Daniel Englander
The Morning Feedstock: June 9, 2008 June 9, 2008 at 6:05 AM
British Energy’s board is set to recommend a £10 billion take over offer from Électricité de France, say reports from inside London’s financial district. Analysts covering the deal say rival bids from Iberdrola and RWE were unlikely to match EDF’s, though the bid size was far from the only reason for its success. The British Government owns 35 percent of British Energy, the UK’s largest nuclear power operator, and has sought a quick sale to inject some fast cash into Britain’s public finances. EDF’s 680 pence per share offer is likely hard to turn down. So is the French operator’s nuclear expertise - it is the largest nuclear power company in the world, and operates 58 reactors that generate roughly 22 percent of the electricity consumed in the EU. Britain announced in January plans to completely overhaul its nuclear power sector, removing old plants and building at least 10 new reactors by 2020 (ed. - that’s awfully fast). Anne Lauvergeon, CEO of French nuclear design and construction firm Areva, was overjoyed with the EDF news, calling Britain “the most exciting place in Europe.” Those word haven’t been uttered since William the Conqueror landed at Hastings in 1066.
Though, it’s possible the British have picked their horse, and its name is nuclear. Stuart Haszeldine from the University of Edinburgh’s Scottish Centre for Carbon Storage has accused the British Government of “incoherence and timidity” in its approach to carbon capture and storage. Specifically, Haszeldine has leveled his criticism against the British plan to hold a competition for building the country’s first demonstration CCS plant by 2014. He has argued that the competition plan is “clumsy,” reserving special criticism for the technology prime minister Gordon Brown has said he plans to favor in the deployment. The competition has focused on post-combustion CCS, essentially the scrubbing of chemicals from flue gas once it’s been burned. Haszeldine thinks more focus should be put on pre-combustion CO2 elimination, either through gasification or sequestration. “It’s micromanaging it, which is a very Gordon Brown approach,” he said.
During a wide-ranging conversation the other night, the subject (of course…) settled on energy. The consensus was that we were at a crossroads, and that it was both exciting and discomforting. Over the weekend, BP’s CEO Tony Hayward put words that weird emotion - not unlike something you’d feel at a middle school dance - by declaring that the era of cheap energy is over. Hayward argued that years of low prices resulted in low investment, which have had the effect of stretching out the oil and gas supply chain almost to its breaking point. While oil companies are set to invest record amounts in oil field exploration, still little is moving into the construction of refining capacity, which is what Hayward was referring to. So, it’s interesting that Hayward would pointedly criticize his industry for underinvesting in infrastructure, but then take the higher margins built into the current commodity atmosphere and use those to justify continued exploration. But there’s something else, something more curious than this. Despite record oil prices, demand is increasing in developing countries at a rate high enough to offset declining demand in the West, though these countries lack the refining capacity to meet that demand - hence the rising gas prices at your friendly corner gas station.
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