Economist Predicts Growth in World Economy

   LEXINGTON, Mass. - (BUSINESS WIRE) - 12/13/2013 - After wallowing in an economic “soft patch” for the past two years, the global economy is likely to emerge in 2014 with modest growth of 3.3 percent compared with 2.5 percent this year, according to a forecast from Nariman Behravesh, chief economist of IHS.
   “The easing of the twin headwinds of private sector de-leveraging and public sector austerity will bolster the improved outlook, especially for the developed economies,” Behravesh said. “Many emerging economies will also likely enjoy stronger growth in 2014, pulled along by export-led growth to the United States, Europe and China. That said, the global growth rebound is likely to be quite modest.”
   The global growth outlook for 2014 is the summary forecast in Behravesh’s annual Top10 Economic Predictions, which were released on December 12. The U.S. economy is forecast to slowly speed up. The drag from fiscal policy will be less, allowing underlying strengths in the economy -- such as housing, the ripple effects of the boom in unconventional oil and gas production, steady growth of consumer spending, and an uptick in capital spending -- to become more visible, resulting in growth of 2.6 percent in 2014, compared with 1.7 percent in 2013.
   Despite signs of weakness, the European recovery will continue, but at a very sluggish pace. Forecast growth of 0.8 percent will be supported by very accommodative monetary policy, stabilizing labor markets, less emphasis on austerity, improved spending power, better competitiveness in peripheral countries and greater confidence in Eurozone politicians to manage their sovereign debt crisis. Germany and the United Kingdom will grow faster than they did in 2013; Greece, Italy and Spain will struggle to attain positive growth. IHS expects China’s growth to inch up from 7.8 percent in 2013 to 8.0 percent in 2014.
   The government is expected to apply additional moderate stimulus if growth dips below 7.5 percent and stronger stimulus if it goes below 7.0 percent as China looks ahead to problems of an aging population and the consequences of rapid credit growth, including a new housing bubble and rising debt levels.
   The other Top10 predictions include:

• Other emerging markets will also perform a little better, with real GDP growth strengthening to 5.4 percent in 2014 from 4.7 percent in 2013. U.S. and Chinese growth will be stronger, and the Eurozone will no longer be a drag, resulting in emerging market exports becoming a source of growth. 
• Unemployment rates in advanced economies will remain high, dropping only to 7.9 percent in 2014 from 8.1 percent in 2013. Improved productivity will erode demand for labor, and aggressive cost-cutting will continue unabated. In the U.S., the unemployment rate is forecast to decline from 7.5 percent in 2013 to 6.6 percent in 2014. 
• Commodity prices will go nowhere in 2014, as they did in 2013, as gradually strengthening demand is matched by higher production and ample inventories. Inflation will remain a low-level threat. 
• The Federal Reserve will begin scaling back stimulus, while other central banks will likely wait or provide more stimulus. The Fed is likely to start trimming its bond purchases no later than January 2014. The Bank of England is expected to raise interest rates in the second half of 2014. However, because of continued weak growth, the European Central Bank may engage in another round of Long-Term Refinancing Operations. 
• Fiscal headwinds, particularly in the U.S. (thanks to the recent budget accord) and Europe will ease. The U.S. federal budget deficit is expected to be unchanged from 2013 to 2014 at just under $700 billion, following a sharp drop from about $1.3 trillion in 2011. Easing fiscal pressure will also be evident in Europe and many of the Eurozone’s crisis economies will be given a little more time to meet their fiscal targets. 
• The U.S. dollar will strengthen against most currencies because U.S. growth will be strengthening, growth differentials with other advanced economies will be sizable, and the Fed is likely to remove stimulus sooner than most other major central banks. 
• There will be more upside risk than downside risk for the global economy: Stronger than anticipated growth in the U.S., U.K. and Germany, combined with better emerging markets performance in China, India and Brazil will likely surprise to the upside; instability in the Middle East and North Africa, additional fiscal drag, and disappointing news from emerging markets will persist on the downside. 
• For 2013, IHS forecast that global growth would hold steady at 2.6 percent and it stabilized at around 2.5 percent. Nine out of 10 predictions for 2013 were on the mark.

