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Today Exobox Technologies Corp. (OTC Bulletin Board: EXBX) (the "Company") announced that one of its board members has identified and assisted management in entering into a non-binding letter of intent to acquire 15 income producing oil & gas wells in the Clinton and Marcellus Shale region in Ohio from a private oil & gas company. These oil & gas wells have a represented PV10 reserve value of approximately $22.5 million (based on current NYMEX pricing). It is intended that the cash flow and net worth from the oil and gas assets will assist to further develop the Company's software products and technologies, as well as those oil and gas assets being acquired. The parties intend on executing a definitive agreement on or before October 19, 2009.

"Upon the closing of the transaction, this will enable Exobox to continue its operations as originally planned. It should provide us critical mass and bring substantial asset value to the Company," said Exobox CEO, Kevin Regan.

The non-binding letter of intent contemplates a purchase price of approximately $13.25 million which includes the assumption of existing debt in an amount not to exceed $3 million, as well as the issuance to the seller of a combination of convertible notes, convertible preferred stock and common stock that on a fully-converted basis would not exceed 9.9% of the total shares outstanding of the Company.

This is a non-binding letter of intent, subject to completion of due diligence by both parties and negotiation of definitive agreements, and there can be no assurance that a definitive transaction will be entered into between the parties incorporating these or any other terms.

Cautionary Statement Relating to Forward - Looking Information for the Purpose of "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995. This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "estimate," "expect," "intend," "will," "should" and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements reflect management's current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. These factors include but are not limited to: the unprecedented volatility in the global economy; the risk that the future business operations of our software products and/or the oil and gas assets that are to be acquired will not be successful; the risk of due diligence by both parties may not be to the satisfaction of either party; the risk of our ability to close on the acquisition of the oil and gas assets; the risk that we will not realize all of the anticipated benefits from our acquisition of oil and gas assets; the risk that oil and gas prices may fall and negatively affect the value of the properties we intend to acquire and/or our ability to raise additional financing based on the value of these properties; actions of competitors; changes and developments affecting the software industry and the oil and gas industry; quarterly or cyclical variations in financial results; development of new products and services; interest rates and cost of borrowing; our ability to protect our intellectual property rights; our ability to maintain and improve cost efficiency of operations, including savings from restructuring actions; changes in economic conditions, political conditions, trade protection measures, licensing requirements and tax matters in the locations in which we do business; reliance on third parties for the provision of exploration and production services; and other factors that are set forth in the "Risk Factors" section, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and other sections of Exobox's Quarterly Report on Form 10-Q for the quarters ended April 30, 2009 and Exobox's 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Exobox assumes no obligation to update any forward-looking statements as a result of new information or future events or developments, except as required by law.

SOURCE Exobox Technologies Corp.

Bionavitas, based in Redmond, Washington, has developed Light Immersion Technology(TM) (LIT(TM)) that enables the rapid, cost-effective production of algae for environmental remediation, manufacturing health and nutraceutical products, and producing biofuels. Blue Marble Energy, based in Seattle, has developed a proprietary technology to produce a wide array of high-margin, carbon neutral specialty biochemicals from organic biomass. These biochemicals include esters, a group of chemicals used in food, fragrance, plastics, resins and adhesives.

"There is no question that algae are a key component of the solution and will help reduce our dependence on fossil fuels," said Ogilvie. "But fuel isn't the only useful product that can be developed using algae. While many people think of oil simply as a source of fuel, it is also an important component of almost everything we eat, drink, manufacture, and wear. With the efficient algae-production capability of Bionavitas, and our ability to convert that algae into specialty biochemicals, it was a natural step for our companies to partner."

"Our Light Immersion Technology gives us the ability to efficiently produce high quality algae that is uniquely suited for Blue Marble's processing technology," said Michael Weaver, CEO of Bionavitas. "We look forward to jointly pursuing commercialization opportunities for our combined technologies."

Light Immersion Technology(TM) can be used to grow algae to remediate selenium, zinc, lead, cadmium, boron, mercury, and other undesirable elements and compounds from industrial waste streams. Blue Marble can then safely process the generated algae biomass into specialty biochemicals. The combination of these unique technologies places Blue Marble Energy and Bionavitas at the forefront of innovative clean technology solutions for numerous commercial applications.

About Blue Marble Energy

Blue Marble Energy is a Seattle-based company utilizing unique bacterial consortia to produce specialty biochemicals and renewable natural gas. BME's mission is to produce drop-in replacements to petrochemicals which are safe, carbon-neutral, and fully sustainable. BME's proprietary AGATE(TM) (Acid, Gas, and Ammonia Targeted Extraction) system processes nearly any organic feedstock, utilizing cultured strains of bacteria to perform fermentation (like brewing beer) to produce a wide variety of biochemicals. This solution will allow manufacturers to replace petroleum with renewable feedstocks and produce some of the chemical industry's highest value products, including esters, amides and anhydrous ammonia. In addition to these biochemicals, the AGATE system generates renewable natural gas as a byproduct.

For more information, visit: www.bluemarbleenergy.net

About Bionavitas

Bionavitas is a Redmond, Washington-based bioscience company committed to revolutionizing the clean technology industry. Bionavitas harnesses the power of algae for biofuel production, health and nutraceutical products and environmental remediation. The company's innovative, patent-pending Light Immersion Technology(TM) addresses the problem of algae "self-shading" by allowing more light to penetrate the algae biomass. This permits the algae to grow deeper and thicker, resulting in the more efficient and expansive algae production necessary for cost effective commercial applications.

SOURCE Blue Marble Energy Corp.

SunEdison and SkyPower expect First Light to generate more than 10 million kilowatt hours (kWhs), enough electricity to power almost 1,000 homes in its first year of operation.

Additional information about First Light:

      -  The system will remove almost 8,000 metric tons of CO(2) from the
         air in its first year of operation, the equivalent of carbon
         emissions from almost 1,800 cars.
      -  Over 20 years, the system will displace nearly 152 thousand metric
         tons of CO(2), the equivalent of removing almost 33,000 cars from
         the road.
      -  To displace the same amount of CO(2) that the system will offset
         over 20 years, Ontario would have to plant more than 6.7 million
         trees.

"This is truly a very proud moment for SkyPower and its joint venture partner SunEdison, together the pioneering architects of Canada's first and, so far, only operational solar park," said Kerry Adler, Chief Executive Officer of SkyPower. "This is a significant milestone for the people of Canada and will help generate a brighter future for generations to come. It is also a testament to the great things that can be achieved when private enterprise, the Ontario government and the local community work together through innovative public policy."

According to SunEdison COO Carlos Domenech, "As the largest system deployed under Ontario's RESOP, First Light Solar Park is a first step in our plan to develop more rooftop and ground mount solar systems. Our joint venture in this project with SkyPower is a success and in full operation, delivering the benefits of solar to Ontario. The province's recently announced Feed-in-Tariff program will continue to stimulate solar development. With the support of the provincial government, municipal leaders and communities, Ontario is an exciting market for solar, and we look forward to building on the foundation we have established with First Light." Commenting on the additional steps taken to protect the Shrike habitat, Domenech added, "Our efforts provide a clear example of how companies can work with government and community organizations to protect endangered species while generating clean renewable energy and delivering greater environmental benefits."

During construction of First Light, SunEdison and SkyPower worked closely with Ontario's Ministry of Natural Resources to successfully preserve habitat for the endangered Eastern Loggerhead Shrike on the property.

According to Elaine Williams, Executive Director of Wildlife Preservation Canada, "Both SunEdison and SkyPower have shown all along their willingness to help the endangered Loggerhead Shrikes. We appreciate all of their help and see this as a great example of how cooperation can lead to good outcomes," she said.

The grand opening ceremony is planned for October 14, 2009 in Stone Mills, Ontario.

About SunEdison

SunEdison is North America's largest solar energy services provider. The company finances, installs and operates distributed power plants using proven photovoltaic technologies, delivering fully managed, predictably priced solar energy services for its commercial, government and utility customers. In 2008, SunEdison delivered more kilowatt hours (kWh) of energy than any other solar services provider in North America. For more information about SunEdison, please visit www.sunedison.com

About SkyPower

SkyPower is the leading independent renewable energy developer in Canada, and possesses proven expertise in developing, building and managing both large-scale and micro-generation wind and solar power projects. SkyPower has developed a national footprint, with a substantial number of projects at various stages of development across Canada, select U.S. States, India and Panama representing thousands of megawatts (MW) of potential nameplate capacity. SkyPower continues to help many different jurisdictions meet their increasing demand for cleaner, non-emitting renewable energy solutions. For more information, visit www.skypower.com.

Source: SkyPower Corp.

Jon Utley is The American Conservative associate publisher, and a former foreign correspondent for Knight Ridder newspapers.

In "Alaska Oil Abundance Versus Washington's Wasted Billions: The case for new oil drilling in Alaska and off America's coasts," Utley explains that 80% of American oil consumption comes from imports, costing some $300 to $400 billion yearly. "They wreck our trade balance, subsidize many of our enemies, and add to our already mountainous foreign debt," Utley says.

While analysts are forecasting $100 dollar-a-barrel oil within a year, the Obama Administration continues to block offshore drilling (even though it was approved by Congress last year) and wants to raise taxes on the oil companies, Utley says.

"New oil drilling in Alaska and off America's coasts would create hundreds of thousands of American jobs and billions of dollars in real tax revenue for Washington," Utley writes in the article. "Compare that to government spending to create jobs, which costs some $200,000 per job."

Solar power, Utley says "involves billions of dollars in costly subsidies which add to the ballooning budget and trade deficits" while wind power will cost the taxpayers $10 billion. "Ethanol was similarly hyped by Washington -- another gigantic boondoggle with severely damaging consequences for food prices and tens of billions of dollars of wasted resources."

"Major technological breakthroughs make vast new oil production possible -- once Washington permits it," Utley says. Natural gas is "already abundant and promises to stay cheap into the foreseeable future. . . . there exists tremendous potential for natural gas in auto and truck engines. . .many trucks, buses, and taxis could easily be converted to run on natural gas, costing less than a dollar a gallon."

