Tax breaks to encourange offshore exploration
February 26, 2010 at 3:06 pm
Alistair Darling has just announced a tax break for energy companies involved in oil and gas exploration in the North Sea. The industry has been reluctant to search for Britain’s remaining oil and gas supplies, and this move is expected to provide them with a friendly shove.
The Chancellor has announced £160 million in tax relief for each field to the west of Shetland. This huge incentive could lead to investment in the region of £14 billion, not to mention the creation of a possible 600 new jobs.
It is thought that the stormy seas off Shetland hold about one fifth of the remaining UK oil and gas reserves. But the waters here are some of the most hostile in the world, and so the 170,000-square-mile area has yet to be explored properly. The encouragement needs to come from somewhere, and it has been decided that tax breaks are the way forward.
The government is hoping to push through the legislation quickly, by the end of March at the latest, so that everything is in place in time for the upcoming general election. This will prevent further time being wasted and shows just how seriously the government is taking the issue.
It is estimated that the UK has £750 billion in revenues locked up under the sea that will go to waste unless the government does something to encourage the exploration firms.
The Chancellor said that the tax breaks provided a “significant boost to the industry” and a “major step forward”. The Scottish Secretary, Jim Murphy, said that it will “improve security of supply, sustain jobs, encourage investment and build skills”.
British Gas launches new energy challenge
February 26, 2010 at 3:05 pm
Fourteen communities across the UK have started to compete in a contest where they will each attempt to become the greenest community in Britain over the course of the year. The 14 finalists were selected from 100 applicants and the race is now on to see who can set the standard.
It is called the Green Streets challenge, and it was launched by British Gas. The energy provider wants to see which community can save the most energy and reduce carbon emissions through generating its own electricity. The winning community will be given over £100,000 for environmental investment in a local project.
The challenge was launched on a slightly smaller scale in 2008 with eight streets competing. In the end it was a street in Leeds that won through managing to cut its energy use by an impressive 35%.
British Gas is to help the communities by providing microgeneration and energy efficiency measures worth in the region of £2 million. Energy options for the communities will involve solar and wind power, as well as a micro hydro scheme, a heat pump, biomass systems and better insulation.
Engineers from British Gas will then assess the energy efficiency to rule on the winning project. The project will provide the company with insight into how it can develop the most efficient small-scale energy generation systems across the country.
Celebrity Ben Fogle is backing the scheme and said that there is a “groundswell of communities wanting to learn how to save money and go green by developing plans around saving and generating energy locally.” He added that the scheme will help to create a blueprint for a more sustainable Britain in the future.
Low oil prices halve BP's profits
February 19, 2010 at 3:53 pm
BP has released details of its annual profit for the last year, but the picture is bleak. In 2009 BP only managed to achieve a profit of $14.4 billion. Although this may seem large, it pales in comparison to the previous year’s profit of $25.6 billion – a fall of 45%. It is the lowest annual profit that BP has reported since 2003.
The main reason for the poor profit margins is the fall in the global price of crude oil over the course of the year. When the July 2008 price of $147 a barrel is compared to the January 2009 price of $40, it is easy to see why the company has suffered so badly.
It was clear that such disastrous results were going to hit BP’s shares hard, and indeed they fell 4% on the news, dropping 22.6p at the close to 572p. The results were worse than had been expected, so this was hardly surprising.
The amount of profit per barrel also clearly displays why BP has been hit so hard. In the last quarter of 2009, BP said that it was only making $1.49 profit on each barrel of oil that it refined. This is compared to $5.20 profit on each barrel the previous year.
Despite the huge fall in profits, there was some good news. The oil and gas production for the company went up by over 4% in 2009, which is higher than its long-term target to increase production by between 1% and 2% every year. However, despite this rise, BP confirmed that it is expecting to produce less oil and gas in 2010.
Shell faces legal challenge to drilling in the Arctic
February 19, 2010 at 3:52 pm
A legal challenge could halt Shell’s exploration of an ecologically sensitive Arctic region containing an estimated 30% of the planet’s undiscovered natural gas reserves.
This month, an alliance of conservation and Alaskan indigenous groups filed the claim which could prevent Royal Dutch Shell drilling for oil and gas in the Arctic Ocean’s Chukchi Sea, less than 100km off Alaska’s northwest coast. Two years ago, Shell paid $2.1bn (£1.3bn) to the US government for the rights to explore and drill for fossil fuels in the region. If Shell continues with its plans it could find 15bn barrels of recoverable oil and 76tn cubic feet of recoverable natural gas, according to the interior department.