High Gas Prices Destroy Consumer Confidence

   NEW YORK - (BUSINESS WIRE) - 3/24/2011 - Consumer confidence in the U.S. fell last week to the lowest level since August of 2010 as more Americans became despondent over the economy.
   The Bloomberg Consumer Comfort Index dropped to minus 48.9 in the period to March 20 from minus 48.5 the prior week. The measure of the current state of the economy slumped to a 15-month low.
    The highest gasoline prices in more than two years weighed on families already dealing with rising grocery bills. The report showed confidence among households with annual incomes exceeding $50,000 fell to the lowest level since March 2010, representing a risk to consumer spending, the biggest part of the U.S. economy.
   For full CCI results, see: http://www.bloomberg.com/cci
   “Given the rise in fuel and food costs, households are clearly indicating frustration over the need to reduce discretionary spending to meet demand for basic necessities,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Even better-off households are feeling the pinch of rising prices, primarily at the pump.”
   A report from the Labor Department March 24 showed the number of Americans applying for unemployment insurance fell last week. Orders for U.S. durable goods, meant to last at least three years, decreased in February, according to figures released by the Commerce Department.
    Stocks rose on optimism European leaders will be able to find a solution to the region’s debt crisis. The Standard & Poor’s 500 Index increased 0.3 percent to 1,301.5 at 9:40 a.m. in New York.
    The Bloomberg Comfort Index, with records dating back to December 1985, fell to a record low of minus 54 in November 2008, while the peak of 38 was reached in January 2000. Readings averaged minus 45.7 last year.
    The latest results for the comfort index reflected worsening results for one of the three components.
    A gauge of Americans’ views of the economy fell to minus 86 last week, the lowest level since December 2009, from minus 80.3 the prior week. The share of households with a positive view of the economy dropped to 7 percent from 10 percent.
   The measure of personal finances improved to minus 5.5 last week from minus 7.7, the report showed. Forty-seven percent of those polled held positive views on their financial situation, up from 46 percent the previous week.
    The buying-climate index rose to minus 55.1 from minus 57.4. Those saying it was a good time to buy needed items climbed to 23 percent from 21 percent.
    Today’s report showed the strengthening labor market is doing little to lift consumers’ moods. The confidence index for Americans with full-time jobs fell to minus 38.4 last week, the lowest level since August, while it improved for those who were unemployed.
    Jobless claims declined by 5,000 to 382,000 in the week ended March 19, Labor Department figures showed today, in line with the median forecast of economists surveyed by Bloomberg News. The total number of people receiving benefits dropped to the lowest level in almost three years.
    Sentiment among women dropped last week to the lowest level since October 2009, the comfort report also showed.
    Although elevated, little change in fuel costs last week may have prevented the comfort index from dropping even more.
    The average price of regular gasoline at the pump was $3.55 a gallon on March 20, compared with $3.56 a week earlier, the highest since October 2008, according to AAA, the nation’s biggest motoring organization. The price jumped 39 cents in the three weeks ended March 13.
   “Consumer confidence paused this week after a two-week rout, continuing to march in time with the price of a gallon of gasoline,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement. At the same time, the index is “uncomfortably near its historic low” of minus 54, he said.
    Gasoline prices and the comfort index have shown a strong inverse correlation since 2004, according to calculations by Bloomberg economist Brusuelas. Additionally, changes in the four-week average of claims for jobless benefits have been in sync with the comfort gauge about 72 percent of the time.
    Americans are paying more for staple food items like cereal, and costs may climb further in the next few months.
   “In recent months we have announced a variety of pricing actions across our businesses,” Ken Powell, chief executive officer of General Mills Inc., the maker of Cheerios, said yesterday on a conference call. “Food manufacturers are managing through a period of rising and volatile costs for food ingredients and energy.”
    The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers aged 18 and over. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate; the percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
    The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points.
    The responses are broken down by participants’ sex, age, income level, race, region of residence, political affiliation, marital and employment status.

Could Illinois Benefit from Higher Pump Prices?

   By Diane S.W. Lee (Illinois Statehouse News) - 3/8/2011 - Illinois workers had to start paying more out of their pocket as a result of the state’s 67 percent income tax hike in January. Now, Illinois drivers are paying more out of their pocket at the gas pump.
   Political turmoil in the Middle East has created higher prices at gas pumps across the nation. But while drivers pay more at the gas pump, the state will pocket the money from the state’s gas sales tax, said Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association.
   “Usually when prices get up in this range in between $3.50 to $4 a gallon, I think you either see a flatness of volume or actually volume going down,” he said. “And on the sales tax side of things, the government will see an increase.”
   According to the Illinois Department of Revenue, the statewide tax on gasoline or gasohol is 19 cents per gallon, and 21.5 cents per gallon on diesel fuel.
   Revenue spokeswoman Sue Hofer did not have an estimate for the amount the state has collected in gas sales tax since the prices started climbing in late February. She said drivers will need to be more flexible.
   “How flexible is someone’s budget, and how flexible are their driving habits?” Hofer asked.
   According to AAA’s Daily Fuel Gauge Report, Illinois consumers are paying an average of $3.62 for a gallon of regular gasoline, up about 83 cents from a year ago. Statewide, consumers paid an average of $3.27 for regular gas a month ago, according to the report.
   When gas prices are high, people are more conservative with their finances, Fleischli said.
    “It stifles your spendable income you have,” he said. “They’ll go into our stores and still buy the things they need — milk and those kinds of things. But they won’t buy the soda pop and candy, things that are impulse buying. That seems to take a hi, when prices get higher than usual.”
   While regular drivers can absorb the cost of higher gas prices by driving less and carpooling more, truckers who drive for a living  may get hit with the cost at the pump, according to Don Schaefer. He is executive vice president of the Midwest Truckers Association, which represents 3,000 Midwest trucking companies.
   “Unfortunately in the trucking industry, in all transportation industries, it’s driven by the fact that you have to have goods and services moved from Point A to Point B on a timely schedule,” he said. “The consumer demands it. The shipper demands it. And there is really no option. You’ve got to make the delivery.”
   According to AAA, a gallon of diesel fuel in Illinois is costing on average $3.86 a gallon, up 90 cents from a year ago, and up 32 cents from a month ago.
   Story courtesy of Illinois Statehouse News. Originally published on 3/7/2011

