Frontierist News

Financial Times

All the world’s extra oil supply is likely to come from expensive and environmentally damaging unconventional sources within 15 years, according to a detailed study.

This will mean increasing reliance on hard-to-develop sources of energy such as the Canadian oil sands and Venezuela’s Orinoco tar belt.

A report from Wood Mackenzie, the Edinburgh-based consultancy, calculates that the world holds 3,600bn barrels of unconventional oil and gas that need a lot of energy to extract.

So far only 8 per cent of that has begun to be developed, because the world has relied on easier sources of oil and gas.

CNN Money

Word that control of the world’s largest integrated oil and gas project had been wrested from Royal Dutch Shell trickled down to the company’s staff on Russia’s Sakhalin Island in December the same way it reached everyone else: via the newswires.

[...]

The news was stunning, even if rumors had been flying: Shell [...] was halving its ownership in the $22 billion project, cutting its stake from 55% to 27.5%, and Gazprom, the Russian gas giant, was stepping in, buying Shell’s share plus half the stakes owned by Japanese partners Mitsui and Mitsubishi, for just $7.5 billion - the equivalent, says a Shell spokesman, of “paying to enter on the ground floor, as if they were a shareholder at the beginning.” The foreign companies also agreed to absorb $3.6 billion of the project’s mounting cost overruns.

Shell apparently wasn’t making many friends there.

Residents [of Korsakov, a small port city on the island's southern coast] say the company led them to believe that housing for 6,000 construction workers would be located in the town, where it could later be reused by the community, which sorely needs it. Many people in Korsakov earn less than $300 a month - a sharp contrast to the wealth of Sakhalin Energy employees, many of whom, especially those who come from other countries, make more than $1,000 a day.

But when construction began, Sakhalin Energy built its housing for workers next to the plant itself, inside a one-kilometer safety zone, where it will be illegal for people to live once operations begin.

[...]

The [Yuzhno] city center is for the most part architectural remnants of the communist era, while the suburbs contain acres of new middle-class housing developments - a reflection of the oil industry’s impact on Sakhalin’s economy. One of these houses can cost nearly $1 million, while a one-bedroom apartment can rent for $3,000 a month, comparable to New York City prices.

[...]

“I’ve spent time in Moscow, Tokyo, and Hong Kong,” says an oil-well engineer for services company Schlumberger, who paid a $70 cover charge to walk into Yuzhno’s newest nightclub, Schastie Project, only to fork over another $19 for a whiskey. “Yuzhno-Sakhalinsk is the most expensive town I’ve worked in.”