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New Oil Tax Impacts Gas Prices:

Felipe — Wed, 11 May 2011 07:30:43 +0000

Gas Prices To Go Up 25pc Due To Extra Oil Tax

Extra Oil Tax Cuts Down Profits of Oil and Gas Companies – During the 2011 Budget pronouncement, Chancellor George Osborne announced that the supplementary charge tax on UK oil and gas production was to be increased from 20pc to 32pc. Up until now oil and gas companies operating in the North Sea were rather quiet about the tax surge but have recently made public that their profits were slashed and energy and gas prices will rise.

The tax increase brought even more insecurity to the unstable UK energy industry. Big suppliers like British Gas owner Centrica, have already warned it may partially shut the UK’s biggest gas field as a result of the tax.

Last Wednesday, 4th of May, CEO’s of Britain’s largest oil and gas suppliers tried to persuade the Government to abandon a £10bn tax grab on North Sea energy companies, amid warnings the levy will “utterly destroy” the industry.

Speaking to the government’s cross-party Energy and Climate Change Select Committee industry representatives threatened that 30,000 jobs are at risk due to the uncertainty raised by the windfall tax.

The Energy Minister, Chris Hune and Justine Greening, Economic Secretary at the Treasury who were also at the hearing stated that the effect on jobs is pure speculation, because the impact on investment was not yet known

According to Greening, George Osborne used the independent Office of Budget Responsibility (OBR) analysis to calculate the tax and concluded that the effect in investment will be minor.

Writing for the Telegraph, Andrew Lilico, Economist with Europe Economics, and a member of the Shadow Monetary Policy Committee said that claims by oil and gas companies that it is going to shut down the North Sea are just silly.

First, let’s remember that Petroleum Revenue Taxation (PRT), including the “supplementary charge” on corporation tax that Osborne raised, isn’t like taxes on widgets or socks or ice cream. It isn’t, as with most taxes, a matter of the government confiscating a portion of someone’s property to use for government purposes (worthy or not). No – it’s the Queen’s oil, not the oil company’s. PRT is simply the way that the oil company pays the Crown for the right to take away and sell that oil. It’s an alternative to a royalty, and can be thought of in much the same way. – Andrew Lilico

It is widely known that tax increases reduces incentives to invest and cut down profit margins from companies affected by the scheme. One way or another, companies find a way to pass this to the end customer in order to minimise the effects on their profit margin.

Centrica has already stated that wholesale gas price for delivery next winter has gone up 25pc because of the jump in commodity prices but has not yet been passed on to customers.

What baffles me about all this is that over the past two year when Brent crude oil prices surged from $80 to $125 a barrel and the profit of these Oil and Gas companies nearly doubled, they kept quiet and even managed to increase oil and gas prices due to one reason or another.

Let’s not forget that the majority of the oil and gas being explored today in the North Sea is fruit of investment planning made a little over a decade ago when oil prices were around $10 per barrel. So to say that a 32pc supplementary charge will shut down the North Sea with Oil prices at $100 per barrel is frankly absurd.

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IEA and IMF Announcements:

Felipe — Wed, 13 Apr 2011 05:45:59 +0000

IEA and IMF Announcements Pulled Oil Prices Down

At the start of the session on Monday Brent crude oil was being traded above $127 per barrel and dipped below $125.50 later in the same session, after Saudi Arabia assured it can pump more oil if needed and hopes of a peace settlement in Libya. On Tuesday prices continued to drop after announcement of the IEA and the IMF that crude prices above the $100 are starting to hurt global economy.

The International Energy Agency report showed that high prices are already starting to dent oil demand while the IMF Economic Outlook predicted that US and Japan economies will expand at a slower pace than previously predicted. As both countries are the first and third largest oil consumers the report had a direct impact in oil prices that slid as much as $4 from Monday to Tuesday.

At the time of writing Brent Crude oil prices were being traded at $123.56 after falling as much as $2.01, or 1.6 %, to $121.97 a barrel on the ICE Futures Europe exchange in London.

Falling oil prices dragged UK gas prices with it and Winter 2011/12 gas eased trading at 73.50 pence per therm and despite a disruption in supply from Norway where a gas field was shut down due to a gas leak, spot gas prices also backed a little and where trade at 59.00 pence per therm thanks to strong LNG supply.