"Research drilling has made vast new oil production possible," Utley says. "Horizontal drilling allows wells to reach into oil reserves as never before and to produce far more oil from each field. . . .a traditional vertical well might expose 200 to 300 feet of reservoir rock [while] a new well using multiple horizontal sections can expose over 20,000 feet of reservoir rock."

"The Obama Administration is a prisoner of its 'base,' which includes extreme environmentalists doing all they can to delay and handicap new oil and gas drilling. If just a fraction of the $700 billion stimulus bill was spent on subsidizing natural gas fueling facilities at interstate truck stops, America could use more of its natural gas to avoid tens of billions of dollars of oil imports," Utley said.

See the entire article at Reason Magazine on-line: http://www.reason.com/news/show/136265.html

SOURCE Reason Magazine On-line

Mr. Miller warns that China continues to be irrelevant to the US economy and energy complex at the current time, given the fact that there is no fundamental U.S. demand.

Oil and Natural Gas are decoupled in the U.S. and investors should not chase a speculatively driven oil price when it has nothing to do with the fundamentals on the ground relating to Natural Gas production and demand in the United States. Oil is a dollar based, but has no linkage to natural gas in the U.S. as it does in Europe and Asia.

Mr. Miller has issued a sell recommendation on Natural Gas producers. There is no fundamental reason for Natural gas to trade above $3 mmbtu in the U.S. in the near term.

Mr. Miller expects natural gas to correct to the $2.50 to $2.75 mmbtu price range getting cheaper, as there is no demand. Thus, the pipeline and natural gas producers will suffer reduced earnings and are overvalued as well.

Chinese government owned and controlled energy companies are deploying capital cheap natural resources globally outside the U.S. to shore up their own deficient domestic portfolio. Chasing China or Asia in the equity market rally is a false illusion in the near term.

Mr. Miller retains a sell recommendation on U.S. renewable energy companies. He predicts will see many of these companies, which are reliant upon massive government subsidies, state approval of pass through price increases, and highly levered fail and/or be purchased at distressed prices when the bust comes, and it is sure to come.

Chasing a false market rally is a formula for failure for all class of investors. Mr. Miller recommends that the sidelines are the best placement of capital at the current time. The real buying opportunity will come, but now is not the time.

About Mr. Miller

Mr. Miller is a globally recognized energy executive and institutional investor with a balance of both financial and energy sector expertise. Mr. Miller began his career on Wall Street during the 1980's and has an extensive background in banking, commodities trading and risk management.

Mr. Miller has a long history in the global energy business and has held a variety of executive management positions both within the United States, Europe and Asia. Mr. Miller has bid on over $25 billion in energy related assets during his career.

Mr. Miller has built, restructured and managed energy businesses for major public energy companies on several continents, including PG&E Corporation, Electricite de France, El Paso Energy, Enron Corporation and JPMorgan Chase.

Mr. Miller holds an MBA in Finance from the Kenan-Flagler Business School at The University of North Carolina, Chapel Hill. Mr. Miller also holds a B.A. in Accounting from Catholic University located in Washington DC.

Mr. Miller is currently on medical leave until late 2009.

Source: VBCC

For the nine months ended July 31, 2009, net income was $127.1 million and diluted earnings per share were $1.73, compared with net income of $123.2 million and diluted earnings per share of $1.67 for the same period in 2008.

Utility margin increased by $3.8 million for the third quarter and by $6.1 million for the nine months ended July 31, 2009 compared to the same periods in 2008. The increase in margin is due to the Company's 2008 general rate case in North Carolina and continued customer growth across its three-state service area. Operations and maintenance expenses were essentially flat compared with the same periods in 2008.

Revised Fiscal 2009 Earnings Guidance

In light of its year to date performance and its forward-looking assessment of the fourth fiscal quarter, Piedmont Natural Gas is narrowing its fiscal 2009 earnings guidance to a range of $1.50 to $1.60 per diluted share with emphasis on the upper end of the range. The Company's earnings guidance includes management's assessment of overall market conditions, customer growth rates and demand, ongoing business process improvement and cost management programs, capital expenditures and financing requirements. Changes in market conditions which the Company cannot reasonably anticipate could cause earnings for the year to differ from this guidance.

Chairman, President and Chief Executive Officer Thomas E. Skains commented, "This fiscal year has been a challenging one as our employees have worked through the very difficult economic conditions brought on by the global recession. By sticking to the fundamentals of maximizing profitable growth opportunities, implementing ongoing cost management and business process improvement programs, spending our capital resources prudently and providing quality customer service, we are poised to achieve another year of record earnings per share for our shareholders."

Conference Call

In conjunction with this third-quarter earnings release, you are invited to listen to the conference call that will be broadcast live over the Internet on Wednesday, September 9, 2009, at 9:00 a.m. Eastern Time, hosted by Chairman, President and Chief Executive Officer Thomas E. Skains. Log on to the web at www.piedmontng.com and click on Investors, then on Presentations. The conference call will be archived on the Presentations page of the website within the Investors section.

    Piedmont Natural Gas Company, Inc.
    Summary of Operations
    (in thousands except per share amounts and degree days)

    Three Months Ended                  July 31
    ------------------                  -------               % Increase
                                  2009         2008           (Decrease)
                                  ----         ----           ----------
                              (Unaudited)   (Unaudited)

    Operating Revenues          $180,201     $354,709             (49)%
    Cost of Gas                   99,362      277,689             (64)%
    Margin                        80,839       77,020               5%
    Operations and Maintenance
     Expenses                     50,124       49,738               1%
    Depreciation                  24,488       23,581               4%
    General Taxes                  8,841        7,928              12%
    Utility Income Taxes          (4,199)      (6,846)             39%
    Operating Income (Loss)        1,585        2,619             (39)%
    Other Income (Expense), net    2,162        2,530             (15)%
    Utility Interest Charges      11,047       12,827             (14)%
    Net Loss                      (7,300)      (7,678)              5%
    Average Shares of Common
     Stock:
         Basic                    72,983       73,368              (1)%
         Diluted                  72,983       73,368              (1)%
    Earnings Per Share of
     Common Stock:
         Basic                    ($0.10)      ($0.10)              - %
         Diluted                  ($0.10)      ($0.10)              - %
    System Throughput -
     Dekatherms                   36,895       38,931              (5)%
    Gas Customers Billed in
     July                            942          943               - %
    System Average Degree Days
     - Actual                         43           35              23%
    System Average Degree Days
     - Normal                         51           53              (4)%
    Percent Normal Degree Days        84%          66%              -


    Nine Months Ended                   July 31
    -----------------                   -------               % Increase
                                  2009         2008           (Decrease)
                                  ----         ----           ----------
                               (Unaudited)  (Unaudited)
    Operating Revenues        $1,415,276   $1,777,357             (20)%
    Cost of Gas                  943,802    1,312,031             (28)%
    Margin                       471,474      465,326               1%
    Operations and Maintenance
     Expenses                    154,200      155,598              (1)%
    Depreciation                  72,937       69,179               5%
    General Taxes                 26,235       25,080               5%
    Utility Income Taxes          73,035       69,092               6%
    Operating Income             145,067      146,377              (1)%
    Other Income (Expense)        18,006       18,316              (2)%
    Utility Interest Charges      35,972       41,479             (13)%
    Net Income                  $127,101     $123,214               3%
    Average Shares of Common
     Stock:
         Basic                    73,180       73,355               - %
         Diluted                  73,476       73,628               - %
    Earnings Per Share of
     Common Stock:
         Basic                     $1.74        $1.68               4%
         Diluted                   $1.73        $1.67               4%
    System Throughput -
     Dekatherms                  170,879      165,947               3%
    Gas Customers Billed in
     July                            942          943               - %
    System Average Degree Days
     - Actual                      3,191        2,953               8%
    System Average Degree Days
     - Normal                      3,119        3,148              (1)%
    Percent Normal Degree Days       102%          94%              -
 
SOURCE Piedmont Natural Gas

With the financial markets in turmoil, and a major renewable energy initiative being undertaken by the new Obama administration, major attention is being focused towards developing and implementing a comprehensive energy production and carbon emissions strategy for the United States.

This major paradigm shift is leading the politicians in Washington and the capital markets to attempt to develop and implement a credible energy plan for the United States. Unfortunately, all efforts to date have been flawed and billions of dollars in taxpayer capital is being wasted.

As a senior energy industry executive who has deregulated many energy products and markets in the United States, Europe and Asia, Mr. Miller has increasingly expressed his concern for the misguided direction that the Obama administration and the Democratic leadership has been taking evidenced by the cap-and-trade bill, called the American Clean Energy and Security Act recently passed by the Congress and other multi-billion dollar handouts for a renewable energy industry not equipped to manage nor deliver the promised results.

Mr. Miller who has a long history of implementing bipartisan and free market views in the energy industry believes the multi billion dollar Obama stimulus and cap-and-trade bill will be wasted with no meaningful change to the reliability and re-powering and re-fueling of US power generation industry and developing sustainable efficient energy production.

The only true proven method of changing energy production is through market driven technology in fuels and efficiency gains. This must be driven by venture and risk capital to finance and judge the winners and losers.

Mr. Miller and other disciplined investors do not intend to invest in the renewable energy sector following the short-term investment drive expected to be created by flawed policies created under the current Obama Administration.

Seasoned investors like Mr. Miller will continue to wait on the sidelines during the short-term boom period and will look to step in and buy failed renewable energy assets at substantial discounts to original cost when the renewable sector flounders in the very near future.

Mr. Miller believes that market will, in a short period of time, become littered with uneconomical renewable energy projects, similar to the illiquid and toxic real estate assets currently held by large banks and hedge funds.

Mr. Miller was one of the first senior energy executives to call the ethanol and bio diesel boom and bust three years ago and was quoted saying at the time, "It is a clear demonstration that government handouts simply do not work, and billions of dollars of investor capital were lost."

Seasoned and disciplined energy executives have begun securing development sites and options for gas and coal plants currently on the wayside in preparation for the next build and re-power cycle which is eminent. Venture capitalist should be taking the risky bets on new power generation technology and other renewable ventures, not the US government.

Who wins with the government renewable energy hand outs embedded in the stimulus package and the cap and trade bill? As always, the investment bankers have all geared up for the hand outs by expanding their respective renewable energy practices and started peddling their wares including project finance services, arrangement of IPO's for new renewable companies (most of which will fail shortly after being taken public) and carbon emission trading and hedging businesses, among other services.

