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| 2008 |
"...some little-noticed rain has
fallen on the nuclear parade. It turns out that new plants would be not just extremely
expensive but spectacularly expensive. The first detailed cost estimate, filed by Florida
Power & Light (FPL) for a large plant off the Keys, came in at a shocking $12 billion
to $18 billion. Progress Energy announced a $17 billion plan for a similar Florida plant,
tripling its estimate in just a year. 'Completely mind-boggling,' says Charlie Beck, who
represents ratepayers for Florida's Office of Public Counsel. 'A real wake-up call,' says
Dale Klein, President Bush's chairman of the Nuclear Regulatory Commission (NRC). 'I'll
admit, the costs are daunting,' says Richard Myers, NEI's vice president for policy
development. The math gets ugly in a hurry. McCain called for 45 new plants by 2030; given
the nuclear industry's history of 250% cost overruns, that could rise to well over $1
trillion. Ratepayers would take the main hit, but
taxpayers could be on the hook for billions in loan guarantees, tax breaks, insurance
benefits and direct subsidies--not to mention the problem of storing radioactive waste, if
Congress can ever figure out where to put it. And those 45 new plants would barely replace
the existing plants scheduled for decommissioning before 2030. This sticker shock has unnerved Wall Street. A Warren
Buffett--owned company has scrapped plans for an Idaho nuclear plant; banks and
bond-rating agencies are skeptical as well. In fact, renewables attracted $71 billion
globally in private capital during 2007 while nukes got zero. The reactors under construction around the world are all
government-financed. 'I have to keep explaining: France and China are not capitalist
countries!' says Congressman Ed Markey, an antinuclear Massachusetts Democrat. 'Nobody
wants to put their own money into this so-called renaissance--just ours.'...Industry
officials argue that if you disregard capital costs, nuclear plants are the cheapest
source of power. But you can't disregard capital costs--they're out of control. The
world's only steelworks capable of forging containment vessels is in Japan, and it has a
three-year waiting list. The specialized workforce required for manufacturing reactors has
atrophied in the U.S., along with the industrial base. Steel, cement and other commodity
prices have stabilized, but the credit crunch has jacked up the cost of borrowing. FPL's
application concedes that new reactors present 'unique risks and uncertainties,' with
every six-month delay adding as much as $500 million in interest costs. Meanwhile,
radioactive waste languishes in temporary storage pools and casks at plants around the
country. Energy maven Amory Lovins has calculated
that, overall, new nuclear wattage would cost more than twice as much as coal or gas and
nearly three times as much as wind--and that calculation was made before
nuclear-construction costs exploded. So how should
we produce our juice? The answer may sound a bit unsatisfying: more wind, less coal but
mostly the same electricity sources we're using, until something better comes along. The
key will be reducing demand through energy efficiency and conservation. Most efficiency
improvements have been priced at 1˘ to 3˘ per kilowatt-hour, while new nuclear energy is
on track to cost 15˘ to 20˘ per kilowatt-hour. And no nuclear plant has ever been
completed on budget."
Going Nuclear
TIME, 31 December 2008 |
"Iraq, the holder of the world's third-largest oil reserves, has
opened nearly 90 percent of its reserves to international oil companies for development in
two major bidding rounds this year as the war-plagued country tries to raise money amid
falling oil prices. Iraq, with at least 115 billion
barrels in reserves, plans to add 4 million to 4.5 million barrels a day to its current
2.4 million barrels per day capacity over the next four to six years as it tries to
rebuild its infrastructure and develop its economy....Top
on the list are the giant Majnoon and West Qurna Phase 2 fields, which hold reserves of at
least 12 billion barrels each. The two fields currently produce far below their individual
output potential of 600,000 barrels per day. Al-Shahristani said only 15 of 78 known oil
and gas fields have been brought into production, and many desert areas in western and
southern Iraq have yet to be explored."
Iraq opens nearly 90 pct of its oil reserves
Associated
Press, 31 December 2008 |
"Russian Prime Minister Vladimir Putin says European consumers will
have to get used to surging natural gas prices. 'The expenses necessary for developing
fields are rising sharply,' the Russian government head told attendees at a meeting of
gas-exporting nations in Moscow on Tuesday. 'This means that despite the current problems
in finances the era of cheap energy resources, of cheap gas, is of course coming to an
end,' he added in his keynote speech. Russian energy giant Gazprom supplies about
one-quarter of all the natural gas consumed by European Union member states via
pipelines....Despite Putin's statements, energy experts in Germany anticipate that gas
prices will drop in the near future. Holger Krawinkel of the Federal of German Consumer
Organizations (VZVB) estimates that natural gas prices for the average German consumer
will fall in the next year by up to 25 percent. The drop in prices is connected to the
recent and precipitous decline in oil prices, which has seen the cost of a barrel of crude
fall to about $43—from a high in July of over $147. The
price of natural gas is pegged to that of oil, with a delay of about six months. Krawinkel
warned that the slide in prices would be temporary, offering consumers a moment to breath
again after record high prices. In the longer term, he said, gas prices would rise again
because of growing global energy demand."
Putin Hails End of 'Cheap Gas' Era
Spiegel,
23 December 2008 |
"Petroleos Mexicanos, the
state-owned oil company, said crude oil output fell 6.5 percent in November from the
year-earlier period as production at its Cantarell field declined at a
faster-than-expected rate. Production dropped to 2.711 million
barrels a day, from 2.901 million barrels a day a year earlier, the company known as Pemex
said today on its Web site. In an e-mail, Pemex cited Cantarell, its largest field, as the
reason for the drop. The Mexico City-based company in October lowered its 2008 output
forecast by 3.6 percent to as low as 2.7 million barrels a day after interruptions from
hurricanes. It was the third time Pemex reduced its forecast this year, after a
faster-than- expected decline at Cantarell, the world’s third-largest field. Cantarell’s output fell 33 percent, more than twice as fast
as government estimates, to 862,060 barrels a day from a year earlier. Declining pressure
at Cantarell has made it more expensive and harder to continue pumping oil from the
offshore deposit. Cantarell accounted for 32 percent
of Pemex’s total output, half of the 65 percent it once represented at its peak. Oil
exports fell 20 percent to 1.511 million barrels a day, according to a chart on
Pemex’s Web site. Mexico is the third-largest supplier of crude to the U.S. Canada
and Saudi Arabia are the first- and second-largest suppliers."
Pemex Oil Production Drops 6.5% on Cantarell Field
Bloomberg,
22 December 2008 |
"Britain was given a sharp reminder of the dangers to its energy
supplies today when Gazprom warned western Europe could be hit by gas shortages. The
Russian gas provider said a long-running row with Ukraine could disrupt supplies to
Europe this winter. The fears were raised just 24 hours before Russia hosts a
meeting of the world's major gas suppliers to set up an Opec-style production cartel that
could also push up the price of energy in the UK and elsewhere...Some 80% of Russian gas exports to Europe flow through Ukraine, which insisted it would ensure the transit of supplies to European Union
countries over 2009. 'Ukraine is ready to give guarantees of uninterrupted gas supplies in
2009 to European gas consumers,' said Oleksander Shlapak, chief economic aide to the
Ukrainian president, Viktor Yushchenko. The promise did little to reduce tensions. Andris
Piebalgs, EU energy commissioner, indicated he was ready to travel to Moscow early
in the new year foremergency talks with the Russians and said he was 'very worried.'
Meanwhile, a loose grouping of gas producers, known as the Gas Exporting Countries
Forum, is to meet in Moscow tomorrow to sign a charter to formalise the
organisation, officials at the Russian energy ministry said. More than a dozen
gas-exporting nations from around the world have been meeting since 2001, but the body has
no formal membership or management. Experts from member states met last month to discuss
the draft charter, and ministerial representatives are expected to sign it at the
meeting, which has been driven by Russia in cooperation with Iran and Qatar. The
three countries, which together account for nearly a third of the world's natural gas
exports, agreed this year to form a 'gas troika' for joint exploration and
production, in a move that sent shock waves through importing nations....David Clark, a
former UK government adviser and chairman of the Russia Foundation thinktank, said he was
concerned Russia and its energy allies were trying to carve up the market and further
develop the use of energy as a political weapon. 'Despite
the downward trend of oil and gas currently the long-term supply-demand picture
suggests that prices are going to rise and this is going to be a
continuing problem,' he said."
Russia warns Europe it could face gas shortages
Guardian,
22 December 2008 |
"Britain could face regular
blackouts within seven years if the Government does not intervene in the energy market to
ensure that more power stations are built, the head of National Grid says today. In an
interview with The Times, Steve Holliday, chief executive of the company that
operates the power and gas transmission network, said that Britain was facing an acute
shortage of generating capacity because a string of ageing nuclear and coal-fired plants
were due to be retired from service....Mr Holliday said that National Grid’s own
analysis indicated that, under a business-as-usual scenario, Britain would fail to attract
enough investment in new plants and would lack sufficient generating capacity to meet peak
demand around 2015. 'We are OK for a period of time . . . but when you go out to the
medium term you can begin to see there is not enough collective generation being built in
the UK. 'We will need to watch that very carefully over the next 18 months to ensure that
window gets shut,' Mr Holliday said. He said that
the Government would need to introduce fresh incentives to guarantee that £100 billion of
investment is made over the next decade to ensure the stability of the power grid. This
could include placing a floor on the price of carbon – a measure that would help to
boost investment in new nuclear reactors and offshore windfarms. 'What is happening that
people are not wanting to build enough power stations? The Government has an obligation to
make sure that the markets are delivering,' Mr Holliday said. 'You can’t afford for
it to fail.' Mr Holliday’s comments reflected similar remarks recently from Alistair
Buchanan, chief executive of Ofgem, and Ed Miliband, the Energy Secretary. Last week Mr
Buchanan said that the falling price of oil and carbon had dealt a 'punch in the stomach'
to Britain’s energy markets. On Friday, Ofgem revealed fresh details of a
consultation designed to boost investment in Britain’s renewable energy industry.
