new goal is to raise production from its current 3 million barrels a day to 4 million by 2015.
The government seeks to boost output from the Orinoco Oil Belt, a rapidly developing region with huge deposits of extra-heavy crude, from 1.1 million barrels a day to 3.9 million. In the next 10 years or so, Ramirez anticipates an influx of around 100,000 new workers to the region, and with that will come expanding infrastructure of schools and housing, and hopefully, a stronger, more stable economy.
Venezuelan President Hugo Chavez commented that OPEC quotas will probably be adjusted to account for the country’s growing reserves. Ramirez said it’s too early to gauge OPEC’s reaction, but he’ll be ready to discuss it when the group raises the subject.
“It’s an issue that we aren’t going to discuss for now, as long as there is no need to discuss it. Now isn’t the time to do it still, because we’re determined to keep the price of oil stable,” Ramirez said. “It’s a new frontier that’s opening up.”
Heating Oil Use Rising in the UK
Heating oil being shipped by barge before distribution! (image: ehow.co.uk)
A recent study from the Office for National Statistics found that households in the United Kingdom are using more heating oil, and energy use on the whole is rising as well, BoilerJuice.com reported this week.
The study was conducted as part of a Social Trends report looking into the environment and factors affecting it. Researchers found that households used approximately 44 million tons of oil in 2009, steadily increasing from the 37 million tons that were used annually in the early 1970s. Over half of that oil was used for home heating.
The study also estimated that greenhouse gas emissions in the UK had fallen 27% from 1990 to 2009. Their findings also showed air pollution in rural areas had fallen to levels not seen since 1987, a vast improvement on particulate pollution numbers seen over the years.
Obviously these figures don’t seem to match up with an increase in fossil fuel usage. However, lawmakers and energy officials worldwide have slowly begun launching efforts to ban use of the two dirtiest heating oils, no. 4 and no. 6. These two fuel grades create significantly more soot and carbon emissions, and should be phased out in favor of no. 2 heating oil, a cleaner option.
Venezuela Beats Out Saudi Arabia as World Leader in Oil Reserves
Venezuela's Angel Falls, considered one of the seven wonders of the world, is located not far from the country's biggest oil refineries. (image: vacationideas.me)
According to OPEC’s annual statistical bulletin, Venezuela has overtaken Saudi Arabia as the country with the most proven crude oil reserves, the Miami Herald reported this week. Between 2009 and 2010, Venezuela’s known reserves climbed by 40% to level out at 296.5 billion barrels of oil. OPEC estimated Saudi Arabia’s reserves weigh in around 264.5 billion barrels.
If Venezuela has so much oil, why isn’t it higher on the list of the world’s top oil producing and exporting countries? For starters, the South American country’s economy is weak – Venezuela’s annual inflation rate of 24% is the highest in its hemisphere. While neighboring countries Brazil and Colombia both saw substantial rises in crude production, Venezuela’s production rates have steadily declined in the past five years. One likely reason is that one-third of the country’s known reserves are extra heavy crude, which is difficult and expensive to extract.
“You can be sitting on the largest reserves in the world but if you do not have the capital and technology to recover them…they are worthless,” commented Jorge Pinon, former President of Amoco Latin America.
As of 2010, OPEC estimated its member nations hold about 81% of the planet’s 1.46 trillion barrels of total known oil reserves. OPEC’s full report will be published in November.
NYC Schools Still Using Dirtiest Grades of Heating Oil
NYC Mayor Michael Bloomberg and Council member Gale Brewer at a cogenerational power facility last year, pursuing cleaner and cheaper energy sources for New Yorkers. (image: distributedenergy.com)
Despite strong encouragement from Mayor Michael Bloomberg and a city-wide pledge to ban the two dirtiest types of heating oil by 2030, hundreds of New York City schools are cementing plans to continue using the controversial fuel for some time to come, New York 1 reported.
In April, the mayor announced the PlaNYC initiative would be upping its game to reduce city greenhouse gas emissions by 30% by 2030. The PlaNYC sustainability plan includes a Clean Heat campaign to eliminate use of #4 and #6 heating oil, the dirtiest grades available, also known as residual oil, by 2030. Most homes heated with oil use #2 heating oil, a far cleaner substitute, but many larger buildings are still using the crummy stuff – including New York City schools.
According to NY1’s report, the Department of Education is currently working on a $70 million deal with an oil provider that will keep cheap residual oil burning in schools. Despite a fierce backlash from concerned parents and environmental activists, the DOE is going ahead with the plan.
“Air pollution affects children more than adults,” commented Richard Kassel, a spokesperson for the Natural Resources Defense Council. “Their lungs are still developing. They breathe more than we do.”
“Soot pollution contributes to the city’s sky-high asthma rates, contributes to heart and lung conditions, and it actually shortens the life spans for thousands and thousands of New Yorkers,” he added.