Biomass Power Plants Fined More Than $830,000

   SAN FRANCISCO - 2/16/2011 - Consent decrees have been lodged against two biomass power plants in Chowchilla and El Nido, Calif., on behalf of the U.S. Environmental Protection Ageny and the San Joaquin Valley Air Pollution Control District.
   The two companies have agreed to pay a combined civil penalty of $835,000 to resolve alleged violations of the federal Clean Air Act and district rules, including excess emissions of air pollutants such as nitrogen oxides—a precursor to ozone—and fine particulates.
    “EPA is committed to doing our part to tackle the worst air quality in the nation. Today’s enforcement actions are a victory for human health,” EPA’s Regional Administrator for the Pacific Southwest Jared Blumenfeld said. “San Joaquin Valley communities can now breathe easier as a result of the significant pollution controls won in these settlements.”
    The settlements require the facilities to install devices to improve monitoring and reporting of air pollutants; enhance automation of the control systems for nitrogen oxides emissions; and prepare more stringent control plans to minimize emissions of air pollutants. As a part of this action, the companies have installed controls that reduce emissions of nitrogen oxides by up to 180 tons per year and carbon monoxide by up to 365 tons per year. The EPA and district will continue to monitor both facilities for an additional two years to ensure completion of all requirements.
    Ampersand Chowchilla Biomass, LLC, (ACB), and Merced Power, LLC, (MP), located within 12 miles of each other in the San Joaquin Valley, are required to pay $328,000 and $492,000, respectively; EPA and the district will split the penalty equally. ACB is also required to pay an extra $15,000 to the district for a district-only violation.
    After refurbishing the plants in 2007-2008, ACB and MP initiated operations in 2008. A joint investigation by the EPA and district found that ACB and MP violated the air permits issued to them by the district by:

• Emitting air pollutants including nitrogen oxides, sulfur dioxide, and carbon monoxide in excess of the permit limits;
• Failing to perform timely source testing to measure emissions of various air pollutants;
• Failing to properly install and operate emissions control systems for nitrogen oxides, a precursor to ozone; and
• Failing to certify the continuous emissions monitoring systems.
• The plants also violated various district rules including requirements for emissions control plans.

    Biomass power plants use green waste from farms and other operations that would otherwise be subject to open burning, and construction debris that might have gone to a landfill, to generate power.
    The San Joaquin Valley exceeds the national health standards for ozone and particulate matter. Nitrogen oxides react with other chemicals to form ozone and small particles, both harmful to the public’s health. Ozone and particulate matter affect the human respiratory system, and are linked to a variety of significant health problems ranging from aggravated asthma to premature death in people with heart and lung disease.
    Both proposed consent decrees are subject to a 30-day public comment period and final approval by the U.S. District Court for the Eastern District of California. A copy of each decree is available at http://www.justice.gov/enrd/Consent_Decrees.html.

Fuel Cell Industry Poised for Growth, Change

   BOULDER, Colo. - (BUSINESS WIRE) - 2/4/2011 - The fuel cell industry is growing even in the face of a global economic recession, with 2010 revenues exceeding $750 million. Markets such as uninterruptible power supplies (UPS), residential combined heat and power (CHP), power for remote monitoring equipment, auxiliary power units (APUs), and portal power for military applications have all experienced an increase in traction over the last year.
   A new white paper from Pike Research identifies 10 key trends that are having an influence on the development of the worldwide fuel cell market.
    “Fuel cells are finding a place in an increasing number of commercial applications, and 2011 is shaping up to be a big year in terms of market development,” Research Director Kerry-Ann Adamson said. “Industry consolidation is a trend that has been long anticipated, but will only accelerate during the course of the year. In addition, new issues have sprung out of nowhere in the past year such as concerns over supply of rare earth metals.”
    Adamson said the issue of government intervention versus the free market will continue to simmer as different countries’ economic policies diverge on matters of fuel cell development. And new markets for fuel cells are continuing to come to the fore as the economics of adoption, both direct and indirect, continue to be tipped in favor of the technology.
    Key fuel cell trends being is watched include:

• The reemergence of private equity firms in the fuel cell market.
• The continuing growth and deployment of fuel cell vehicles.
• The rising influence of Japan and Korea in the global fuel cell industry.
• The emergence of hydrogen as an energy storage medium.
• Rare earth restrictions as an obstacle to fuel cell adoption.
• Unmanned aerial vehicles (UAVs) as a key market for micro fuel cells.