National Grid is investing £3 billion per year in the power and gas transmission network
to replace ageing wires and pipes and tie in new power plants and windfarms. Critics say
National Grid is being too slow in connecting many of these projects to the grid, as many
renewable projects face long delays in obtaining planning consent."
National Grid chief Steve Holliday: blackouts will be common in 7 years
London
Times, 22 December 2008 |
"From his office overlooking Trafalgar Square, Mr Holliday, a
52-year-old former rugby player, oversees Britain's biggest utility company — a £16
billion empire of pipes and wires that employs 17,500 people and distributes gas and
electricity to tens of millions of people across Britain and a great swath of the
northeastern United States. National Grid, Mr Holliday says, is doing fine. 'By its
nature, this is a very defensive business.'...By
2020, about 20 gigawatts of generating capacity, nearly a third of the present UK total,
will have been lost, according to Mr Holliday. To avoid a future of blackouts and huge
economic disruption, all of this will need to be replaced, at an estimated cost of £100
billion. But that's not all. The UK aims to replace it with a completely different mix of
lower-carbon fuels - including a vast expansion of offshore wind energy and a set of giant
new nuclear reactors, up to three times more powerful than the existing fleet. All of this
is happening as supplies of North Sea gas — Britain's fallback fuel for a generation
— are rapidly running out, leaving us increasingly reliant on imports. Building the
infrastructure needed for this transformation in the way we heat our homes and power our
businesses will not be easy, especially in a severe recession that has dried up access to
credit. 'Clearly, investor confidence is a lot lower
than it was a year ago,' Mr Holliday said. 'No one had forecast the huge speed with which
this recession has come about.' The stakes could not be much higher. Although Mr Holliday insists that Britain's energy supplies look
secure 'for the next few years', he argues that new laws will be needed to ensure that
there is sufficient investment to avoid a supply crunch around 2015. 'When you look out to
the medium term, there is not enough generation being built,' he said. 'I continue to
worry that we are not making enough progress on that front. How can we incentivise
investments that we can all agree are the right thing to do and get on with them
earlier?'. New planning laws that came into force
this year should help, but Mr Holliday suggests that the Government will need to take a
firmer approach by intervening in the market directly, placing a floor on the price of
carbon or creating other incentives. In particular, big new offshore wind farms - which
the Government has earmarked as a key future source of power for Britain - will not arrive
without legislative changes, Mr Holliday believes. 'The regime that's in place at the
moment for offshore wind does not in any shape or form,' he said....For its part, National
Grid has already agreed to invest £18 billion by 2012 reinforcing the network by tying in
new power plants and wind farms and building a liquefied natural gas import terminal on
the Isle of Grain in Kent. However, further investments will be needed to build links to
remote wind farms planned off the coast of Scotland and potentially to bind the UK's power
grid more closely to Europe, with new sub-sea power connections to Norway, Belgium and the
Republic of Ireland. National Grid plans to fund half of its current investment programme
through cashflow, with the rest raised as debt. This is where the company's relative
isolation from the turmoil in the wider economy starts to fray. 'It has been significantly
harder to raise debt in the past 12 months,' Mr Holliday admitted."
Preparing the ground for an industrial revolution at National Grid
London
Times, 22 December 2008 |
"In the IEA’s annual report, 'The World Energy Outlook
2008', the agency says that 'although global oil production in total is not expected to
peak before 2030, production of conventional oil...is projected to level off towards the
end of the projection period.' This rather cryptic formulation, which sounds a lot like a
compromise between factions in the IEA, says that at some date between now and 2030 world
oil production will peak, but not to worry because the difference will be made up by
increasing production of natural gas liquids, ethanol, and heavy oil. When Fatih Birol,
the IEA’s chief economist, was interviewed by the Guardian newspaper last week he was
pressed to explain just what 'level off towards the end of the projection period' actually
means. To the astonishment of the interviewer, the
answer came back as 2020 - only 11 years from now.
For an Agency that has steadfastly maintained that there was plenty of oil to keep on
increasing production for the foreseeable future, this admission caps the turnaround that
came with the publication of this year’s Energy Outlook. In that publication, the
agency says new research shows that oil production from the world’s existing oil
fields may be declining at 6.7 percent a year rather than the 3.7 percent rate previously
estimated. The impact of this admission on government policy has yet to been seen. Many believe that a 2020 date for the plateauing of world oil
production is far too optimistic and that a more realistic time frame is between 2010 and
2013 if it has not come already due to the economic slowdown. The next shoe to fall in the general recognition of imminent peak oil may
be at the US’s EIA which will be changing leadership in about a month."
Investment - Peak Oil Review
ASPO-USA, 22 December 2008 |
"A survey of 200 oil and gas
companies shows the oil price required to allow new oil projects to break even has climbed
from about $18 US per barrel in 1999 to $60 in 2007 and an estimated $62 now…In addition to jeopardizing future conventional oil projects, oil at
$45/barrel makes new tar sands production uneconomic, has the same effect on biofuels, and
discourages development of more fuel efficient vehicles."
Investment - Peak Oil Review
ASPO-USA, 22 December 2008 |
"Alarms continued to sound
around the world last week bemoaning the sudden drop in oil exploration and production. Active drilling rigs in the US have fallen to 1,790 - down 12 percent
from September. Industry analysts expect that hundreds more rigs will be idled by summer
and that there could be a total drop of as many as
1000 rigs or a 50 percent decline during 2009 from the September 2008 peak. In Alberta, Connacher Oil and Gas announced that it was cutting
production from its oil sands project nearly in half because current prices for bitumen
could not cover the costs of existing production. Other oil sands producers are expected
to follow if prices do not revive. Shell, however, expressed the hope that production and
engineering costs for oil sands projects will drop soon and that it is waiting for the
opportune time to revive new projects that were put on hold last month. At the LNG summit in Barcelona, speakers grappled with the issue
of whether very expensive investments in LNG terminals continue to make sense in face of
the economic downturn. There will be a 50 percent growth in world LNG production capacity
during the next three years, but after that there could be a supply crunch as investment
is scaled back."
Investment - Peak Oil Review
ASPO-USA, 22 December 2008 |
"For hard-pressed businesses and consumers in the US, Europe and
other oil importers, the price collapse has been one ray of light in an increasingly
gloomy economic outlook. But it has also caused a seismic shock to the energy industry
worldwide, re-shaping it in ways that will often be unwelcome for oil consumers. It took
more than four years for oil to go from $35 per barrel in 2004 to over $147 in July 2008,
and less than six months to fall all the way back again. For
hard-pressed businesses and consumers in the US, Europe and other oil importers, the price
collapse has been one ray of light in an increasingly gloomy economic outlook. But it has
also caused a seismic shock to the energy industry worldwide, re-shaping it in ways that
will often be unwelcome for oil consumers. The full implications have yet to sink in. 'The
industry is in shock; this has all happened so quickly,' says Daniel Yergin of Cambridge
Energy Research Associates. Already, however, the consequences are evident in project
delays and cancellations, cost-cutting efforts and financial distress for many companies.
More expensive forms of oil such as Canada’s tar sands, and alternatives to oil, such
as biofuels, are at risk. Mr Yergin compares the
threat to unconventional oil with the collapse in oil prices during the recession of the
early 1980s. Then Exxon was forced to abandon a costly attempt to extract oil locked
into the shale of Colorado. It is not only transport fuels, which compete directly with
crude oil, that are affected. The price
of oil is tied to the price of natural gas – formally by contract in some regions
such as the European Union and Japan, informally elsewhere – so the price of gas has
also fallen sharply. That throws into doubt the economics of forms of generation that
compete with gas, including nuclear, renewables such as wind and solar, and coal. Cheaper
oil and other forms of energy also weaken the incentive for businesses and consumers to
use fuel more carefully. Jesse Toprak of Edmunds.com, a US motoring website, says petrol
at $4 a gallon meant a hybrid petrol-electric car would pay for itself in two or three
years. Below $2 a gallon, the payback is typically seven to eight years. Having hit a peak of $4.10 in the summer, petrol now sells for
$1.66. ...The International Energy Agency, the rich
countries’ watchdog, points to the steep rate of decline in output from conventional
oilfields, meaning that new fields must constantly be opened simply to hold production
steady, and to the tremendous potential future demand for fuel in emerging economies such
as China and India. When the global economy recovers,
there is no doubt that more oil, and other sources of energy, will be needed. If the
investments in energy supply are not made, then supplies will be tight, and prices will
soar again – quite possibly even higher than they went last summer. Al Romig of Sandia National Laboratories, a US government national
security research centre, argues that price volatility is one of the most serious
obstacles to developing alternatives."