If the schools have to switch eventually anyway, what’s causing the holdup? Unsurprisingly, it boils down to money. Upgrading and converting heating equipment requires money and time, a process that DOE spokespersons said “won’t happen overnight.” However, activists are hopeful new pressure from the City Council could speed things along.
“I don’t understand why it takes so long,” said Council member Gale Brewer. “Health is number one. It does need to be done quickly.”
The Top 10 Oil-Producing Countries
An oil rig in Russia, which overtook Saudi Arabia as the world's number one oil producer two years ago. (image: tehrantimes.com)
This isn’t breaking news, since the top oil producing countries in the world have the most natural stores of oil and don’t change very often. However, fluctuation in output from any of these countries can affect the heating oil and gas prices that affect our everyday lives. Staying apprised of news and developments in these nations, from political upheaval to the discovery of new supplies, could be useful to heating oil consumers. So, here’s a refresher:
1. Russia produces 9.5 million barrels of oil every day. That’s around 12% of the world’s oil. Though they export slightly less oil than Saudi Arabia, fuel enthusiasts might be interested to know Russia is also the world’s largest exporter of natural gas.
2. Saudi Arabia produces 8.3 million barrels each day. The country contains approximately 100 major oil and gas fields, and is the world’s top oil exporter.
3. The United States is better known as the world’s number one consumer of oil, but the country also produces 5.4 million barrels a day. The U.S. is still struggling in the aftermath of the devastating BP oil spill off the Gulf Coast.
4. Iran produces 4 million barrels of oil a day, almost 4% of the world’s oil. Iran’s controversial nuclear program has been a source of concern for several countries, but they maintain the goal is to generate electricity with low-enriched uranium.
5. China produces 3.8 million barrels of oil every day. But, like the United States, they don’t even make the list of top 20 oil exporters and also experienced a catastrophic oil spill last year when a pipeline exploded.
6. Mexico produces 2.6 million barrels of oil each day. The country is still doing damage control from last year’s pipeline explosion that killed 13 children in San Martin Texmelucan.
7. Canada also produces 2.6 million barrels a day. Exportation could increase with the country’s development of tar sand extraction, but so far environmental concerns have prevented U.S. lawmakers from approving a huge pipeline from Canada to the Gulf Coast.
8. The United Arab Emirates produce 2.4 million barrels of oil daily, though they have the sixth largest oil reserves in the world. Climatically sunny, UAE is said to be looking into developing renewable energy sources, especially solar power.
9. Iraq produces 2.4 million barrels every day. The unofficial birthplace of OPEC, Iran continued to help meet world oil demands despite years of war, upheaval and sanctions.
10. Kuwait produces 2.4 million barrels of oil a day. The country has the fifth largest oil reserves in the world, which started being discovered and explored in the late 1930s.
Heating Oil Price Trend for July 5: -2¢
Standard & Poor's Monday warning that a rollover of Greece's debt would be interpreted as a default caused concern and a slow day at the oil markets. (image: satelliteradioplayground.com and Nicholas Whitaker for HeatingOil.com)
Oil prices slipped late on Monday when concerns arose that a rollover of Greece’s debt will be considered a default, which could cause global oil demand to nosedive. Confidence in the global economy is already weak, and this latest report of Greece’s financial struggle from U.S.-based rating agency Standard & Poor’s demonstrated that this issue will likely continue to spook traders until its resolution is secured.
Heating oil dropped two cent while crude for August delivery slipped 20 cents to settle at $94.74 a barrel on the NYMEX.
The International Energy Agency’s decision to tap 60 million barrels of emergency reserves also continued to affect prices, even more than releasing the oil itself. OPEC members criticized the decision as a political move and an inappropriate manipulation of natural market activity. However, a recent Dow Jones survey showed most members were sensitive to the IEA’s argument as well, and anticipated that the weekly Department of Energy inventory report due out on Thursday will show inconsistencies in supply and demand that typically occur around holidays.
Despite OPEC’s failure to come to a decision to raise output following February’s ongoing deficit in production from Libya, the group has increased production. OPEC produced 29.76 million barrels of oil a day in May, and upped that by 657,000 barrels a day in June. Analysts commented they wouldn’t be surprised to see oil level out at around $100 a barrel in the near future.
Today’s average heating oil price in the Northeast is two cents lower than Monday’s average price.
New Bioheat Fuel Terminal Opens in New Jersey
Sprague Energy's Steve Levy is jazzed to show off the company's new Bioheat storage capabilities in West Harrison! (image: Michael Pellegrin/biodieselnow.com)
When people hear the term “biodiesel,” they often think of it as an alternative fuel for vehicles, which it is. However, this biodegradable, nontoxic, and renewable substance is perfectly compatible with home heating equipment like oil-fired furnaces and boilers. When used for home heating, biodiesel is often referred to as Bioheat. And it was a good week for Bioheat, as Sprague Energy and Sunoco Logistics announced the official opening of an expansive biodiesel supply and loading terminal in New Jersey.