    Pike Research’s white paper, “Fuel Cell and Hydrogen Industry: Ten Trends to Watch in 2011 and Beyond”, offers perspective and insight on 10 trends that will change the shape of the fuel cell industry during 2011. Information and analysis in this paper is drawn from Pike Research’s ongoing coverage of the global fuel cell market. A full copy of the white paper is available for download on the firm’s website.

2010 Called 'Wonderful Year' for Energy Investors

   NORWALK, Conn.- (BUSINESS WIRE) - 1/13/2011 - Despite a poor start, 2010 finished as a “wonderful year” for energy investors, with more than 65 percent of oil and gas stocks delivering positive returns last year, according to the IHS Herold 2010 Energy Peer Group Stock Market Performance Report, which was just released by information and insight provider IHS.
   Driven by economic growth, crude prices, which hit bottom in late May 2010 at around $65 per barrel, rose steadily and consistently through the second half of the year, and took oil company shares with them.
   The median gain for the 503 stocks covered in the report was 21 percent, which, while it did not match the record-setting 59 percent gain posted in the 2009 IHS report, did outperform the market indices of nearly all Organization for Economic Cooperation and Development (OECD) countries. Total capitalization jumped by more than $300 billion, further reducing the severe losses the sector incurred in 2008 the report said, but did not extinguish them.
   “Sometime in the first quarter of 2009, equity markets began to move upward in response to the economic growth that was becoming apparent in OECD countries,” said Robert Gillon, senior vice president and co-director of energy equity research at IHS. “It seemed as though every statistic that confirmed expansion was under way was reflected in a rise in the price of crude, which boded well for oil stocks. That pattern continued throughout the year, with oil prices and oil shares at a recovery high at the closing bell of 2010. In particular, North American oil stocks delivered the most returns to their investors.”
    After finishing second-to-last as a peer group in 2009, U.S. Royalty Trusts earned redemption by taking top honors in 2010 as the best performing peer group reviewed, posting a gain of more than 44 percent. MV Oil Trust led the group by posting a return of 111 percent.
    Companies in the E&P Limited Income Partnerships group followed closely with gains of nearly 43 percent. According to the IHS report, these survey-leading returns were in response to monetary stimuli by numerous central banks, where open-market interest rates fell to the lowest levels seen in decades, which forced yield-conscious investors to take on more risk in order to maintain their desired level of income.
    “The vast amount of liquidity being injected into the economic system, particularly in the U.S. has resulted in a strong correlation between equity prices and oil prices,” Gillon noted. “By contrast, for many years prior to 2009, there was a reverse relationship, with higher crude prices perceived to cause a reduction in disposable income, lower consumer spending, and declining domestic product and stock prices. To our mind, this is the normal state of affairs, but to predict we will be back to normal in short order would be unwise.”
    Mid-sized U.S. E&Ps, led by McMoRan Exploration Company, generated a segment return of nearly 42 percent, outperforming every other group of oil and gas producers globally. McMoRan delivered a total return in 2010 of nearly 114 percent.
    As a group, Master Limited Partnerships — mostly pipeline and storage companies — enjoyed a hearty gain of nearly 35 percent, while the peer group of Integrated Oil Stocks with U.S. Downstream returned 22 percent, which was marginally above the survey average. Canadian Integrated Oil Stocks and Integrated Oil Stocks without U.S. Downstream Operations gained less than half that amount, at 10 percent and nine percent, respectively. Returns from the latter group, the report said, were dragged down by the generally poor performance of European markets. On the other hand, shares in the Refining and Marketing category offered a healthy median gain of 38 percent and did well globally as demand for distillates rose with increasing economic activity.
    EnCore Oil plc of the U.K., whose shares rocketed by 773 percent following the discovery of the Catcher field in the U.K. sector of the North Sea, was the runaway leader of the Smaller E&P Companies Outside North America, but among companies starting at more than $0.50 per share, Xcite Energy Ltd. of the U.K. stole top survey honors for best total return of 552 percent due to its North Sea heavy oil project. Notably, Xcite Energy was also the top performer in last year’s survey.
    Pacific Rubiales Energy enjoyed splendid results with its heavy oil development program in Colombia, and the sizzling gain of 131 percent placed the company at the top of the list of Largest Oil and Gas Producers for a second year in a row. CNOOC Ltd. maintained the title of largest capitalization amongst the Largest Oil and Gas Producers by a very wide margin. The Chinese producer, which had a steaming 56 percent total return, is the first in this sector to have its market valued exceed $100 billion.
    Amongst the Largest Integrated and Diversified Oils, top-ranked Ecopetrol’s 84 percent gain reflected rapidly growing oil production, and it also got an updraft from the soaring Bogota market. Sunoco Inc. and Valero Energy, last year’s bottom two performers in the Largest Integrated and Diversified Oils group, moved into the top 10 due to a dramatic turnaround in refining margins. BHP Billiton is the only member of the 2009 crop to repeat in the top 10 this year.
    In a stunning turnaround, nine of last year’s top 10 finishers fell to the bottom half of the table in 2010, with Petroleo Brasileiro and Rosneft Oil, numbers one and two in the previous ranking, being hit particularly hard.
   Thanks in part to the Greek financial crisis, European markets were among the worst-performing financial exchanges and companies there had a tough 12 months, the report noted. Eni, Spa and Husky Energy repeated in the group’s bottom 10. BP p.l.c., as anticipated following the Deepwater Horizon incident, suffered through a horrendous year and now ranks eighth by capitalization, down from second in 2005.
    While oil stocks carried the sector in 2010, continued weakness in the North American natural gas market did not prevent the large producers from generating solid shareholder returns, with the median performance of the group nearly matching that of the entire survey. However, a high concentration of North American natural gas in the production mix detracted from returns, since U.S. natural gas spot prices, which began the year at what now seems like the lofty price of $6/MMBtu, ended the year at a nine-year low for the date, which was about 30 percent below where they began. This led to the denouement of Southwestern Energy, which had been a stellar performer in the previous three years, the report said.
    “Natural gas inventories were well above average and U.S. domestic production showed no signs of topping out,” Gillon added. “Fortunately for everyone but the Europeans, it has been ferociously cold in Europe, so gas is being shipped to the higher priced markets. The world is well supplied with gas, and the modest upward slope to the current futures curve is testimony to the glut in supply.”
    Stocks in the Alternative Energy group held the basement position as worst in class, posting losses of more than 24 percent after gaining 26 percent in 2009. Said Gillon, “We’re not sure what to say about alternative energy, except perhaps a requiem. In the five years we have shown this segment in the survey, it has been the worst performing group twice, second worst twice, and soared to fourth from the bottom on one happy occasion. They suffer when natural gas prices go down, when government subsidies are cut, when the wind doesn’t blow, when it blows too much, and when the sun doesn’t shine. There may be other problems as well, which we will probably find out about in 2011.”
   See: IHS Herold