Over a barrel
Financial
Times, 21 December 2008 |
"Royal Dutch Shell Plc said construction and engineering costs may fall in Canada, allowing Europe’s largest oil producer to revisit plans to expand oil-sand projects. 'We expect that procurement costs will come down quite a lot,' Chief
Executive Officer Jeroen van der Veer said today in an
interview at an energy conference in London. 'If the overheating goes out of the market,
the break-even price that you can build an oil-sands project will come down again.' Shell
last month delayed seeking regulatory approval for its Carmon Creek oil-sands development
in Canada. That followed October’s indefinite postponement of the second-phase
expansion of The Hague-based company’s Athabasca project because of rising
construction costs. Shell will go ahead with projects that could be profitable under
various scenarios for oil prices, van der Veer said. 'More oil sands will come, but you
don’t know exactly when.' Shell planned to drill wells and inject steam into the tar-
like sands at Carmon Creek to increase production from the deposit in northern
Alberta."
Shell May Revisit Oil-Sand Projects as Procurement Costs Drop
Bloomberg,
19 December 2008 |
"Historically, the price of oil has been closely correlated with
economic performance. High energy prices have fuelled inflation, hit demand and crimped
output. The record price of oil only five months ago undoubtedly played a part in the
present slowdown. Yesterday's production cuts were dramatic, but until the extent of the
economic downturn becomes clearer, the recent slump in oil prices will be difficult to
arrest and harder to reverse. Opec knows that the issue of price is one of supply and also
demand. The US Government predicted yesterday that
demand for oil in the US, the world's largest consuming country, is set to level off and
is unlikely to grow at all between now and 2030.
Growing use of alternative fuels, increased energy efficiency and a decline in the use of
gas-guzzling cars and SUVs is shifting US oil use, according to the Energy Information
Administration. In a report yesterday the agency predicted that the use of renewable
energy, including solar, wind, biofuels and tidal power, would grow by 3 per cent per
year. Overall energy use is expected to increase gradually but at a significantly slower
pace than expected a year ago. The EIA, the arm of
the US Government that produces official statistics on energy, also concluded that US
reliance on imported oil will fall. It said that imported liquid fuels, mainly oil, would
meet 40 per cent of US needs by 2025, down from 58per cent. US oil demand is weakening
rapidly as the country slips into recession. Figures from the International Energy Agency
this month showed November demand in the 50 continental states was about 18.5 million
barrels per day, down nearly 10 per cent on a year ago. That still represents some 21 per cent of global demand of about 86
million barrels....With demand collapsing, as some of the world's biggest economies enter
recession and growing signs that Chinese oil consumption is also weakening, crude prices
have slipped by more than $100 since July, when they briefly touched a record of $147 a
barrel. Andrew Horstead, energy analyst for Utilyx, predicted further price falls below
$40 unless other countries joined forces with Opec with production cuts of their own. He
said: “The demand numbers coming out of the US are incredibly weak, so I doubt if
this will be enough to push prices higher on its own.”
Big cut in Opec oil production fails to stop prices falling to 4½-year low
London
Times, 18 December 2008 |
"We are in uncharted waters; the fall in the price of crude oil since
July's peak of $147 per barrel is unprecedented but so was the crash to $10 per barrel in
1998. The problem with deeply traded commodities, such as oil, is that small imbalances in
supply and demand create huge price changes. What we do know is that the current price is
uneconomic for most producers and if it remains at these levels, there will be widespread
economic and social distress in countries such as Iran, Mexico, Nigeria and Venezuela.
Economic collapse in such countries and the ensuing social unrest is not desirable, even
for hawkish Washington Republicans. Even more
undesirable is a collapse in oil investment, a supply squeeze followed by a surge in the
price of crude to even greater heights."
Oil thrown on to uncharted waters
London
Times, 18 December 2008 |
"SRI Consulting published a new report
on producing crude oil from western Canada's oil sands deposits. The report concludes that 'with rational engineering and prudent
business decision making, grass roots tar sands projects should be economically viable at
benchmark crude oil prices below US$60 a barrel.'
This brings about good news and bad news for the Canadian Oil Sands sector.This is a
pretty big deal, especially with benchmark crude prices in the low $40/barrel range. For
example, in the 2008 third quarter, Suncor Enegy Inc. (NYSE:SU) reported that its
projected operating costs per barrel had increased to $36.50/barrel.Mining Canada's oil
sands gets more costly every quarter. Suncor's cash flows are good, but its expenditures
are high and, as financing gets tighter and tighter, it needs to drive down its operating
costs. This is true whether oil is selling at $40/b or $70/b."
New Technology Could Help Oil Sands Producers (SU)
24/7 Wall St, 18 December
2008 |
"U.S. oil consumption will be flat through 2030, as the use of
biofuels, rising oil prices and new car efficiency standards temper demand for petroleum,
the Energy Information Administration said. The last 20 years 'has been a history of
rising oil use,' Howard Gruenspecht, acting head of the agency, part of the U.S. Energy
Department, said in a speech today in Washington. The new outlook 'projects a break
in this trend, with no appreciable growth in oil consumption between now and 2030 and
biofuels being all of the growth in liquids.' Use of liquid fuels, including
biofuels, will grow by 1 million barrels a day between 2007 and 2030, the agency said in
its Annual Energy Outlook. Ethanol consumption will increase to 12.2 billion gallons, and
cellulosic ethanol feedstocks will reach 12.6 billion gallons by 2030, EIA says. The
outlook predicts oil prices of $130 a barrel, using 2007 dollars, by 2030....The EIA said earlier this month that global oil consumption would
drop by 50,000 barrels this year, the first time it has forecast a decline since 1983. Imports of oil and gasoline are projected to fall from 58 percent of
supplies to less than 40 percent in 2025, EIA finds. Natural gas imports also will decline
as increased offshore production along with new gas from Alaska and unconventional sources
reduce the share of imports from 16 percent in 2007 to 3 percent of supply in 2030."
U.S. Oil Consumption Flat Through 2030, EIA Predicts
Bloomberg,
17 December 2008 |
"Despite the recent rout in oil
prices, the government expects crude to shoot back up over the long term. That is expected to result in a drastic drop in oil imports and a greater
use of renewable energy. Oil imports - which currently make up 60% of all the oil consumed
in the U.S. - should drop to about 40%, the Energy
Information Administration said in its long-term energy outlook on Tuesday. The drop will largely be the result of higher oil prices encouraging
conservation and an expanded use of home-grown biofuels. In making its predictions, EIA
used an average crude price of $130 a barrel in 2030. That price is nearly double the
projections for 2030 made last year - $70 a barrel....Although the report was not meant to
predict oil prices, EIA analysts say increased demand
and limited access to new supplies will push crude prices up in the long term, despite
crude's recent plunge. The upward revision in price is a major shift in the government's
long-term views on oil supply and demand. Limited access to new oil sources - particularly
in OPEC countries - is a major reason why prices should increase....'People are becoming
aware of the fact that conventional supplies of oil outside of OPEC are quite limited,'
said Robert Kaufmann, director of Boston University's Center for Energy &
Environmental Studies. 'It's getting harder and harder to tell the story that oil prices
will remain low forever....EIA's higher price estimate could give ammunition to
policymakers seeking a big push into alternative fuels, or those seeking a more hawkish
foreign policy, or both, said Kaufmann. He said non-OPEC production peaked in 2004, and
OPEC countries are expected to provide a greater share of the world's oil going
forward....EIA's price revision is in-line with predictions made earlier this year by the
International Energy Agency (IEA), a similar group to EIA that has a more global focus.
The IEA drastically lowered its long-term world oil supply forecast this spring - from
nearly 120 million barrels a day to maybe 100 million per day by 2030 - citing access to
resources as a major concern. In making its
predictions, EIA does factor in the growth of supplies from 'nonconventional' oil, like
oil from tar sands or biofuels made from plants.'"
U.S. expects big drop in oil imports
CNN,
17 December 2008 |
"Vital spending on energy infrastructure such as power stations and
gas storage sites is threatened by the financial crisis, which has hit the supply of
investment funds, the industry regulator has warned. Alistair Buchanan, chief executive of
Ofgem, told the Financial Times that energy companies were having to manage 'some
tremendous pressures', including the rising cost of finance. 'The issues that are
affecting the financial markets could have quite a significant impact on the energy
market,' he said. 'It is going to be a very interesting year.' His comments will reinforce
concerns about whether the industry can meet the government's objectives of making energy
supplies secure and affordable while cutting carbon dioxide emissions. Energy companies have estimated that £100bn-plus of investment
will be needed to to keep Britain's lights on and boilers firing in the coming decades.
MPs on the business and enterprise select committee warned last week that the financial
crisis and a lack of political leadership threatened Britain with an 'energy crunch' that
could have 'disastrous' social and economic effects. They added that the industry needed
to be allowed to make reasonable profits, or badly needed investment in infrastructure
would not come....Ofgem has already begun exploring
the implications of a gas or electricity network operator getting into financial
difficulties. Early next year it will hold 'war-game' exercises to rehearse the
consequences of a possible crisis, such as a network operator being hit by a bad debt owed
by a big company that has gone bust. That danger remains hypothetical, however: there is
no evidence of any network company getting into trouble. A more immediate problem is the
steep rise in the cost of funding, which threatens investment plans...Ofgem would be
reviewing whether the industry could deliver the investment that would be needed to
guarantee security of energy supplies. 'The economy could pick up quite dramatically, and
the demand pick-up could be quite steep,' he said, and when that happened, the supply of
gas and electricity might not be able to keep up."
