Atlantis Slow To Rise From The Deep  

BHP has announced that the opening of their Atlantis field in the Gulf of Mexico has been delayed due to the aftermath of last year's hurricanes.

BHP Billiton confirmed fears of production delays at its $US1.1 billion ($1.46 billion) Atlantis oil and gas project in a quarterly report released yesterday.

"The recent hurricanes in the Gulf of Mexico have impacted the availability of equipment required to allow for completion on schedule in the third quarter of 2006," BHP said. "As a result, the project schedule remains under review."

Energy group president Philip Aiken first raised the possibility of commissioning delays at the BP-operated Atlantis project at a closed analysts briefing in December.

Macquarie Equities analysts yesterday told clients they believed expected production of 200,000 barrels of oil and 180 million cubic feet of gas a day would be delayed by at least six months, with a significant effect on BHP's 2007 earnings.

At an oil price of $US62.80 a barrel, Atlantis would deliver nearly $US1 billion - or 7.5 per cent - of earnings before interest and taxes in 2007. Therefore delaying the start-up by six months could reduce 2007 EBIT by $US340 million, or 3 per cent.

Macquarie attributed some of the delay to BP, which as the operator had prioritised the repair of its damaged Thunderhorse platform in the Gulf of Mexico rather than the start-up of the Atlantis project.

"The Atlantis issue highlights one disadvantage of being a minority partner and not operating major assets," Macquarie analysts said.

BHP is also talking up the prospects of their Californian LNG terminal, announcing that they have keen customers for all the planned capacity. Treasurer Peter Costello has been over there lobbying on BHP's behalf - hopefully he picks up some tips on how to commit to renewable energy from the Californian government.

One week after Woodside Petroleum announced new plans to export liquefied natural gas to California, BHP Billiton said 18 large buyers had signed letters of interest in purchasing gas from its rival $US600 million ($795 million) Cabrillo Port import terminal project.

No final agreements will be struck until the offshore terminal is approved by the US Coast Guard, the California State Lands Commission and the Governor, Arnold Schwarzenegger, which BHP believes could occur later this year.

The US Coast Guard "stopped the clock" on the approvals process last year, asking BHP to submit more information about the environmental impact of the project, which has faced fierce opposition from environmentalists. "We're confident the information that is in there will allay the fears and concerns the environmental community had over the last year or so," Kathi Hann, BHP's Californian spokeswoman said yesterday.

A new draft environmental report is expected to be released on March 2. Cabrillo Port will then undergo a 45-day public review process - including hearings in April - before authorities decide its fate. "We're hoping to have everything finalised and issued by late [Northern hemisphere] summer, maybe early [autumn]," Ms Hann said.

Of the 18 potential buyers expressing interest in BHP's LNG, all names were kept confidential except for the Los Angeles Department of Water and Power. But it is understood the letters of intent, if converted to contracts, would represent more than the terminal's LNG capacity when it opens as early as 2010.

Last week, Woodside announced it would develop a rival LNG import project in California, called OceanWay, which would reheat the gas on dedicated ships rather than using a floating terminal like Cabrillo Port.

Looking at it from the other side of the ocean, The Oil Drum has a detailed post on North American Gas (including LNG) supply which includes a link to Michael Klare's latest on the Geopolitics of Natural Gas.

In the high-stakes arena of energy geopolitics, natural gas is rapidly emerging as the next big prize. What oil was to the twentieth century, natural gas will be to the twenty-first. Consider these recent developments:

* As we went to press, Russia was restoring the flow of natural gas to Western and Central Europe after state-controlled Gazprom curtailed deliveries on January 1 in a bid to force Ukraine to pay the market price for gas previously supplied at subsidized rates. Although emphasizing the price issue, Russian officials apparently intended to constrict Ukraine's energy supplies as a way of punishing that country's pro-Western president, Viktor Yushchenko, architect of the Orange Revolution, for his overtures to NATO and the EU. Gazprom's pipelines to Western Europe (which buys a quarter of its gas from Russia) pass through Ukraine so it could siphon off some of the diminished supply, leaving very little for other customers and provoking fears of an energy crisis at the onset of winter.