May gas contracts prices also registered a slightly reduction and were traded at 61.30 pence per therm down 0.10 pence while prices for the third quarter fell nearly half a penny to 64.30 pence.

Despite a secured line of LNG tankers already on its way to Britain gas brokers are concerned LNG terminals won’t be able to compensate further supply disruptions.

Backed by lower gas prices, OTC (over-the-counter) energy prices also fell with the MWh being sold at 50.90 pounds, 85p lower than previous sessions. The restart and reintegration to the grid of Hartlepool 1 nuclear reactor on Monday also influenced lower energy prices.

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Oil Prices Hit New Highs:

Felipe — Wed, 06 Apr 2011 06:12:41 +0000

Brent Crude Hits Highest Levels since Financial Crisis

Brent crude oil prices hit a 2 1/2 year high and firmed at $121.06 yesterday. Concerns of a disruption in supply due to the unrests in the Middle East and the lowest US unemployment rate in two years were the major factors for this surge in oil prices. Last time Brent crude oil prices traded above the $120 mark was back in September 2008, right in the middle of the financial crisis. According to some analysts we have reached a “danger point” and if oil prices continue to rise global economy could suffer an inflationary shock putting global growth to a halt.

Estimates from the International Monetary Fund suggest that every $10 increase on oil prices shaves 0.2pc off world growth. Before the turmoil started in the Middle East Brent crude oil was being traded at around $98 to $100 a barrel, so with prices now at the $120 mark we can conclude that global growth will retract 4pc, based on the IMF estimates.

Over the past few days’ oil prices surged from $115 to $120. Market analysts stated that such increase was a “cumulative impact” of weeks of unrests in the Middle East, especially with military action in Libya showing no signs of an easy resolution.

Speaking to The Telegraph Paul Horsnell, head of commodities research at Barclays Capital, said:

“Oil at $120 is a psychological level and it looks like it could be a trigger number, with markets suspecting something on the supply side from Saudi Arabia or OPEC. Spare capacity is becoming more limited and there is concern about the next supply outage.”

Paul Horsnell wasn’t the only analyst questioned by The Telegraph over the surge in oil prices. In the article “Oil rises above $120: what the analysts are saying” renowned market analysts explained why Brent crude oil prices peaked.

What affects will higher Brent crude Oil Prices have in the UK economy?

So it has already doubled the Monetary Policy Committee’s 2pc target at 4pc as climbing oil prices could accelerate inflation. The Office of Budget Responsibility has already estimated an increase of 0.5 percentage points in inflation this year due to the increase in oil prices since November 2010.

Not to mention other commodities that are directly and indirectly tied to crude like energy and gas. Higher oil prices means higher energy and gas prices.

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Middle East Unrests Continues:

Felipe — Wed, 09 Mar 2011 02:29:12 +0000

Middle East Unrests Continue to Influence Gas Prices

UK gas prices climbed to its highest levels in more than 21 months supported by conflicts in Middle East which are pushing Brent crude oil prices close to the $120 a barrel. On Monday Brent crude oil prices firmed at $117.40 a barrel, causing a rally in the UK gas market. Winter gas contract prices climbed to 68.50 pence per therm on Monday morning, the highest since May 2009.

Concerns about the turmoil in Libya, tensions in Saudi Arabia and rumours of the wave of anti-government protests spreading across the Middle East and North Africa, spooked the market early this week.

So far Libya has cut off only 2 percent of Europe’s gas supply but as unrests spread to countries like Oman, Yemen and Algeria, the uncertainties about future oil and gas production in these countries increase.

“The potential disruptions of gas production in countries currently under social unrest are significant,” – said an energy broker.

Higher oil costs push up some mainland European gas contracts and affect prices in the U.K. because of pipeline connections to Europe. Stronger oil also means that European gas suppliers may buy gas in the UK over the coming months as their oil hooked up prices rise in price.

Gas for summer 2011 contracts rose 1.75 pence to 59 pence and April’s climbed to 58.90 pence. Meanwhile spot gas prices were traded at 59.75 pence on Monday, up 2 pence from Friday. On Tuesday prices continued to surge hitting 60 pence per therm. At the time of writing.