Slowdown hits energy investment
Financial
Times, 16 December 2008 |
"China's once ravenous hunger for energy is weakening at a record
rate, compounding the pressure on Opec to slash global oil production this week by as much
as two million barrels a day to prevent a glut. With China's
economy slowing sharply, the country's electricity output during November fell 9.6 per
cent from a year ago to just over 254 billion kilowatt-hours, according to official
figures published on Monday. It was the second
consecutive monthly decline and the largest fall on record. Other data pointed to a 3.5
per cent fall in demand for crude oil during the month....A sharp decline in consumption
in the US and Japan, the world's number one and three oil consumers respectively, has
already driven oil prices down by about $100 since July. Hopes held by oil exporters that
continued growth in Asian demand might serve to bolster prices are rapidly fading, amid
growing fears that China too is slipping into recession. Since 2003, China has contributed
one third of the global growth in oil demand. But Goldman
Sachs, the investment bank, predicted on Friday that Chinese energy demand was 'on the
cusp of a sharp deceleration' as manufacturers cut production and lay off staff to cope
with the downturn. It forecast that oil demand would fall by 200,000 barrels per day
during 2009. This month, Francisco Blanch, commodity strategist at Merrill Lynch,
predicted that the price of oil could fall to $25 a barrel if China entered recession."
Drop in China's oil demand pressures Opec to cut production
London
Times, 16 December 2008 |
"From the plains of North Dakota to the deep waters of Brazil, dozens
of major oil and gas projects have been suspended or canceled in recent weeks as companies
scramble to adjust to the collapse in energy markets. In the short run, falling oil prices
are leading to welcome relief at the pump for American families ahead of the holidays,
with gasoline down from its summer record of just over $4 to an average of $1.66 a gallon,
and still falling. But the project delays are likely to reduce future energy supplies
— and analysts believe they may set the stage for another surge in oil prices once
the global economy recovers....The list of projects delayed is growing by the week. Wells
are being shut down across the United States; new refineries have been postponed in Saudi
Arabia, Kuwait and India; and ambitious plans for drilling off the coast of Africa are
being reconsidered. Investment in alternative energy sources like biofuels
that had flourished in recent years could dry up if prices stay low for the next few
years, analysts said. Banks have become reluctant lenders, especially to renewable energy
projects that may prove unprofitable in an era of low oil and gas prices. These delays could curb future global fuel supplies by the
equivalent of four million barrels a day within the next five years, according to Peter
Jackson, an energy analyst at Cambridge Energy Research Associates. That is equal to 5
percent of current oil supplies. One reason projects
are being shut down so fast is that costs throughout the industry, which had surged in
recent years, are still elevated despite the drop in oil prices. Many companies are
waiting for those costs to come down before deciding whether to go forward with new
projects."
Big Oil Projects Put in Jeopardy by Fall in Prices
New York Times, 15
December 2008 |
"In its 2007 World Energy Outlook, the IEA predicted a rate of
decline in output from the world's existing oilfields of 3.7% a year. This, it said,
presented a short-term challenge, with the possibility of a temporary supply crunch in
2015, but with sufficient investment any shortfall could be covered. But the new report,
published last month, carried a very different message: a projected rate of decline of
6.7%, which means a much greater gap to fill. More importantly, in the 2008 report the IEA
suggests for the first time that world petroleum supplies might hit the buffers. 'Although
global oil production in total is not expected to peak before 2030, production of
conventional oil ... is projected to level off towards the end of the projection period.'
These bland words reveal a major shift. Never before has one of the IEA's energy outlooks
forecast the peaking or plateauing of the world's conventional oil production (which is
what we mean when we talk about peak oil). But that is as specific as the report gets.
Does it or doesn't it mean that we have time to prepare? What does 'towards the end of the
projection period' mean? The agency has never produced a more precise forecast - until
now. For the first time, in the interview I conducted with its chief economist Fatih Birol
recently, it has given us a date. And it should scare the pants off anyone who understands
the implications. Birol, the lead author of the new energy outlook, is a small, shrewd,
unflustered man with thick grey hair and Alistair Darling eyebrows. He explained to me
that the agency's new projections were based on a major study it had undertaken into
decline rates in the world's 800 largest oilfields. So what were its previous figures
based on? 'It was mainly an assumption, a global assumption about the world's oil fields.
This year, we looked at it country by country, field by field and we looked at it also
onshore and offshore. It was very, very detailed. Last year it was an assumption, and this
year it's a finding of our study.' I told him that it seemed extraordinary to me that the
IEA hadn't done this work before, but had based its assessment on educated guesswork. 'In
fact nobody had done this research,' he told me. 'This is the first publicly available
data.' So was it not irresponsible to publish a decline rate of 3.7% in 2007, when there
was no proper research supporting it? 'No, our previous decline assumptions have always
mentioned that these are assumptions to the best of our knowledge - and we also said that
the declines [could be] higher than what we have assumed.' Then I asked him a question for
which I didn't expect a straight answer: could he give me a precise date by which he
expects conventional oil supplies to stop growing? 'In
terms of non-Opec [countries outside the big oil producers' cartel],' he replied, 'we are
expecting that in three, four years' time the production of conventional oil will come to
a plateau, and start to decline. In terms of the global picture, assuming that Opec will
invest in a timely manner, global conventional oil can still continue, but we still expect
that it will come around 2020 to a plateau as well, which is, of course, not good news
from a global-oil-supply point of view.' Around 2020. That casts the issue in quite a different light.
Birol's date, if correct, gives us about 11 years to prepare....There is a vast difference between a decline rate of 3.7% and 6.7%.
There is an even bigger difference between suggesting that the world is following an
unsustainable energy path - a statement almost everyone can subscribe to - and revealing
that conventional oil supplies are likely to plateau
around 2020. If this is what the IEA meant in the
past, it wasn't expressing itself very clearly."
George Monbiot - When will the oil run out?
Guardian,
15 December 2008 |
"When crude hit $70 a barrel, Canada’s oil sands became
alluring. At $80, wind energy was profitable. And at $100-plus, even pricey plans to turn
coal into gasoline came within reach. Now it’s retrench time....So far, companies
aren’t cutting major ongoing projects with oil under $50 amid a growing global
recession and sharply shrunken demand. But increasingly they’re postponing final
investment decisions — the point at which contracts get signed, contractors are
hired, and money is committed — at least until the lofty costs of doing business
mirror crude’s fall....at $40, analysts say
crude is getting close to a point which, if sustained, could prompt companies to pull back
on established yet expensive operations. 'On our
estimates, almost 800,000 barrels of Canadian output could go off line if oil prices
dipped below $38 a barrel,' Merrill Lynch analyst Francisco Blanch said in a recent
report. However, pullbacks in exploration set the stage for a supply crunch — and
significantly higher oil prices — once the economy rebounds and demand returns.
Investment bank Barclays Capital said recently: 'We suspect that even in a much slower
growth environment for oil demand over the next one or two years, the stresses and strains
afflicting the supply side of the business suggest that the global economy could
transition quickly from credit to energy crunch.”
Oil companies are hitting the pause button
Houston Chronicle, 13
December 2008 |
"China's once insatiable appetite for oil has choked. An abrupt
economic slowdown has corroded the machinery of China's economy, while stubbornly high
fuel prices have forced drivers off the road. Crude
imports are falling, fuel exports have resumed and once flat-out refiners are shutting
down. Demand from the world's second biggest
consumer of oil after the United States, one of the main catalysts that launched oil's
rally six years ago, likely contracted for the first time in three years last month, data
due next week is expected to show. Analysts say that is not an anomaly. A full-year
decline in consumption may loom next year, even if the economy continues to expand at 8
percent or more as expected."
As China economy brakes, oil demand goes in reverse
Reuters,
12 December 2008 |
"Petro-Canada, the
country’s third- largest oil company, plans to slash spending on oil and natural gas
projects in Canada and overseas by 25 percent to C$4
billion ($3.2 billion) next year after crude prices plunged. Petro-Canada will reduce and
defer investment further if commodity prices 'remain weak for an extended period of time,'
the Calgary-based company said today in a statement. Production is forecast to fall next
year."
Petro-Canada Slashes 2009 Spending on Plunge in Oil
Bloomberg, 11 December 2008 |
"The International Energy Agency, an adviser to 28 nations, said global oil demand will contract this year for the first time since
1983 and cut its outlook for 2009. Consumption worldwide will shrink in 2008 by 200,000
barrels a day, or 0.2 percent, the IEA said in a monthly report today. The reduction in demand is concentrated in developed economies in the
Organization for Economic Cooperation and Development, where oil use will tumble 3.3
percent. Next year’s growth may be wiped out if the economic slump deepens, the
agency said....The IEA reduced its 2008 estimate by
350,000 barrels a day, or 0.4 percent, to 85.8 million barrels a day following weaker economic forecasts from the International Monetary Fund.
In the fourth quarter of this year demand will shrink by 1.6 million barrels a day, or 1.8
percent. Next year consumption worldwide will
increase by 400,000 barrels a day, or 0.5 percent, to 86.3 million barrels a day,
according to the report. While the agency trimmed
its estimate for oil use in developing nations by 300,000 barrels a day in 2009, that
still leaves growth of 2.9 percent, taking non-OECD demand to 39.4 million barrels a day.