The petition, to the 9th Circuit Court of Appeals, argues that the gain in resources would come at a high environmental cost. Specifically, it challenges the decision by the US Minerals Management Service (MMS) to approve Shell’s plans on the grounds that it was taken after only an “abbreviated and internal review”.
The proposed drilling area is home to endangered bowhead whales, threatened polar bears and a large, diverse population of fish. Oil spills and other pollution could adversely affect the ecosystems of which the animals are a part, and which are as yet poorly understood. The Arctic is heating up twice as fast as the rest of the world and environmental groups also worry that drilling could further increase the rate of warming.
“We all deserve clean air and clean water,” said Michael LeVine, Pacific Senior Counsel for Oceana, a member of the petitioning coalition. “Shell, like anyone else, must comply with the law, and it is the government’s responsibility to enforce the laws that protect our air, water and ocean resources.”
In response, Shell, which is one of a handful of companies granted access to the Arctic for drilling, has defended the necessity of its proposals and environmental record. A spokesman argued that the natural gas and oil available in the Chuckchi Sea could “play a major role in reducing [US] dependence on foreign sources of energy” and claims that “extensive scientific studies and technological advances demonstrate that we can operate in the Arctic in an environmentally responsible manner.”
Environmentalists point to the harmful effects of current drilling in nearby regions as evidence against Shell’s proposals. Pamela Miller, Alaska programme director for the Northern Alaska Environmental Center, says that “Chronic spills are a fact of life from oil and gas operations on Alaska’s North Slope, where over 6,000 spills have occurred since 1996, and more than 400 of these took place at offshore oil fields. In the icy conditions of the Arctic Ocean, there is no way to effectively clean up spilled oil.”
7% drop in British Gas bills
February 12, 2010 at 4:09 am
Finally, there is some good news for energy customers. Following months of expensive bills that were completely out of line with wholesale costs, British Gas has announced that it is to cut its gas bills by 7%. As a result, 8 million households are set to benefit immediately.
The savings will certainly be noticeable, with the average customer now saving £55 a year on their previous bills. But although this news will be warmly received by many, it still means that customers are paying a lot more than they were just over a year ago.
The major energy providers have come in for heavy criticism in recent months for not passing on the cuts seen in the cost of wholesale oil and gas. The recent spell of bitterly cold weather has put even more pressure on the power suppliers to cut their bills, and finally the message is starting to come through.
British Gas has gone one step further and has also got rid of the difference in price that customers on pre-payment gas meters were paying, the extra cost of which was hitting some customers hard. Despite this, the price cuts are only affecting gas bills, and electricity bills will remain unchanged.
British Gas now claims to be the cheapest duel-fuel supplier following the cuts. The cheapest duel-fuel tariff it now provides online is £899. Following the cuts, the average duel-fuel price is to drop from £1,202 to £1,147, according to figures from Uswitch.
Now the pressure is on for the other major suppliers to drop their prices as well, and hopefully a new price war will erupt, following the British Gas cuts.
Winter gas bills ‘too high’
February 5, 2010 at 2:53 pm
Up to a third of connected households may not be able to pay their winter gas bill, according to Which? magazine, after the January snows forced millions of customers to turn up their central heating.
The watchdog noted that 38% of the 1000 people polled were feeling glum about their winter finances, and beginning to regret using so much gas over the festive season. Experts predict that as much as £70 could be added to the average gas bill – hardly a good start to the New Year.
Many Brits have swapped heating systems for woolly socks, whilst others take more drastic measures, ignoring the chocolate and the booze in the supermarket, and cutting back on everyday essentials, such as bread and milk.
Of course, if the crowds in the supermarkets are anything to go by, some people will have already spent their month’s budget on hundreds of loaves of bread and enough frozen food to sink a ship, in a bid to stave off a frosty apocalypse that never arrived.
Energy UK, a representative of the gas industry, urged customers to continue heating their homes – “We understand that people may be worried about their bills during this cold weather, but anyone who has concerns about paying their bill should contact their supplier as early as possible.”
In particular, the elderly and the infirm were singled out as vulnerable citizens. Help the Aged, a charity concerned with the welfare of pensioners, noted that many people might be missing heating grants, simply because they are unaware that help is available.
As the nationwide gas crisis begins to subside, the government has begun battening down the hatches, just in case the same problems resurface in the future. Last week, Gordon Brown’s cronies approved the construction of an underground fuel storage chamber in Cheshire, capable of holding 240m cubic metres of natural gas.
