Devon, Gas Producers Reaping High Prices, Say Enough (Update1)
June 16 (<a href=quote.bloomberg.com>Bloomberg) -- Devon Energy Corp., the largest U.S. independent natural gas producer, last month posted a seven-fold surge in earnings, partly because U.S. gas prices more than doubled. Now it's seeking divine intervention to lower them.
We should all pray for warm winters and cold summers in North America,'' James Hackett, Devon president and chief operating officer, told investors at a Credit Lyonnais energy conference in Paris. Rising prices
become a question of competitiveness for America. It's not good for consumers or business.''
It also may not be good for producers. Prices for U.S. natural gas, as measured at the Henry Hub in Louisiana, have averaged $5.83 so far this year, about double the price last year. That may mark a boom, and veterans fear a bust.
Every project works at $6 gas -- it will sow the seeds of its own destruction,'' said Thomas Edelman, chairman of Patina Oil & Gas Corp., a Denver company that operates natural gas fields in Colorado's Wattenberg Field.
It's very unhealthy for the economy, and in the long run, for the industry.''
So-called independents such as Patina simply drill for new deposits and pump out oil and gas, unlike bigger oil companies such as BP Plc of London or ConocoPhillips of Houston who own oil refineries and chemicals plants. Yet such independents produce 70 percent of all U.S. natural gas.
While the number of working rigs is 30 percent more than a year ago, the current count is one-fourth lower than the peak of 1,058 on July 2001, months after Henry Hub prices rallied to $10.50 in December 2000. Nine months later, gas was at $1.82.
The question is what will kill the rally this time?'' asked Brad Beago, an analyst at Credit Lyonnais.
We're not seeing a huge rush to put every rig back to work.''
Gas Deficit
The U.S., the biggest energy market and consumer of about 18 percent of the world's gas, will use about 8 billion to 10 billion cubic feet of gas more than it produces by 2010, according to Cambridge Energy Research Associates. That's even with prices curbing use at steel, aluminum and ammonia makers.
``We don't expect that decline to stop, no matter how much drilling you do,'' Robert Esser, senior consultant director at Cambridge Energy, told the Paris conference.
One of the biggest sources of new demand is for electricity generation, because natural gas is a cleaner-burning fuel source. About 16 percent of U.S. electricity was generated by natural gas in 2000, up from 13 percent four years earlier, according to the U.S. Department of Energy. Utilities used 5.5 trillion cubic feet of natural gas in 2002, 36 percent more than five years earlier, the government estimated.
Esser and others expect the U.S. will have to make up the difference through new facilities to handle imports of liquefied natural gas. Gas can be converted to liquid at minus 260 degrees Fahrenheit (minus 162 degrees Celsius), allowing exports in tankers instead of pipelines.
LNG in U.S.
Liquefied natural gas, or LNG, will account for as much as 15 percent of U.S. gas in a decade, up from about 3 percent now, according to Guy Outen, chief financial officer for Shell International Gas.
Royal Dutch/Shell Group, producer of 40 percent of the world's LNG, plans to ship LNG from Venezuela, Nigeria and eventually from a project off Russia's Sakhalin Island, through plants in Mexico's Baja California, Altamira and Cove Point, Maryland, and Elba Island, Georgia.
The current plans were in place before the increase in prices in the U.S.,'' said Outen, who said plans were made on an assumption of $3 per million British thermal units.
We don't forecast today's gas price for our long-term projects.''
High heating bills or surging costs for electricity to run air conditioners this summer will help overcome local opposition to new plants that can convert LNG back into gas, proponents argue.
Opposition ``is less when the price is higher for things like air conditioning and heating,'' said Outen.
`Not Appropriate'
Hackett of Devon said he's not planning on prices staying high. ``It's just not appropriate'' to anticipate $5 gas, he said. Devon is based in Oklahoma City, Oklahoma.
Almost 98.5 percent of the 23 trillion cubic feet of gas consumed in the U.S. last year came from North America, including 15 percent from Canada. Four liquefied natural gas terminals in the U.S. East Coast supplied the remaining 1.5 percent of the nation's gas, according to the American Gas Association.