Chinese consumption will climb 3.7 percent to 8.23 million barrels a day....Forecast
demand in the countries of the OECD was cut by 300,000 barrels a day to 47.5 million
barrels a day in 2008, and by 200,000 barrels a day to 46.9 million a day in 2009....The
Organization of Petroleum Exporting Countries will have to provide about 30.8 million
barrels a day next year to balance supply and demand, the IEA said, 200,000 barrels a day
more than estimated in the previous report. The adjusted 'call' on OPEC was cut by 500,000
barrels a day in the fourth quarter of this year. Supply estimates from outside OPEC were
cut for this year and next because of prolonged disruptions in Azerbaijan and the Gulf of
Mexico. That means non-OPEC supply in 2008 will shrink for the first year since 2005, when
hurricanes battered platforms off the U.S. coast, by 90,000 barrels a day to 49.6 million
barrels a day. Next year non-OPEC production will increase by 480,000 barrels a day to
50.08 million a day."
IEA Says Oil Use to Fall for First Year Since 1983
Bloomberg, 11 December 2008 |
"Oil would have to cost between
$55 and $65 per barrel for developers to produce transportation fuels derived from coal, according to a Rand Corp. report. The report, prepared for the U.S. Air
Force and the Energy Department, said that coal could supply 3 million barrels per day of
transportation fuel for 90 years. The Air Force has promoted domestic coal to liquids, or
CTL, as an alternative to foreign oil, against Democratic protests about the effect on the
climate....The oil price that would make coal-derived fuels profitable accounts for the
costs of capturing 90 percent of the carbon from coal liquefaction, the report says."
Oil Price Must Rise to Justify Coal Fuels, Rand Study Says
Bloomberg,
10 December 2008 |
"Sinking oil prices will not drop much lower and will rebound to $80
per barrel in 2011 as a recovery in the world economy should begin by the end of next
year, Deutsche Bank
chief energy economist Adam Sieminski predicted Wednesday. Lower fuel prices should
persist for a while, helping to boost the economy, Sieminski said at the Deloitte 2008 Oil
& Gas Conference. 'We're actually pretty near the bottom of the oil cycle pricewise.
It could dip a little bit lower from where we are now. We might see $30. But it's not
going to stay there,' he said. He forecast crude oil will average $47.50 a barrel in 2009,
$55 in 2010 and then zoom to about $80 a barrel in 2011 because world economic growth,
after falling to 'very near zero' in 2009, will rebound to 2.6 percent in 2010 and stay
positive thereafter for a while. The global economic crisis has sliced more than $100 off
the cost of a barrel of oil since July by tamping down consumption. Oil was trading around
$45 on Wednesday...Worldwide, a $20 per barrel drop in oil prices is worth $700 billion,
equal to the recent U.S. bailout package. Although
Deutsche Bank expects worldwide oil demand to fall 2 percent or 1.8 million barrels a day
(bpd) next year, the world supply of oil and natural gas -- while not running out any time
soon -- will become an issue again when the economy recovers, he said. Oil prices near $40
are going to delay frontier oil projects such as oilsands development in Canada and shale
gas plays in the United States, and that will decrease supply, stabilize prices and in the
end boost them. Oil prices at about $80 are needed to sustain investment, he said. Russia,
in particular, he noted, is seeing oil output fall after a period of rapid growth, and
when recovery comes, the world will need that oil. 'If GDP turns around, not having
Russian production is going to be a big problem,' Sieminski said. World motor fuel demand is declining 1 million bpd at the same time new
capacity is coming on line, Sieminski said. Some 2 million bpd of refining capacity is due
for start-up next year, he said. Long term, policy
makers and industry leaders need to emphasize increasing energy efficiency, diversification of fuels and global standards for efficiency and
greenhouse gas reduction."
Oil seen at $80 in '11 on global recovery-Deutsche
Reuters,
10 December 2008 |
"Dieter Helm, Professor of
Energy Policy at the University of Oxford, said the UK will face shortages and high prices
for electricity from 2020 when the current generation of coal-fired power stations and
nuclear stations have to close down. He said the
only way to avoid the problem it to invest in a new generation of power stations,
including clean coal and nuclear, as well as renewables like wind and solar. In a report
for think tank the Policy Exchange, Prof Helm looked at UK energy policy over the last few
decades. He said that the current policy to subsidise renewables through the Renewables
Obligation is failing because wind, solar and hydroelectric power cannot fill the
impending energy gap. Instead he called for a 'Low Carbon Obligation' that paid energy
companies to invest in nuclear or carbon capture and storage (CCS) that will allow coal
stations to operate without releasing as much carbon into the atmostphere. He said: 'The
Renewables Obligation is one of the most expensive ways of subsidising renewables in the
developed world. It also fails to support other low carbon technologies, such as nuclear
and carbon, capture and storage (CCS).' Prof Helm is the latest expert to warn of an
energy gap as the UK is forced to close down old coal-fired stations because they are too
polluting and nuclear stations because they are not safe. However he is one of the first
to suggest the Government should subsidise nuclear and other low carbon
technologies."
UK faces energy blackouts without investment in nuclear and clean coal
Daily
Telegraph, 10 December 2008 |
"Russia's energy ministry
believes that the country's oil production will stabilize at 535 million mt/year (10.7
million barrel/day) by 2020, after which it will start falling, a ministry's official said Monday. Under the basic scenario of the draft
energy strategy until 2030, the country's oil production will reach 500 million mt/year in
2010, 530 million mt/year in 2015, 535 million mt/year in between 2020 and 2025, and 530
million in 2030, said Vitaly Bushuyev, the general director of the ministry's institute of
energy strategy. 'We need to be prepared for [the decline in output],' Bushuyev told an
energy forum in Moscow, adding that international oil prices were likely to fall after
2012 to 'the level of minimum profitability of the oil business. The significance of the
oil business in the world will start reducing after 2015 to 2020 as the world economy will
switch to innovative paths of development,' he said. The strategy also envisages crude oil
exports to the countries outside the Commonwealth of Independent States--which comprises
12 states of former Soviet Republics--to be up to 214 million/mt in 2010, 229 million
mt/year in 2015, 225 million mt/year in 2020, 221 million mt/year in 2025, and 212 million
mt/year in 2030....In the gas sector, the strategy forecasts gas output to increase to 701
billion cubic meters/year in 2010, 800 Bcm/year in 2015, 880 Bcm/year in 2020, 910
Bcm/year in 2025, and 935 Bcm/year in 2030. Gas
exports outside the CIS are expected at up to 181
Bcm/year in 2010, 237 Bcm/year in 2015, 279 Bcm/year in 2020, and to stabilize at 310
Bcm/year from 2025 to 2030, Bushuyev said. The ministry expects total investments in
Russia's energy sector at between 2006 and 2030 at $1.9 trillion, he said."
Russian oil output to fall after 2020: national energy ministry
Platts, 8 December
2008 |
"Norm Steenstra's budgeting worries mount with each new load of
cardboard, aluminum cans and plastics jugs dumped at West Virginia's largest county
recycling center. Faced with a dramatic slump in the recycling market, the director of the
Kanawha County Solid Waste Authority has cut 20 of his 24 employees' work week to four
days from five, shuttered six of the authority's drop-off stations and is urging residents
to hoard their recyclables after informing municipalities with curbside recycling programs
that the center will accept only paper until further notice. 'The market is just not there
anymore,' Steenstra said. Just months after riding an incredible high, the recycling
market has tanked almost in lockstep with the global economic meltdown. As consumer demand for autos, appliances and new homes dropped, so
did the steel and pulp mills' demand for scrap, paper and other recyclables. Cardboard
that sold for about $135 a ton in September is now going for $35 a ton. Plastic bottles
have fallen from 25 cents to 2 cents a pound. Aluminum cans dropped nearly half to about
40 cents a pound, and scrap metal tumbled from $525 a gross ton to about $100. It's getting more difficult to find buyers in some markets, Streenstra
said."
Bottom drops out of recycling industry
Associated Press,
7 December 2008 |
"The world faces a crude supply shock if oil prices remain below $70
(Dh257.11) per barrel, Qatar's Energy Minister Abdullah Bin Hamad Al Attiyah said on
Wednesday arguing that lower prices would discourage investment in new capacity. His
comments at a petrochemicals industry conference in Dubai echo recent statements by Saudi
Arabia's King Abdullah Bin Abdul Aziz and Oil Minister Ali Al Nuaimi, who identified $75
as a fair price for oil..... A price of $70 per
barrel is needed 'to avoid any (supply) shock in the future,' he said, explaining that this price level should be sufficient to
encourage companies and oil producers to continue investing in capacity expansion
projects. 'Below $70, it will be non-economical to invest in the hydrocarbon sector,' Al
Attiyah told the Gulf Petrochemical and Chemical Association (GPCA) forum. 'Today there is
no cheap,' he added...'So this is our concern that
when the economic crisis is over and demand starts (to pick up) again, then the world will
face a big shortage of supply,' Al Attiyah
said."
Qatar warns of crude supply shock
Gulf News, 4
December 2008 |
"Norwegian oil and gas group StatoilHydro said on Thursday it would
withdraw its application for the construction of an 'upgrader' for its Canadian oil sands
project. A full-scale refinery or upgrader has been planned in Alberta after StatoilHydro last year bought 257,000 acreas of oil sands leases
for $2 billion in a bid to diversify away from ageing North Sea oilfields....In May 2008, StatoilHydro decided to postpone the planned upgrader by
two years to 2016. The upgrader was intended to process the bitumen from oil sands into a
synthetic crude oil."
