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Wed 6 Aug 2008 04:00 AM

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Food for thought

EU ministers cave on unrealistic transportation fuel law.

As Oil & Gas Middle East went to press, the European Union announced it was dropping its ambitious plans to draw 10% of transportation fuels from biomass.

Spiralling global food prices and a slightly unrealistic target have combined to kill the bill.

Of course, one of the downsides to buying up crops to process into fuel supplements is that it forces the price of those goods up. Maize, rice and sugar cane all make for viable feedstocks to turn into transportation fuel additives, but they also play a vital role in filling the world's numerous stomachs.

As wealthy and environmentally righteous nations seek to reduce their fossil fuel consumption by filling their tanks with foodstuffs, they deprive many of the world's inhabitants of a meal because they price them out of the market.

Whether it's the thought of starving people in the developing world, or simply the spiralling cost of their breakfast cereals that has prompted the EU delegates to drop its additive targets before the bill becomes law, we cannot judge for certain.

What has been touted instead is a much greater drive towards energy efficiency. Of course, improving efficiency comes at a cost to industry, but its one with very few downsides.

The drive to consume less fuel, and keep output high is also right at the top of the oil and gas industry's agenda. With dollar prices per barrel still nestled in triple figures, using less and selling more is imperative to keep ahead.

Investments in more accurate process control, predictive maintenance tools and more fuel efficient turbines, pumps and compressors will stay with the industry for decades, whether the price drops to US$10 a barrel, or shoots past $200.

Already most of the region's players are making significant headway with flaring reductions, with several combining re-injection of associated gas with EOR techniques to boost recovery factors.

Progress is being made downstream too, with more efficient fuels hitting the market and within the transport sector through better engine technology.

Whether legislation is really the right tool to employ as an incentive to change fuel use is a matter for debate, but with oil prices above $100 a barrel, you can be sure that the best minds in the industry, from the drilling well to the engineer building the next Prius, will be focused on efficiency with benefits to all.

Daniel Canty is the editor of Oil & Gas Middle East.

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