The tag along corporate law firms have done the same and well as all of the major consulting firms. These financial institutions, law firms, and consulting firms will be the short term financial winners as service providers for fees.

The losers will be, as always the pension, insurance, endowment, and retail investors who directly or indirectly invest in the renewable energy sector during the boom period and then get stuck "holding the bag" when the bust comes, especially when the financial sponsor firms dump their renewable energy deals that they sponsored and financed.

Finally the biggest long term winners will be the vulture and distressed investors like Mr. Miller and other disciplined investors, who will be waiting on the sidelines during the short term boom period and will look to step in and buy assets for pennies on the dollar when the renewable bust comes in a few years. Thus the biggest winners will ultimately be the distressed investors, much like the current US real estate crisis, which the US Government is financing.

The Government will do the same in the Renewable energy sector when the bust comes as they will have no choice but to bail out the renewable energy sector.

SOURCE VBCC

"This report further proves Ohio's dedication to technology innovation coupled with its access to a world-class supply chain and a talented, educated workforce is vital in building a strong foundation for the widespread application of advanced energy systems," said Lieutenant Governor Lee Fisher. "There are many business incentive programs the state offers to companies that create new jobs, thereby creating a supportive and encouraging environment for new investment."

Based on significant research and input from experts in the field, including the advisory panel that helped guide the study, Pew developed the following definition: A clean energy economy generates jobs, businesses and investments while expanding clean energy production, increasing energy efficiency, reducing greenhouse gas emissions, waste and pollution and conserving water and other natural resources.

The Pew study shows in 2007 Ohio ranked among the top five states with the most jobs in clean energy (3,653), energy efficiency (5,367) and environmentally friendly production (2,800). Overall, Ohio boasted a total of 35,267 clean jobs in 2007, which represents an overall job growth of 31 percent since 1998 and an average annual job growth of .85 percent each year. For more information about The Pew Charitable Trusts and the report, visit http://www.pewtrusts.org/news_room_detail.aspx?id=53254

Ohio's leaders are leveraging the state's key assets such as Ohio's manufacturing infrastructure, skilled workforce and advantageous location to support a growing advanced energy industry. Ohio's historic strengths in advanced design, advanced materials and advanced manufacturing combined with the state's ability to seamlessly transform these existing skill sets into those needed to compete for the jobs of the future creates the perfect environment to make the state a global leader in this rapidly growing industry. Ohio-based companies are now producing an increasing array of solar panels, wind turbines and component parts, biomass products, fuel cells, hydroelectric components, geothermal parts and storage facilities that promote better utilization of advanced energy resources and competitiveness in a global marketplace.

"Ohio has surplus automotive skilled labor and manufacturing capability that is rapidly being converted to accelerated growth of the clean energy industry and is available for clean energy companies that want a rapid start," said Ed Burghard, executive director of the Ohio Business Development Coalition. "Ohio is successfully reinventing itself as the location of choice among leading suppliers to the technologies of the future, and our state serves as a model for struggling states and cities with economies that rely on traditional manufacturing processes."

One of the most significant initiatives supporting Ohio's advanced energy industry is the Ohio Third Frontier, an unprecedented and bipartisan commitment to expand Ohio's technological strengths and promote commercialization that leads to economic prosperity throughout Ohio. Since its inception, the program has retained or created 7,700 high-paying technology jobs and has attracted more than $3.5 billion in private investment to Ohio, a 9:1 return on investment. Ohio's Third Frontier has already invested more than $100 million in advanced energy technology research and development since 2002, and is projected to provide $24 million in additional grants related to advanced energy in the coming year.

"Business leaders in the advanced energy industry are realizing how, in Ohio, they're able to successfully build a business without sacrificing their personal life," Burghard said. "Business owners profit from the bottom-line benefits of better work:life balance for their employees. Ohio offers low-cost, low stress communities in a combination of micropolitan and metropolitan cities. This diversity provides executives and employees the resources and time to make any ambition achievable. Ohio truly is the state of perfect balance."

SOURCE Ohio Business Development Coalition

In a letter delivered this morning to House and Senate leaders and the Obama Administration, U.S. investors specifically called for adoption of the following policies: a strong national Energy Efficiency Resource Standard; a national Renewable Portfolio Standard (also called a Renewable Electricity Standard); a mandatory national climate policy to reduce greenhouse gas emissions economy-wide; and a low-carbon fuel standard and other transportation policies to lower use oil use and greenhouse gas emissions.

Coordinated by Ceres and its Investor Network on Climate Risk, the letter was signed by leading pension funds such as the California Public Employees' Retirement System (CalPERS), the California State Teachers' Retirement System (CalSTRS); large asset managers including BlackRock and Deutsche Asset Management; nine state treasurers; three state/city comptrollers; two labor pension funds -- SEIU Master Trust and UNITE HERE -- as well as other investors (see full list of signers below).

The letter states that strong energy and climate action is 'essential' for long-term economic prosperity and that the costs of inaction could be 'economically debilitating.' "We are convinced that building our nation's low-carbon energy infrastructure is an important part of the solution to our current economic crisis. Delaying action on these policies will deny U.S. families and businesses access to low-cost clean power, reduce our nation's energy security, and require more stringent, costly solutions to address climate change in the future," states the letter.

"The value of aggressive, national action to fight climate change and remake our energy and transportation sectors cannot be overstated," said California State Treasurer Bill Lockyer, a board member of the nation's two largest public pension funds, CalPERS and CalSTRS, with approximately $300 billion in combined assets. "The benefits will extend far beyond the environment. If we succeed, we will secure long-term security and prosperity for our economy, our businesses, and our workers and families, and in the bargain save taxpayers and consumers billions and billions of dollars."

"The policies outlined in the letter would allow us to invest our clients' assets with appropriate cognizance of the continuing risks -- and exciting opportunities -- that will result from physical, regulatory and technological change spurred by a changing climate and the policy response," said Alex Popplewell, global co-head of responsible investment at BlackRock, which manages $1.3 trillion in assets. "2009 will be a year of intense investor focus on the architecture of global agreements on climate change policy. We see it as essential that the United States play a full and urgent part in both clarifying its domestic approach to this complex issue and contributing to the successful conclusion of international agreements."

"Strong national climate and energy legislation will send clear market signals to the business community -- creating new industries, putting people back to work, and helping move American companies to the forefront of global competitiveness on clean energy," said Mindy S. Lubber, President of Ceres and the Director of the Investor Network on Climate Risk, an alliance of 77 investors with approximately $7 trillion in assets. "An energy efficiency resource standard is a critical component of such legislation and is equally as important as a renewable energy standard," she added.

Calling energy efficiency and conservation the "fastest, easiest, and cheapest ways to significantly reduce greenhouse gas emissions and improve the bottom line of companies," the letter urges passage of a national Energy Efficiency Resource Standard that would set national energy savings targets and save utility customers up to $144 billion by 2020, according to estimates provided by the American Council for an Energy Efficient Economy. "Energy efficiency is the cheapest form of power we can produce and it is time for national policy to step in and tell electric utility companies that they need to shift their business practices to deliver a lot more of it," states the letter.

The letter assigns high importance to sending a signal to the markets that greenhouse gas emissions will carry a price. "National climate legislation acting in harmony with the market will facilitate greater investment in clean technologies and other climate change solutions and will enable the U.S. to not only compete globally, but to lead," it states.

To facilitate rapid deployment of existing and emerging technologies, the letter urges Congress to enact a strong national renewable portfolio standard (also referred to as a renewable electricity standard), a policy already in place in 29 states.

Stressing the need to extend clean energy policies to the transportation sector, the letter urges legislators to: adopt a national low-carbon fuel standard, support expansion of public transit and legislation to promote the reduction of vehicle miles traveled, adopt performance-based incentives to stimulate the development of new technologies and adopt maximum feasible fuel economy standards.  SOURCE Ceres, Boston, MA and INCR, Boston, MA

FMA Congresses is Holding a Three Day Event that Will Focus on Energy Reduction, Environmental Sustainability and Green Data Centers. The Event, 'Progressive Energy & Environment Congress 2' is Held from April 20 to 22 at the Westin Peachtree Plaza in Atlanta, Georgia

This conference is designed to help participants learn how reducing energy consumption can lead to higher profits by decreasing operational costs and the ways in which energy certificates, greenhouse gas credits and carbon offsetting can be optimized to obtain immediate benefits.

    The congress program features:

    -- A range of concurrent sessions with in-depth presentations on key
       issues
    -- Case studies from experts detailing practical advice and successful
       strategies
    -- Highly interactive workshop sessions with Q&A peer advice
    -- Panel discussions with lively debate amongst your peers


    Speakers:

    -- Greg G. Williams, Director, SH&E Performance Assurance & Process
       Innovation Global Policy & Strategy, MeadWestvaco
    -- Douglas Kaempf, Director of Renewable Energy, U.S. Department of
       Energy - Energy Efficiency and Renewable Energy
    -- David Hitchings, Director GreeNG, Northrop Grumman Corporation
    -- Steve Wolfe, Head of Energy Management, Adams County / Ohio Valley
       Schools
    -- Karen Heyob, Associate Chief Engineer (Environmental), Honda of America

       Manufacturing Inc.
    -- Ray Ratheal, Director, Energy Policy & Planning, Eastman Chemical
       Company
    -- John Stevens,VP, Energy Strategy and Policy, Praxair Inc.
    -- David Freedman, Director, Engineering & Construction, Georgia
       Department of Natural Resources
    -- Melissa Vernon, Director of Sustainable Strategy, InterfaceFLOR
    -- Dennis Wolcott, Corporate Energy Manager, Parker Hannifin Corporation

The largest power company of the US, the Tennessee Valley Authority has signed a ten-year strategic agreement with GE Digital Energy to monitor and protect their power systems from failures and outages. The agreement is said to be worth around $15 million.
The agreement with GE Digital Energy is for the use of their Multilin Universal Relay (UR) product for the protection of existing and future substations of TVA.
TVA selected Multilin UR products after a rigorous evaluation of all the global protection and control vendors.
To read the whole article click here.