StatoilHydro scraps downstream oil sand project
Thompson
Financial News, 4 December 2008 |
"Despite tumbling oil prices, Brazil's government insists it will
develop massive offshore oil deposits, but critics say geological hurdles, regulatory
uncertainty and depressed markets could delay the country's hope for a fast track to oil
wealth. The largest discovery of oil deposits in at least 20 years could make Brazil one
of the world's top 10 producers and has triggered avid debates on how to spend the
new-found wealth....Unless oil prices recover from
current levels, the deposits under a thick layer of salt beneath the ocean floor may not
be profitable. 'We are talking about at least $50 per barrel to make the subsalt (oil)
viable,' Gustavo Gattass, oil and gas analyst with investment bank UBS Pactual, told the
conference. He assumed a minimum return on
investments of 10 percent....A host of technological challenges to extracting an estimated
50 billion barrels from around 7 kilometers (4.5 miles) below sea level could further
increase costs, currently at around $600 billion, Gattass said. A slow oil flow from the
wells could double the need of production modules and increase costs to a 'ludicrous' $1.3
trillion, he said. 'The production cost may be higher than its market value -- that's a
big risk,' Nina Todorova, a World Bank oil economist, told the conference that ended on
Thursday....How to finance such investments, equal roughly to two years of the world's
total upstream expenditures, is also uncertain. Assuming the price of oil bounces back to
$60, Petrobras would have the capacity to finance only the development of Tupi, one of
several subsalt fields, with its own cash flow, Gattass said. The oil company said on
Thursday it secured three loans in the last month totaling $900 million, the latest in a
flurry of recent announcements seeking to dispel speculation it was struggling to raise
funds. Raising debt to finance the subsalt project would cut profits significantly, adding
to a tax burden of more than 60 percent, Gattass said. Brazil will depend on private and
mostly foreign investors to help develop a significant part of the subsalt reserves, said
Edmar Almeida, an oil expert at the Federal University of Rio de Janeiro. But doubts
abound about how the government will regulate the development of the new reserves."
Brazil's new oil reserves still buried in doubts
Reuters, 4 December 2008 |
"Motorists must be glad the price of fuel is one thing they do not
have to worry too much about as they face the worst recession since the 1930s, but cheap fuel is not good for anyone in the long run. Global oil prices have collapsed since July, losing two thirds of their
value from a peak of almost $150 a barrel and dragging fuel costs to their lowest levels
for several years. But while low energy costs come as
welcome short-term relief to consumers and companies struggling with the financial and
economic crisis, longer term they can be bad for everyone. Low energy prices squeeze
investment in the oil industry, reducing future supplies. They discourage energy saving
and they destabilize countries dependent on oil exports, making oil in the future more
likely to be expensive and even more volatile. Perhaps most important of all, low energy
prices stifle investment in alternative energy, deepening dependence on oil and other
hydrocarbons and increasing greenhouse gas emissions.
'In the very short term, because we are in a recession, we could all use a low oil price,'
said Mike Wittner, global head of oil research at French Bank Societe Generale. 'It is
like a tax break, putting money back into pockets for a short time.' 'But in the longer
term, today's oil price is too low to support much new supply and will slow the momentum
toward alternative fuels, new technology and conservation.' In a rare pronouncement on oil
prices, Saudi King Abdullah said on Saturday that crude at $75 a barrel was 'fair.' Saudi
Oil Minister Ali al-Naimi later explained that oil at that level would encourage new
output from marginal, higher-cost sources....most analysts broadly agree with the Saudi
view, saying they are worried about the consequences of under investment and the need to
prevent a shortage in the years ahead..... While the desired 'sweet spot' for oil prices
may be lower during a recession, when extra stimulus is needed, most oil industry
economists say it is probably well above where oil prices are at the moment -- around $47
a barrel. In real terms over the last 40 years at today's prices, Deutsche Bank estimates
that oil prices have averaged around $35 a barrel, a price it says is far too low for
long-term comfort. 'The 'sweet spot' is between $60 and $80, probably the top of that
range. That is the long-term fair value,' Lewis said. Simon Wardell, director of the
energy markets group at Global Insight Ltd in London, sees broad agreement between OPEC
and consuming countries that around $75 is about right for oil. 'That price gets you
investment in new production, is high enough to encourage more efficient use of oil and is
enough to maintain the budgets of the Middle Eastern countries,' he said...The
International Energy Agency (IEA), which advises 28 industrialized countries on energy
policy, says it wants oil prices high enough to foster sustained investment in new energy
sources, including costly deep-sea drilling. 'It is very difficult to put an absolute
level on what price is fair,' said David Fyfe, head of the IEA's oil industry and markets
division. 'But there is a lot of high cost oil, be it in ultra deep-water, or Canadian oil
sands or Arctic developments in northern Russia, which needs a relatively high price.' 'We
would see a danger if prices fall a lot lower -- that would exacerbate the chances of a
medium-term supply crunch."
Cheap oil: short-term good, long-term dangerous
Reuters, 3 December
2008 |
"The IEA's annual forecast has become steadily darker in recent
years, but this time the deterioration in its outlook is dramatic. Only a year ago, the
agency was predicting that global oil production in 2030 would reach 116m barrels per day,
up from around 84mb/d, but now it has slashed that to 106mb/d. At the same time, the
agency has also doubled its oil price forecast. Last year, it said the cost of crude would
fall in the long term, but now it predicts an average of $100 per barrel until 2015,
despite the deepening recession, and rising to $120 in real terms by 2030. It concludes
that the era of cheap oil is over and that the recent extreme price volatility will
continue....One reason for the deeper pessimism about
oil is a new analysis of the rate at which output of existing fields declines due to
falling reservoir pressures - an inevitable feature of oil production. This number has
always been difficult to estimate, but now the IEA has done a detailed study and has
concluded that the global average decline rate for fields that have already peaked is 6.7%
per year, much higher than previous estimates and in spite of billions of dollars of
remedial investment. That means that, to satisfy the IEA's predicted demand growth of
10mb/d day by 2015, the industry must build 30 mb/d of additional capacity. It is as if the oil industry is struggling up a sand dune, constantly
slipping back, forced to scramble three steps to make the distance of one. The IEA says
the challenge of raising oil production is made even harder by the recent collapse in the
oil price - from a record high in July of $147 per barrel to around $55 - because many
planned oil investments are now uneconomic. News of projects being delayed comes almost
daily, creating the conditions for an even bigger price spike whenever the economy
recovers. The report warns that 'there remains a real risk that underinvestment will cause
an oil supply crunch [by 2015]'. This would pitch the world back into recession, with all
the economic and social misery that implies.... PFC
Energy, a Washington-based consultancy, has concluded that, on a more prudent estimate of
Opec reserves, its output could peak by the middle of the next decade."
Pipe dreams
Guardian,
3 December 2008 |
"Shell, one of the biggest players in the oil sands, last month
delayed an expansion of its oil sands mining operation when costs rose and oil prices
fell. Adrienne Lamb, a spokeswoman for the company, said Shell is reviewing and
redesigning the Carmon Creek project and plans to submit a new application to regulators.
The company hasn't yet decided when that will take place. Shell had been expected to make
an investment decision on Carmon Creek in 2010. However, Ms. Lamb said that will now be
delayed because of the changes and the company hasn't decided on a new schedule. Shell had
not released a cost estimate for the project, which was to have been built in two 50,000
barrel per day tranches. Unlike the company's mining operations, Carmon Creek would use
thermal techniques to produce the reserves, pumping steam into the ground to liquefy the
tar-like bitumen so that it can be pumped to the surface. Along
with Shell, Suncor Energy Inc , Nexen Inc , Petro-Canada , Canadian Natural Resources Ltd.
and others have said they'll delay or defer projects in the region because falling oil
prices have squeezed profits while costs stay high. A shortage of skilled labour in
the remote region has helped push up costs as companies compete for a small pool of
tradesmen and contractors."
Another Canadian Oil Sands Project on Hold
Neftegaz.RU, 1 December 2008 |
"U.S. auto sales plunged 37
percent in November to their worst level in more than 26 years, dashing expectations that this dismal year for vehicle demand had found
a bottom, and adding more ammunition to the Detroit automakers' case for a congressional
lifeline."
Nov. auto sales sink to worst level since 1982
Associated Press, 2 December 2008 |
"Azerbaijan and Turkmenistan agreed a common energy export strategy
that could help unlock new pipeline routes from the Caspian region, easing European
dependence on Russian supplies. The EU and US have urged Turkmenistan to join the planned
Nabucco pipeline project to move gas across Azerbaijan, Georgia and Turkey. 'Turkmenistan
and Azerbaijan are rich in hydrocarbon resources and share a common view about
diversifying energy export routes to the world market,' Gurbanguly Berdymukhamedov, the
president of Turkmenistan, said after a meeting on Friday with Ilham Aliev, the leader of
Azerbaijan, in Turkmenbashi, an oil town on the Caspian Sea. Mr
Berdymukhamedov has expressed interest in Nabucco but is under pressure to increase gas
exports to Russia, the main market for Turkmen gas. He has also contracted to supply gas
to China through a new pipeline now being built to the east."
