Finance

Refineries – The Missing Link: Part Two

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Refining has long been a low-margin business, not for the faint of heart. The difference between what refiners pay for input and what they get for output, known as the crack spread, is traded on major oil markets. It sometimes goes negative, meaning refiners lose money on every barrel.

In the 1970s, with widespread worries over fuel supplies, US refiners overbuilt capacity. Since the 1980s, refiners have sold, merged, and shut down excess capacity, and upgraded capabilities, resulting in fewer refiners but more capacity actually utilized and better economics overall. Keep reading →

 /  Published August 15, 2012 at 8:30 AM

Baltimore Works Towards Big Energy Efficiency Goals

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In this economy many cities are looking for ways to make their facilities more energy efficient, and more of them are leveraging Energy Performance Contracting (EPC) to make substantial energy efficiency improvements without any upfront capital.

Since the late 1970s, EPCs have become an increasingly effective way to avoid the cost barrier typically associated with significant building upgrades and retrofits. An EPC permits public entities, such as schools, hospitals, universities and governmental agencies, to fund energy conservation measures based on the amount of utility savings they provide. Under these programs, a qualified energy services company audits a customer’s energy usage, identifies potential savings and guarantees those savings through a long-term agreement. This is a great way for public entities to maximize existing operational budgets for needed upgrades that are guaranteed to reduce energy costs in the long run. Keep reading →

 /  Published August 7, 2012 at 1:30 PM

Financial Education for the Solar Industry

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Each month we see dozens of solar projects; most of them will never get financed. Quite simply, the economics do not support the deal. For promising projects, we perform a detailed viability analyses but in most cases this is not necessary; it does not take much to spot an un-financeable solar project. Why then do they keep coming?

The lack of knowledge regarding a project’s financial viability is not only widespread in the solar community, but it is costing the industry terrific amounts of time and lost opportunities as projects are pursued (sometimes for months) before a check on project economics points out their unsuitability. Keep reading →

 /  Published August 1, 2012 at 8:30 AM

Energy at Center of $3 Billion Shaw Group Purchase

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The Shaw Group has agreed to be bought by CB&I in a cash and stock transaction valued at $3 billion, creating one of the world’s largest engineering and construction companies focused on the global energy industry. Under the terms of the deal, CB&I, also known as Chicago Bridge & Iron, will pay $46 a share in cash and stock, about $41 in cash and $5 in CB&I equity, representing a premium of 72% over Shaw’s closing price on Friday. CB&I plans to operate Shaw as a business sector under the brand name CB&I Shaw, where it will retain Shaw’s brand equity and allow the combined organization to recognize synergies and capitalize on both companies’ resources and capacity.

 /  Published July 30, 2012 at 1:40 PM

U.S. Economic Growth Slowed to 1.5% in Second Quarter

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The U.S. economy grew at an annual rate of just 1.5 percent from April through June, as Americans cut back sharply on spending. The slowdown in growth adds to worries that the economy could be stalling three years after the recession ended.

 /  Published July 27, 2012 at 3:45 PM

DC War of Words Heats Up on Energy Tax Policy

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For most people the issue of corporate taxation is both intriguing and offputting in equal measure. The complex and often contradictory nature of the enormous US tax code allows for a combination of passion and boredom that extends to almost no other region of policy.

That is part of what has made attacking the US tax code in an effort to simplify it or make it reflect policy goals so challenging; companies with tax lawyers on call can take advantage of seemingly innocuous or even beneficial tax policy, only to be accused later of corruptly using ‘loopholes’ or ‘subsidies’ to run their businesses. At the same time, financiers and corporations build otherwise unsustainable business models around the tax code rather than at the intersection of supply and demand, in turn warping the very markets they intend to serve. Keep reading →

 /  Published July 27, 2012 at 1:30 PM

Vanadium and Energy: Rare Earth Metal Market Outlook

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Vanadium is a metal used in the steel, aerospace and energy storage industries – and as with virtually all commodities – the supply, demand and price outlook for this commodity varies depending on who one speaks with.

The energy and metals markets first collided in the 1970’s and 80’s when oil and gas companies looking to expand their businesses merged with mining companies. For example, Union Oil of California (UNOCAL) acquired rare earth miner Molycorp in 1977 – UNOCAL was subsequently acquired by Chevron in 2005, making Molycorp a fully owned subsidiary of the oil giant. Keep reading →

 /  Published July 26, 2012 at 8:30 AM

Citic, CLSA, CNOOC, Nexen, Sinopec and Talisman: China’s Multi-Billion Dollar Week in the Energy Markets

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The bureaucrats in Beijing and the businessmen in Shanghai have been busy in recent weeks, negotiating a series of headline deals that sync into broader themes of Chinese access to global energy and commodities markets.

Bankers at Wall Street and City of London banks have spent much of the past week telling financial reporters that the impending sale of the remaining 80% of the Asian arm of French bank Credit Agricole represented an old finance industry meme: an out-of-towner overpaying for access to the premier league of global banking. Keep reading →

 /  Published July 25, 2012 at 10:30 AM

Proposed CNOOC Takeover Of Nexen Would Up Its Sway Over Brent

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CNOOC’s proposed bid for Canadian oil-and-gas producer Nexen would increase Asia’s sway and influence over the pricing of Brent crude, the global oil benchmark, market analysts said Tuesday. The proposed takeover, which would be China’s biggest foreign acquisition, would put the largest crude stream that feeds into the physical Brent benchmark into Chinese hands. This would mean exclusive insight into North Sea production issues and maintenance that will affect the price of Brent crude and other crudes priced off of it.

 /  Published July 24, 2012 at 1:45 PM

NRG Energy, GenOn Energy to Merge in $1.7 Billion Deal

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NRG Energy said Sunday that it plans to acquire rival GenOn Energy in a $1.7 billion all-stock deal that would create the largest competitive power company in the U.S.
The combined company would have about 47,000 megawatts of power plants across the U.S. and have an enterprise value of $18 billion, the companies said. NRG President and Chief Executive David Crane will maintain his current positions at the combined company. GenOn Chairman and CEO Edward R. Muller will join the NRG board as vice chairman. Both companies had considered merger opportunities over the last few years as a way to cut costs and expand their footprints to better compete. Then, Mr. Muller said he contacted Mr. Crane this past spring to discuss a potential deal.

 /  Published July 23, 2012 at 9:40 AM
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