Oil Industry's Center of Gravity Moves Eastward

   NEW YORK--(BUSINESS WIRE) - 12/5/10 - The center of the oil universe is moving steadily eastward as oil companies throughout Asia add capacity to meet the region’s growing demand for oil and natural gas. This year’s ‘Energy Intelligence Top 100: Ranking the World’s Oil Companies,’ which incorporates the Petroleum Intelligence Weekly (PIW) Top 50, leaves little doubt they will continue to surge in size and influence.
   ‘Big oil,” meanwhile, appears to be cooling to mega mergers.
    Asia’s government-controlled national oil companies (NOCs) are increasingly dominant. ‘Energy Intelligence Top 100’ is the only oil company ranking that measures Asian and other government-controlled national oil companies (NOCs) side by side with privately controlled international oil companies (IOCs). This year 41 NOCs and 59 IOCs made the list.
    Malaysia’s Petronas (17), China’s CNOOC (38) and Thailand’s PTT (53) have been among the fastest rising companies in recent years. Korea’s National Oil Corp. (KNOC) made it back onto the list in this edition, landing at 77 following its acquisition of Canadian assets.
    Yet even more dramatic was the ascent of India’s Reliance Industries, which jumped a remarkable 26 spots to land at 40. Its success is the result of significant increases in both gas production and distillation capacity --made even more remarkable considering this growth was organic.
    The Top 100 control 87 percent of the world's oil reserves and 72percent of its gas reserves. Rankings are based on operating metrics rather than more traditional measurements such as market capitalization or revenues. A company’s rank is determined by the sum of ordinal ranks in each of six operational categories: Oil Production; Gas Production; Oil Reserves; Gas Reserves; Product Sales, and Refinery Distillation Capacity.
    The Top 100 are also ranked in more than 100 other financial, upstream, refining and marketing categories.
While the names at the very top of the list barely shift, “look a little deeper and most of the companies in this group are in the midst of important changes,” says ‘Top 100’ Editor and Senior Research Analyst Ian Nathan. Some of these changes “could actually push them down, not up, in the next few years.”
    BP, which faces huge costs associated with Deepwater Horizon disaster, may be the most prominent example of a shrinking giant. But the 2011 rankings suggest IOCs as a group may be rethinking size and mergers as a growth strategy.
   An expected consolidation wave in 2009 didn’t materialize. And a look back to 1997 shows that today’s six largest IOC’s contribute a smaller share of global oil and gas operations than their aggregated predecessors.
    While the consolidation may have made strategic sense for these companies at the time, the Top 100 research suggests that operational size is now being rethought as a driver of value creation.
    That would be a significant break from the past. An astonishing 48 companies appearing in the 1997 Top 100 have disappeared from the rankings due almost entirely to M&A.
   Research that produced the latest ‘Top 100’ also showed:

