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Triple Crunch Log                                                                                                            

project and invest with BG to build two new LNG cargo ships in China to be used in the project. … The process of producing gas from underground coal seams has attracted opposition from some environmentalists and farmers in Australia over concerns that it will pollute the water table in a country already facing severe water shortages. Vast amounts of trapped salty water are released along with the gas when the coal seams are drilled into. At the peak of production in 2014, BG estimates that 190m litres of water will be released each day. BG will build two large desalination plants to treat the water. It has also promised to monitor groundwater and compensate owners of bore pipes if the volume or quality deteriorates. Some 300 conditions have been set by the federal government for both projects, mostly concerning the protection of groundwater.”1003

Republicans go climate sceptic. Guardian CiF: “Not so long ago, cap-and-trade enjoyed bipartisan support. Now, the Tea Party has polluted the GOP's environmental agenda.”1004

1.11.10. Oil services feel post-Macondo activity jump. FT: “Deepwater drilling, and the services companies that make it possible, have recovered quickly from the Macondo incident, driving share prices up across the sector. Pete Rose, Hunting’s finance director, says: “Despite Macondo, we see deepwater as becoming more and more important – that’s where the majors are exploring and that’s why we made the purchase [of Innova]. We also anticipate an increase in business because of stricter regulatory environments. … A US government report into the Macondo disaster is due in January, and is expected to lead to tighter safety regulations, equipment specification and drilling procedures across the offshore industry. Industry leaders predict this will lead to a knock-on effect, with EU commissioners also examining legislation.”1005

Oil industry could terminate leases for UK offshore wind farms if they need the seabed for exploration, drilling or pipelines. FT: “Industry executives are warning that the lease terms, issued by the Queen’s Crown Estate, could threaten the funding of future projects. One developer was reported this weekend to have said that conflict between the two industries looked likely. If a company was forced to abandon a site, it could have to write off millions in development costs and future revenues. In the UK, an estimated £3.6bn has already been invested in developing offshore wind energy and projects worth another £137bn are in the pipeline.”1006

Enel Green Energy IPO: “they got away with it.” FT Alphaville: “According to one of the joint bookrunners on the Enel Green Energy IPO it is. … But if we are measuring IPO’s on the Ocado template – i.e. they got it away – then Enel Green Energy has indeed been a success. And it can’t have been an easy sell given the dismal performance of EGE’s peer group this year. So credit where it’s due. That said, it took 10 banks to do it.  Is that really something to brag about?”1007

Saudi oil minister hints at a higher oil price - and blames renewables. FT: “Ali Naimi, the oil minister of Saudi Arabia, was in mischievous mood on Monday night, positing an oil price of $70 to $90 for the foreseeable future, and suggesting that oil consumers should be happy with such a settlement – because a price of more than $70 was needed to justify investments in renewable energy.”1008

What lessons should companies draw from the BP spill? First, a Deepwater Horizon lurks in every organisation. You do not need to be in a safety-critical industry, such as oil, chemicals or nuclear. Enron and Arthur Andersen were felled by fraud; Lehman Brothers by risky financial bets. … Second lesson: BP did itself no good in the early days of the crisis by saying that, while the spill was its responsibility, it was not its accident because a subcontractor had been running the rig. This didn’t work, nor should it. Companies are fully responsible for what their contractors do.  … Third, words matter. Mr Dudley approvingly quoted Tony Hayward, his predecessor, who declared that BP would be judged by what it did rather than what it said. Actually, Mr Hayward’s fate was sealed both by what he did – he failed to stop the oil spilling – and by what he said. Anyone could suffer the attention lapse that led to Mr Hayward making the unfortunate “I’d like my life back” remark. That is why you need to rehearse what you plan to say before you venture out. You do not want to be stiff or offer “no comments”. You want to be helpful, while measuring your words. It is not easy, but, as ever, the more you practise, the better you get. Fourth, there is no point moaning about the media.  … That is the way it is. Blogs and Twitter keep up a relentless patter. But what really hurts is round-the-clock television. Those hours need to be filled with supposed experts who are expected to say what is happening before they can possibly be sure. It rankles with companies, but is not going to change. Far better to prevent the crisis happening in the first place.”1009

The real problem isn't banks, it's investors. Guardian: “Some estimates put the buying and selling of unlisted privately held shares in the US at the same level as trading in listed shares. In other words, the highly regulated and taxed public markets on the New York Stock Exchange and Nasdaq are being superceded by largely unregulated and lightly taxed private markets. It is a trend that makes some regulators nervous. Charles Bean, the Bank of England deputy governor, is aware the next crisis could be triggered by these little understood but highly influential markets. … Bean points to an area where disaster could strike. "One area where more information would be useful is on the activities of the shadow banking sector," he said. "Almost inevitably, one has less knowledge of these institutions than of regulated entities. But we have seen that serious problems can arise in such hidden corners of the financial sector." Shadow banking is like the hidden economy. It is a way to avoid tax and the scrutiny of the state. Lehman Brothers was a shadow bank. So was Bear Stearns. They traded derivatives of assets rather than the assets themselves. … At the heart of the problem is the investor. Banks, fund managers, corporate lawyers and accountants are merely the agents of investors. Far from being the benign savers of yesteryear, investors are a rapacious breed who chase the high returns at almost any cost.”1010

2.11.10. BP oil spill costs to hit $40bn: $7.7bn (£4.8bn) bigger than previously thought. Guardian: “The new charge knocked BP's pre-tax profits for the third quarter of 2010 down to $1.8bn, down from $4.98bn a year ago. In late July BP set aside $32.2bn to cover the cost of the clean-up, more than the City had expected, a move which pushed the company into a record loss of $17bn for the second quarter of 2010. At that time, though, the Macondo well was still leaking oil into the ocean, and was only finally shut off in mid-September. The final cost of one of the worst environmental disasters ever could climb further. BP said that the total charge of $39.9bn was its "current best estimate of those costs that can be reliably measured at this time".1011

BP boss Bob Dudley tries to draws a line under a “traumatic” period. FT: BP's dividend will not be restored to pre-Gulf spill levels when it resumes its payout to shareholders and is expected to remain permanently lower. … BP is confident that it will escape a finding of gross negligence. Dudley explained: "We

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