Caspian energy export deal
Financial
Times, 1 December 2008 |
"Another of the cornerstones in
the world's attempt to wean itself off fossil fuels has been the belief that nuclear power
could be ramped up substantially. If all the plans for new nuclear generators are totted
up, the World Nuclear Association has said that an additional 237 reactors will be built
over the next 21 years. The only snag with that plan lies in the island of Hokkaido and in
a century-old steel forge that produces 80 per cent of the world's reactor cores - a
highly specialised piece of steel, milled from a single 600-tonne ingot, which only a few
companies in the world can handle. Nearly two years ago, the nuclear industry started to
get worried: Japan Steel Works (JSW) was able to churn out only four of these reactors a
year, far, far below the demand implied by the politicians' promises and considerably
lower than the biggest players in nuclear - Areva, of France, and Toshiba, of Japan - were
at all happy with. JSW accepted that there was a
problem and said that it would invest heavily to ramp up production to 8 cores per year.
But that will still not be enough to meet implied demand: JSW has an overstuffed order
book that stretches decades out and the tussle to win spots near the front of the waiting
list has turned ugly, according to some reports. Toshiba, Hitachi and Mitsubishi all hold
stakes in JSW in what is understood to be an 'ongoing gesture of goodwill' to the
steelmaker. In a move that analysts said revealed the extent of the desperation in Europe,
Areva struck a deal with JSW this month for long-term purchase agreements and bought a 1.3
per cent stake in the company. JSW has said that it
might be able to produce 12 reactor cores per year by 2011. Nuclear industry insiders told
The Times that JSW's virtual monopoly was still the 'biggest, most overlooked bottleneck'
for a nuclear renaissance."
Grand plans for global energy are under threat - but from unexpected sources
London
Times, 29 November 2008 |
"Lack of capacity in the nuclear
construction industry means that Britain will have to rely on imported natural gas to meet
an emerging shortfall in power generation over the next decade, according to a senior
executive of EDF, the French utility that has agreed to acquire British Energy, the
nuclear power generator. Bernard Dupraz, senior executive vice-president for power
generation at EDF, said Europe did not have the engineering and construction capacity to
build enough nuclear plant at sufficient speed to fill the gap left in Britain by the
planned closure of elderly and obsolete power stations. 'I think to fill this gap it will have to be gas-fired power stations,'
he said. According to the Government’s Energy White Paper, the UK will lose 22.5
gigawatts of power by 2020 because of closures of old nuclear stations and coal-fired
plant that fails to meet EU emission regulations. The French utility wants to build four
nuclear reactors in Britain over the next decade. It hopes to begin pouring concrete on
the first site in 2012 after a five-year licensing process and the first electrons might
be generated by 2017. Mr Dupraz reckons that when its build programme is in full swing, it
could bring a nuclear plant on stream every 18 months. EDF’s preferred technology is
the EPR, designed by Areva, the French utility, a nuclear reactor capable of 1.6 gigawatts
of generating capacity. If four reactors are built by
British Energy/EDF and perhaps a fifth plant by E.ON, the new nuclear contribution will
fill less than half of the power gap forecast by the Government. The likely solution will
be the rapid construction of gas-fired power stations which could be built in a shorter
time frame. Mr Dupraz said: 'The problem will be
solved with gas.' However, more gas will leave
Britain further exposed to energy price volatility and increase the country’s
dependence on imports of fuel from Russia. It would
also hamper efforts to reduce Britain’s carbon emissions."
UK energy shortfall to be filled by gas-fired stations as nuclear reactors are built, says
EDF chief
London
Times, 28 November 2008 |
"The slump in crude oil prices is putting more development projects
on ice. Shell today withdrew its application to build
a 100,000 barrels daily oil sands mining project near Peace River in Northern Alberta.
Last week Shell delayed expansion of its existing tar sands operation. Many other oil
sands projects have already been delayed. In the
East Irving Oil said the massive $8 billion Elder Rock oil refinery project in Saint John,
N.B., is being stretched out with an eight-year timetable instead of four. Irving now
operates a 300,000 barrels daily refinery at Saint John - Canada's largest. A final
decision on Elder Rock will be taken next year by Irving and partner BP Plc. 'We face
rising capital costs, labor shortages and increased global competition,' said Kevin Scott,
Irving's director of refining."
Oil slump hamstrings Shell, Irving projects
Montreal
Gazette, 28 November 2008 |
"South Africa has put a
provision in its nuclear policy to restrict uranium exports to satisfy local demand, but has no specific plans yet on when and how it would put it into
force, a spokesman said on Wednesday. 'We have a policy that gives us the instruments to
restrict the export of uranium to satisfy local demand first,' Minerals and Energy
Ministry spokesman Bheki Khumalo said...South Africa,
which has Africa's largest uranium reserves, has
categorised uranium as a critical mineral."
S.Africa may step in to restrict uranium exports
Reuters, 27 November
2008 |
"Uranium is not a particularly rare metal: It is the 48th
most common element in the Earth’s crust, is enriched in common granitic and rhyolite
rocks, and because of multiple valence states sensitive to oxidation and reduction, is
geo-chemically very mobile. As a result, small, high-grade occurrences are multitudinous
and occur in many geological environments. But the mighty and energetic 'U' occurs in
exploitable concentrations in only four significant deposit types worldwide. The most
attractive are high-grade, unconformity-style deposits in northern Saskatchewan’s
Athabasca Basin. The 'Basin' is the world’s largest historic (over 350 million
pounds U3O8) and current producer with 23% of 2007 production.....However, one uranium
play literally fluoresces an order of magnitude brighter than all others: Hathor
Exploration Limited (TSX: V.HAT,
Stock
Forum). The 'HAT' has made one helluva discovery in the eastern Athabasca Basin.
It’s called the Roughrider Zone within their 90% owned Midwest Northeast project, and
it has potential to become a world-class uranium deposit....These basement-hosted
deposits, including Midwest and Roughrider, are in contrast to typical unconformity-style
deposits from which most historic Athabasca production has come. Although exploration for unconformity deposits in the Basin is
mature, exploration for basement-hosted ore bodies is in its infancy and more discoveries
are sure to come. They are more difficult targets to find, not only because of their
extremely tiny footprint but they often lack the typical airborne electromagnetic
signature from graphite conductors in unconformity deposits....Based on drilling to date, significant mineralization is contained
within an alteration envelope with a strike length of about 115 m x 40 m width by 80 m
depth. Although this is a small volume of about 370,000 cubic meters, Dale pointed out the
Midwest A deposit, located 1.6 km to the southwest, contains all-in resources of 10.1
million pounds of U3O8, of which 4.3 million pounds are contained in 9200 tonnes
grading 21% U3O8, a volume of 3300 cubic meters. Folks, these deposits are miniscule,
the proverbial needles in a haystack, and they are incredibly rich. In fact, they are the
richest ore bodies on the Earth....Speculative risk is still very high for investors. Four
risk factors come to mind: The geometry of the zone is unclear. Since it appears to
be controlled by steeply dipping basement faults cross-cutting steeply dipping metamorphic
foliation, Roughrider could be highly irregular in shape and grade, resembling an amoeba,
and continuity could be problematic. Various
analysts’ and newsletter writers’ calculations of 30 to 40 million
pounds-in-the-ground are purely pie in the sky at this juncture... The predicted worldwide near to
mid-term shortage of uranium, long lead times to production, and supply destruction due to
on-going water problems at Cigar Lake and McArthur River bode well for the future price of
the metal. However, uncertain world economic
conditions could lead to scuttling or delay of proposed nuclear power plant construction
and expansions resulting in decreased demand and a depressed uranium price."
World-class deposit potential
Stockhouse,
27 November 2008 |
"The global financial crisis has injected uncertainty into the
natural gas market with concerns growing that the credit crunch could hurt both demand and
supply, according to participants in an international gas conference. 'We have a new level of uncertainty, multiplied by the
crisis and price volatility,' Alex Forbes of Gas Strategies Consulting said on Wednesday,
summing up the mood at the European Autumn Gas Conference. Gas industry executives who
gathered in this lakeside town in northern Italy tried to figure out if the global
economic slowdown, coupled with milder climate and energy efficiency measures introduced
in many developed countries, would put the brakes on gas demand...A big question mark was hanging over future supplies as concerns
increased that the crisis would force major producers to scale back investments in new
exploration and infrastructure projects. Russia's Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), the world's biggest
natural gas producer, may face funding problems and delays in its long-term development
projects and is unlikely to increase exports to Europe, said Jonathan Stern, Russia expert
at Oxford Energy Institute. Separately, Gazprom said
on Wednesday it would keep its main financial and operational targets for the next 10
years, reviewing them after the first half of 2009. Opinions differed about where major
exports of liquefied natural gas would flow in the next few years, with some betting on
robust U.S. demand while others saw Asia as the main market for LNG imports with demand in
Europe picking up."
Crisis means uncertainty for gas market - industry
Reuters, 26
November 2008 |
"The partners in the Midwest
joint venture in Saskatchewan, Canada, have announced their decision to postpone the
uranium mine project due to current economic conditions. Denison has also suspended operations at the Tony M mine in Utah, USA.