• The 4 percent rise in Top 100 oil reserves was largely the result of a massive reserve upgrade by Petroleos de Venezuela (PDV); Top 100 gas reserves grew 2 percent.
• Top 100 oil output declined by approximately 1 percent, damped by Opec production restraint, and gas production fell nearly 2 percent, hindered by severely diminished production from both Gazprom and Turkmengas.
• Median revenue for the Top 100 was down 25 percent, while income dropped 42 percent.; median capital expenditures slid 35 percent.
• Four companies joined the Top 100 list: Cenovus Energy, Southwestern Energy, Ultra Petroleum and Korea National Oil Corp.
• North America is stirring again as a major upstream player, helped by unconventional (shale) gas success. 

Energy Intelligence has offices in New York, London, Houston, Dubai, Moscow, Washington and Singapore.

BP to Pay Single-Facility Clean Air Act Penalty

WASHINGTON - (EPA) -10/3/2010 - The U.S. Environmental Protection Agency and the U.S. Justice Department announced on Sept. 30 that BP Products North America Inc. has agreed to pay a $15 million penalty to resolve federal Clean Air Act violations at its Texas City, Texas petroleum refinery.
   The penalty is both the largest ever assessed for civil violations of the Clean Air Act’s chemical accident prevention regulations, also known as the risk management program regulations, and the largest civil penalty recovered for Clean Air Act violations at an individual facility.
   “BP’s actions at the Texas City refinery have had terrible consequences for the people who work there and for those in nearby communities,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today's settlement, in conjunction with other actions already taken by EPA and other federal agencies at Texas City, demonstrates the agency's continuing commitment to actively and vigorously working to hold BP accountable and to make them comply with our nation’s environmental protection laws wherever the company operates.”
    “The Clean Air Act is intended to prevent not only accidents like the fatal March 2005 accident, it also penalizes accidents like these three that result from poor practices and cause air pollution,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This settlement emphasizes the serious nature of the fires and releases of hazardous air pollutants that occurred at BP’s Texas City Refinery and puts industry on notice that the Department of Justice and the EPA will aggressively pursue those who fail to comply with the laws that protect our environment.”
    The settlement, which is subject to court approval, addresses violations stemming from two fires that occurred at the refinery on March 30, 2004 and July 28, 2005, and a leak that occurred on August 10, 2005. During the three incidents, each of which resulted in the surrounding Texas City community to shelter-in-place, thousands of pounds of flammable and toxic air pollutants were released. The settlement also resolves allegations that BP failed to identify all regulated hazardous air pollutants used at the refinery in plans submitted to EPA.
    The EPA identified the Clean Air Act violations addressed in the settlement during a series of inspections of the Texas City refinery initiated after a catastrophic explosion and fire on March 23, 2005 that killed 15 people and injured more than 170 others.
   In addition to the Clean Air Act General Duty Clause and risk management program violations resolved by today’s settlement, EPA also identified violations of other Clean Air Act requirements at the refinery relating to the control of benzene, ozone-depleting substances, and asbestos.
   Exposure to benzene can significantly harm human health and exposure to asbestos, a known human carcinogen, can cause two types of cancer: lung cancer and mesothelioma. These other violations were resolved in a February 2009 settlement that required BP to spend more than $161 million on pollution controls, enhanced maintenance and monitoring, and improved internal management practices at the refinery, as well as pay a $12 million civil penalty and perform a $6 million on a supplemental project to reduce air pollution in Texas City and the surrounding area.
    With the Sept. 30 settlement, the federal government will have recovered approximately $137 million in criminal, civil, and administrative fines related to process safety violations at the Texas City refinery. In addition, BP Products has performed approximately $1.4 billion in corrective actions and the company will spend an estimated additional $500 million, to improve safety at the refinery as required by settlements entered into with the Occupational Safety and Health Administration (OSHA) and the criminal Clean Air Act plea agreement following the fatal March 23, 2005 explosion.
    The Clean Air Act General Duty Clause and risk management program regulations contain a comprehensive set of requirements to prevent accidental releases of hazardous air pollutants, an important objective of the Clean Air Act. These regulations require owners and operators of facilities, such as petroleum refineries, to, among other things, perform adequate and timely equipment inspections and repairs, train employees involved in the operation and maintenance of equipment, evaluate the consequences of changes to operating practices and equipment, and ensure that operating procedures contain clear and comprehensive instructions.
    BP’s Texas City refinery is the third largest in the United States, with a production capacity of more than 460,000 barrels of oil per day.
    The proposed settlement was lodged today in the United States District Court for the Southern District of Texas. The settlement is subject to a 30-day public comment period and final court approval.
    Source: http://www.epa.gov/. For more information: http://www.epa.gov/compliance/resources/cases/civil/rcra/bptexas.html