For all their concern of potential damage to the industry in the years ahead, producers aren't grousing about today's profits.
When the gas price spiked, we were absolutely delighted,'' said Patina's Edelman.
At $4 we make a fortune. At $6 it's a gift from God.''
Mercosur presidential summit.
Monday, 16 June
<a href=www.falkland-malvinas.com>MercoPress. Asunción, the capital of Paraguay that currently holds the chair of Mercosur will be hosting a presidential summit this Wednesday to which Venezuelan President Hugo Chavez has also been invited.
The summit takes place at a very special moment following Argentina and Brazil’s official commitments to revamp Mercosur, turning the trade block into a strong instrument that should rapidly expand to the rest of South America beginning with Peru and Venezuela.
Mercosur currently has four full members, Argentina, Brazil, Paraguay and Uruguay, plus associate members Chile and Bolivia.
Brazilian president Luiz Inacio Lula da Silva and his Argentine counterpart Nestor Kirchner have agreed to the creation of a “strategic alliance” between Mercosur two main members, that with the support of the other countries will address an agenda of “actions and results rather that speeches”, as was highlighted during Mr. Kirchner’s recent visit to Brazil.
Rapid integration of South America, the creation of a directly elected Mercosur Parliament, and an only position regarding trade and cooperation discussions with United States, the European Union and in the framework of the World Trade Organization are some of the ambitious points to be considered during the two days summit in Paraguay by Mercosur, Chile and Bolivia’s presidents.
In the final ceremony Paraguay will hand Uruguay the six months pro tempore chair of Mercosur that will end in December when Argentina takes over.
Chavez Frias has already had four years ... and time is running out
<a href=www.vheadline.com>Venezuela's Electronic News
Posted: Monday, June 16, 2003
By: Hector Dauphin-Gloire
Date: Fri, 13 Jun 2003 22:32:09 -0400
From: Hector Dauphin-Gloire montonero22@hotmail.com
To: Editor@VHeadline.com
Subject: the Bolivarian Revolution
Dear Editor: In his recent letter Mr. Elio Cequea, presumably a Venezuelan and a supporter of the Bolivarian Revolution, presents an eloquent defense of the Revolution. I agree with him for the most part, and it is clear that he is a man who loves social justice. I have only two points to quibble with him. The one is minor; but the other leads into questions of deep importance for the future of the revolutionary process ... questions of great concern both for the supporters of Chavez and for his opponents.
I would argue, first of all, with Mr. Cequea's description of the Bolivarian Revolution as the first non-violent, democratic revolution in history.
Mr. Cequea is CLOSE to being correct, in that many of the revolutions that are often supposed to be non-violent, actually include a dose of actual or threatened force.
The liberation of India, for example, would probably not have come about as soon as it did without the Second World War. The end of apartheid in South Africa was at least partially due to the military defeats of the South African army in Angola.
The much-heralded democratization of Costa Rica was carried out by a Social Democratic clique that seized power in a military insurrection, following a disputed election, that at least in its initial stages repressed its political opponents including both the Christian Democrats and the Communists.
The end of the Salazar tyranny in Portugal was brought about when a group of socialist military officers overthrew the government ... it was a military overthrow, even though fairly bloodless.
There have been some non-violent democratic revolutions (in Poland 1989, or in Tanzania 1964, or in Chile under Allende) but they have been very rare ... and often, as in Chile, quickly reversed.
In all these cases, force played a role: either the ruling regime was reasonable or humane enough to step down before further force was required, or force was an ever present threat (implicit force, even if not explicit), or external force (such as a foreign war) weakened the existing regime enough that it could no longer step down.
The Portuguese revolution of 1974 was heralded as a peaceful revolution, a "Carnation Revolution," but let it be remembered that the rose grows with the thorns, and that that peaceful democratization was carried out through a military coup, by Socialists who, though certainly democrats by their lights, were often not liberal democrats in the Western sense.
Truly, hidden within most peaceful revolutions is some violence, somewhere along the line; nine times out of ten, within the rose-scented glove is the curled fist.