Located at the Sunoco Logistics Newark Terminal, the supply center will be the first in the state to provide different types of fuels, including multiple biodiesel and Bioheat blends of low-sulfur diesel and heating oil. For now, the available blends include B2, B5, B10, and B20.
According to Steve Levy, Sprague Energy’s managing director, the terminal is home to a 132,000 gallon storage tank, and utilizes state-of-the-art rack injection. While the outdated “splash blending” technique was inconsistent at best, “injecting biodiesel with the automated rack blending system saves time and money while ensuring a homogeneous blend,” Levy says.
The new facility will aid distributors in the high-demand areas of northern and central New Jersey, bringing biodiesel and Bioheat to a large number of both commercial fleets and residential homes.
“Our goal is to provide the terminal and pipeline infrastructure our customers demand,” said Michael J. Hennigan, president and CEO of Sunoco Logistics. “By adding biodiesel and Bioheat blending capability at the Newark terminal, Sunoco Logistics continues to meet our customers’ needs for biofuels distribution.”
Biodiesel feedstock supplies will come from vegetable oil, animal fats, and recycled cooking oil, all steps in the right direction.
For heating oil consumers, this is good news. It means more people will have better access to cleaner fuel options, which translates to a lowered impact on the environment and on consumers’ wallets. The more we invest in alternative forms of energy, the less we will have to depend on foreign oil, which will eventually drive down prices. In other words, sometimes less really is more.
Heating Oil Price Trend for June 30: +10¢
OPEC secretary general Abdullah El-Badri will meet with IEA reps to mend the rift over tapped emergency reserves and discuss ways to improve coordination in the future. (image: daylife.com and Nicholas Whitaker for HeatingOil.com)
Last week’s controversial decision to tap 60 million barrels of emergency oil reserves hasn’t had the impact the International Energy Agency desired, as heating oil prices surged ten cents and crude climbed $1.88 to finish at $94.77 a barrel on the NYMEX on Wednesday.
Reserves were released in an effort to bring prices down and stabilize the market. Analysts believe the results were short lived because it wasn’t done in March when Libyan production first began to bottom out, and because 60 million barrels simply isn’t that much. Global oil demand averages over 89 million barrels every day.
OPEC officials unanimously criticized the IEA’s decision, saying they never want this situation to be repeated. However, they also expressed a conciliatory attitude and a desire for the partnership to move forward. OPEC secretary general Abdullah Salem El-Badri is scheduled to meet with IEA executive director Nobuo Tanaka soon to discuss improving coordination between oil producers and consumers.
In other factors, Tropical Storm Arlene had some traders concerned about production disruptions in the Gulf, and many believe prices will continue to climb while the U.S. and other oil consuming countries replenish their reserves. Worries over Greece’s debt trouble have calmed for now, but new estimations show steady exports from Libya likely won’t return to normal levels for another few months. And lastly, the Tuesday report that oil inventories dropped far more than expected last week kept prices up again today.
Today’s average retail heating oil price in the Northeast is ten cents higher than Wednesday’s average price.
Heating Oil Provider Releases Tools, Information to Help Consumers Understand Price Protection
Irving Energy has been providing heating fuel and resources to consumers in Northern New England and Atlantic Canada since 1924. (image: irvingoil.com)
Choosing a heating oil dealer and payment plan can be an intimidating and tedious decision. Understanding why prices fluctuate like they do is complicated and frustrating at times, but finding the right protection plan for your home heating needs is certainly worth the effort.
With that in mind, Irving Energy, a New England and Canada-based heating oil, propane and diesel fuel provider, has created an educational series aimed at helping customers make the right fuel decisions for themselves by demystifying price protection.
The series includes articles, an interactive tool, and a consumer forum – the first in the industry of its kind. First, nine articles demystifying price protection should help consumers get a firm grasp on pricing and protection. A few topics include:
• Five Big Misconceptions About Price Protection Plans
• Five Questions to Help You Decide on Which Pricing Option is Right for You
• Propane and Heating Oil Fixed Pricing: Reasons For and Against
• Propane and Heating Oil Downside Protection: Reasons For and Against
• Variable Market Pricing: Reasons For and Against
Once they’ve done their research, consumers can explore Irving’s innovative online price protection decision-making tool, designed to really narrow down the options to fit individual needs. As for the forum, customers have the opportunity to give their opinions on price protection plans and see what 500 other consumers have already said.
“As heating fuel users begin researching options for the upcoming heating season, we believe it is important that customers have the resources to learn about the differences of fixed price heating fuel plans, downside protected heating fuel plans, and heating fuel variable pricing,” said David Simmons, senior manager of marketing and residential sales.
“Giving customers the scoop on heating oil and propane price protection plans will ultimately help cut through the clutter so they can make an informed and smart decision,” he added.
Even if you’re satisfied with your current home heating situation, you can never know too much about energy consumption and how the business works. Interested energy consumers can get started with the series on Irving’s website here.