Stronger gas prices means higher energy prices, baseload power for Tuesday was traded at 51 pounds per megawatt-hour. The biggest rise was seen on Winter 2011/12 contracts with increases of 2 pounds trading at 56.90 pounds per megawatt-hour. At the time of writing.

Updated

U.K. natural-gas and power contracts declined after two days of gains as crude fell and milder weather was forecast.

Gas for summer, the six months from April, lost as much as 1.55 pence, or 2.6 percent, to 58 pence a therm, according to broker prices compiled by Bloomberg. It was at 58.4 pence as of 9:25 a.m. in London. The winter contract dropped as much as 1.05 pence to 67.75 pence.

Gas for same-day delivery fell 0.9 pence to 58.9 pence.

Power for next month dropped for the first time in nine days, losing 90 pence, or 1.8 percent, to 50.10 pounds a megawatt-hour.

source: Bloomberg Businessweek

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Middle East Price Impact:

Felipe — Tue, 22 Feb 2011 23:47:43 +0000

Gas Prices Rise as Middle East Unrest Continues

What started in Egypt seems to be spreading all over the Middle East. Popular revolt and political uncertainty is making investors plan for the unpredictable, as crude oil prices continues to rise, which in turn is contributing to higher gas and energy prices.

When the protests started in Egypt crude oil prices were below the $100 mark, more precisely at $98 a barrel. Last Monday the Brent crude oil barrel was traded at $108. As UK gas prices are tied up to oil prices, prompt and curve gas prices rose too.

Prompt gas contracts for immediate and day-ahead delivery were both up nearly one penny from Monday’s close at 54.55 pence. While winter 2011 gas contract traded at 63.50 pence per therm, the highest level since October 2009.

On Tuesday morning National Grid data showed that the system was undersupplied which associated with a slightly higher increase in demand was also responsible for higher wholesale gas prices.

Since nearly 50% of UK power production uses gas as a fuel day-ahead energy prices also reported an increase of 0.75 pounds and were traded at 47.25 pounds per megawatt-hour. A drop in wind power generation also added to higher energy prices.

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Internet’s Energy Consumption:

Felipe — Wed, 22 Dec 2010 04:04:01 +0000

The Internet’s Energy Consumption and Its Carbon Footprint

Over the past few years there has been an ongoing debate about the growing amount of energy needed to power the World Wide Web, a.k.a the Internet, and the impacts on our environment. Many have tried to pin down the exact amount of energy needed to power the internet and its carbon footprint. Recently The Guardian published an article saying that the Internet’s carbon footprint was around 300 million tonnes of CO2 per year, equivalent to every person in the UK flying to America and back twice over.

The article was published in August and with the number of internet users growing by the day worldwide I wouldn’t be surprised if these figures were higher nowadays. According to the UN by the end of the year there will be 2 billion world internet users, that is 1/6 of world population.

Hypothetically, if these growth rates remain the same, the entire world would be online by 2020.

To measure the Internet’s exact power consumption and then determine its carbon footprint we would need to know the precise number of computers, laptops and mobile phones that are online these days (which we don’t). Add that to the amount of energy consumed by all the Data Centres worldwide to then determine the internet power consumption and its carbon footprint.

Scary isn’t it? But we gathered some data just to give you a better understanding of roughly how much energy is needed to power the World Wide Web these days.

Back in 2006, data centres in America consumed a total of 61,000,000,000 kWh (yes you read it right 61 trillion kWh), which is enough to power the UK for 2 whole months.

A single Google search produces 0.2g of CO2. Not that much right? But now, 3,100,000 Google searches emit enough CO2 to power an average house for a whole month.

The monthly searches processed by Google produce 260 tons of CO2 which is equivalent to power an American fridge-freezer for 5,400 years. This consumes 3,900,000 kWh of energy, which is equal to washing 5.57 million loads of laundry.

But wait, it gets worse! A single spam message produces the equivalent of 0.3 grams of CO2. Multiply that by 62 trillion pieces of spam circling the World Wide Web each year and we have the emissions equivalent of driving around the Earth 1.6 million times.