Report: Virtual Power Plant Capacity to Climb

   (BUSINESS WIRE) - 9/27/2010 - Virtual power plants (VPPs) utilize software systems to enable utilities to efficiently manage an increasing diversity of electricity generation, energy storage, and demand reduction assets.
   As the power generation mix becomes more complex over the next several years thanks to adoption of distributed generation, storage technologies, and demand response (DR) programs, VPPs will be a vital real-time management tool to make every megawatt count.
   According to a new report from Pike Research, the global VPP market will more than double in capacity over the next five years, rising from 19.4 gigawatts (GW) in 2009 to 41.1 GW by 2015, under a base case forecast scenario. By that year, the cleantech market intelligence firm forecasts that worldwide VPP revenues will reach $7.4 billion.
   “Virtual power plants enable utilities to stretch supply from power generation and demand response, without requiring any large-scale infrastructure upgrades,” Pike Research Senior Analyst Peter Asmus said. “This approach delivers greater value to the customer while also creating benefits to the host distribution utility as well as the transmission grid operator. When compared to the fossil fuel based centralized power plants that dominate electricity markets worldwide, one of the primary advantages of VPPs is that they can react quickly to changing customer load conditions, all in a dynamic and real-time fashion.”
    Pike Research divides the VPP universe into four distinct segments:

• Demand Response-based VPPs: This is the largest commercial segment in the United States, which has the most mature DR market in the world.
• Supply-side VPPs: Europe, particularly Germany, has led the world in this category, though most of the projects have been R and D pilots, with only a handful of VPPs in commercial operation.
• Mixed asset VPPs: This is the ultimate goal of the VPP. This segment brings distributed generation and DR together to provide a synergistic sharing of grid resources to squeeze out more value, thereby reducing capital costs. Few of these projects are in commercial operation today.
• Wholesale auction VPPs: Unique to Europe, VPP auctions have been used in the region as a condition of mergers, requiring asset owners to auction off base load and peaking capacity to bidders under short- and long-term contracts. Unlike the category of the supply-side VPP segment, these resources are typically traditional centralized power plants burning fossil fuels.

    Pike Research’s study, “Virtual Power Plantsm,” provides a comprehensive analysis of global market opportunities and growth prospects for virtual power plants including a detailed examination of business models, technology issues, and regulatory and policy factors. Key industry players are profiled, including SWOT analysis for utilities and technology providers active in the VPP sector.
   The report also features global market forecasts, segmented by region, for capacity and revenue in four key VPP segments through 2015. An Executive Summary of the report is available for free download on the firm’s website.

Energy Legislation Stall Could Mean Job Loss

Petroleum Institute: House Measure Will Hurt Economy
-----------------------------------------
               By Kevin Lee
         Illinois Statehouse News
-----------------------------------------
   SPRINGFIELD - 9/16/2010 - With November's midterm elections approaching, the ground swell for new energy and climate control legislation may have taken a backseat to national politics.
   The result could be thousands of lost jobs for Illinois, according to a coalition of pro-renewable energy groups.
   Last year,  the U.S. House of Representatives passed  federal legislation that would impose nationwide renewable energy benchmarks, market-imposed caps on emissions and greater investment into new technologies, such as clean coal.
   But the U.S. Senate has stalled on the legislative package, and a consortium of energy and business groups are claiming that inaction could cost the nation for years to come.
   A report jointly released by the consortium indicated that the nation could lose out on 1.9 million jobs over the next decade.
   Six hundred thousand of those lost jobs could originate in 10 states with unemployment rates exceeding 10 percent, including Illinois, which stands to lose 68,000 jobs over that period.
   Climate change and renewable energy became headline issues in the aftermath of the BP Gulf of Mexico oil spill, but progress on sweeping energy federal legislation has been put on hold.
   Tim Greeff, policy director for the national consortium Clean Economy Network, said with November's elections approaching, the energy debate has been hijacked by politics.
   "I certainly don't see this as a Democrat vs. Republican issue. These issues don't become partisan until they get to (Washington,) D.C. And that's why it's really so unfortunate that it has gotten caught up in the partisan bickering," Greeff said.
   Instead, U.S. Senate Majority Leader Harry Reid, D-Nevada, said the Senate will spend its fall session working on a sweeping legislative proposal focused on tax cuts and incentives for small businesses and entrepreneurs.
   Chris Van Atten, a spokesman for American Businesses for Clean Energy, said that development of renewable energy sources and job creation go hand-in-hand.
   "Clean coal technology is one that holds promise for job creation in the Midwest region. It may be renewable energy strategies in different parts of the country. But there are certainly opportunities available," he said.
   The American Petroleum Institute claims that the energy legislation passed by the U.S. House threatens the nation's and Illinois' economies.
   "The climate change bill under consideration by Congress ignores the impacts on everyone who uses or produces petroleum fuels like gasoline, diesel and natural gas. So it will hit both households and businesses hard – everyone who uses cars, trucks, planes, trains, and tractors or the thousands of products produced or transported using these fuels," the API said in a statement.
   The U.S. Department of Energy has already targeted Illinois as a major source of carbon retention and storage, a new method of burning coal that would reduce greenhouse emissions.
   Last month, the DOE pledged to commit $1 billion to retrofit an oil-fired power plant in the western Illinois town of Meredosia in what has become the most recent iteration of the FutureGen project.
   Earlier this month, U.S. Sen. Dick Durbin, D-Ill., was in the central Illinois town of Taylorville to discuss another proposed clean-coal project, the Taylorville Energy Plant.
   Durbin outlined his support of efforts for domestically produced energy with the Taylorville plant and FutureGen, though efforts to move forward on both projects have frequently stalled.
   "If you look at the potential for job creation, for providing clean domestic energy and for positioning our state as a world leader in clean energy production – these are truly opportunities Illinois cannot afford to miss," he said.
   But Greeff said Congress will likely wait until after November's elections before engaging in groundbreaking energy debates.
   "It has become an issue that the Democrats and Republicans are trying to stake out positions on instead of moving forward and finding the common ground that's actually good for American business," he said.
  Story courtesy of Illinois Statehouse News

