LONDON, Jan 31 (Reuters) – Shareholders must be hoping the
removal of Aubrey McClendon as Chesapeake’s chief executive will
end the corporate governance discount attached to the company’s
share price and unlock superior returns. They are likely to be
Removing McClendon does not the resolve the company’s basic
problem: it is the second-largest producer in a market (U.S.
natural gas) which has been transformed by the advent of a new
technology (hydraulic fracturing) and now faces years of
oversupply as well as a radical change in the cost of production
which has left many old assets stranded and devalued.
LONDON, Jan 30 (Reuters) – The arrival of a swarm of
activist hedge funds and investors in the oil and gas sector may
be good news for corporate governance, and possibly for
shareholders. But it risks killing off the innovation and
risk-taking which has revolutionised U.S. petroleum production
over the last decade and transformed the global energy outlook.
Activist Carl Icahn has finally pushed Chief Executive
Aubrey McClendon out from the Chesapeake, the firm he
founded in 1989, and grew into the country’s second-largest
producer inside two decades.
LONDON, Jan 29 (Reuters) – TransCanada has promised
to adhere to 57 special safety conditions, and in the event of
an accidental oil spill from its Keystone XL pipeline would be
responsible for all cleanup costs, Nebraska Governor Dave
Heineman promised this month when he approved the company’s
revised route through the state.
Responding to concerns about the possibility of catastrophic
pollution, the pipeline has been re-routed to avoid the
environmentally sensitive Sand Hills, though it still crosses
parts of the High Plains (Ogallala) Aquifer.
LONDON, Jan 28 (Reuters) – The U.S. Department of Energy
must make a historic decision in the next few months: whether to
allow large-scale natural gas exports from the United States.
The issue is as much about philosophy and foreign relations
as the practical impact on gas prices and big energy users such
as the chemical, fertiliser and steel industries.
LONDON, Jan 25 (Reuters) – Oilfield services company
Halliburton blamed the upfront cost of rolling out its
“frac of the future” efficiency initiative, as well as lower rig
rates and idled equipment, for shrinking margins in its North
American business, when the company presented its Q4 results on
Frac (or frack as it also called) of the future maybe
causing the company some discomfort in the short term. But it is
a perfect case study of how the drilling industry is innovating
in response to pressure to cut costs and its environmental
LONDON, Jan 24 (Reuters) – Most analysts and journalists
still draw a sharp distinction between the production of oil and
gas from conventional fields and from unconventional resources
such as shale. The reality is more complex.
In practice it is not easy to tell where conventional
petroleum production ends and unconventional production begins.
LONDON, Jan 23 (Reuters) – OPEC’s influence on oil prices is
very visible in the short run, but it is less certain that its
pricing power can be maintained in the long term, according to a
thoughtful review published by Bassam Fattouh and Lavan Mahadeva
of the Oxford Institute for Energy Studies.
Fattouh and Mahadeva examine how the cartel’s strategy and
power over oil prices have varied over time depending on market
conditions and the interaction among OPEC members (“OPEC: What
Difference Has it Made?” Jan 2013).
LONDON, Jan 22 (Reuters) – China is already the world’s
fourth-largest gas consumer, but it will struggle to reach its
goal of doubling gas use to 260 billion cubic metres a year by
2015 unless a range of barriers can be overcome.
Lack of upstream investment is only one of many problems
facing China’s gas industry. Getting the price right is more
LONDON, Jan 21 (Reuters) – “The limit of production in this
country (the United States) is being reached, and although new
fields undoubtedly await discovery, the yearly (oil) output must
inevitably decline, because the maintenance of output each year
necessitates the drilling of an increasing number of wells.
“Such an increase becomes impossible after a certain point
is reached, not only because of a lack of acreage to be drilled,
but because of the great number of wells that will ultimately
have to be drilled.”
LONDON, Jan 18 (Reuters) – China’s petroleum resources are
roughly comparable to the United States’. There is no reason for
the country to become increasingly reliant on imported crude and
natural gas, provided it can successfully explore and develop
its enormous natural endowment.
For China’s top policymakers, the prize is huge. Boosting
domestic oil and gas output would significantly reduce the
country’s economic and military vulnerability. China could
emulate the success of the United States following the shale
revolution and achieve a greater measure of energy security.