TPT March 2016

G LOBA L MARKE T P L AC E

Elsewhere in oil and gas . . . › For many companies in the US, deferred completions – known as DUCs, for drilled-but-uncomplete – provide a way of waiting out the current doldrums in their business while remaining poised to rapidly increase production when oil and natural gas prices start back up. By some estimates there are upwards of 4,000 drilled wells across the country producing nothing, but ready to be tapped quickly. This well backlog could account for as much as 500,000 barrels of oil a day, about the same amount that Iran is expected to send into the global market when it completes its compliance under the recent nuclear deal by the end of this year. Thus the “underground storage” strategy could work against producers releasing abundant new supplies on signs of higher prices. While some analysts believe any revival-dampening impact would be small and short-lived, because this new form of adaptation to market conditions is new to the industry, no one can be sure. › Another pragmatic approach to persistent low oil and gas prices is that of Mitsui & Co Ltd. As reported by Jess McHugh of the International Business Times (1 January), the second-largest trading firm in Japan by market value seeks to diversify its assets by picking up shares in struggling energy companies. “If we wait for oil demand to recover it will take about three years,” Mitsui CEO Tatsuo Yasunaga told the Financial Times . “It is good timing to find distressed assets that small and mid-sized players may be pressured to sell off.” Mitsui does, however, “want to avoid conflicting with the oil majors,” according to Mr Yasunaga. Volkswagen faces fines up to $37,500 each on 580,000 vehicles sold in the US, but prosecutors bring no criminal charges In the first litigation filed against Volkswagen AG by the US in the emissions-control cheating scandal, the Justice Department on 4 January sued the German automaker in federal court in Detroit on charges that it installed “defeat devices” to dupe emissions tests in 580,000 diesel-powered vehicles sold in the US. The subterfuge, which Volkswagen has acknowledged, added to air pollution even as car buyers paid a premium to reduce the environmental impact of their driving. But, despite a pledge by the Justice Department in September to go after executives responsible for corporate wrongdoing, prosecutors stopped short of filing criminal charges and did not single out any individuals. This came as a surprise to Automot i ve

many observers, as – while regulators in India, South Korea, Germany and elsewhere across the globe are conducting their own investigations, as are attorneys-general in all 50 American states – the Justice Department had been seen as the only government agency that might hold company executives personally accountable. Even so, as noted by the Wall Street Journal , the civil lawsuit reaffirms allegations made by regulators last year and significantly ramps up pressure on the company by putting the case before a federal judge and formally seeking court-ordered penalties. The suit, filed on behalf of the Environmental Protection Agency (EPA), seeks sanctions that could total more than $18bn, although what Volkswagen ultimately pays would be up to the judge. ING analysts said they expect Volkswagen will seek to settle the matter out of court. (“US Sues Volkswagen Over Emissions Scandal,” 5 January) Volkswagen also owns the brands Audi, Porsche and Lamborghini. The 4 January lawsuit covers vehicles with two- litre engines that were the subject of initial EPA allegations in September, as well as three-litre engines that were the focus of separate charges by the agency in November. The three- litre engines were included in some Audi and Porsche diesel- powered models. The Justice Department said it would seek to move the suit filed in Detroit to a federal court in California, suggesting it could be consolidated with related cases. That litigation includes scores of lawsuits by owners of diesel-powered vehicles – who in some cases spent $6,000 more than they would have for a gasoline-fuelled model – seeking compensation for the declining resale value of their cars. › Michael Brune, executive director of the Sierra Club, the New York-based environmental organisation, had a suggestion for Volkswagen on avoiding such troubles in the future. “Now it’s time that Volkswagen focus on building clean electric vehicles that don’t make our families sick and our air dirty,” Mr Brune told Smart Grid News (5 January). “You can’t cheat on tailpipe emissions tests if there are no tailpipes.” Steel A decision by Ohio-based AK Steel to raise prices in a depressed market inspires some cautious optimism In a conspicuously counter-intuitive move, at least one American steel company has raised its prices on several products. As reported by Alex Nixon of the Pittsburgh Tribune- Review , AK Steel (West Chester, Ohio) said on 9 December that it was removing a 4 per cent discount from stainless steel sheet, pipe and tube. The company also set higher prices for non-stainless flat rolled steel products and upped its automotive stainless steel by $40 a ton. (“AK Steel bucks trend by raising prices,” 25 December)

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M ARCH 2016