FTC Begins Oil-Trade Investigation
FTC Chairman Jon Leibowitz explained the regulation group will use "compulsary process," allowing the Commission to require people to disclose information. (image: huffingtonpost.com)
The Federal Trade Commission has begun investigating oil traders, producers and refiners to determine whether they’ve been engaging in anti-competitive practices or manipulation, or giving federal agencies misleading data about the price of crude oil, the Wall Street Journal reported this week.
“Let me assure you that the commission will conduct this investigation as efficiently and effectively as possible,” FTC Chairman Jon Leibowitz announced in a letter to Senator Maria Cantwell, a longtime proponent of stricter regulation scrutiny for the energy markets.
The probe was inspired in part because refining profit margins of U.S. operations saw huge increases between the beginning of this year and May. This raised some eyebrows since refiners were only functioning at 81.7% capacity, a 7% decrease from the same time period in 2010. The Commission plans to review exactly how refinery operators decided to shut down some equipment for maintenance, since lagging output can push gas prices higher.
Several Democratic U.S. senators, including Harry Reid (Nevada), Patty Murray (Washington), Dick Durbin (Illinois), Claire McCaskill (Missouri), and Chuck Schumer, (New York) also called for the investigation.
“In the last six months, the refiners’ profits have skyrocketed. They were 42¢ in January; they were 64¢ in April; 80¢ a few weeks ago in May. There is not a good free market explanation for that,” Schumer commented. “There are clear signs that refiners may be stockpiling oil, which keeps prices high. I urge the FTC to immediately investigate and ensure that New Yorkers are not being victimized by this type of manipulation.”
The probe coincides with the work of the Obama administration’s task force, created in April in an attempt to reign in prices by identifying and eliminating illegal conduct within the oil and gas markets.
“We remain committed to preventing and prosecuting any anticompetitive, fraudulent, or otherwise illegal activity which we identify through the foregoing investigation,” Leibowitz wrote in another recent letter to Senator John Rockefeller, who requested an investigation in March.
Stay tuned for developments as the probe unfolds.
The Newest Biofuel Option: Straight Vegetable Oil
Last month, Vermont passed legislation mandating that all heating oil sold in the state must contain at least a 7% biodiesel blend by 2016. Could heating oil users and dealers soon be offering vegetable oil along with No.2 oil? (image: sustainability.jhu.edu)
By Quinn Wonderling
GoVo Biofuels LLC has developed a new biofuel that some believe could solve the dilemma of affordably heating large older buildings with locally-sourced fuel and matching, modified boiler equipment, the Clean Tech Center reported this week.
GoVo works to provide vegetable oil-based fuels that can be used as substitutes for heating oil and diesel. Many consumers are hesitant to switch for fear of high conversion and installation costs – But in this case, testing on larger buildings such as apartment complexes proved the necessary boiler equipment upgrades and modifications were cost effective. That’s because the new fuel is essentially straight vegetable oil; it’s less expensive and significantly more eco-friendly.
Plus, the heating capacity/energy potential of the two fuels are almost exactly the same. Though some biofuel skeptics question whether distribution networks are advanced enough to make them a viable option, both dealers and consumers stand to benefit from the development of a cheap, widely produced biofuel.
Such biofuel developments are highly relevant to heating oil dealers looking to expand beyond biofuel blends and check out alternative fuels that require total boiler/equipment makeovers.
According to the report, “the highest use of #2 heating oil is in the Northeastern United States, and GoVo Biofuels is working on a scalable plan to address the challenge of reducing consumption of petroleum, particularly for the heating market.”
A Glossary of Heating Oil Terms
(image: climateprogress.org and Nick Whitaker via heatingoil.com)
AFUE Rating: An acronym for Annual Fuel Utilization Efficiency, the AFUE rating indicates the percentage of heating oil that is successfully converted into actual heat for a home. The higher the AFUE percentage is, the better the conversion rate from oil to heat. For example, an AFUE of 85 percent means that 85 percent of fuel is being successfully used to heat a home, while the remaining 15 percent is lost, in the form of exhaust.
Automatic Delivery: A service provided by some heating oil dealers to consumers with full-service contracts, automatic delivery relies on software systems that help dealers to monitor local temperatures and estimate heating oil consumption in order to accurately gauge a customer’s supply. When calculations show that a consumer’s supplies are low, oil companies will automatically make a delivery. Often customers do not have to be home to receive oil and will instead be billed after the delivery.
Biofuel Heating Oil: A type of heating oil that is a blend of petroleum-based heating oil and fuels derived from plant sources (such as soybeans, corn, and wood by-products). Biodiesel and ethanol are also types of biofuel. Bioheat, though often used interchangeably with the term biofuel, is a brand name trademarked by the National Biodiesel Board. Bioheat is the most popular biofuel heating oil in the United States. Advantages of biofuel heating oil are that it is partially made from renewable resources, it can be produced domestically, and it releases less carbon than 100-percent-petroleum heating oil. Although many heating oil customers have the option to purchase oil blends consisting of petroleum and biofuel, obtaining one hundred percent biofuel is difficult because of a lack of large-scale production.
