The investment announcement follows approval from the UK government for BP and partners Shell, ConocoPhillips and Chevron to proceed with the £4.5bn Clair Ridge project, the second phase of development of the North Sea Clair field.

In a statement BP said its £4bn investment Clair and three other projects represents the highest level of annual investment the company has ever made into the UK North Sea.

`Although it began more than 40 years ago, the story of the North Sea oil industry has a long way yet to run. BP has produced some five billion barrels of oil and gas equivalent so far from the region and we believe we have the potential for more than three billion more,’ said Bob Dudley, BP’s group chief executive.

‘After some years of decline, we now see the potential to maintain our production from the North Sea at around 200,000–250,000 barrels of oil equivalent a day until 2030. And we are working on projects that will take production from some of our largest fields out towards 2050.’

The company added that the four BP-operated North Sea projects are said to be part of a wave of major oil and gas projects around the world that BP expects to come on stream over the next five years.

The Clair Ridge project, which BP said will install two new bridge-linked platforms with the capability to produce an estimated 640 million barrels of oil, is planned to come on stream in 2016 and to extend production from the greater Clair area to 2050.

The Clair partners also announced the successful appraisal of an extension to the Clair field — South West Clair — confirming the overall Clair field complex’s status as the UK’s largest hydrocarbon resource with more than seven billion barrels of oil and gas initially in place.

In the central North Sea, with partner RWE, BP’s £550m development of the Devenick gas field recently passed a significant milestone when its 600-tonne module was lifted onto Marathon Oil’s East Brae platform.

Earlier this year, BP and its partners also announced plans for the £3bn redevelopment of the Schiehallion and Loyal fields, west of Shetland, and the £700m development of the Kinnoull field in the central North Sea.

BP said that together with development drilling and a number of smaller projects, the four projects represent almost £10bn of project investment by itself and its partners.

Source: www.theengineer.co.uk

The USGS released a report in 2008 saying that there could be up to 400 billion barrels of oil equivalent reserves in the Arctic, comprising 6.7% of the world’s proven oil reserves and 26% of natural gas reserves, recoverable with current technology. Much of the world is waiting to see exactly how these resources will be exploited and who, if anyone, will ultimately reap the riches.

The Arctic hydrocarbon question has resulted in a flurry of interest in all things Arctic by many northern countries. With oil and gas in the equation, nearly every aspect of Arctic management becomes a geopolitical issue to any country with a stake in energy security.

It is perhaps for this reason I found myself in Tromsoe, Norway in late January, 300 km north of the Arctic Circle, along with nearly 1,000 other scientists, policy-makers and industry-representatives at the Arctic Frontiers conference, an annual event to discuss all things related to Arctic science and policy.

The Arctic has been getting quite a bit of attention over the last decade, and certainly it has been deserved. Drastically reduced sea ice, rising sea and air temperatures, changing ecosystems, acidifying ocean waters, all driven by climate change, are good indicators that the Arctic will be the first region on Earth to undergo widespread transformation at the hands of anthropogenic global warming.

But with these environmental stresses comes emerging economic opportunity. As sea ice recedes, greater offshore area is potentially open for fisheries, transportation, tourism, and (of course) drilling. Though quite a bit of discussion at the Arctic Frontiers conference was devoted to environmental threats from climate change, one of the main financial supporters of the conference was ConocoPhillips, the fifth largest oil refinery in the world.

ConocoPhillips was also the first company to start producing gas in Alaska in 1965. From the industry’s perspective, one of the drivers for continuing to move into the Arctic for oil and gas exploitation, in spite of the fact that the current cost of recovering the cheapest Arctic oil is US$35/barrel (compared to US$5 for Saudi oil), is the continuing rise in demand from places like China. After all, when accounting for Copenhagen pledges, OECD oil consumption is predicted to decrease by 2035.

The Arctic expansion is not a given, however, even if no additional regulation on Arctic drilling were instated. There are significant (if not obvious) challenges to operating in the Arctic: overcoming cold weather, ice, lack of infrastructure, limited weather forecasts, and deep waters will require a lot of R&D, new technology and infrastructure development.

And then there is the discussion about additional regulation. Given the concern about all the stresses that Arctic communities and ecosystems are facing as a result of climate change, oil and gas activity would add another layer of risk that governments may or may not want to take. Not only is it extremely difficult for oil companies to operate in ice-covered waters, it is currently impossible to clean up an oil spill under ice, or even in areas of broken ice.

Statoil, a Norway-based oil and gas company, is advocating an ecosystem-based approach to assessing the impact of new oil and gas exploitation in Arctic and sub-Arctic regions. They are supporting the development of a model of various ecosystems, looking closely at their “functional and structural elements,” that is, the plants, animals, habitats, other various resources needed for living, and their complex interlinkages that make up an ecosystem. Then decision-makers can run simulations of the potential effects of oil and gas activity (drilling, oil spills, tankers, invasive species, etc.) on the entire model ecosystem. Sounds appropriate, right?