The possible revival of a Saddam-era oilfield deal between Iraq and China has given hope to top oil multinationals over the potential of getting contracts giving them access to Iraq's vast untapped resources.

The deal, like others made by Saddam Hussein was effectively frozen by international sanctions and then by his overthrow.

The news that Iraq's oil ministry is thinking of awarding China the first foreign contract to develop oil resources has given heart to western oil majors that Baghdad is opening up and looks ready to honor its contract rather than handing over the al-Ahdab field to the US, which has 142,000 troops in the country.

After the US led invasion in 2003, US firms won most of the big infrastructure deals and European firms feared that the same would happen with Iraq's oil wealth.

This deal, worth some $700 million, could be a beginning for other Chinese companies and a door opener for other development deals. Iraqi oil minister al-Shahristani is expected to visit China, Japan and Australia to discuss oil investment projects.

The oil minister favors centralized control of Iraq's oil, but a new constitution gives autonomous federal regions a role in

developing resources. There might be a political message in his overture to China signaling his centralization goal to the Kurdish regional government in the north which has struck deals with many independent oil exploration companies.

The government has given priority to the Ahdab oilfield because of its proximity to new power stations and refineries. It expects output to increase from 30,000 barrels per day to full capacity of 90,000 over two years.

Though Russia's Lukoil did not comment, analysts say that if Baghdad were to validate the West Qurna oilfield deal, Lukoil would be willing to start work again.

While multinationals will not sign multibillion dollar contracts until an investment law is in place and security improves, a western executive says that the Chinese "don't give a damn whether there's an investment law to protect them" and "don't have the same incentives on profitability as the international oil companies."

The major oil companies are confident that the fields they would like to work on will not be assigned to rival companies from India or China, as the Iraqi government is aware that it needs the technology and finance that international oil companies bring.

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The US government's independent inspector on Iraqi reconstruction reported that Iraq's largest industry, the oil sector, has lost $US16 billion in oil export revenue over a 2 year period and insurgent attacks on the country's energy infrastructure have prevented it, in part, from maintaining adequate electricity supplies.

"A number of factors, including attacks, aging and poorly maintained infrastructure and criminal activity are adversely affecting Iraq's ability to develop a viable energy sector," said Inspector General for Iraq Reconstruction Stuart Bowen.

In an unclassified summary Bowen said that these factors are working together to hold down Iraq's oil exports and the availability of electricity.

The oil sector in Iraq which was expected to be a big revenue raiser for the rebuilding of Iraq, has been subjected to repeated attacks on its pipelines and oil export facilities.
Iraq is paying billions of dollars to import gasoline and other refined petroleum products for its people, in spite of owning huge oil holdings.

The US has invested about $320 million to help Iraq improve its capability to protect its oil and electricity infrastructure.
Bowen noted that in addition to the initiatives Iraqi leaders are taking to enhance security and performance of the oil and electricity infrastructure, they also need to take "bold action" to protect energy sites in the country.

Iraq's oil production is far below pre-war levels when Iraq pumped between 2.8 million and 3 million bpd. Currently the country's oil exports have been running at almost 1.7 barrels a day.

Iraq needs investments by foreign energy companies in its underdeveloped and undiscovered fields to boost its oil production.
Iraq claims to need up to US$20 billion in investment to reach oil production limits of 6 million bpd.

However, many foreign companies are apprehensive about doing business in Iraq due to the ongoing violence.

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A deal between Iran and Sinopec for developing a major Iranian oilfield will be finalized in the next 2 months, Iran's deputy oil minister stated.

Deputy Oil Minister Mohammad Hadi Nejad Hosseinian was quoted as saying "The talks will be finalized in less than two months and the contract will come into effect two months later."

Sinopec agreed in October 2004 to take the lead in developing the Yadavaran field and to buy 10 million tons of LNG a year for 25 years.
But the finalization of the deal, in the manner of other Iranian energy contracts with foreign firms had been subject to protracted negotiations and delays. Disagreements over pricing for the deal were behind a previous delay.

The Yadavaran oilfield is estimated to have 3 billion barrels and is expected to produce 300,000 bpd, around the same amount of crude that China currently imports from Iran.
The deal worth as much as US$100 billion if signed could draw fire from the US.

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Russian Foreign Minister Sergei Lavrov in an effort to alleviate Western concerns over Russian energy deals said that talk of revising PSA's or seeking to exclude foreigners from the sector were unfounded.

Lavrov said, "Assertions about 'revisions' of PSAs and especially about squeezing foreigners out of the Russian energy sector have absolutely no basis whatsoever".

He also added that "Carrying out checks in no way means that licenses for developing deposits within the Sakhalin-2 project will be withdrawn".

Recent threats from Russian officials to withdraw an ecological permit for the Sakhalin-2 oil and gas project led by Shell have led to fears that Russia wants to renegotiate the production sharing agreement.

Natural Resources Minister Yuri Trutnev said on Tuesday that work on the Sakhalin-2 project could continue while a full-scale ecological probe, due to start on October 25 is held.

Shell has doubled the estimated cost of the Sakhalin-2 project to $20 billion which has infuriated Russia, complicating talks on the strategic swap of assets with state controlled Gazprom.

Concerns about the suspension of oil pipeline loading for technical checks on the ExxonMobil run Sakhalin-1 PSA project abounded while ExxonMobil's arm in Russia said it was unaware of any order to suspend work and business was continuing as usual.

The head of Russia's technical standards agency said that he hoped Sakhalin-1 would be able to deal with any breaches of the rules at its De Kastri terminal before its planned launch on October 1.

ExxonMobil said that while the issue needed to be sorted out, the scheduled launch of the terminal was possible.

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With oil falling toward $61 on robust US inventories ahead of the winter heating season, OPEC said that the price slide from summer peaks had gone as far as it should go.

US crude fell to US$61.01 per barrel, reversing the rebound from 6-month lows below US$60.
Easing Middle East tensions, ample fuel stocks and slowing US economic growth have resulted in the steepest decline in oil prices since the Gulf War, falling from July's high of US$78.40 a barrel.

OPEC President Edmund Daukoru said that the slide in prices was harmful for investments and that OPEC was already talking among itself about what needs to be done.

Industry analysts feel that if the price slide continues, OPEC might cut its quota.
It is expected that if prices fall below US$60, it would trigger OPEC action.

While OPEC has avoided setting a target oil price to defend, Saudi Oil Minister Ali al-Naimi said that prices were "reasonable" when they were above US$62 a barrel.

On the other hand, BP is adding to the downward pressure on prices by increasing production at its Prudhoe Bay Field. BP expects to hit 400,000 barrels a day by the weekend, just 50,000bpd below full capacity.US stocks stand at their highest level since January 1999. US stocks of distillates are projected to rise.

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The Peak Oil Theory of Value is worth analyzing in the view of recent comments by ExxonMobil's Australian CEO Mark Nolan that there " is no peak oil theory of value."
Beyond something "that possesses us" and "makes us speak its words and do violence to our nature", is the question: What is theory?
A theory is a doctrine, or scheme of things, which terminates in speculation or contemplation. A simple way to understand the concept of a theory is that it is the premise or set of premises upon which an argument rests, although the focus of theory is on the “science” of something, more so than the “art” thereof. 
If a theory is something that is going to possess us, it better be a good theory.

Reporter Mike Sexton from ABC in a conversation with Mark Nolan ExxonMobil came upon the ExxonMobil view regarding peak oil.
He said that while the peak oil theory suggests that at one point the world will have used more than half its oil supply and future demand will be sharply higher than supply, big oil isn't buying it.
Nolan said that these theories have been around since the 1920's, especially when oil hits high prices. The ExxonMobil view is that the world has abundant energy resources and there is no peak oil theory of value.
Mr. Nolan did not expand on his throwaway comment that there is no peak oil theory of value initially. Later he talked about

the US Geological Survey's report that the Earth has more than 3 trillion barrels of conventional recoverable resources and so far we’ve produced 1 trillion of that. An additional 1 trillion barrels are estimated with conservative estimates of heavy oil and shale oil.

While the USGS estimate is notoriously optimistic with lots of good petroleum geologists and engineers taking the USGS to task on it, the focus of this article shall remain on the Exxon man's comment on there being "no Peak Oil theory of value."

So what is a theory of value?
You know what a theory is; Value is the worth of something or its utility to satisfy the needs of people.
A theory of value must be the premise or set of premises upon which an argument rests, relating to the worth of something, or its utility to satisfy the needs of people.
A key question in economic theory is how the value of goods and services comes about, and how to calculate the correct value of goods and services if such a value exists.

The first category in measuring value is called the "intrinsic theory of value". This theory implies that every item has an inherent worth built into the item itself that does not depend on what people think of it. Intrinsic valuations mostly depend on the process of producing an item and the costs involved in that process as a measure of the item’s intrinsic value. The "labor theory of value" which holds that the value of an item comes from the amount of labor spent producing the item, is one of the  most influential of the intrinsic theories.

The second category is the "subjective theory of value". This theory holds that for an object to have economic value, i.e. a price, it must be useful in satisfying human wants and not be in unlimited supply.
Goods that are in unlimited supply, or in a greater supply than that demanded, would have lower value. This theory recognizes that an item may be more useful in satisfying the needs or wants of one person than another, or of no use to one person and of great use to another.
This theory differs from the intrinsic theory in that it holds that beyond the objectively correct value of an object, is the value of individual judgments.

The third category is the "cost-of-production theory of value". The theory is that the price of an object is determined by the sum of the cost of the resources that went into making it. Factors such as labor, capital, land or technology will all come under cost of production.

Now that we have the basics, it's back to the Peak Oil Theory of Value. The central argument of Peak Oil is a scientifically valid concept that relies on historical "discovery" numbers and extraction figures for conventional petroleum.
Extraction figures implies that you cannot extract what you have not discovered and peak oil says that mankind has found most of the world's oil deposits. And it appears that mankind has extracted about half of all the conventional oil that will ever be extracted. This is the basic premise.

Peak oil refers to conventional petroleum as the substance that will be available in lower and lower quantities. Conventional petroleum is the rock oil that is made to flow from pores in rock formations into bore holes in the ground and lifted from there to the surface of the Earth.
The world’s exploration, production, transportation, refining, marketing, delivery and end use is geared by conventional petroleum.
The world's extraction and use is currently at 85 million barrels per day.