* A dispute between China and Japan over the ownership of an undersea gas field in an area of the East China Sea claimed by both countries has grown increasingly inflammatory, with China sending warships into the area and Japan threatening "bold action" if the Chinese begin pumping gas from the field. The conflict has soured relations between Beijing and Tokyo and provoked a strong nationalistic response from the populations of both countries. The huge anti-Japanese demonstrations in Shanghai and other Chinese cities last April were prompted, in part, by Tokyo's announcement that it would permit drilling in the area by Japanese firms. A peaceful resolution of the dispute does not appear imminent.

* Ever since India announced plans more than a year ago to build a natural gas pipeline from fields in Iran to its own territory via Pakistan, the Bush Administration has been applying pressure on New Delhi to cancel the project, claiming it will undermine US attempts to isolate Tehran and curb its nuclear efforts. "We have communicated to the Indian government our concerns about the gas pipeline cooperation between Iran and India," Secretary of State Condoleezza Rice announced after meeting with Indian Foreign Minister Natwar Singh on March 16. But the Indians have continued talks with Islamabad and Tehran over the pipeline plan.

The United States is becoming increasingly dependent on natural gas. This country now relies on natural gas for approximately one-fourth of its total energy supply, more than from any source except oil. As a result, the economy has become more and more vulnerable to fluctuations in gas supply and pricing--a vulnerability that should be especially evident this winter as gas prices hit record levels, with painful effects on the poor. Natural gas provides approximately 14 percent of the energy used to generate electricity in this country, 45 percent of home heating fuel and 31 percent of the energy and petrochemicals consumed by agriculture and industry. Gas is also used as a feedstock for the manufacture of hydrogen, a promising new entrant in the race to develop alternative fuels.

The United States currently relies on North American supplies for most of its gas, but with those reserves being depleted at a rapid pace and few untapped fields available for exploitation, need for gas from other regions is growing and energy plants seek more gas from foreign suppliers like Qatar, Nigeria and Russia. As with oil, America could become heavily dependent on foreign suppliers for essential energy needs, a situation fraught with danger for national security. Many of America's key allies, including the NATO powers and Japan, are dependent on imports.

There is also a lot of fuss going on about the disruption of gas supplies to Georgia from Russia after a number of pipelines were suspiciously blown up. I did read some interesting commentary on this (which talked about the juggling of supplies from Russia and Iran to various customers via various pipelines) but I've lost the links. Energy Bulletin has a couple of links here.

The Governor General devoted his Australia Day speech to the topic of global warming and the need to move away from fossil fuels. At least someone associated with the government is talking sense.

Global warming is one of the greatest threats to Australia's future, the Governor-General, Michael Jeffery, has warned in his Australia Day address.

More care must be taken of the country's natural wealth, he warned, and this would require people to make individual change their way of life - including turning to more environmentally friendly energy sources.

"One of the most daunting environmental challenges is global warming," he said. "Governments are responding around the world, but lifestyle changes we can make as individuals are also important. There is no single solution. It requires a range of strategies."

Major-General Jeffery has previously spoken of the need for more sustainable use of water resources, a theme he returned to in yesterday's address. "We are now realising how to better conserve and utilise our most precious natural resource - water - by more sensible and efficient household, agricultural, industrial and commercial use, and by restoring the health of our rivers and groundwater systems," he said.

General Jeffery acknowledged the important role that mineral resources such as coal play in Australia's economy, but warned they were finite and said alternative sources of energy should be considered.

"Our land is our golden soil, yielding mineral wealth to miners and opportunity for farmers," he said. "Mineral resources, including offshore oil and gas reserves, generate tens of billions of dollars annually in an energy- and construction-hungry world.

"But our mineral resources are not infinite. In particular we need to encourage further research and development of alternative, safe, efficient and clean energy sources."