While the ecosystem-based management approach is a good idea, it has to be done right for all the effort to actually pay off. Modeling ecosystems, even those in the Arctic which are relatively simple compared to a Brazilian rainforest, is an extremely difficult task. Furthermore, for it to be meaningful, someone has to set the standard for what regulators want to achieve when ‘preserving’ ecosystems. Do we want to ensure that Arctic ecosystems are entirely unaffected by oil and gas activity? What would an ‘unaffected’ ecosystem look like? How much change are we willing to tolerate? So far, scientists and policy-makers have been pushing these questions on each other. Policy-makers want to know how to ensure oil and gas extraction is sustainable (at least from an ecosystem perspective), and scientists insist than this is a term for policy-makers to define.

We should probably applaud Statoil for being this concerned, whether out of the goodness of their hearts or just being better prepared for the impact assessments they will have to comply with anyway. After all, the Norwegian oil and gas industry is considered well-regulated, complete with a carbon emissions tax, discharge permits, and a holistic regulatory body, the Norwegian Petroleum Directorate. In the aftermath of the Deepwater Horizon disaster last summer, Norway was the first country to suspend offshore drilling.

This is not to say there are no tensions among the regulators and the regulated in Norway. There is currently a raging battle in the Norwegian government over whether to allow drilling near Lofoten, an Arctic archipelago, which environmentalists and some members of the fishing industry are concerned could disrupt important bird and sea mammal populations, not to mention fish stocks, particularly cod, and could be a difficult area to clean up any oil spills due to extreme weather. Industry argues that its “extraordinary” safety record indicates it is ready to operate in an area like Lofoten, and that such development could create 1,000-2,000 new jobs and additional tax revenue.

Russia, on the other hand, is moving full-steam ahead with its Arctic hydrocarbon exploitation. Russian-owned Rosneft and BP are set to explore the Arctic shelf in the Kara Sea (with Putin arguing that BP is the best partner to have precisely because of their wake-up call from the Gulf of Mexico flub). However, according to Valery Kaminsky, Director of VNII Okeangeologia, Russian plans to scale up Arctic offshore drilling are being postponed to 2016. The technology is simply not ready for handling sea ice and shifting icebergs.

The US is experiencing a more uncertain internal dialogue, similar to Norway’s. After the Deepwater Horizon blowout, the Department of the Interior placed a moratorium on offshore drilling for sixth months, although it was later clarified that there was no moratorium for Alaska, only an “additional review of proposed drilling plans” according to The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Secretary Salazar emphasized the need to approach Arctic drilling with the utmost caution.

With the release of the final report of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, the readiness of the US for Arctic offshore drilling is called into question. In their working paper on the challenges of Arctic oil spill response, the commission indicates that the shallower waters of the Chukchi and Beaufort Seas compared to the Gulf of Mexico, as well as the less expansive human use on the Alaska shores reduces the economic impact and clean-up difficulty of any potential oil spill in this region. Existing regulation requires an emergency response action plan in the event of a spill, which must contain, among other things, a “worst-case discharge appendix.”

However, in light of the incredible destruction unleashed by the Deepwater Horizon spill, the Commission is hesitant to place complete trust in emergency response action plans. They have suggested the need for increased regulatory standards for the response plans, and question whether BOEMRE has the expertise or capacity to review the plans. For example, NOAA, the EPA and the Coast Guard may be able to contribute effectively to this process.

Since the release of the Commission’s report, the Coast Guard has been vocal about the risks of relying completely on industry for oil spill response. Right now, the Coast Guard is not in a position to provide response capacity in the Arctic, with only one of their three ice breakers being available for an oil spill off Alaska’s northern coast. Fram Ulmer, former Alaska lieutenant governor, has suggested that investing in the Coast Guard is prerequisite for offshore Arctic drilling.

The take away message on the precautionary side is that we should probably wait to expand Arctic drilling until we have the appropriate technology, regulation, and capacity to clean up an oil spill in offshore Arctic areas, especially those that experience ice cover for part of the year. The industry side argues that their safety record is good enough to warrant regulatory trust, that is, nothing like the Gulf of Mexico oil spill is going to happen in the Arctic.

The precautionary side replies – I think we can wait. The oil and gas are not going anywhere.

Source: www.leadenergy.com

He said Brazilian ethanol is the “best type of renewable energy” and offers the possibility of an “ultrapotent fuel that could revolutionise the market”.

BP is channelling its research into renewable fuels accordingly, with 40pc of its $1bn (£625m) annual spend in this area targeted at Brazilian ethanol, Mr Dudley told the weekly Brazilian news magazine Veja.

“There will obviously a time when the oil runs out and with this prospect on the horizon, we will use more renewable energy sources,” he said.