Despite its huge energy consumption the internet is likely to play an important role as we move towards a low carbon economy. Thanks to advances in communication technologies an estimated 40% of the working population could work from home. If 40% of American workforce worked from home twice a week, carbon emission would be reduced by 53 million metric tons year, equivalent of taking 10 million cars on the road.

If you would like more information on our range of energy broker services or would like to find out how this could benefit your business, simply call our energy team today on 0870 710 7560 or request a call back at time to suit.

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Facebook,Thanks For Higher Bills:

Catalyst Commercial Services Ltd — Sun, 14 Nov 2010 19:20:10 +0000

Is Facebook Responsible For Higher Energy Bills?

As a market leading energy broker we have noticed that the current generation is more committed to discovering and reducing its carbon footprint than ever before. But despite this growing awareness and our need to conserve and reduce our energy consumption, there is one thing that has changed our lifestyle, and increased our energy consumption like nothing else we have ever seen before. Facebook, the social networking site accounted for 1 in every 10 internet visits in September – up 4% from the same month last year, now overtaking popular search engines such as Google in the rankings.

Astonishingly Facebook now attracts 55% of all visits to social networking sites but others such as Twitter, Linkedin and Tumblr have seen visits at least double in the last 12-months, a recent report suggested.

With all of this increased online activity comes an obvious need for an increased supply of electricity, both from the millions of online users, to the huge new data centers needed to host all of this data. With its membership now passing the 500-million mark back in July, the storage and transmitting of messages, pictures and other information through Facebook uses a vast and still rapidly increasing amount of energy, as the network continues to expand its worldwide operations.

And with 4.5 billion updates posted to Facebook every week, the vast amount of energy needed for all of this online activity is enormous.

One of the pricing fundamentals of any commodity is the supply and demand factor, and with any increased demand, we see an impact on the supply and eventually the cost.

Because of Facebook’s rapid growth, their new hosting facility will need to be twice the size of its previous data centre, and to compound this issue the main source of electricity for the site is from coal fired power stations, the largest source of global warming pollution.

But this problem isn’t just limited just to Facebook, as the demand for cloud based applications grows Google, Facebook, Yahoo and others are investing billions of dollars to build new data centers to meet their growing demand for Web services, adding to the world pollution from computing.

In fact a recent study has estimated that the average user now spends at least 7-hours a month on Facebook alone, and reports suggest that this desire for social networking is set to increase further over the coming years.

Given that energy is an expensive and rising cost, these service providers do have a financial and environmental motivation to use as little electricity as possible.

But the implications for increased online activity is unlike anything that we have ever experienced before in our life times, and our desire and hunger for further social media interaction wont stop here.

Facebook is set to launch its latest Google taunting product on Monday, the long anticipated Facebook email system. The launch of an @facebook.com email is not itself a great surprise, as the existence of a secret project officially known as Project Titan has been circulating since February.

We just hope that our dwindling business energy supplies can cope long term with all of this increased use of energy.

More Facebook Facts

Facebook like served a billion likes in the first 24 hours after its launch
To put your friend count in perspective, the average user has 130
People spend over 500 billion minutes per month on Facebook, while the current active official user count now stands at over 500 million.
More than 2.5 billion pictures are uploaded to Facebook each month.
If Facebook were a country, it would be the fifth-largest country in the world, after China, India, the U.S., and Indonesia.
There are more than 800,000 developers building applications for Facebook.
70% of Facebook users live outside of the US.
Yahoo! tried to buy Facebook in 2006 for $1,000,000,000.
8,300,000,000 hours are spent on Facebook monthly.
Facebook was originally bankrolled by a co-founder of Paypal for $500,000

Please add your comments below as we would love to know your thoughts on this for you and your business.

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Energy Market Report Nov10:

Catalyst Commercial Services Ltd — Mon, 08 Nov 2010 01:46:14 +0000

Our monthly analysis of the UK gas and power markets is now available on line for the month of November 2010. The service is intended to keep you up to date with all the major news in Europe’s gas and power markets. It is also designed to keep power executives focused on market activity in an easy to digest format.

Your find our November 2010 report here and all historical energy reports can be located here.

If you would like more information on our services or would like to find out how this could benefit your business, simply call our energy team today on 0870 710 7560 or request a call back at time to suit.