I mention this, not to defend either the Bolshevik perspective that all revolutionary violence is justified, nor the Conservative view that no revolutionary violence is justified; surely we can have a more humane, yet realistic outlook which acknowledges that most revolutions involve some force and repression, but seeks to minimize it and refrain as much am possible from harm to non-combatants.
I mention it, rather, in defense of Mr. Cequea's argument: that few governments have ever carried out social change on the order that the Chavez regime hopes for (and that Venezuela needs) without any repression or bloodshed, and that therefore the Chavez government, truly, is to be commended for its moderation and its tolerance.
By the guideline that I mentioned, that force and harm to non-combatants are to be minimized, surely the Chavez revolution deserves the plaudits of the world for the lack of repression, the preservation of liberal freedoms, the relative lack of bloodshed.
Do not point out isolated instances of repression or bloodshed, but simply compare Venezuela's record to, say, that of Costa Rica after its democratic revolution of 1948 (when two major newspapers had been shut down) and then observe the relative tolerance that exists in Venezuela.
My second criticism of Mr. Cequea's argument is more substantive. He argues that revolutions accomplish changes once and for all, and establish a line in history across there shall be no regress. In defense of his point he argues that "France never returned to a monarchy" after its Revolution.
Would that it were so, but it isn't. France returned to a monarchy after the fall of Napoleon in 1815, and had a reactionary monarchy until the 1830 revolution, and then a liberal monarchy until the 1848 revolution.
This may seem like irrelevant history, but it isn't ... it shows, among other things, that History, as some have said of God, "grinds fine but exceedingly slow."
Christianity was the first major creed in the West to proclaim that all men were equal and that slavery was incompatible with God's will for mankind; and truly, as Christianity spread across the Roman Empire, slavery began to break down. But history grinds slow; slavery returned several times, in different forms, as a scourge of Western civilization, and it took twenty full centuries from the birth of Christ for the last remnants of the slave culture of Greece and Rome to be extirpated from Europe.
Progress comes about in the aftermath of revolutions, but it comes about slowly, and in the immediate aftermath of revolutions there is as much frustration of hope as there is ground for exaltation. The French and the Cuban revolutions were both undertaken in the name of justice for the poor and suffering; and indeed, in the long run, the French and Cuban regimes managed to greatly improve the health, education, nutrition, and social solidarity of their poorest citizens.
But in the short run, the French poor were actually hungrier after the Revolution (because the Revolution had expropriated the Church, until that time the only provider of food to the destitute, and had not set up secular charities to take their place).
In the short run, the Cuban poor actually had a lower life expectancy for the years immediately following the 1959 Revolution (because most Cuban doctors, fearing a loss of income and status, left for Miami between 1959 and 1961, hemorrhaging the island's medical infrastructure).
In the short run, things got worse, even though in the long run, Republicanism in France and socialism in Cuba accomplished much good for the poorest citizens of each country.
(And please, for purposes of this discussion, let's leave the Russian Revolution out of it ... the Russian Revolution, in retrospect, was a tragedy, that became hijacked first by the Bolsheviks and then by Stalin. Cuba never had a Stalin, or a Mao, thank God- although there was certainly repression and political execution in Cuba, it never approached nearly the scale that it did in either Russia or China, either in kind or in degree).
This has a cautionary importance for both the opponents of Chavez and for his supporters.
To his opponents, I say this; Remember that revolutions always cause some hardship and sacrifice in the short run, and do not assume that because standards of living for many poor Venezuelans may have dropped in the last four years, they will continue to drop in the future.
Maybe, as the redistributed farms begin being cultivated, as the new industrial cooperatives begin producing, as foreign capital learns to live with Chavez, as the government learns from experience, and as the industries that went on strike realize that further strikes are futile and only hurt the country further, the recession will turn around; and maybe, once the government gains the political strength to carry out real economic redistribution (land reform, food distribution, higher taxes on the wealthy and middle class) the poor will see an even bigger rise in their share of the national income relative to the current property-holding classes.
