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Mon, May 05, 2008

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Recreating Sun in Hunt for Energy
Shell Drops Wind Project
Recreating Sun in Hunt for Energy
A nuclear fusion laboratory designed to recreate the temperatures and pressures inside the sun could be built in Oxfordshire under plans being drawn up by British scientists. The aim is to build the world’s most powerful lasers and use them to blast tiny pellets of hydrogen fuel to create energy.
The process could, say the researchers, be a partial solution to the world’s energy crisis, offering a source of safe, carbon-free power with a minimum of radio-active waste, Timesonline said.
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Researchers intend to build the worldÕs most powerful lasers and use them to blast tiny pellets of hydrogen fuel to create energy.
“The aim is to destroy matter by turning it into pure energy,“ said Dr John Collier, head of the high power laser program (HiPER) at Rutherford Appleton Laboratory, which was launched last week. “This is the same process that powers the stars. Our task is to find how to control it to offer humanity a new source of energy.“
HiPER, would place Britain at the forefront of research on nuclear fusion, now enjoying a global revival after decades of neglect. The Rutherford laboratory, in Harwell, Oxfordshire, is seen as the most likely site.
In France construction work has begun on a separate experiment, the £8 billion Iter fusion project that uses magnetic fields, not lasers, to create the conditions for fusion. The first ’burn’ at Iter is expected around 2022.
It also coincides with the start-up of America’s National Ignition Facility (NIF) at the Lawrence Livermore laboratory in California, which is shortly expected to achieve a limited form of controllable nuclear fusion. Success there would prove that laser fusion has real potential for power generation.
The NIF will use 192 laser beams, each more powerful than any currently in operation, to trigger nuclear fusion in a tiny pellet of frozen hydrogen.
Professor Ed Moses, director of the NIF, said, “Our goal is to achieve a form of nuclear fusion where we get more energy out of the system than we put in. That would show it is possible to get a continuous reaction going--and that fusion could be used to generate a flow of energy.“
HiPER is being designed to build on the American work but with the ability to maintain a steady flow of fusion blasts--taking it closer to the system needed for power generation.
In laser-based fusion, the laser beams would be used to heat fuel pellets to 100m degrees Celsius in just a fraction of a second--about 10 times hotter than the middle of the sun.
The pressures generated by atoms exploding from its surface would then crush the 2mm pellet to a hundredth of its size in a bil-lionth of a second. Moses said, “At one point the surface of the fuel will be moving inwards at 1m miles per hour until it is 100 times denser than lead.“
Under such conditions the hydrogen atoms that make up the fuel are ripped apart, creating a plasma of electrons and hydrogen nuclei. As they interact and fuse into helium some of their mass is destroyed, releasing energy in the form of heat, light and radiation.
Professor Mike Dunne, director of the central laser facility at Rutherford, and head of the HiPER scheme, said, “Our project has no military link. It is designed purely to demonstrate the potential for power generation.“
Shell Drops Wind Project
A row over the British government’s ambitious renewable energy targets erupted on May 2 after Royal Dutch Shell pulled out of the London Array, the world’s largest proposed offshore wind farm.
According to Businessweek, environmental groups and politicians criticized Shell for its decision to put its one-third stake in the £2 billion project, which is projected to generate 1gw of emission-free energy--enough to power a quarter of London households--up for sale.
The announcement was made days after Shell revealed it had earned $7.7 billion profit in the first quarter of 2008. In its annual $27 billion investment program, renewable energy is barely visible. The Environment Secretary Hilary Benn called the decision “very disappointing. A lot of people would want to understand why this was the case... in a week in which the company announced record profits“.
The Friends of the Earth campaigner Nick Rau accused Shell of leaving a renewables project “high and dry“ while investing in fossil production. “We’re very disappointed that Shell...is pulling out of the London Array. It should be investing in renewable energy, not sucking fossil fuels out of the ground,“ he said.
Critics also accused the government it of doing little to ensure it reaches the target of increasing wind generation capacity to 33gw by 2020--an 80-fold increase over the next 12 years. Rau said, “If the government is serious about renewables targets, one measure might be to address turbine shortages by encouraging manufacturing capacity in the UK.“
Since Shell and its partners E.on and DONG Energy set up the joint venture five years ago, the costs of building offshore wind farms has jumped by roughly 50 per cent. Having received planning approval, the partners were set to take the final investment decision by the end of September. Shell has already begun sounding out other companies, including Centrica, to see if they are interested in its stake.
A spokesman for the British Wind Energy Association said Shell’s move was a “hard-headed business decision. This is simply not as lucrative as oil and gas“. Dr. Paul Golby, head of E.on UK, claimed the project’s economics were now “marginal at best“.
The energy industry called for the government to extend the Renewables Obligation (RO), an incentive scheme that partially subsidizes power from renewable sources. Most of the onus for meeting EU targets to cut emissions by 20 percent by 2020 falls on the energy industry, which generates 5 percent of the country’s power from renewable resources. By 2020, this will have to grow to 40 percent.
Under the RO scheme, energy suppliers are only required to source 15 percent of generation from renewables by 2015. The industry argues the government must increase the threshold to 40 percent, under which companies can receive subsidies to pay for more costly projects.
4th Price Rise
Pakistan increased gasoline and diesel prices for the fourth time in two months after record crude oil prices increased import costs for refiners.
EnergyCol3
Most Expensive Oil Company
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The biggest oil discovery in the western hemisphere in three decades and speculation about an even larger deposit turned Petroleo Brasileiro SA into the world’s most expensive energy producer.
Petrobras, as the company is known, trades at 17.2 times profits after rallying 87 percent in the past year. The shares are twice as expensive as Russia’s OAS Lukoil and Royal Dutch Shell Plc of the Netherlands, and 50 percent more than Exxon Mobil Corp., as investors focus on the Rio de Janeiro-based company’s oil finds rather than its falling profits, Bloomberg reported.
“You just never know when they’re going to make the next announcement,’’ said William Landers, who oversees $8.2 billion in Latin American stocks at BlackRock Inc. in Plainsboro, New Jersey, including shares of Petrobras. “You don’t want to be on the wrong side of that trade.’’
The Brazilian government’s controlling stake in Petrobras may add to the stock’s allure on speculation the company will get favorable treatment in exploiting oil. President Luiz Inacio Lula da Silva’s administration pulled 41 exploration licenses from an auction after Petrobras found the Tupi oil field Nov. 8, a discovery that caused the stock to jump 14 percent, the biggest rise in nine years. Tupi, 155 miles (250 kilometers) off Brazil’s coast, may have 8 billion barrels of recoverable oil.
Petrobras shares rose another 5.6 percent on April 14 after the head of Brazil’s oil agency said the offshore Carioca prospect may hold the equivalent of 33 billion barrels of crude, large enough to be the world’s third-biggest field. Chief Executive Officer Jose Sergio Gabrielli said later Petrobras is still exploring to determine Caricoa’s size.