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BP update on GOM Oil Spill:

Catalyst Commercial Services Ltd — Thu, 27 May 2010 07:20:27 +0000

BP’s Efforts on the Oil Spill in the Gulf of Mexico

BP published another press release on Thursday, May 20, 2010 about their continued efforts to contain the oil spill that happened in the Gulf of Mexico.

BP said that they were working with other experts and the government authorities on their subsea efforts. Their main focus has been to intervene via the BOP (blow out preventer) in order to stop the oil from flowing from the well, and to collect its flow from the points where there are leaks.

Their RITT (riser insertion tube tool) containment system has been able to collect 3000 barrels of oil and 14M standard cubic feet of gas a day at the end of the leaking riser. The team continues to collect and store the oil and flare the gas on Discoverer Enterprise, their drillship, 5000 feet above at the surface.

Apart from these attempts, they are preparing for an operation called as “top kill” with which they hope to seal the well. As per their plans, they are hoping to begin this operation in a few days.

For the surface spill, they have employed more than 930 vessels to collect the escaped oil and disperse it. With the help of these efforts, they have skimmed around 7.8 million gallons of oily liquid off the surface.

In order to be able to accurately determine the rate at which oil is flowing from the riser, the US government has put together a team called as the Flow Rate Technical Team (FRTT), which is responsible for developing more precise estimates than the ones available from several parties at the moment. This is because the third parties’ estimates are often based on the dimensions that the riser had before the incident. However, during the incident, the riser structure has gotten altered, due to which those estimates aren’t accurately applicable.

BP has agreed to fully support the FRTT by proving them with whatever information they need to be able to do their job well.

BP has also launched a live feed on their website, www.bp.com, in order to help all readers see their efforts directly on the Internet. So far, this was available only to the government entities including the US Coastguard, the MMS (Minerals Management Service) etc. in addition to the scientists and engineers involved in the attempts to curb the spill.

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Aberdeen All Energy Show:

Felipe — Thu, 20 May 2010 07:30:16 +0000

All Energy Show in Aberdeen to Reveal Offshore Valuation Study

In its tenth consecutive year the All Energy show kicks off today in Aberdeen. According to the organisers this year’s show will feature 400 participating companies from the renewable energy sector representing 16 different countries.

Already a reference in the renewables sector the fair will feature a series of sessions about wind power, marine energy innovations and a few others all focused obviously in renewable energy generations. But one session in special is causing a lot of buzz.

For the first time ever a full economic valuation of Britain’s offshore renewable energy resources will be presented by the Offshore Valuation Group, a group of organisations from the public and private sector, chaired be the Public Interest Research Centre.

In short, the report said wind and wave power has the potential to generate the same amount of electricity as is currently achieved by North Sea oil and gas production. By achieving only a third of its full potential 145,000 jobs could be created and by 2050 the UK could export electricity.

Tim Helweg-Larsen, Director of PIRC, said: “To discover that we own a resource with the potential to return the UK to being a net power exporter, and on a sustainable basis, is genuinely exciting, and a wake-up call to those in a position to foster the further development of this industry.”

Such potential associated with Government incentives, private funding, technical expertise and development projects in hand is pushing the Highlands and Island into pole position globally when the subject is green energy generation.

The co-operative Bank, a bank specialised in small to medium renewable projects of up to £25m will use the event to launch a new Scottish renewables team. The Co-operative also announced that it has designated £200m for renewable projects which will be mostly spent in Scotland.

Meanwhile governing bodies are preparing the sector to avoid the same errors committed by the oil and gas industry. Brian Nixon, Chief Executive of Aberdeen based industry forum Decom North Sea wants companies planning to invest in renewable energy operations to present a decommissioning plans to demonstrate how they will fund these projects at the end of their life spans.

“Where the oil and gas industry did not always think ahead and consider what would happen to installations at the end of their lifespan, the people behind the ongoing wind developments can think about how they are getting infrastructure in place and how it will be taken away afterwards.” he said

And added:

“By taking this action, they will ensure future projects are truly sustainable and environmentally appropriate.”

If all the predictions made by the Offshore Valuation Study are met, Britain is on its way towards a low carbon economy not to mention that this is a huge boost towards meeting our Climate Change Bill agreements.