The Rodent, on the other hand, used the day to demand "root and branch" reform of history teaching (exactly which levels and which states he had in mind weren't specified), focusing in particular on the need for students to know the date of the Battle of Hastings (for those who don't know, 1066, with William the Conqueror of Normandy defeating King Harold of England). Apparently critical analysis of history is considered some sort of thought crime in the Prime Miniature's eyes and students should be rote learning a series of dates that mark various triumphs of the British Empire (and calamitous defeats, in the case of 1066) and accepting whatever knowledge is being handed down from above unquestioningly. Funny that.

John Howard declared the "phoney and divisive" debate over national identity was finished but argued for "root and branch renewal of the teaching of Australian history in schools".

"Too often, Australian history has fallen victim in an ever more crowded curriculum to subjects deemed more relevant to today," Mr Howard said in a speech on the eve of Australia Day.

"Too often it is taught without any sense of structured narrative, replaced by a fragmented stew of themes and issues. And too often history, along with other subjects in the humanities, has succumbed to a postmodern culture of relativism where any objective record of achievement is questioned or repudiated."

Mr Howard said he would prefer history was taught with a strong emphasis on pivotal dates and events such as the Battle of Hastings and the European discovery of Australia. More students needed to study history, Mr Howard said, to help prepare them to become informed and active citizens.

The NSW Board of Studies' history inspector, Jennifer Lawless, said the Prime Minister's criticisms did not apply to the NSW history syllabus, which was "very rigorous and content-driven as opposed to theme-driven".

She described the ability to memorise dates as "a fairly lower order skill that students acquire early on. We move on from that and teach more sophisticated historical skills, like using historical sources appropriately, questioning those sources, analysing and interpreting, looking at perspectives and interpretations."

NSW is the only state where history is taught as a separate, mandatory subject from years 7 to 10. All year 9 and year 10 students must learn the history of Australia from Federation to the 1990s.

Ms Lawless said the number of students enrolled in HSC history courses had increased in recent years. Last year 9996 year 12 students studied modern history and 10,336 ancient history.

The president of the History Teachers Association of NSW, Pamela Panczyk, said: "I don't think students need to know the date of the Battle of Hastings. I wouldn't usually mention it.

On the subject of history and postmodern relativism, while I was on my Xmas break I came across Liddell Hart's "History of the First World War" amongst my old books collection and decided to take a look to see how much it had in common with the view of some modern left wing commentators that one of the causes of the first world war was Germany's plan to build a railway from Berlin to Baghdad, in part to transport oil from what is now Iraq and Saudi Arabia - but was then part of the Ottoman (Turkish) empire. This plan is viewed as a major threat to British dominance of India and the Orient in general, because it gives the Germans direct access to the Indian Ocean (via the Persian Gulf) along with access to middle eastern oil.

Liddell Hart appears to be a true blue Tory based on his writing (he spends a lot of time praising Winston Churchill's role in the war, which is unusual given that the book was written in the 1930's, a time during which Winston was rather unpopular) so he would seem to be unlikely to be making too many excuses on behalf of the Germans.

The British didn't wait for long after hostilities broke out to make a grab for the oil fields of southern Iraq (which also helped to protect their own fields in Kuwait), dispatching a division from India which had successfully captured Basra by November 1914 (3 months after the war had started). Hart notes that "the oilfields near the Persian Gulf were of essential importance to Britain's oil supply".

Hart also notes that the planned Baghdad railway was the symbol of Germany's dream of a "Germanic Middle East", but doesn't comment much more on the topic - so it doesn't appear to have been a particularly important issue at the time, at least not publically.

Another interesting snippet from the book included the note that both Britain and Germany were well into overshoot even back then - neither country could feed itself which made the British naval blockade and the German submarine campaign of prime importance - with both sides coming close at various stages to starving the other into submission. The British managed to develop enough anti-submarine capbility to keep their shipping moving goods from the colonies and North America, while the Germans were bailed out twice - in 1916 by Rumania's unfortunate decision to join the war on the side of the Allies, only to promptly crumble to defeat, enabling Germany to seize their wheat (and oil) supplies, then in 1917 the collapse of Russia enabled the Germans to occupy the Ukraine, which again helped bolster their grain supplies.