Budget Plan: A type of payment option for heating oil consumers, budget plans spread the cost of heating oil payments out over many months at a locked-in or variable rate. Budget plans allow for heating oil users to pay one flat rate every month of the year, as opposed to paying for heating oil deliveries as they are made in during the fall and winter.
Cash on Delivery (COD) Heating Oil: A type of pay-as-you-go service, COD heating oil allows the consumer to buy home heating oil from distributors without making long-term commitments or entering into a contract. Usually consumers must be home at the time of delivery and must pay the day of service with either cash or credit. COD heating oil is often provided at a discount because retailers are not obligated to perform maintenance on home heating systems or make regularly scheduled deliveries.
Contango: A situation in which the future price of a commodity is higher than the commodity’s “spot” or current price.
Superior Plus Corporation: An American Heating Oil Giant is Born
(image: superiorplus.ca, chappoil.com, and pncequity.com)
After investing nearly $160 million in heating oil properties throughout the Northeast this fall, Superior Plus Corp. has become a major player on the U.S. heating oil scene. Although this is the Calgary, Alberta-based company’s first foray into the U.S. energy market it is backed by the unmatched weight of its $2.2 billion general enterprise, which includes specialty chemicals, construction products and Canada’s largest propane distribution business.
Superior bought up Sunoco Inc.’s heating oil and propane services in September for $82.5 million – taking advantage of Sunoco’s redoubled interest in its gasoline holdings – and followed that up with the $76 million purchase of part of Griffith Services from CH Energy Group in November. The two acquisitions brought Superior approximately 150,000 new customers in Pennsylvania, New York and New England.
The Griffith assets delivered nearly 40 million gallons of heating oil, 2 million gallons of propane and 13.4 million gallons of motor fuel to primarily residential customers in Connecticut, Pennsylvania and Rhode Island in 2008. The Sunoco holdings include two pipeline-supplied fuel terminals and 22 retail bulk plants providing up to 20 million gallons of storage capacity in the core Mid-Atlantic market.
“We are very pleased to enter into this transaction to expand our refined fuel distribution and energy services business in the north-eastern United States as part of Superior’s growth strategy,” Grant Billing, Chairman and Chief Executive Officer of Superior, stated in a press release following the second acquisition. He continues:
GES’s business operations in Connecticut, Pennsylvania and Rhode Island are an excellent strategic fit and are complementary to the Sunoco assets Superior purchased on September 30, 2009. In addition to increasing residential and commercial heating oil, propane and motor fuel products and services, the distribution network is expected to create additional synergies as Superior integrates the two acquisitions.
It is no secret that the heating oil and propane distribution business in the northeastern U.S. and eastern Canada is highly fragmented, and Superior has set its sights on additional acquisition and consolidation opportunities in the region.
Even including the new U.S. heating oil properties, Superior Corp.’s propane services – the company’s longest tenured enterprise – remains the backbone of the corporation. Started in 1951, Superior Propane now has a 45 percent share of the Canadian market, servicing 160,000 customers. Superior Corp. subsidiary ERCO is a leading supplier of chemicals and technology to the pulp and paper industries with manufacturing centers in the U.S. and South America, and other affiliates include construction products company Winroc and Superior Energy Management which provides fixed-price natural gas and electric services in Canada.
Billing, formerly an executive of Norcen Energy Resources, was brought on board to restructure the corporation after a failed 2005 foray into aluminum products saddled the company with debt.
Heating oil services are not unlike propane services, and the Sunoco and Griffith properties are part of Superior’s general strategy of expanding its reach in the energy sector, Greg McCamus, head of Superior’s U.S. Refined Fuels arm said in an interview Nov. 26. The company had been planning the move for “some time” and thought the timing was right – with cash in hand – this fall, he added.
“Heating oil is a stable cash flow business similar to the propane business and a good way to establish our footprint and get more customers,” he said.
There is “absolutely” an intention to expand the company’s nascent U.S. refined fuels business, McCamus said. With the industry mainly dominated by smaller players, Superior has an opportunity to flex its financial power to bring unique services.
Superior Plus, a Canadian-established corporation enters the States with a history in propane and a keen interest in the heating oil industry. (image: chadbourne.com)
In addition to expanding its energy portfolio, Superior also acquired Specialty Products and Insulation Co. in August for $135 million and is in the process of a $130 million revamping of its U.S. Midwest chemicals business.
“There is an opportunity to bring our brand and focus to more customers,” McCamus said.
While the company intends to maintain the focused local businesses of the new operators in its portfolio – and will keep most of the current employees and infrastructure in place – there will be an added emphasis on progressive service innovations, McCamus said.
Most of its new competitors do not emphasize expansion and Superior, armed with 4,600 current employees, sees a potential opportunity for growth, despite a general decline in heating oil use, McCamus said.
A foothold in the U.S. energy sector also gives the company a launching pad to service customers who may be interested in moving away from heating oil towards propane, and Superior’s size allows it to provide a wide suite of retail and services solutions. The company will also be able to facilitate a transition to high efficiency furnaces and can move its fixed-rate electric and natural gas services to current heating oil customers, McCamus said.