To those in Venezuela who support Chavez (and I consider myself a strong supporter of Chavez in spirit, even though I'm only a foreign onlooker), I say: Remember that revolutions naturally bring hardship and sacrifice in the short run- our task is to make that short run as short as possible!
Chavez has already had four years, and time is running out before the poor, in whose name Chavez revolted in 1992 and was elected in 1998, lose faith in him. The Chavistas need to carry out responsible and effective economic reform SOON that will do the job and improve conditions for the poor and working classes of Venezuela.
This is my fervent hope; that those who currently hold a privileged economic position will realize that justice and social stability demand that they lose some of their advantages in property, position and privilege, and that the government begins to take more effective and responsible measures to create jobs and improve the well-being of Venezuela's currently impoverished majority.
I pray for this every day, that through some collaboration between the government and its opposition, a solution can be attained, that will bring peace, but more importantly, peace only with JUSTICE.
The lesson of every revolution throughout history is that peace can't stably last without justice, as Pope Paul VI once said. But the lesson of many, many revolutions is just as much that justice doesn't automatically come about once you've overthrown an unjust system; in fact, that's exactly when the hard part really starts.
It's at that point that one's virtues are really called upon; it is after the Tyrant has been overthrown that one needs most to have hope that things will turn out better in the long run, wisdom to think deeply and plan the best methods, mercy towards one's opponents so as to not waste time, effort or worse, human life itself in pointless factional squabbles; and most of all the spirit of love, that one always remembers the ideal towards which we strive, the achievement of material sufficiency and spiritual fulfillment for all citizens.
Sincerely,
Hector Dauphin-Gloire
montonero22@hotmail.com
Environmental Technician
Medics from US aid destitute in a lawless Colombia
Posted by click at 10:20 AM
By Juan Pablo Toro, Associated Press, 6/16/2003
ARAUCA, Colombia - The high fever and sores spreading over her son's skin had been worrying Jensi Rojas for days, but she could not afford to take him to a doctor.
So when a group of medics, including six from the US military, set up a makeshift clinic inside a school in this town in eastern Colombia, Rojas brought in the sick 8-year-old.
After examining the skinny boy, a US Army doctor handed Rojas a prescription and assured her in thickly accented Spanish that her son would feel better in no time. He was in the late stages of chicken pox, the doctor explained.
''For people who don't have money, this is a great help,'' Rojas said Saturday.
The 26-year-old mother was among about 1,000 people who received free medical treatment through a program organized by Colombian authorities and US Army special forces soldiers working in this lawless region near the Venezuela border. It was one of the rare times American military personnel have mixed with civilians in Arauca.
Roughly 70 Army special operations forces have been in Arauca State since late January, training Colombian troops to protect a key oil pipeline from attacks by leftist rebels.
Even though the American soldiers are barred from participating in missions with Colombian soldiers, leftist guerrillas have characterized the Americans' arrival as an act of aggression and threatened to step up the violence.
Arauca has become one of Colombia's most dangerous regions, with civilians dying regularly in bomb attacks blamed on the larger Revolutionary Armed Forces of Colombia, or FARC. The rebels, along with a smaller guerrilla group, are fighting the government and right-wing paramilitary forces in a 39-year conflict that kills an estimated 3,500 people annually.
In a raid yesterday, soldiers discovered nearly 2 tons of explosives at a rebel hideout in the mountains of central Colombia, the Colombian Army said.
Saturday was the third day since the program began last month that the team of doctors and nurses have made themselves available to the residents of Arauca. Organizers hope to treat a total of 8,000 women and children before the program ends later this year.
As doctors examined the patients inside rundown classrooms for more than seven hours, Colombian and American soldiers stood guard outside.
Most patients suffered from asthma, skin infections, and stomach problems. Like Rojas, most were poor and could not afford the roughly $20 charged by private doctors in the area. Although Arauca is wealthier than many states in Colombia because of its oil, unemployment is high.
''This is a great opportunity to meet the people and help them out,'' said the US Army doctor, who asked that he not be named.
This story ran on page A8 of the Boston Globe on 6/16/2003.
© Copyright 2003 Globe Newspaper Company.