Bovespa Gain
The oil company helped lead Brazil’s Bovespa to a 6.3 percent jump on April 30, making it the world’s best-performing equity index this year among the 20 biggest markets, after Standard & Poor’s assigned the country an investment grade credit rating. Petrobras added 0.7 percent to 42.50 reais as of 9:49 a.m. New York time today as the Bovespa increased 2.6 percent.
Petrobras, now the world’s ninth-biggest company, with a market value of $248.3 billion, is still half the size of Exxon, the largest oil producer.
Fourth-quarter profit at Petrobras declined about 3 percent as costs increased faster than sales. The company produced an average 2.34 million barrels of oil, natural gas and natural-gas liquids a day in March, down from 2.35 million barrels a day the month before.
Petrobras isn’t earning enough, said Saulo Sabba, who oversees Rio-based Maxima Asset Management’s Maxima Participacoes FI em Acoes fund, the best performer among Brazil-based equity and hedge funds last year. Sabba said he’s “very underweight’’ Petrobras.

Profits Delayed
“It needs to show production growth today,’’ Sabba said. “This is what’s going to influence the results this year and next. To add a long-term position, I don’t think this is the time.’’
Roberto Koeler, who helps manage the equivalent of $3 billion in assets at Icatu Harford in Rio, has Petrobras as his largest holding even though he says the stock is overpriced. Petrobras’s price-earnings ratio was 8.77 a year ago and below 5 in June 2004, according to data compiled by Bloomberg.
The company’s valuation surpassed PetroChina Co.’s in November after shares of the Beijing-based oil company posted their biggest monthly retreat ever.
Lukoil, based in Moscow, and Royal Dutch Shell, based in the Hague, trade at 7.77 and 7.6 times earnings, respectively. Irvine, Texas-based Exxon’s PE ratio is 11.60. The rest of the world’s 10 largest oil producers are also cheaper than Petrobras. Brazil’s biggest company by market value looks less expensive relative to the oil it owns.

9,800 Meters Below the Ocean
Petrobras trades for the equivalent of 34.91 reais per barrel of proven reserves, or $20.58, according to Bloomberg data. That’s cheaper than Exxon’s $22.19 a barrel and Royal Dutch Shell’s $23.80 per barrel of oil equivalent in reserve. Under this measure, Petrobras is still more expensive than BP and Lukoil, which fetch $14.75 and $4.71 a barrel, Bloomberg data show.
Pumping oil from the Brazilian discoveries, parts of which are 32,000 feet (9,800 meters) below the ocean’s surface, will require boring almost twice as far down as the world’s deepest offshore well.
“Once Petrobras has the technology to start production on these finds, then we can start looking at the fundamentals,’’ Sabba said. The potential profits make Petrobras a long-term investment and its price relative to potential earnings worth it, said Craig Shaw, who helps manage $6 billion in emerging-market assets at Harding Loevner Management in Somerville, New Jersey.
“It takes a long time to really find out what you got, but early indications are quite striking,’’ Shaw said. “It’s a very good company as it stands, and when you throw in the potential of what may be found, yeah, that does add to the valuation.’’

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