McCamus would not further elaborate on the company’s expansion plans, stating that he was unable to speak publicly about specific acquisition targets. Currently, energy holdings represent merely a third of the corporation’s entire assets, with U.S. refined fuels accounting for approximately 10 percent of net worth.
“We will continue to look at the best way to round out our footprint,” he said.
From a price standpoint, it is unlikely that customers will see any change with the new regime.
“Our approach is not to be the cheapest,” McCamus said. “What we are trying to do is be competitive and provide high quality service with an emphasis on safety.”
The goal is to “offer a basket of services to customers” who may want a variety of options in how they manage their energy needs, he added.
A CH Energy Group spokesperson echoed this assertion, assuring current GES customers earlier this month that they would see little change in their day-to-day operations.
“We’re not seeing any changes to the way these companies are operating as part of the sale,” spokesperson John Maserjian told Petrol World. “We don’t see any changes for their employees or their customers.”
While McCamus remains bullish about Superior’s prospects, indicating that the regulatory structures of the U.S. and Canada are similar enough that they should be easy to navigate, other analysts suggest that the company may face some near-term challenges as it remains strapped by the economic recession and the subsequent drop in demand.
A high wholesale price for crude oil (and propane) coupled with a thus far warmer-than-average winter and similarly tepid economic activity have led to energy conservation and an attending drop in revenues for Superior, credit rating service DBRS reported recently. While declining demand has been somewhat offset by higher prices for Superior’s chemicals company, Winroc has struggled recently, DBRS said.
On its own website Superior contends that the economic downturn has bottomed out.
Last week the company announced the closing of a $50 million stock sale to raise funds for the GES acquisition. Superior had raised $45 million in a similar stock deal in September and $150 million in October by deferring a portion of its debt until 2016.
Hydraulic Fracturing (Hydrofracking): The Risks and Rewards of the Controversial Drilling Technique
Not an alien probe—a wellhead for hydraulic fracturing, with injection pipes. (image: dpcusa.org)
Fracking—if you’re a Battlestar Galactica fan, “fracking” is a coarse term for an intimate activity, as well as being an all-purpose, heavy-duty swear word.
However, if you’re in the oil or gas industry, or just read the news relating to upstate New York and eastern Pennsylvania, fracking—or fracing, as it’s also spelled—means something very different: hyrdofracking, or hydraulic fracturing. It’s a mining or drilling technique used to break up rock underground to create easier access to resources. It’s common in oil drilling; incredibly common in natural gas production; and is even used sometimes to revive flagging drinking water wells. It’s also used for some solid (as opposed to liquid or gas) mineral resources. For example, it’s used at a quarry in North Carolina to break granite blocks out from the surrounding bedrock.
Despite being in the news of late, it’s not a new technique. It was first commercially used in 1903, and was first used in the United States in the late 1940s. At present, thousands of wells use hydraulic fracturing. However, the “gas rush” in the Marcellus Shale formation in upstate New York and Pennsylvania has caused hydraulic fracturing to bubble to the surface of public consciousness: it may now come into widespread use in a densely populated region unaccustomed to fossil fuel resource extraction. Since the process—like most large-scale industrial processes—can have negative consequences, the near-certainty of its widespread adoption in this region has resulted in public controversy, as people weigh the benefits of economic gain against health and environmental risks.
And the debate has been loud, as would be expected when enough natural gas to satisfy US demand for at least a decade is set against possible harm to the water supply for almost 10 million people in one of the world capitals of media, finance, and law. It’s not natural gas per se that’s sparked a firestorm of controversy, it’s the technique—hydraulic fracturing—used to extract it.
So what exactly is hydraulic fracturing?
Fossil Fuel Subsidies: The Politics and Economics of Climate Change
Obama at the G-20 Summit. (image: dailyadvance.com)
When President Barack Obama spoke in front of the United Nations global warming summit and promised to “work with my colleagues at the G-20 to phase out fossil fuel subsidies so that we can better address our climate challenge,” his proposal was alternately applauded and condemned. “It’s a great idea,” said Frank O’Donnell, the president of Clean Air Watch. “Wrong-headed,” said Jack Gerard, president of the American Petroleum Institute.
Observers of the politics of climate change are not surprised by such starkly opposed points of view. The confluence of the UN Summit on Climate Change (September 22), the G-20 Pittsburgh Summit (September 24–25), and the United Nations Climate Change Conference in Copenhagen (December 7–18) has made late 2009 a pivotal moment for the international community to shape environmental and energy policy, and both environmental groups and the fossil fuel industry have been preparing for it.
Global actors like the Organization for Economic Cooperation and Development (OECD), the United Nations Environment Program (UNEP), and the International Energy Agency (IEA) have all chosen to weigh in on climate change at this moment. It all builds to the Copenhagen conference in December, which now appears to be the precursor to an informal agreement on emissions reductions goals rather than a legally binding treaty.