Report: Clean Coal Proposal Costly, Incomplete

By Bill McMorris      
Illinois Statehouse News

    SPRINGFIELD – 9/2/2010 - The push for clean coal technology in Illinois has hit another snag.
    A much anticipated report on a clean coal proposal in central Illinois questions both the costs and benefits of the $3.5 billion project.
   The report, released Wednesday by the Illinois Commerce Commission says Nebraska-based Tenaska Energy's proposed plant is costly, incomplete and potentially harmful to competition in the marketplace.
   "The General Assembly should consider whether the current plant configuration best balances the interests of rate payers and the goals of the Clean Coal Act," it read. "The cost associated with electricity generated by (the plant) is substantially higher than…other types of generation."
   And that may be an understatement, according to commission member John Colgan.
The plant would use technology to convert coal into natural gas with near-zero emissions. Project developers are hoping to funnel carbon through a pipeline to the Gulf states, where it can be used to extract oil from wells.
   While the grand idea may work on paper, it still produces an incomplete picture of the project. Developers came to the $3.5 billion price tag without assessing the costs or carbon sequestration and the potential pipeline–significant gaps, according to Colgan.
    "Their initial report did not have a final decision of how to sequester the carbon," he said. "It is difficult to make a decision without knowing what those costs are going to be."
    The high construction costs and costly nature of producing electricity–about 40 to 50 percent higher than traditional coal production–will have to be pushed on to commercial customers. Residential consumers will not see their rates increased by more than 2 percent over the next 30 years, according to a law passed in 2009.
    That leaves businesses and industries vulnerable to bearing the cost. Colgan says Illinois' competitive markets could dry up as large electricity distribution sources like Exelon force out smaller start-ups.
   "If these alternate sources are forced to buy from Taylorville and this 2 percent cap is reached, they'll have to buy the overflow at a much higher rate," he said.
    Colgan said the federal government has taken a keen interest in clean coal technology, especially in Illinois where carbon sequestration is thought to be ideal. The government is directly financing a $1 billion retrofitting in the FutureGen project and has offered to guarantee $2.7 billion in loans for the Taylorville project.
But private investors are not biting at the prospect of projects like the Taylorville plant–a warning sign about the financial risks associated with clean coal technology, according to Colgan.
    "It's a whole new approach to energy that the federal government threw a lot of stimulus money into, but there's probably not a lot of venture capital out there to support this kind of project," he said.
If the state does not approve the Tenaska plan, it will fall apart, along with federal backing.
    While the ICC did not discuss whether the plant should be built, its message clearly hurts the project's chances of passing the General Assembly.
    "We understand what the General Assembly is trying to do–moving to cleaner technology in a carbon based economy–but there is going to be a rate impact," Colgan said.
    Backers of the project are optimistic lawmakers will look beyond costs and approve the project based on the environmental and technological impacts of clean coal.
    "I am fairly confident we can convince the legislature that the project makes sense on all levels," Taylorville Mayor Greg Brotherton said. "It will stimulate the economy, it is environmentally safe and it uses resources we have widely available to us."
    Opponents like Kevin Wright, president of the Illinois Competitive Energy Association, hope lawmakers will take the report seriously.
    "It should be persuasive with legislators, given the high cost and the rate impact on consumers and the engine of the Illinois economy," he said.
    But Teneska representatives countered that the ICC report seemed to misunderstand the purpose of the project, though their figures were similar.
"The premise under the Clean Coal Law of providing for an initial clean coal facility is that it is important to develop the State's coal resources in an environmentally friendly manner," said the company in a statement.
   "No one has ever tried to tell the General Assembly that the initial clean coal facility is going to be the cheapest option."
    The report was given to lawmakers on Wednesday. They are expected to reach their final decision on the matter later this fall.
   (Story courtesy of Illinois Statehouse News)