As a departure from conventional petroleum are tar sands and oil shale, that require different methodologies not only to extract or produce, but also for transportation, refining and delivery. The infrastructure in the world for plumbing for these is negligible. Besides, non-conventional hydrocarbon sources have a far more negative economy in both energy return on investment and monetary metrics.

The question for the future is whether the world's energy sectors and the economies they drive can make the transition from extracting, refining and delivering conventional petroleum to delivering non-conventional petroleum. And additionally, if the transition can happen... will it happen faster than conventional sources are depleting?

Coming back to the peak oil theory of value begs the question - what is it worth to be able to understand if not predict that the world's capacity to extract conventional petroleum is on a downhill run? What is it worth to be forewarned?

If we're headed for a cold, bleak future, isn't it best to look at the peak oil theory of value as a caution toward the future trends of mankind's energy use and particularly mankind's oil use.

Is the value of peak oil intrinsic or subjective? Is it based on the cost of production? Or is it quite simply that understanding of Peak Oil is a key to mankind understanding how to survive into the future. That seems like a perfectly useful “theory of value.”

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Russian plans to divert up to 25-45 billion cubic meters of gas from its Shtokman field to Europe and away from the US could be bad news for US companies Chevron and ConocoPhillips.

The Shtokman field has a planned output of 70bcm a year. With plans to divert up to half of it to Europe, Russia's current gas supplies to Europe get a 15 to 30 percent boost.

Previously Russian gas monopoly Gazprom had said that it wanted to grab 10 percent of the US market by 2010 by liquefying almost all of the gas for shipment to the US.

Shtokman has gas reserves of around 3.7 trillion cubic feet and is a challenging project due to its offshore, out of helicopter range, location. Gazprom has shortlisted 5 companies including Chevron, ConocoPhillips and Total to help it develop the field.

If Gazprom is planning to focus on Europe as the key market for Shtokman's gas, then the European companies on the shortlist such as Total, Statoil and Norsk Hydro would have better chance of being part of the project. ConocoPhillips and Chevron may be left out as Gazprom has said that in the final line-up it will only take 2 or 3 partners on for the $20 billion project.

Gazprom has repeatedly put off announcing its choice of partners. Russia is using the bidding process for partnership in the

Shtokman project as a bargaining chip to become part of the World Trade Organization. If Russia does not succeed in this, the chances that Shtokman will have European partners are high.

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Russia tried to ease European concerns over its business maneuvers like investment in the European aerospace consortium and the withdrawal of permits to western oil companies in Russia. France, Germany and Russia met over the weekend at a castle in the north of Paris where these issues came up.

A Russian state-controlled bank has acquired a 5.02 percent stake in EADS and the government is believed to want to increase the stake. Speculation that Russia might gain a position on the board of the European consortium was rebuffed by EADS and French Finance Minister Thierry Breton.
However at the meeting in Paris, Putin stated that the acquisition "is not at all the sign of an aggressive behavior on the part of Russian partners" and that they "will not use this stake to change in any way the institutional situation of EADS."

Concern was also evinced over the future of French oil giant Total in Russia. There have been indications that Total may lose its license for the Kharyaga oil field. Putin told reporters in Paris that these were "greatly exaggerated rumors".
French officials believe that Putin's words are solid guarantees for France's investments in Russia.

Though Putin did not address the disagreements with ExxonMobil or Shell over contracts and revoked licenses, he assured western countries that he was aware of the co-dependent nature of energy suppliers and consumers. He also indicated that some oil resources would be redirected to Europe.

Russia also signed two "Memoranda of understanding" which act as blueprints for potential contracts worth more than $10 billion.
One MOU is between French construction giant Vinci and the Russian Transportation Ministry for a highway between Moscow and St. Petersburg. The other looks at possible cooperation on railroad, transportation and infrastructure in Russia between the Russian and French transportation ministries.

Chancellor Angela Merkel of Germany insisted on the need for "reliable partners," between Europe and Russia, in energy matters.

Besides business matters, the three countries also discussed current diplomatic issues.

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Russia's nationalist oil policy that's aiming to wrest back control of the country's resources from the world's most powerful energy firms has come under international glare following events last week.

Shell and ExxonMobil's Sakhalin island project, BP's joint venture with TNK in eastern Siberia and Total's operations in the Kharyaga oil field have all been affected by threats to revoke licenses granted years ago to the companies. The Russian move was no crude step, rather a well planned effort with ambassadors overseas, Siberian officials, the natural resources ministry officials, environmental agencies all coming in with a variety of reasons - financial, time overruns, environmental - to account for the retraction of contracts.
For Shell, BP and Total, environmental concerns were cited by government officials.

While Western companies have not commented publicly, the moves have attracted international condemnation.
Japan was stinging in its reaction saying the delay in the Sakhalin-2 project would have a 'negative influence on overall Japanese-Russian relations.'

Japan is to take gas from the Sakhalin-2 project and has two leading companies, Mitsui and Mitsubishi, holding 45 per cent of the venture.

Russia's nationalized energy giant Gazprom, is believed to be the reason behind the politicking and in fact in response to Japan's statement, Russian ambassador said that a state-run company could speed along the project. He meant Gazprom, which has been trying to negotiate its entry into Sakhalin for many years now.

The asset swap that was being negotiated between Gazprom and Shell, which would give Gazprom a 25 percent stake in Sakhalin-2 has also been suspended.
Costs overrun have been touted as the reason behind the falling through of the deal. Cost increases mean that Gazprom can claim a reduction in value of the 25 per cent of Sakhalin that it is acquiring, which means recalculating the asset swap.

The Production Sharing Agreement signed a decade ago between Shell and the government, allows the government to retain ownership while the partners develop the project and take revenue in early years to pay back their investment. After this, the government receives an increasing proportion of revenues up to 70 per cent. Cost overruns and delays mean that the government will get less money, and get it later.

PSA's and cost overruns also affect ExxonMobil's Sakhalin-1 project. Costs could increase there, from $12.8bn to $17bn. The Russian government reacted angrily and said that Exxon could be stripped of its license.

Total faces the withdrawal of its license for environmental reasons and failing to reach production levels set out in its PSA.

PSA's made sense for Russia in the mid-90's when the government was financially stretched and could not invest on its own account.

But it is unpopular in today's Kremlin, when the rising oil prices have filled government coffers. Also the fact that they are internationally enforceable make them humiliating for the government in that it does not have sovereignty over its assets.

Gazprom is in talks with ONGC, India to buys out its stake, which will give the company a stake in 2 key projects on the island. Gazprom is also keen to secure the stake of three owners in the TNK-BP venture.
There have been reports that exploration licenses for the Kovykta field could be withdrawn from BP.

It certainly seems clear that Gazprom and the government are strategically exerting pressure on foreign companies.

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Crude oil dipped to below $60 a barrel at $59.80 after Iranian President Ahmadinejad said that Iran is open to discussing "everything" if the US stops its threats against the country.

Crude oil for November delivery fell by 61 cents, or 1 percent, to $59.94 a barrel in after-hours electronic trading on the Nymex.

Hedge-fund managers and other large speculators cut their long positions, or bets prices will rise, by 39 percent in the week ended Sept. 19. Traders with long positions outnumbered short positions by 22,498 contracts on the Nymex.

BP's announcement that it expects to resume production of about 150,000 barrels a day from the eastern field in a week's time is also expected to have helped in the price drop.

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BP and its minority partner, ExxonMobil in the Thunder Horse project in the Gulf of Mexico, are at odds over how to deal with increasing problems at the deepsea oil project.

The world's largest semi-submersile oil and gas platform, has been delayed yet again, this time targeting 2008 production.

According to a BP employee, the delay has been caused by problems including inferior welding on the project's distribution systems and other underwater equipment, as well as defects on the production, drilling and quarters platform.

He said BP is considering a temporary bypass system to get oil flowing in 2007 that will involve the completion of a workover riser, a connecting piece used to install equipment to complete the wells.
This temporary structure would be environmentally very risky from a spill standpoint and 25 percent partner ExxonMobil has pushed for waiting until the permanent structure can be properly repaired before production begins.

While ExxonMobil said that it cannot discuss any business it conducts with co-venturers, it can assure the public that any developments that they are part of will adhere to the "highest standards of safety, health and environmental conduct in design, construction and operation of facilities."

ExxonMobil and ConocoPhillips are also BP's partners in the Prudhoe Bay Field project. As the operator of Prudhoe Bay, and the majority owner in Thunderhorse, BP is the key decision maker on those projects and its partners are said to be suffering from the fallout of BP's decisions.

Analysts noted that the closure of the Alaskan field and the delay of the Thunder Horse project would affect the earnings of ExxonMobil.

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Speculation that BP will become a partner of Calgary-based EnCana Corp. has been stoked by BP PLC's announcement that it is making the largest investment to date in U.S. refining capacity to handle Canadian oil sands output. The company stated that it is in the final stages of planning a $3 billion upgrade of its Whiting refinery near Chicago.

The investment would increase the refinery's capacity to handle heavy crude from 85,000 barrels to 350,000 barrels a day.
BP is the only major oil giant without a stake in the Alberta oil sands.

EnCana Corp. hopes to produce 500,000 barrels of oil sands crude a day by 2015, and is close to deals to help process the output. A deal would probably include exchanging an interest in a refinery for a stake in oil sands production.
EnCana will announce a partner or partners by the end of this month.

BP said it is in talks to expand deals with current suppliers and has nearly completed agreements with other players.

The capacity to process additional oil sands is essential for the industry because of estimates that production from Alberta's Fort McMurray region could triple to three million barrels a day by 2015.

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Update

BP said Wednesday it will spend $3 billion to upgrade its Whiting, Ind., refinery to process more Canadian crude and benefit from increasing production from deposits buried in northern Alberta.

The largest gasoline market in the world hasn't seen a new refinery open in 29 years. Though the industry enjoyed record profits last year, it isn't likely to break that streak anytime soon.

Despite dramatically improved profit margins, most refiners still don't believe that the 5 percent a year return on investment is worth plunking down $2 billion to build a new facility.