While no mainstream voices bother to deny the powerful effect that greenhouse gas emissions have on climate change, the policy debates over the best means of reducing greenhouse gas are vigorous. Cap and trade has garnered the most attention out of the policy tools aimed at combating emissions, especially in the United States since the Waxman-Markey bill passed the House in June and the Senate debates its own cap and trade proposal. But the biggest incentive for emitters may not be the absence of a limit—it may be that the government subsidizes those emissions.
Profile of an Oil Producer: Iraq
Iraqi oil workers at Beji refinery outside of Baghdad. (image: wn.com)
History of Iraq’s Oil Industry
Discovery of oil in 1908 at Masjid-i Suleiman in Iran led to a subsequent search in Mesopotamia (later named Iraq by British mandate). When the Ottoman Empire (of which Mesopotamia had been a part since 1534) collapsed in the early 20th Century, Western powers jumped at the chance to become involved in the economic affairs of the region and gain access to its oil.
Foreign geologists visited Mosul (the northern province) disguised as archeologists. The Turkish Petroleum Company, TPC, (created to exploit oil in Mosul) was a joint English-German-Dutch venture, and despite its name did not include Turkish participation. During WWI, Britain converted its navy from coal to oil fuel, increasing the importance of Iraq’s oil on the world stage, and leading to Britain’s capture of Basra (1914), Baghdad (1917) and Mosul (1918). In 1916, the secret Sykes-Picot act partitioned the Ottoman Empire, assigning Baghdad and Basra to the British, and what is now known as Syria to the French. Post WWI, German interests in the area were confiscated by the British.
Also after WWI, American interests entered the scene in Iraq, as the US pursued a position of equal access for their capital and interests in what were previously English and French “zones of influence.” The American State Department supported American oil companies after experiencing fuel shortages and price increases during the Great War, and withheld support from agreements that effectively stonewalled American efforts to enter the Iraqi oil market. Though WWI ended in 1918, it was only in 1922 that a provisional agreement was reached to allow an American presence in the TPC. In 1924, the American oil syndicate (called the Near-East Development Company) acquired partial ownership of TPC, and America gained a foothold in Iraq.
During the Lausanne Peace Conference (1922-23), politics and oil mixed to determine whether Mosul belonged to Turkey, or whether it was part of the newly created Iraq. Britain’s voice was Lord Curzon, the British Foreign minister and head of the British delegation, and his statements regarding the status of Mosul stretched the truth. He claimed that England’s policies in Iraq had nothing to do with oil, but rather with protecting the interests of the Iraqi people. Though the hypocrisy involved in Lord Curzon’s statements was well documented, Britain (through diplomacy and veiled threats of renewed hostilities in Iraq) eventually managed to put the question before the League of Nations for arbitration. To no one’s surprise, the League of Nations (where the British Sir Eric Drummond held the position of General Secretary) ruled in favor of Britain.
With Mosul part of British-created Iraq, teams of geologists flooded the region. Oil was struck at Baba Gurgur in October 1927. The field was found to have reserves of 16 billion barrels, fulfilling the high hopes of the TPC partners. In 1929, TPC changed its name to Iraq Petroleum Company. The IPC managed to maintain a monopoly on Iraq’s oil supply until conflicts with the Iraqi government over oil development and profits led to nationalization. Nationalization of the oil industry occurred in 1972, with the Soviet Union supplying funds for oil expansion in North Rumalia.
Following nationalization, Iraq made a major effort to increase oil production capacity and exploration, as well as build new refining infrastructure. There was also a push in establishing petrochemical and other downstream industries, and a focus on nationwide aptitude in all aspects of the industry. The change in the industry was immediate—in 50 years of control of Iraq’s crude oil production, foreign oil companies had never made efforts to create any in-country refining capacity. Further, foreign investors had withheld technological information from locals and had ignored local downstream oil-based industry. Post-nationalization, Iraq’s oil output increased from 2 million barrels per day in 1973 to 3.6 million barrels per day in 1979. This output (in the midst of the 1979 energy crisis) marks the peak of Iraqi oil production. Investment in all areas of the oil industry showed substantial results, and Iraq was well on its way to becoming an oil producer on the national stage and achieving a stature that matched its substantial reserves.
Eye on Copenhagen: Can the World Agree on a Climate Treaty to Replace Kyoto?
Copenhagen UN Climate Change Conference 2009 COP 15 logo. (image: en.cop15.dk)
From Kyoto to Copenhagen
Debate over climate change legislation in the United States rages on, and even the Obama administration has conceded that a climate bill will not be finalized until 2010. However, a more important agreement on climate change could take place before the year’s end: a new carbon emissions treaty—a successor to the Kyoto Protocol—is the aim of the Copenhagen conference this December.
