FuelClub Discount

According to Shell Oil Co. president, John Hofmeister, the oil industry should not be held responsible for steeping prices of gasoline. He further added that America must produce more domestic oil despite the fact that biofuels and other alternative sources of energy are developing at a rapid rate.

In an alternative-fuels conference in Sacramento Mr. John Hofmeister said that: “We see no alternative” in the short term, in his keynote speech to the Low Carbon Fuels conference.

He supported the benefits of a new type of ethanol and other futuristic fuels and also delivered a message in favor of conventional fuel, suggesting: Fuel forms such as crude oil will continue to lead the market in the future.
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Last month Prime Minister Harper confirmed government support for carbon capture technology and tossed $240 million into a generating plant in Saskatchewan to convert it to a carbon capture and storage unit. The plan is to generate power with coal, trap the emissions, then pipe it underground. Whether it will work or not is yet to be determined, and if it does there is the question of whether it could happen fast enough to significantly slow down our ballooning carbon emission problem.

Preventing carbon emissions from entering the atmosphere is certainly a good thing, but technical fixes like carbon sequestering alone do not address the critical issue that we face with the environment, and alone are little more than an expensive public relations stunt.
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Shell has revealed that it is ready to boost oil production in Iraq once the country has finalised its petroleum laws.

The chief executive officer of Shell, Jeroen van der Veer, told the Center for Strategic and International Studies: “We are very much prepared to go back to Iraq”, reported Reuters.

However, he said that the safety of his staff was important and that they must be able to work without danger.

“You have to know the rules of the game because you have to bring a lot of money to the country. We expect that the petroleum law, we hope that it is finally passed…during this year,” he added.

The news organisation said that Iraq has the third largest oil reserves in the world, with some of the cheapest extraction costs.

Mr van der Veer recently said that he expected easy-to-produce oil and gas to peak on the next ten years.
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It looks like gasoline, smells like gasoline and runs in regular gasoline engines, but it isn’t made from crude oil; it comes from crops.

It’s called “biogasoline,” and under a partnership announced Wednesday between Royal Dutch Shell and Virent Energy Systems, it could be coming to a filling station near you.

The European oil giant and the Madison, Wis.-based bioscience firm said they are working on a way to convert plant sugars found in non-food crops like switchgrass or sugarcane pulp into a synthetic gasoline that can be substituted for petroleum-based gasoline.

The fuel could be a breakthrough. Unlike ethanol, it can be used in high concentrations in conventional gasoline engines, and can be stored and transported in existing oil industry infrastructure — eliminating the need to build a whole new biofuels system, the companies said.
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Shell’s Canadian oil sands business is suffering a profitability squeeze because of the soaring cost of energy needed to extract bitumen from sand.

The oil company’s annual report, published yesterday, reveals that operating expenses at the Athabasca Oil Sands Project in Alberta have soared by almost 50 per cent in the two years since 2005, while output at the bitumen mining project has either remained static or declined.

Shell’s oil sands profits dipped sharply last year when a fire temporarily reduced the output of its upgrader, a refinery that converts bitumen into a synthetic crude oil. Earnings from oil sands fell from $651 million in 2006 to $582 million (£291 million), which the company attributes to lost output from the shutdown. The net production of the oil sands business, after deducting royalty payments, fell from 95,000 barrels per day (bpd) in 2005 to 81,000 bpd in 2007.

However, Shell’s filing to the US Securities and Exchange Commission (SEC), published yesterday, also shows a massive surge in the operating cost of the Athabasca project. It rose from $664 million in 2005 to $722 million 2006 and $967 million in 2007.

The burgeoning overheads in Canada emerged as Shell revealed that it had fully replaced its oil and gas output in 2007 with additional reserves. Shell’s total proven reserves were unchanged at 11.9 billion barrels of oil and gas, Jeroen van der Veer, Shell’s chief executive, said.

Excluding the effect of purchases and sales of oil-producing assets, such as the sale of part of its Sakhalin gas project to Gazprom and the buy-in of Shell Canada’s minority interest, Shell added 1.5 billion barrels of oil to its reserves last year. According to Shell, that equates to a reserve replacement ratio of 124 per cent, compared with an average for the top five oil companies of 108 per cent.

A big proportion of the extra barrels relate to gas reserves, notably in Qatar, where Shell has agreed sales contracts for liquefied natural gas, which enables Shell to book reserves. Other reserve additions include gas in Australia’s North West Shelf and the Ormen Lange gasfield in Norway.

Peter Voser, Shell’s finance director, said that overall internal cost inflation was running at 10 per cent per annum. He estimated that the operating cost of an oil sands barrel was in the range of $20 to $25 per barrel.

Shell will not reveal the development cost of its oil sands projects, including an expansion that will add 100,000 barrels per day of output, but it is likely to be close to $20 per barrel, well above the average of between $6 and $7 per barrel for the company as a whole.

Oil sands represent about 10 per cent of Shell’s proven reserves of 11.9 billion barrels and are assessed separately by the SEC, which considers oil sands to be a mining business. However, the potential resource in the ground in Shell’s acreage is 20 billion - which is not in dispute, since the reserves are close to the surface.

Separately, Shell disclosed yesterday that the US Department of Justice is investigating Shell’s use of Panal-pina, a Swiss freight forwarding company, in connection with alleged corruption in relation to customs officials in Nigeria. The Justice Department began a criminal investigation last year into illegal payments to customs agents in Nigeria and sent letters to 11 oil and oil-service firms. Shell said that it had started an internal investigation and would cooperate with the Justice Department.

Source: The Times

Royal Dutch Shell today reassured investors over its oil and gas reserves after expectations had grown that the Anglo-Dutch oil giant would report a decline.

The group said net oil and gas reserves in 2007 were 11.9 billion barrels of oil equivalent (BOE), in line with the level at the end of 2006, while the overall reserve replacement rate was above 100 per cent.

Shares in Shell added 7p to £17.22 in early trading. However, Shell refused to set short term growth targets, stating instead that it expects production to increase by 1-2 per cent up to 2010 and 2-3 per cent beyond that date.

Last month, Shell refused to disclose its reserve base while reporting record-breaking annual profits of $27.6 billion (£13.9 billion).

The profits broke European company records and prompted calls by environmental groups for a windfall tax on “obscene” oil profits.

However, the results, which were boosted by surging global crude prices, masked a 6 per cent slump in daily oil production last year to 3.3 million barrels, down from 3.5 million in 2006.

The company also faced a 10 per cent rise in costs and a steep drop in both refining margins and cashflow.

Shell said this morning that organic reserves additions for 2007, excluding acquisitions, divestments and year-end price effects, were 1.5 billion BOE, compared to 1.2 billion BOE of production, and reserves replacement was 124 per cent.

Organic reserves replacement for the year, including year-end price effects, was 109 per cent, it added.

The City has been particularly sensitive about the issue ever since Shell mis-stated its reserve figures in 2004. The company was forced to pay out more than £200 million in fines and compensation to settle the scandal.

Shell said it is building over 50 large projects that will underpin new cash flows for decades to come. It added it has over 10 billion boe of resources under construction which will add around 1 million boe per day of production.

Jeroen van der Veer, chief executive at Shell, said: “This is an unprecedented phase of activity for the company… We are creating new heartlands for Shell in a new energy landscape.”

Source: Times Online, UK