New refinery construction has been stunted for years by poor economics, changing environmental rules and vociferous community opposition.
The years long struggle to obtain the necessary air and zoning permits is another factor stymieing the building of new facilities. Instead, refiners run their facilities full-tilt and resort to upgrading and expanding them.

Currently, the US has some 149 refineries processing nearly 17 million barrels of crude a day. This is less than the 1981 figure of 325 refineries handling 18.6 million barrels a day. With demands 20 percent higher today, much of the deficit is made up by imports and also with refiners adding capacity to their existing sites.

Connecticut-based Premcor Refining Group plans to spend up to $220 million to boost capacity at its Port Arthur refinery. San Antonio-based Valero Energy Corp. will add 36,500 barrels-per-day of capacity across its refineries, while Marathon Ashland Petroleum is expanding its Detroit refinery by about 26,000 barrels a day.

Good refining years tend to encourage major expansion projects.
Refining margins, the difference between the cost of a barrel of oil and the price of products made from it, hit $16 a barrel during the second quarter of last year and averaged $10.44 for all of 2004. This is a significant increase from the average margin of $6.45 between 1999 and 2003.

Despite the lucrative margins, experts believe that refiners are not expected to expand production capacity at the same rate as in previous years.
This might be because refiners have tackled the easier expansion projects and have been busy making changes to meet new lower-sulfur regulations.
Concerns over a shifting federal regulation known as New Source Review might also have stifled investments.

During the Clinton administration, an interpretation on the law required refiners to make environmental upgrades when performing what the industry deemed routine maintenance.
Under pressure from the industry, the Bush administration has backpedaled on that provision.

Over the next several years though, we can expect new facilities.
Phoenix-based Arizona Clean Fuels plans to build a $2.5 billion, technologically advanced refinery in southwest Arizona. The company hopes to negotiate an oil supply agreement with Mexico's national oil company, Pemex, which would ship crude to the Pacific Coast using an existing pipeline.
The crude would then be loaded aboard tankers and shipped up the West Coast. The investment group would then build a pipeline from the coast to the refinery.

Considering that the Arizona Clean Fuel partners have been trying to obtain the necessary air permits since 1999, many in the industry remain dubious.

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A rare rebellion by government investigators against their own agency, has 4 auditors who monitor leases for oil and gas on federal property say that the Interior Department clamped down on their efforts to recover more than $30 million in fraudulent underpayments of royalties for oil produced in publicly owned waters in the Gulf of Mexico.

Bobby L. Maxwell, who was formerly in charge of Gulf of Mexico auditing, said that these assets belong to the American public and "the agency has lost its sense of mission, which is to protect American taxpayers."

These lawsuits have surfaced as both Democrats and Republicans are questioning the Bush administration's willingness to challenge the oil and gas industry.
Two of the lawsuits claim that two senior auditors with the Minerals Management Service were ordered to drop their claim that Shell Oil had fraudulently shortchanged taxpayers out of $18 million.
Similar suits against Kerr-McGee Corporation and another 2 dozen companies were also suppressed.

Interior officials have denied these accusations, claiming that the auditors simply want a share of any money recovered through their lawsuits.
The department says that the auditors should have followed proper procedure if they believed that fraud was being committed by the companies they were auditing, instead of pursuing private lawsuits under which they could receive up to 30 percent of the monies recovered from the companies.

The auditors have sued the companies under the False Claims Act, that allows individuals to expose fraud against the government. A losing company is required to pay triple the amount of recovered money as well as back interest. In the cases brought by the auditors, this amounts to more than $120 million. People who successfully recover money for the government in such cases are entitled to a share.

While Shell said it had not seen the suits and could not comment, a spokesman from Kerr-McGee said that the case is without merit and the company is fighting it.

The lawsuits come at a time when the Interior Department is already under fire from Congress, accused of covering up ethical lapses and managerial incompetence.

Senator Ron Wyden, Democrat of Oregon, who has been investigating the accusations said, “If it was one isolated instance, you could say that’s somebody who had a bad experience and was frustrated,” Mr. Wyden said.

“But when you have three or four professional, nonpolitical, independent auditors all bringing the same message, that is too important to ignore.”

The Interior Department under President Bush has focused on increasing oil and gas production in the US. Lawyers who have specialized in lawsuits under the False Claims Act said they had never seen a group of government investigators use the law against their own agency and considering that it is 4 and not an isolated one, it forms a pattern of practice.

The agency’s own statistics indicate that revenue from auditing and enforcement plunged after President Bush took office.

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Over the next 5 years, Chevron Corp. will fund up to $25 million in research at UC-Davis to develop renewable fuels from plant waste.

Chevron Technology Ventures, a subsidiary of Chevron, will support a wide range of projects focusing on converting renewable feedstock's available in California into transportation fuel.

Barry Klein, vice chancellor for research at UC-Davis, said that this will fit into a niche of energy research on biofuels and bioenergy and that they hope to make an impact on generating new sources of biofuels.

Klein expects the research projects to move quickly with a group from UC-Davis and Chevron hashing out details and deciding on specific research proposals. A pilot program should be in the works at the end of the 5 year time frame.

The research will focus on California's agricultural industry as a key source for the raw materials to generate energy. Any carbon based material that can be fermented is a source of fuel. So parts of crops that are typically thrown away, like leftover rice straw, wheat straw, nutshells, grape skins, can all be recycled into energy.

UC-Davis has been a leader in energy and transportation research. In April the school received a $1 million grant from the California Clean Energy Fund and established the Energy Efficiency Center. Since 2005, the campus has received more than $7 million in funding and funding commitments for its UC-Davis Bioenergy Research Group, which includes scientists and administrators in seven major campus units.

Chevron has also displayed heightened interest in bioenergy and has already pledged $12 million over 5 years to the Georgia Institute of Technology focusing on research on cellulosic biofuel and hydrogen.

In May, Chevron formed a biofuels business unit to advance technology and pursue commercialization of the fuel. It also made a small initial investment in a biodiesel production plant in Galveston, Texas.

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Reliance Industries from India announced that its natural gas reserves could yield as much as 50 trillion cubic feet and that it was bringing forward the start up of a new refinery it had planned by 6 months.
Additionally, Reliance's head of international operations Atul Chandra stated that one of its discoveries at a site he declined to identify could yield 1 billion barrels of oil.

Reliance made one of the world's largest gas finds at the Krishna Godavari basin, which were estimated to contain 35 tcf. Now with reserves and technical resources put together, it could exceed 50 tcf.

Chandra also said that Reliance will soon enter the coal business once the Indian government has liberalized the coal industry to allow private investment in production.
Reliance also hopes to enter Iraq "at the appropriate time" either on its own or with partners.

At a time when many international oil majors are struggling to keep projects on schedule due to a tight market for inputs and contractors, Reliance has preponed the start up date of its new Jamnagar refinery by 6 months to June 2008.
Chandra said it would be one of the most sophisticated in the world, with a complexity level of 14.4 as measured by the Nelson index, enabling it to process heavy crudes.

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Inflation and foreign exchange pressures have pushed up Exxon Mobil's expected spending on its Sakhalin oil project in Russia above the 2002 estimate of $12.8 billion.

Bob Davis, a spokesman from the company said that Exxon Mobil had seen higher oil field service costs, but that he was unable to quantify the spending amount on the Sakhalin-1 project.

He said that "the budget is essentially the same, but the $12.8 billion was in 2002 dollars."

The Sakhalin-1 started output in August and is expected to reach 250,000 barrels per day by the end of the year.
Moscow plans to auction off newly discovered deposits in the region, though Exxon Mobil says those properties are included in its existing contract. The government and the company are currently at odds over whether the oil giant will be allowed to enlarge the license territory of the Sakhalin-1 block to the nearby deposits.

Just weeks before its first shipments are set to begin, a regional environmental watchdog questioned the environmental and technical readiness of Exxon Mobil's export terminal on the Pacific Ocean.
The Russian Resources Ministry has also revoked environmental permits for Shell's Sakhalin-2 project.

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BP's Gulf of Mexico field which was originally scheduled to start production at the end of 2005 has hit new technical glitches which will push its start-up date to the middle of 2008.

This latest slippage in the Thunder Horse field will make it harder for BP to meet production growth targets in the coming years and also calls into question the company's skill at overseeing complex projects, especially when its management of Alaskan oilfield and pipelines in already under scrutiny.

BP announced that tests carried out had revealed metallurgical failure in components of the subsea system and that while the company plans to retrieve and rebuild all the subsea production equipment, it was too early to estimate the additional costs involved.

Thunder Horse's manifolds were manufactured by FMC Technologies, which also built the manifolds for the similarly sized Atlantis project.

The shut down of the Prudhoe Bay Field has severely affected BP's US output. The Alaskan problem and the fatal explosion at a BP Texas refinery last year have got regulators, lawmakers and law enforcement agencies investigating BP.

Thunder Horse, designed to process 250,000 barrels of oil  and 200 million standard cubic feet of gas per day has been repeatedly delayed.

It is expected to be the biggest producer in the Gulf of Mexico when it finally gets going. BP owns 75 percent of the project with ExxonMobil owning the balance.

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Government approval for Shell's $20 billion Sakhalin project was withdrawn and state-owned Gazprom was reported to be trying to buy half of the TNK-BP joint venture, giving impetus to doubts about the involvement of foreign companies in the Russia's oil and gas sector.

The reason for withdrawing environmental approval on the Sakhalin-2 project was supposedly to "satisfy the arguments of the prosecutor's office". The prosecutor generals office had allaged that the permission to develop the second phase of the

Sakhalin scheme had been granted illegally. Shell denied the charge and said it was continuing work on Sakhalin, but admitted that the removal of its environment permit might lead to more delays and further cost overruns.

Shell has faced lots of problems on the project with doubling costs and mounting anger from environmentalists over potential damage to the endangered whale population. In this situation state-owned Gazprom has been trying to purchase 25 percent stake in Sakhalin-2.

Some feel that Gazprom is acting as the political arm of Kremlin and the permit issue is the latest attack by the government in an attempt to wrest back control of oil and gas assets held in the private sector.
Local reports hint that ExxonMobil's Sakhlain 1 project could meet a similar fate.