December 7 marks the opening day of the United Nations Climate Change Conference in Copenhagen. The conference is typically referred to as simply “Copenhagen” or abbreviated as “COP15,” which doesn’t stand for “Copenhagen” but for the fifteenth meeting of the “Conference of the Parties” to the UN Framework for Climate Change. The lofty goal of the conference, which closes on December 18, is to set new global standards to combat climate change, standards which can be adopted by superpowers like the US, as well as emerging economies like the fast-growing industrial nations of India and China.
The event will bring to the table virtually every country on the planet—192 countries are expected to be represented—making for, as the Independent’s environment editor Michael McCarthy estimated, roughly 10,000 to 15,000 advisors, diplomats, policymakers, and members of the media.
The Kyoto conference, 1997. (image: mofa.go.jp)
The Copenhagen conference is the biggest climate change meeting since the Kyoto Protocol, and has been preceded by a number of conferences that tried to build a foundation for agreement at Copenhagen. As the Kyoto Protocol is due to expire, Copenhagen offers the opportunity for a global climate change treaty to succeed Kyoto. As many onlookers have noted, much is at stake.
McCarthy, who’s been writing a series about the build-up to the summit for the Independent, said the conference “will have a far broader reach and potential impact on the world” than some of the most significant international political gatherings in history. He cited antecedents such as the 1814-1815 Congress of Vienna (which redrew the map in the wake of the Napoleonic Wars) and the 1945 Potsdam and Yalta conferences (which redrew the map in the wake of World War II). Those conferences, McCarthy elaborated, dealt with political structures and national borders, which change over time and can disappear entirely (Kingdom of Piedmont, anyone?). The issue at hand at Copenhagen is “something fundamental to life on earth: the stability of the biosphere.”
To maintain the stability of the biosphere, the Copenhagen conference intends to update the emissions standards set at the Kyoto conference. Kyoto, which took place in 1997, set emissions standards for nations that signed and ratified the Protocol. Each signatory agreed to reduce its greenhouse gas emissions by 5.2% from the levels emissions were at in 1990. The pact was initially adopted by 37 nations but was famously (or infamously) never ratified by the US. (As of October 2009, the Protocol has been ratified by 184 countries.)
Despite Al Gore’s support, the Kyoto Protocol failed to win approval from US Senate, due to its lack of restrictions for developing nations—a hurdle still current. (image: biocrawler.com)
That the US never ratified the treaty that Al Gore signed in Kyoto has become a looming problem as Copenhagen fast approaches. In early October the press reported that the US was refusing to include any Kyoto Protocol targets on carbon dioxide emissions in any agreement reached at Copenhagen, because the Kyoto pact doesn’t include restrictions on developing nations.
Because of this history—the US as a champion of ideas that failed to put them into action–one of the biggest concerns many nations have about Copenhagen is that the US has not been able to pass strong climate change legislation of its own.
With a number of politicians in the US warning that significant climate change legislation might not get passed until 2010—well after Copenhagen has happened—concerns about the global ramifications of domestic policy talks are mounting. As Anne Petsonk, international counsel for the Environmental Defense Fund, told the New York Times, the bottleneck here is sending a bad signal to the world. “The appearance to the international community,” she told the paper, “would be that the U.S. Congress is just adrift.”
The US Climate Bill
Which begs the question: Why is President Obama’s climate bill meeting with such opposition in Congress? (see video below: Senator Voinovich clashes with Senator Boxer over the Kerry-Boxer cap and trade bill.)
embedded by Embedded Video
Economic concerns trump environmental worries among opponents of climate legislation. Senators on both sides of the aisle have reservations about the climate bill. Whether their constituents face unemployment or high energy bills, legislators are loath to add to economic difficulties in their home states.
Additionally, big business is bringing out the big guns in Washington, lobbying hard to halt legislation they see as potentially harmful to the bottom line. Two such opponents of the climate bill are the Chamber of Commerce and the oil industry.
The Chamber of Commerce, which pushes a wide-ranging agenda, recently came under fire for putting significant funds toward defeating the climate bill. Companies like Nike, Apple, and Exelon Corporation have even left the organization, citing the Chamber’s stance on climate change as the reason.
Reporting on the Chamber’s hefty lobbying budget—and its efforts to stymie the climate change bill in Washington—the AP cited the stance of an executive from the Mohawk Fine Paper company, also a recent Chamber defector, who said it adversely affected the company’s credibility to “belong to an organization that vigorously opposed action on climate change.”
Another powerful corporate interest slowing climate change legislation in Washington comes from the oil industry. According to Capitol Hill publication Roll Call, oil companies were among the top spenders on lobbying in the third quarter of 2009. The American Petroleum Institute, which represents oil companies, shelled out $2.2 million on lobbying in the third quarter, up from $1.8 million over the three prior months, while ConocoPhillips spent nearly $4 million all on its own during the same period.
While some politicians claim that the fate of Copenhagen doesn’t hinge on the US passing climate change legislation—California Senator Barbara Boxer has come out publicly with this sentiment—many are wary. As the New York Times reported, those in the Boxer camp believe “that no agreement is better than a bad deal that cannot be ratified or endorsed.”
