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Billions in Oil Investments at Risk From High-Cost Projects Ignoring Carbon Constrained World
If you want a safe bet, don’t invest in some of today’s tempting oil and gas projects. That’s the message from a UK-based financial think tank that aims to align the global energy market with climate reality.
The report highlights a top 20 of the world’s most expensive future oil projects being considered for development, and concludes that, to be profitable, some of them will need oil prices to be far higher than today’s levels. Photo credit: Shutterstock
It highlights a top 20 of the world’s most expensive future oil projects being considered for development, and concludes that, to be profitable, some of them will need oil prices to be far higher than today’s levels.
The findings in the report, CTI says, demonstrate the mismatch between continuing oil demand and reducing carbon emissions to limit global warming.
Since an earlier CTI report in May this year, institutional investors have been asking for more details of the economic justification for projects that require high oil prices.
This latest research ranks oil majors according to their capex (capital expenditure) exposure to undeveloped, high-cost projects, and reveals the projects at highest risk.
The companies, CTI says, need to reduce exposure to exploration projects that must earn the highest prices for their oil, and that this is the principle that should determine investment decisions, rather than the simple pursuit of production volume.
All the fields require at least $95 a barrel to be sanctioned, identified by CTI as the key risk level—the market price required to go ahead with the project, assuming a $15 contingency allowance or “risk premium” on top of the break-even price.
Some projects will need prices above $150 per barrel. The global Brent oil benchmark has ranged between $99 and $114 per barrel over the past 12 months.
Using data from the independent consultants Rystad Energy, CTI finds that BP, ConocoPhillips, ExxonMobil, Chevron, Total, Eni and Royal Dutch Shell are considering investing a total of $357 billion over the next decade on new production in costly and often technically-challenging projects—ranging from Canadian oil sands to deep water finds in the Gulf of Mexico and discoveries in the Arctic.
Both BP and Total have particularly high exposure to deep water and ultra-deep water projects, while ConocoPhillips is heavily exposed to Arctic projects. High carbon-emitting oil sands projects account for 27 percent and 26 percent respectively of Shell’s and Conoco’s potential high-cost development spend.
“This analysis demonstrates the worsening cost environment in the oil industry, and the extent to which producers are chasing volume over value at the expense of returns,” said Andrew Grant, CTI analyst.
Some majors have started cutting already. For example, in the Canadian oil sands sector so far this year, Total and Suncor have shelved the $11bn Joslyn mine project, and Royal Dutch Shell has put on hold its Pierre River project.
With deep-water projects, BP has delayed/cancelled its Mad Dog extension in the Gulf of Mexico, and Chevron is reviewing its $10bn Rosebank project in the North Sea.
In the Arctic, Statoil and Eni have deferred a decision on the $15.5bn Johan Castberg project.
The CTI report says projects that depend on sustained high prices for a return are at risk from a future double hit of falling oil prices and growing climate regulation in an increasingly carbon-constrained world.
Its study in May this year showed that oil prices have twice fallen as low as $40 per barrel in the last decade.
The U.S. Energy Information Administration recently reported that the oil and gas sector has increased borrowing heavily to cover spending and dividends.
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Cabin fever is often associated with being cooped up on a rainy weekend or stuck inside during a winter blizzard.
In reality, though, it can actually occur anytime you feel isolated or disconnected from the outside world.
What is cabin fever?<p>In popular expressions, cabin fever is used to explain feeling bored or listless because you've been stuck inside for a few hours or days. But that's not the reality of the symptoms.</p><p>Instead, cabin fever is a series of negative emotions and distressing sensations people may face if they're isolated or feeling cut off from the world.</p><p>These feelings of isolation and loneliness are more likely in times of <a href="https://www.healthline.com/health-news/yes-covid-19-cases-are-rising-why-you-still-need-to-practice-social-distancing" target="_blank">social distancing</a>, self-quarantining during a <a href="https://www.healthline.com/health/what-is-a-pandemic" target="_blank">pandemic</a>, or sheltering in place because of severe weather.</p><p>Indeed, cabin fever can lead to a series of symptoms that can be difficult to manage without proper coping techniques.</p><p>Cabin fever isn't a recognized psychological disorder, but that doesn't mean the feelings aren't real. The distress is very real. It can make fulfilling the requirements of everyday life difficult.</p>
What are the symptoms?<p>Symptoms of cabin fever go far beyond feeling bored or "stuck" at home. They're rooted in an intense feeling of isolation and may include:</p><ul><li>restlessness</li><li>decreased motivation</li><li><a href="https://www.healthline.com/health/irritability" target="_blank">irritability</a></li><li>hopelessness</li><li><a href="https://www.healthline.com/health/unable-to-concentrate" target="_blank">difficulty concentrating</a></li><li><a href="https://www.healthline.com/health/irregular-sleep-wake-syndrome" target="_blank">irregular sleep patterns</a>, including sleepiness or sleeplessness</li><li>difficulty waking up</li><li><a href="https://www.healthline.com/health/lethargy" target="_blank">lethargy</a></li><li>distrust of people around you</li><li>lack of patience</li><li>persistent <a href="https://www.healthline.com/health/depression/depression-vs-sadness" target="_blank">sadness or depression<br></a></li></ul>
What can help you cope with cabin fever?<p>Because cabin fever isn't a recognized psychological condition, there's no standard "treatment." However, mental health professionals do recognize that the symptoms are very real.</p><p>The coping mechanism that works best for you will have a lot to do with your personal situation and the reason you're secluded in the first place.</p><p>Finding meaningful ways to engage your brain and occupy your time can help alleviate the distress and irritability that cabin fever brings.</p><p>The following ideas are a good place to start.</p>
When to get help<p>Cabin fever is often a fleeting feeling. You may feel irritable or frustrated for a few hours, but having a virtual chat with a friend or finding a task to distract your mind may help erase the frustrations you felt earlier.</p><p>Sometimes, however, the feelings may grow stronger, and no coping mechanisms may be able to successfully help you eliminate your feelings of isolation, sadness, or depression.</p><p>What's more, if your time indoors is prolonged by outside forces, like weather or extended shelter-in-place orders from your local government, feelings of <a href="https://www.healthline.com/health/anxiety" target="_blank">anxiety</a> and fear are valid.</p><p>In fact, anxiety may be at the root of some cabin fever symptoms. This may make symptoms worse.</p><p>If you feel that your symptoms are getting worse, consider reaching out to a mental health professional who can help you understand what you're experiencing. Together, you can identify ways to overcome the feelings and anxiety.</p><p>Of course, if you're in isolation or practicing social distancing, you'll need to look for alternative means for seeing a mental health expert.</p><p>Telehealth options may be available to connect you with your therapist if you already have one. If you don't, reach out to your doctor for recommendations about mental health specialists who can connect with you online.</p><p>If you don't want to talk to a therapist, <a href="https://www.healthline.com/health/depression/top-iphone-android-apps" target="_blank">smartphone apps for depression</a> may provide a complementary option for addressing your cabin fever symptoms.</p>
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