Sakhalin-2 is one of 2 projects run by western energy firms under production sharing agreements signed in the 1990's when

Russia lacked the resources to develop oil and gas projects on its own. With the Russian economy now booming thanks to high oil prices, many government officials have called for a revision of the Sakhalin-2 deal to include Russian participation.

Similarly, Gazprom is said to be in talks to buy the holding in the TNK-BP joint venture that is currently controlled by three local Russian investors.

Russia has taken repeated steps in recent years to consolidate state control over the energy sector.

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The no-show of oil giants in the recent auction of oil prospecting licenses held in India has been attributed by Director-General of Hydrocarbons VK Sibal to the strength of the country.

The absence of the oil majors like Exxon, Chevron and ConocoPhillips has been attributed to the maturity of Indian companies which refused give in to demands for large share of the production from the blocks.

BP and BG from the UK, Total of France and ENI of Italy, and companies from Malaysia, Myanmar, Australia, Ukraine, and Cyprus took part in the auction.

Though the actual investment could be much larger, the latest auction of prospecting licenses is expected to lead to investment of $8-10 billion, in a worst-case scenario.

The next round of auction blocks are expected to be bigger in scale and the data acquisition process for the blocks has begun with marketing kicking off in December.

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Update

A record 165 bids were received for 52 blocks put up for exploration by the Indian government.

Global energy giants British Gas, British Petroleum, Italy's ENI and Malaysia's Petronas are among the 66 firms that have bid for exploration acreages.

However, super majors Chevron, ExxonMobil and Conoco Philips of the US, who were expected to partner Reliance Industries, did not participate at all.

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Oil majors like BP, Shell and Exxon Mobil are among a throng of investors who are bidding for 55 exploration blocks covering 30,00 sq. km for oil and gas exploration rights on India's continental shelf.

This is the largest auction of oil and gas acreage to be held in India and interest in the licensing has been high after Cairn Energy's billion-barrel Mangala discovery.

Murli Deora, India's Petroleum and Natural Gas minister, said that he was confident that investor perception of India's oil and gas prospects was changing rapidly.

More than two third's of India's oil is imported with the oil import bill currently at $45 billion. This bill is increasing with rising demand in India and is adding to the financial burden of supporting fuel subsidies to the nation's rural poor.
Subsidies on fuel for cooking and lighting in rural India costs the government up to $15 billion.
State owned Oil and Natural Gas Corporation is in a race with Chinese oil companies in the hunt for foreign sources of fuel.

BG Group of Britain and BHP Billiton are seeking acreage in the Indian licensing round. Cairn Energy is looking to extend its Indian activity with a bid for 11 blocs.
Chevron, which is already in partnership with India's Reliance Energy has also bid.

The Indian government changed the bidding rules to give more weight to companies with “international credibility” so that it could attract big oil’s expertise and deep pockets.
Chevron, Exxon and BP are thought to have been aggressively pursuing exploration rights in the Krishna Godavary basin where substantial gas reserves have already been found.

Bidders will be judged on their technical skill, scale of proposed work program and the profit share they seek from the state. The results will be announced at the start of next year by the Indian government.

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Exxon Mobil Corp. which was involved in a dispute with Venezuela over a 500,000 barrels shipment of oil from the La Ceiba field has resolved the problem.

The shipment worth about $29 million had been blocked by state oil company Petroles de Venezuela on the grounds that Exxon Mobil had violated conditions for the development of the field by producing oil after a cutoff date for initial tests.
Ownership of the oil produced after the test deadline was the matter being disputed. Oil produced before the deadline belonged to the developers of the tract, Exxon Mobil and Petro-Canada.
Exxon Mobil tried to sell its stake in the tract in 20901 but did not find any buyers.

While company spokesman from Exxon Mobil announced that the crude has been shipped, neither party disclosed the terms of the agreement.

Relations between Exxon Mobil and Venezuela have been strained ever since President Chavez unilaterally raised royalties in 2004 on 4 heavy-oil ventures. Recently Venezuelan Energy and Oil Minister Rafael Ramirez said his country wants to change the terms of the contracts governing La Ceiba and two other profit-sharing ventures which would mean that Venezuela takes a majority stake in the projects.

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BP PLC and Shell Oil Co. are among 10 companies that the government is in negotiations with to rework improperly prepared oil and gas leases that didn't include clauses requiring royalty payments for oil selling above $36 a barrel.

Head of Interior's Minerals Management Service, R.M Burton said that BP and Shell "are thinking about it."
Both the companies seem willing to make changes in the leases.

Besides these 2 companies, the Interior department has spoken with 20 of the 55 energy companies that have interest in the leases and has developed "proposed terms".

The leases were made at a time when the price of oil was between $10 to $20 a barrel and the idea was to encourage companied to drill in deep water by waiving the usual 12 percent royalty as long as prices remained low.
But some companies aren't paying royalties since the clause was omitted in their lease agreements.

The government says it is near agreement with the two giants to recover some of neary $10 billion in lost royalty.
Republicans and Democrats shared their outrage over the loss of billions of dollars in lost royalty over what Interior officials have called a "mistake" in lease agreements.
The House Government Reform Committee is not satisfied with the department's explanations.

Burton said that she wants to know if the error was intentional or not. While Republican Darrell Issa said that the error shows the "culture of irresponsibility, unaccountability that pervades the entire department", some Democrats called for criminal investigations saying there was an obvious element of fraud.

Rep. Edward Markey stated “We will have a solution to the Middle East before you have an agreement from Shell and BP for a $36-a-barrel threshold."

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BP said that 1,000 barrels of oil were spilled in a highly industrial area in the Port of Long Beach, California.

The company said that the released product, used in the production of transportation fuels, has been contained and that it is working with officials to clean up the release. Locations for possible released product into the environment are being investigated.

Beside the fact that the company does not expect a supply disruption, the leak has also not caused any injuries, harm to wildlife or any significant impact on the environment. No oil has been released into the ocean or its tributaries.

BP said that the product pipeline was in compliance with federal and state pipeline regulations and that the company takes full responsibility for the leak and its cleanup.

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Chevron recently announced that it successfully completed a record setting production test on the Jack #2 well in the Gulf of Mexico.
At a total depth of 28,175 feet, the Jack #2 is the deepest successful well test drilled with a sustained flow rate of more than 6,000 barrels of crude oil per day.
More than half a dozen world records were set for test equipment pressure, depth and duration in deep water were set during the Jack well test, helping CHevron and co-owners carry out the deepest extended drill stem test in deep-water Gulf of Mexico history.

Chevron's success is undoubtedly historic, but the Jack #2 is not "the first" deep well ever drilled in deep water. Similar efforts are being conducted in the Gulf, and plannned elsewhere by other oil companies.

Additionally Chevron's announcement is not "new" news. The well was drilled in 2004 and the company spent the last 2 years evaluating and testing the prospect. While the Jack well penetrated a respectable amount of "oil pay", the technical teams of Chevron required large amounts of additional testing, data gathering and analysis in order to solidify future development plans. Thus, the company kept the news close to their chest till last week.

Considering that Chevron needed to spend huge sums of money to the tune of almost $80 million per year just to rent a rig and the extra costs of geoplogists, petroleum engineers, drill bits, mud, wireline services and the rest, to explore the commercial viability of the discovery and to coduct follow up testing after the drilling of the Jack #2, it is not surprising that the company kept its information tight.

Though Chevron and its partners have not publicized data on the oil quality and reservoir parameters of the Jack #2, an insider from Devon Energy Corp, a partner, stated that while the oil-bearing rocks at Jack #2 do not present any "undue complexity", the producing reservoirs are very different from one another. This might have to do with fraction systems within rock formations and the intrusion of lower and older salt beds into the rock formations above, with salt formations playing a prominent role in controlling the location and entrapment of petroleum.
Some estimates place the oil resources in the deep waters of the Gulf of Mexico in the range of 15 billion barrels. These are expected to be in the lowr Tertiary formations below the "allochthonous salts", which are the bed of salts that overlay the stratigraphically "younger" formations. These subsalt formations are the targets aimed at by oil-exploring firms.
There might be a lot of oil there if you can find it. But it's cheaper to send space probes to Mars than to drill beneath the deep salt!

Though Chevron and its partners have not described the quality of gas or oil, sulfur content, or the oil-to-gas ratio of the reservoir, it is believed that the reservoirs are oil dominant.

Since the Jack well is located far from all existing subsea oil-gathering pipelines, the transport of oil to shore poses a major logistic problem.
Chevron and Devon have been in discussions with the US Minerals Management Service regarding the possibility of using floating production, storage and offloading vessels.
An additional concern is that if the facility, when productive, produces associated natural gas, then that will also present a handling problem. Thus the production associated gas could be used to power the production platform or it will have to be re-injected into the rock formation.

Cost estimates for field development in the vicinity of Jack #2 are about $80-120 million per well drilled, with an additional $1.3 to $1.5 billion for subsea facilities.
Chevron's Tahiti project, located elsewhere in the in the deep waters of the Gulf of Mexico carries a $3.5 billion price tag and is expected to produce 125,000 barrels per day. Chevron's Blind Faith project in the Gulf of Mexico will cost an estimated $1 bilion and yield about 30,000 barrels per day.
The capital expenditure per barrel of oil equivalent produced per day is $28,000 and $33,000 respectively for the two projects, in contrast to shallow water, shelf development in the Gulf of Mexico which is tagged at about $1,000 per barrel of oil equivalent produced per day.
So deep water development may be 30 times more expensive than shallow water offshore development.

There will be other deep-water wells, but the Jack #2 stands alone as the milestone on the pioneering trail, being the first confirmation of a significant oil discovery in a frontier exploration area.

The Jack well stands as an example of applying immense measures of resources to solving a great problem. It stand as a symbol of the culture and industry of our interrelated world with decades' worth of fundamental research, development work by industry and government, spectacular scientific and engineering developments and entreprenurs coming together to pull it off.

Chevron utilized the most advanced scientific and engineering assets, locating and drilling a well in deep water, based entirely on information gained from remote sensing. Among the indispensable developments behind the Jack #2 well were those in geology, oceanography, geophysics, cartography, numerical computing, signal processing, drill bit design, drilling rig design, down-hole logging and completion, metallurgy, mathematics and more.