“The alcohol extracted from sugar cane is cheaper, less polluting and more efficient than that from corn, for example, produced in the US.

“Brazil also has a huge advantage in relation to its competitors. The climate and soil are ideal and the sugarcane crop does not have to compete for areas with food crops, as happens in the case of America.”

More than half the cars in Brazil already have flex-fuel engines, meaning they can run on pure ethanol or ethanol mixed with petrol, and around 80pc of new cars sold are of this type.

Embraer, Brazil’s aerospace company, has also produced small aircraft which are fuelled by ethanol.

Mr Dudley said BP had recognised the potential of Brazilian ethanol some years ago, even before the discovery of vast oil fields off the country’s south-east coast focused international attention on Brazil as an important energy source.

“Of $1bn that we spend every year worldwide on research on renewable fuels, $400m (£250m) is destined for Brazilian alcohol,” he said. “The goal is to develop cellulosic ethanol and create an ultrapotent fuel that may revolutionise the market.”

Source: www.telegraph.co.uk

BP has also been accused of working “hand in glove with dictatorship” while Vodafone is under fire for bowing to presidential pressure to shut the mobile telephone network down.

BP, which has sunk $14bn into oil operations and is hoping to double production there, said “hundreds” of employees or their dependents were being evacuated from Cairo and some drilling operations had been halted.

BG, formerly part of British Gas, said it had closed its Cairo office and flown home all non-essential expatriate staff from Egypt, but its production of liquefied natural gas goes on.

Vodafone has flown 25 people and their families back to the UK in recent days, the company’s chief executive Vittorio Colao disclosed.

The boss of the world’s biggest mobile phone operator added that two of its Egyptian employees are known to have been injured in rioting between supporters and opponents of Mubarak. One of the two is missing, and the company is trying locate him.

And British banks such as Barclays, airlines such as BA and others with exposure to the growing Middle East market have seen their shares hit as investors worry about the damage to UK plc from the turmoil in the region.

BP has been criticised by the non-governmental organisation Platform, which claims the oil company had with other British and American oil companies “worked hand in glove with dictatorship.”

The environmental and social justice group also said Hesham Mekawi, the BP Egypt chairman, has praised “the stability of the country” and claimed BP had allowed the American Chamber of Commerce in Cairo – of which it is a member – to put pressure on US Congress not to support a recent motion calling on Mubarak to hold fair elections and respect human rights.

BP said it had played a constructive role in Egypt which had benefited the entire population. “We’ve been in Egypt for 40-plus years as a major investor in the country’s industry, employing a well-trained workforce in quality jobs, supplying significant amounts of energy to meet the rapidly growing population’s needs,” said a spokesman.

BP has made Egypt one of its top priorities after a major gas find in the Nile Delta last summer. It hopes to more than double its oil and gas production to over 320,000 barrels a day – almost a tenth of its global output.

Meanwhile Vodafone’s Collao said: “We have also suffered some ‘infrastructure damage’,” which he defined as mobile stations out of action due to fuel shortages, or because Vodafone staff are unable to provide essential maintenance.

The British company owns 55% of Vodafone Egypt which employes around 6,000 and has nearly 29m customers.

Colao defended his decision to shut down its mobile phone network in Egypt last week on the regime’s orders. “The network was down for 24 hours. We didn’t have any option as the government was within its rights under emergency powers that it invoked after the outbreak of demonstrations.”

He said disruption to services is continuing with many Egyptian customers unable to send text messages, but that the network was operational for those taking advantage of ‘roaming’ agreements between different operators.

“Our main concern at the moment is for the safety of the people of Egypt and our colleagues. But we are not telling people to stay at home, some employees can work their shifts. This is a very fluid situation.”

Last year, Vodafone was approached by its Egyptian partner, Telecom Egypt, with an offer to buy out the British company’s stake. But talks broke down because the two sides couldn’t agree a price.

Vodafone reckons its holding in its Egyptian joint venture will rise in value because only around 70% of Egypt’s population owns a mobile phone, whereas in Europe there is saturation coverage.

Source: www.guardian.co.uk

After the signing ceremony in London, with Energy Secretary Chris Huhne and Rosneft chairman Igor Sechin in attendance, BP’s chief executive Bob Dudley said the deal “underlines our long term, strategic and deepening links with the world’s largest hydrocarbon-producing nation.” Rosneft’s president Eduard Khudainatov said it would allow his company to “utilise the experience and expertise of BP”.

But in Washington, where BP has few friends after the catastrophic oil spill in the Gulf of Mexico last year, some members of Congress expressed concern at the possible implications for US security.

At the start of the year, Russia opened its first oil pipeline to China, exporting 300,000 barrels a day.

The Eastern Siberia-Pacific Ocean pipeline will enable the Kremlin to command higher international oil prices as it now supplies both east and west.

Source: www.tribunemagazine.co.uk