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Tube Sucking Oil Away:

Catalyst Commercial Services Ltd — Tue, 18 May 2010 06:16:22 +0000

BP have now resorted to sucking oil away from the massive Gulf of Mexico oil leak using a long mile tube. In a recent statment engineers have finally succeeded in keeping some of the oil gushing from a blown well out of the Gulf of Mexico after more than 3-weeks of failures.

http://www.youtube.com/watch?v=-yJlJOaR1jA

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BP Starts to Make Progress:

Felipe — Mon, 17 May 2010 13:45:09 +0000

BP Starts to Make Progress to Contain Oil Spill

After nearly 3 weeks and thousands of barrels of crude oil spilled over the Gulf of Mexico BP finally managed to make progress in containing the spill. On Sunday underwater robots managed to insert the small tube into a broken 21 inch pipe known as the riser which will now be funnelled to a drilling ship on the surface.

The siphoning plan became an alternative after the failure of containment dome thought to be the best way to plug the leak. However, this wasn’t enough to calm US authorities including President Barack Obama; new case studies revealed that crude oil may be leaking 10 times faster than estimated.

Scientist have found a plume of oil 10 miles long, three miles wide and 300ft thick pouring into the ocean at a rate of between 25,000 to 80,000 barrels a day – compared to the current estimate of 5,000 barrels a day.

How the Siphoning Works

* The insertion tube is a five foot long steel pipe about four inches in diameter with specially designed rubber baffles. The tube will be inserted into the Horizon’s riser to provide a direct connection.

* The direct connection, combined with the injection of methanol, will minimize the formation of hydrates that could block the flow of hydrocarbons.

* The riser insertion tube will be installed about 600 feet from the wellhead.

* The insertion tube will be connected to a 5,000 foot riser that will convey the hydrocarbons to the Transocean Discoverer Enterprise drillship on the surface.

* Once in place, oil will flow up into the Enterprise’s riser to the surface.

* Once at the surface, the hydrocarbons will be processed and oil will be separated from water and gas. The oil will then be temporarily stored before being offloaded and shipped to a designated oil terminal onshore.

* The Enterprise is capable of processing 15,000 barrels of oil per day and storing 139,000 barrels.

* A support barge will also be deployed with a capacity to store 137,000 barrels of oil.

What’s next?

* This riser insertion tube is on site and is being prepared for installation in the next few days.

* ROVs will assist in the installation and connections to the riser (tubing) back to the surface.

This catastrophic oil spill is not only devastating the area but it will also start to have its effects in the economy as oil prices are likely to rise backed by concerns about higher costs and tighter regulations for the energy majors.

We asked one of our energy consultants Chris Hurcombe if he thinks the oil spill will propel crude oil prices to higher levels.

He said “That this current oil disaster is having little impact on oil prices as prices are currently at their lowest level since February”. He continued “This is supported by the fear that demand for energy will be hampered by the current economic instability in Europe”.

What do you think will happen to oil prices? Will this catastrophic disaster influence in oil prices in the long run or do you think there will be an immediate impact on the crude oil prices?

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No Easy Answers for Oil Leak:

Catalyst Commercial Services Ltd — Tue, 11 May 2010 07:30:39 +0000

Despite several efforts to stem the flow of oil from the leak, nothing so far has worked. A new effort from BP will see them launch a smaller dome, after attempts with a larger dome have failed. The new called Hat Dome could be deployed within 72-hours a BP spokes person has revealed.

http://www.youtube.com/watch?v=9O8oIssrGqE

Which ever method they choose to use, there has never been an oil leak at this depth before, so all of the time its completely new territory for the clean up team.

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Worst Oil Leak in History:

Felipe — Mon, 10 May 2010 12:40:21 +0000

Worst Oil Leak in History is Costing BP £6.5m a day

In 25 years of deep water drilling the oil industry has never seen such a catastrophic event like the one BP is dealing with now. The failure of the ultimate safety system that every drilling operation must have is what caused which looks like the worst environmental disaster in American history.

So far BP’s Gulf of Mexico spill has cost the oil giant £350m, however, the final bill is likely to be much higher thanks to the 5,000 barrels of crude pumped daily into the sea.