The Chevron effort is emblematic of our era but should not be confused with the "technology will save us" line of thinking.

Chevron has gone offshore, into deep water and conquered the rock. Like the Titusville well of 1859, the greatest accomplishment of the Jack #2 is that it shows that it can be done.

Mankind is entering upon the backside of Hubbert's curve. Global oil production is on the verge of entering the phase of irreversible decline. Worldwide oil extraction and depletion has exceeded oil discover by a wide margin for many years now.
Chevron's announcement is well timed and welcome in the present climate but it further illustrates a key element in the Peak Oil thesis... "easy" oil is gone. We have been drilling it up, lifting it out of the ground and voraciously consuming it for 147 years. The oil that we'll lift in the future will be in faraway places, under difficult conditions and in harsh climates besides being expensive.
So be warned. If you ever left the world of Peak Oil... welcome back.

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Germany based BMW will bring a hydrogen-burning car to the US based on the 7 series but with an internal combustion engine capable of running on either hydrogen or gasoline.

The technology is the first to be offered in a commercial car and can operate on the gasoline-only mode if a hydrogen-fueling station cannot be found. The car comes with a V12 engine and a total cruising range of 425 miles; 125 in the hydrogen mode and 300 miles in the gasoline mode.

The car, called the BMW 7-Series Hydrogen 7 Saloon, will be loaned to people who can shape opinion on the hydrogen infrastructure in the US. Entertainers, politicians and players in the energy and auto industry will be driving the car with BMW hoping that positive word-of-mouth will launch a movement to make hydrogen more available as an alternative fuel.
So BMW is going to market these vehicles to high profile, visible people initially.

The company wants the cars to be operated on hydrogen as much as possible. There are 2 fueling stations where the Hydrogen 7 Saloon can be tanked up with the required liquid hydrogen, near L.A. and in Washington D.C. But BMW officials said that it will offer mobile stations for users who might not be close to these locations.

The car's branding wil be a luxury car that operates on the cleanest of alternative fuels. And it's availability will be driven by how quickly hydrogen infrastructure is put into place.

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Iraq and Iran plan to strengthen their commercial ties by jointly developing oilfields that straddle their border. The two countries have already agreed to the unitisation principles and will sign the agreement as soon as the technicians mark out the common oil fields.

The deal entails both countries defining their reserves in the cross-border field and then pumping the crude jointly. After the deal is struck, the two sides will build a pipeline to carry Iraqi crude to Iran's southern refineries.
Iran is also willing to buy about half a million barrels a day of crude at market price for their Abadan refinery from Iraq.
With future sales of Kirkuk crude and Basra light crude also marked out, the two predominantly Shia Muslim countries are really forging deeper ties giving rise to concerns among the Sunni minority, other Arab states and the US which still has 145,000 troops in Iraq.

Besides this, Iraq would also like to forge similar deals involving oilfields with Syria and Kuwait.

Iraq is also looking for partnerships with oil companies to develop its fields and is awaiting the passing of the hydrocarbon law which will set oil policy by the end of the year.
The National Oil Company will be set up as soon as the law is passed as a regulatory and supervisory holding company for setting oil policies which operating companies will implement.

Iraq's state oil marketer SOMO will hold talks with customers to discuss contracts for the first half of 2007 in November or December.

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Notwithstanding the $10 drop in the price of oil over the last few weeks, the government predicts that crude will still average near $70 for the rest of 2006.

The Energy Information Administration said it expects gasoline prices to average $2.55 a gallon by January before rising again next spring.

EIA's bullish price view is based on rising demand with only a limited increase in supply.
The agency expects worldwide petroleum consumption to grow by about 1.7 million barrels a day in 2007 as opposed to the 84 million barrels a day used in 2005.
EIA reduced its estimate of oil consumption by 100,000 barrels a day due to high prices.

Production capacity is expected to increase only slightly during the forecast period, existing and potential supply problems throughout the world will shape the tight supply-demand balance resulting in little relief from current pricing patterns.

Following the EIA's report oil prices briefly turned higher but later gave gains back with US light crude for October delivery trading down 51 cents on the Nymex.
It also provided a little boost to the shares of oil majors like ConocoPhillips, ExxonMobil and Chevron.

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Flawed drilling leases issued in 1998-99 are allowing oil companies to avoid federal royalty payments and the companies are now facing pressure to resolve them.

A mistake made 8 years ago omitted a provision in more than 1000 drilling leases that would have required royalty payments if the price of oil went above $36 a barrel.
Congress had set the $36 mark at that time to allow royalty breaks to spur deep-water exploration.

With the current prices being almost double the trgigger level, most of the leases would have been subject to royalty payments if the provision had not been forgotten.

Chevron Corp, which has recently announced the discovery of new oil in the Gulf of Mexico acknowledged that 2 of the 8 leases involved in the discovery were among those issued without the royalty threshold.

The new discovery made by Chevron and its partners, Statoil ASA of Norway and Devon Energy Corp is believed to contain as much as 15 billion barrels of oil.
Chevron said that the "majority of the discovered resource" including the test well is from leases subject to federal royalty payments but oil found in 2 other lease blocks could be exempt.

The company claimed that those 2 lease areas had not been drilled yet and any conjecture about royalties for those blocks is an academic exercise.
Executives from the company have also assured the Congress that they are ready to discuss reworking the royalty issue in the leases to reach a mutually satisfactory resolution.

BP PLC and Shell oil Co. have also agreed to make changes in the leases held by them. But the companies have argued that the leases are contractual agreements and care should be taken while tampering with them.

Congress is applying pressur eon the companies to reach a compromise with a provision being added in an Interior spending bill that would prohibit any company that refused to rework the leases from bidding on new oil leases. The spending bill has not received final approval.

The Government Reform Subcommittee is set to hold another hearing into the royalty relief controversy hoping to ferret out how the mistake was made in the 1990's and why it was not quickly corrected.
The mistake could cost the government $10 billion in lost royalties, even if the new Chevron discovery is not taken into account.

But getting to the bottom of the blunder "is especialy important in light of Chevron's recently announced new discovery."

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Deputy Prime Minister Barham Saleh of Iraq said that Iraq's emergence as a "secure petro democracy" could suppress sectarian violence and called for partnerships with international companies to boost the country's oil industry.

He conceded that disputes between local officials and the central government over who controls oil proceeds were one of many obstacles to making improvements but said he hoped that oil would be a "unifying force for Iraqis rather than a resource to fight over."

Saleh is aware that foreign oil companies are needed to modernize Iraq's oil sector and meet the country's goal of doubling current crude production. The absence of legal framework governing investments and ownership of oil resources has hampered foreign investments.

Big oil companies are willing to send crews for exploration and pumping to Iraq depite the insurgency and attacks on oil workers as long as there are legal ground rules for their participation.

Iraq is on the way to ushering in a hydrocarbon law that could bring in investments by foreign companies in the oil sector. A law setting ground rules for managing Iraq's huge petroleum reserves is also to be approved by the end of the year.
The country needs invenment and has to push libralization and open up markets.

The main trouble in enacting laws is the difference in opinion about whether the resource is controlled by regional governments or Baghdad.

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Sir Richard Branson has joined hands with venture capitalists Vinod Khosla and Ron Burkle and invested more than $60 million in Cilion, a company that will make bio-ethanol from corn in an effort to satisfy California's need for environmentally friendly fuels. California already uses bioethanol to fuel cars, but most of it is imported from the American Midwest.

Gov. Schwarznegger issued a directive, earlier this year, calling for the state to make 20 percent of the fuel itself by 2010.

Cilion, a joint venture between Western Milling and Khosla Ventures, plans to build enough refining capacity to meet the target itself.
Cilion plans to start work on the first of seven bioethanol plants within a few weeks. It will bring corn from the Midwest and process it with technology that makes it competitive with petrol at oil prices as low as $40 a barrel.

Branson's Virgin empire plans to move into environmental businesses of which this project is a starting move.
Virgin Fuels, a subsidiary will alone invest $400 million in several biofuel schemes. The company is also working with the government on a plan to make it economical for train companies to use biodiesel.
Besides this Branson is said to be considering big investments in other technologies including wind power, hydro-electric and even nuclear stations. The company is open to investing in any kind of alternative-energy.

Branson who attended the recent environmental summit in California said that he feels that global warming is the biggest crisis facing mankind and that every company chairman should be thinking about devoting a percentage of his earnings to it.

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Following charges by the Chad government against Chevron and Petronas regarding non-payment of taxes and their subsequent exclusion from the oil producing consortium in the country, Chevron Corp has agreed to pay extra tax to the government.

President Idriss Deby had ordered the two companies out of the country on charges of not having paid upto $450 million in taxes.

While Chevron has committed to paying the taxes in the coming days, no agreement has been reached with Petronas.

ExxonMobil holds a 40 percent stake in the consortium with Chevron and Petronas holding 25 and 35 percent respectively. They have financed a 657 mile pipeline from Chad to Cameroon's Atlantic port with a capacity of 225,000 barrels per day.

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Conoco Co. has decided to withdraw from Thailand after failing to break even for the last 15 years. Shell and Petronas are both interested in acquiring the Jet petrol stations operated by Conoco Co.

While Conoco has already approached several oil companies operating locally to buy its 147 petrol stations nationwide, industry executives believe that Conoco will call for public bids in the Thai operations in the near future.

Tiraphot Vajrabhaya, chairman of Shell Company of Thailand said the multinational was always exploring opportunities to expand in Asia Pacific, under its "move from West to East" strategy.

Though Shell is estimated to have invested upwards of 4 billion baht in its Thai operations, after depreciation and current market value are taken into account, the price of any acquisition is likely to be lower.

The current climate of retail oil business in Thailand is very poor and Shell is not going to expand this year. They will invest 200 million baht in general maintenance of its stations this year, much lower than normal investments of 700-800 million baht a year.

A Petronas executive also confirmed that the company plans to bid for Conoco's jet stations but is not planning to expand its network this year beyond the 117 stations it already has.

The bidding process if it goes ahead is expected to last  from 6 months to a year.

While companies are always looking for opportunities to expand, the final decision will rest with the headquarters and will depend on conditions, the market situation, potential and pricing.

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