With crude oil dealing at around 78 US dollars per barrel, BP is loosing 390,000 US dollars per day only with the oil leak. Add to that another $10m daily clean up bill instead of the initial $6m a day revealed last week.

Right now BP’s priority is to minimise the impact of the situation. Over the weekend attempts to put a giant cap over the leak failed because ice-like crystals clogged the cap’s top when it was over the leak and now engineers must wait before they can try again.

BP’s chief executive Tony Hayward admitted he wasn’t confident that the dome would work. This so called “dome” is designed to collect oil from leaks and it can be siphoned off at any time but it had never been used at such deep levels.

“The oil industry has been drilling wells in deep water for 25 years, drilling 5,000 plus wells, maybe 10,000, around the world and this has never occurred. It was a catastrophic event,” said Mr Hayward.

Despite failures in attempts to stop the leakage, the oil company’s Chief Executive is confident they will fix this catastrophic problem any time soon.

“For sure we will fix it; it’s simply a matter of time. Clearly, the sooner the better, but we will fix it, that’s certain.” stated Mr Hayward.

The spill may lead to tighter rules on offshore oil exploration which will consequently lead to higher crude oil prices and a reduction in investment on the sector.

BP is not the only company quantifying the losses. Two companies, Lancashire Holdings and Catlin, said their losses caused by the sinking of Transocean’s rig two weeks ago could be the worst in history. JP Morgan estimates that the incident may cost insurers $1.6bn, approximately £1bn, and lead to an overhaul of the relationship between insurance companies and the oil industry.

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New Oil Supply Found:

Felipe — Fri, 07 May 2010 13:16:58 +0000

Rockhopper Struck Oil in the North Falkland Basin

British oil and gas exploration company Rockhopper struck oil in its Sea Lion prospect locate in the North Falkland basin. The find could help improve UK’s tax for income drilling but could heat up the diplomatic row over the sovereignty of the Falkland Islands.

Rockhopper findings were made at a depth of approximately 2,750 metres and the company is now considering whether to drill an appraisal well. The successful strike was made at the company’s Sea Lion prospect located 137 miles north of the British territory.

The Company has run a suite of wireline logs and logging data collected thus far indicates that the well has encountered a 150 metre gross interval of sand and shares. The data show that the well has 53 metres of net pay distributed in multiple pay zones, the thickest of which has a net pay of 25 metres. These pay zones have an average porosity of 19%.

“We are extremely excited by the results,” said Samuel Moody, the Managing Director of Rockhopper. “While we are presently acquiring additional data, current indications are that we have made the first oil discovery in the North Falkland Basin.”

The find sent Rockhopper’s shares soaring by 150%, to 94p following the announcement. Rockhopper shares were not the only ones to shoot up yesterday, Desire Petroleum shares rose 23¾, or 63%, to 61½p.

But investors should be cautious until Rockhopper’s well is determined commercially viable or not. The next step is the more serious of all; a series of complex “wireline” analysis will have to be completed to establish further details. The key will be an estimate of the permeability of the rock, which governs how fast the oil can flow and whether the reservoir will be commercially viable.

“The volume of oil could be quite significant but we don’t know yet if it will flow. That is the big question mark.” said Richard Rose, an Analyst at Oriel Securities.

It is too early to jump into to conclusions at this stage but such findings in the area could change the game if Rockhopper’s well proves to be commercially viable. Not only on the economical side of the coin but also it could spark up another diplomatic row between Britain and Argentina over the sovereignty of the Falkland Islands.

Back in February, Argentinean President, Cristina Kirchner, forced British ship passing through Argentina to obtain permits to do so. Right now the only thing Argentina could do is ban British oil companies from using their ports, but with a little investment the Harbour at Port Stanley in the Falklands could be used instead. Especially now that crude oil prices are on the rise.

We want to hear from you now. Will this discovery spark up another diplomatic row between the UK and Argentina? Share your thoughts below in our comments section.

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The UK's Largest Energy Blog - Catalyst-Commercial.co.uk » Oil News

New Oil Tax Impacts Gas Prices:

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IEA and IMF Announcements:

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Internet’s Energy Consumption:

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Facebook,Thanks For Higher Bills:

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Energy Market Report Nov10:

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BP update on GOM Oil Spill:

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Aberdeen All Energy Show:

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