The partners in the Midwest project - Areva Resources Canada (69.16%), Denison Mines Corp
(25.17%) and OURD Canada Co (5.67%) - announced in December 2007 the formal decision to
proceed with development of the project. However, Denison announced that the partners have
now decided the postponement the project due to the 'current economic climate, delays and
uncertainties associated with the regulatory approval process, the increasing capital and
operating costs and the current market for uranium.' The company said that, based on
current estimates, capital costs have increased by some 50% from the previous estimate of
C$435 million ($355 million)....Denison's expected US uranium production will fall by some
200,000 pounds U3O8 (90 tonnes U3O8), to between 1.2 and 1.6 million pounds U3O8 (544 to
725 tonnes U3O8), as a result of the suspension of operations at Tony M. Denison said that it is also significantly reducing its expected
exploration and capital expenditures in 2009. It
expects exploration expenditures to total $4.2 million in Canada and $1.6 million in the
USA. In Mongolia, Denison expects to spend $5 million to advance its projects, and in
Zambia $3 million is expected to be spent to complete the detailed feasibility study and
secure the mining licence. The company stated, 'The impact on Denison's uranium production
beyond 2010 is uncertain.'"
Economic crisis impacts North American mines
World
Nuclear News, 26 November 2008 |
"Consumers who were expecting significant falls in their energy bills
over the next few years – which have risen by more than 40 per cent in 2008 –
could be disappointed, Alistair Buchanan, the chief executive of Ofgem, told an
influential group of MPs. Britain does not have
enough storage capacity to buy and hoard gas when it is cheap, and the credit crisis has
delayed projects which would have improved the situation. To make matters worse, the
financial turmoil means that gas and electricity wholesale companies are now demanding a
higher deposit for energy because they are worried that their customers – the retail
distributors – will not have enough money to honour their commitments in the future.
Mr Buchanan told the Business and Enterprise Select Committee on Energy that gas companies
were being charged considerably more by their banks to borrow money. 'Companies are having to decide how much of this should be pushed through
to consumers. This is very, very frightening,' he said. His comments will come as a severe
blow to hard-pressed consumers, who have had to cope with a series of bills increasing
this year. The average joint gas and electricity bill has jumped from £912 at the start
of the year to £1,303....Most experts predicted that energy bills would start to come
down in 2009 because of recent heavy falls in the gas wholesale market. However, Mr
Buchanan warned that customers might fail to see much long-term reduction in their bills,
because of gas companies escalating costs. 'Our British utility companies have significant
refinancing to achieve in the next 18 months. They are very healthy companies but they
have to refinance their debt,' Mr Buchanan said. Peter Luff, the Conservative chair of the
Committee said afterwards: 'This has to hit consumers. It has to. They will be puzzled to
see oil prices tumbling and no reduction in their gas bills, but the forward gas market
remains ahead [of the current price] throughout 2010 and 2011.' Most gas companies buy
their energy on the 'forward market', which allows them to purchase contracts at a set
price in the future. According to energy consultants ICIS Heren, the price of wholesale
gas in summer 2009 is 49.87p, but rises to 53.5p in summer 2010 and to 55.p in 2011.
Though this price has fallen very sharply since the peak they reached this summer, Ed Cox
at the company said, 'They remain very high in historical terms compared to a few years
ago. The era of cheap energy is very much over.' Most experts agree that consumers will
never see prices return to where they were five years ago, when the average gas and
electricity bill for a family was nearly half its current level – at just £534 a
year....According to figures submitted to the committee the forward price of gas in 2011
is lower in Europe by at least 5 pence a therm, and even lower in America. He blamed the
lack of storage capacity for imported gas. Britain
can store between 10 and 12 days' worth of gas, compared with an average of 70 days' worth
of storage in Europe. Various projects to increase capacity in this country have run into
trouble because of the credit crisis. Portland Gas, which was planning a major facility in
Dorset, admitted earlier this month that it will be seriously delayed. Not only will consumers need to get used to annual energy bills of well
above £1,000, business users will be very heavily hit."
Gas prices could be "very, very frightening" in future, MPs told
Daily
Telegraph, 26 Nov 2008 |
"Kazakhstan plans to boost
uranium output by more than a third to about 12,000 tonnes next year, a move that could make the country's state atomic company the world's
biggest producer, a company official said on Wednesday. Kazatomprom plans to boost
production to 11,900-12,000 tonnes in 2009 from around 8,600 tonnes this year, Vice
President Sergei Yashin told Reuters in Moscow. 'I think this year we will have production
of about 8,600 tonnes. In 2009 we plan to increase production to about 11,900 tonnes, so
about 12,000 tonnes,' Yashing said. Yashin said those figures could make the state miner
the world's biggest producer of uranium in 2009. 'Next year we will probably be in the top
place in the world by production. This year we are probably in the third place by
production volumes,' he said. Kazakh uranium resources are estimated at about 1.6 million
tonnes, which puts the Central Asian state on the second place in the world by reserves,
Yashin said, adding that additional exploration will
be done next year to uncover more resources."
Kazakhstan to boost uranium production in '09
Reuters, 26 November 2008 |
"The Kingdom [of Jordan] is close to finalising a mega-deal with the
Royal Dutch Shell Oil Company to tap the Kingdom’s vast amounts of oil shale
resources, an energy official said. 'We are close to finishing negotiations and we expect
the agreement to go before Parliament for approval within the next month,' Natural
Resources Authority (NRA) Director Maher Hijazin told The Jordan Times on the sidelines of
the 10th Arab Conference on Mineral Resources. According to Hijazin, Shell will survey and
develop 22,000 square metres of land, nearly one-quarter of the country, in the central
and southern regions of the Kingdom. The project will
be transferred to the government after the end of the concession. Under the potential
concession agreement, which is expected to be between 15 and 20 years, Shell will use
their patented In-situ Conversion Process, under which the ground is heated over several
years, to extract oil shale in oil form. If approved
by Parliament, it will mark the first large-scale application of the firm’s In-situ
Conversion Process, according to the company’s website. Shell officials could not be
reached for comment."
Oil shale deal with Shell imminent
The Jordan Times, 25 November 2008 |
"...the head of Shell, Jeroen
van der Veer, warned the Confederation of British Industry on Monday that we 'had better
make speed, or else the lights would go out. A sense of urgency is needed'. Van der Veer
pointed out that the financial crisis would be a problem for a couple of years, 'but the
energy challenge will be a problem for at least 50 years'. He told the audience to face three hard truths. First, the world's
population will increase from 6 to 9 billion over the next couple of decades and these
people will all want electricity and transport. Second, oil and gas alone will not be able
to provide this fuel: renewables in time will come into their own but we are a while away
from that future at the moment. And third, CO2 levels will go up in concentration higher
than the levels recommended by the scientists."
Financial crisis? That's nothing
Guardian,
25 November 2008 |
"As uranium miners delay projects, cut costs and place mines on care
and maintenance to deal with current economic conditions, others are eyeing merger and
acquisition opportunities and preparing for the next spike in uranium prices. Denison Mines Corp. (TSX:DML) announced Tuesday that the mid-sized
uranium producer and its partners are postponing development of the Midwest uranium
project in Saskatchewan. The company also plans to temporarily shut down its Tony M mine
in Ticaboo, Utah, and cut capital spending. Earlier this month, Uranium One Inc. (TSX:UUU)
said it has taken a US$2.8-billion writedown and is cutting costs across all operations
after placing its Dominion mine in South Africa on care and maintenance....Salman Partners analyst Pat Donnelly said the plunge in prices was the
result of commodity funds and hedge funds 'dumping whatever they could get out the door to
get cash' as markets crashed last month. In total, seven million pounds of uranium were
traded in October alone, meaning 2008 is shaping up to be the busiest year for uranium
trading in as decade, he added. But as miners respond to low prices by delaying new projects and
temporarily halting production at old ones, a real supply shortage could result, Donnelly
said."
Some uranium miners closing mines while others eye opportunities amid rebounding price
Canadian Press, 25 November 2008 |
"Offshore wind is a vital part of what José Manuel Barroso, the
European Commission president, has described as the 'third industrial revolution': the
transformation of the energy industry to cut greenhouse gas emissions and the European
Union's reliance on gas and oil. If the EU is to hit its target of deriving 20 per cent of
its energy from renewable sources by 2020, offshore wind will play a crucial role. Centrica has big plans to join that revolution, building a total
of 1,600MW of offshore wind capacity. Yet those plans are under threat. Centrica has said
it is reviewing that programme, which would demand a further £4bn ($6bn) of investment,
as the cost of building offshore wind farms has soared. Similar stories are being played
out across the EU. As the credit crunch bites, utilities are going over their investment
plans to see whether they are still viable; not just for renewable energy but for all
projects. Several, including Eon of Germany and
Iberdrola of Spain, have warned they are likely to slow the rate at which they are
investing. The financial crisis has hit the outlook for investment in three ways: by
raising the cost of funding, cutting the prices of gas and electricity, and scaling back
expectation of future demand."
Wind farms becalmed by turmoil
Financial
Times, 24 November 2008 |
"Clean technology will rival the
Industrial Revolution and every major technological development since then to become the
'Sixth Revolution,' as the world grapples with the threats of peak oil, global warming and
the need for energy security, says financial analysis firm Merrill Lynch. While such revolutions occur only about every 50 years, and can deliver
'a golden age' based on the new technology's transformative possibilities, we are now on
the cusp of the next great change, says Merrill Lynch clean-tech strategist Steven
Milunovich. 'History shows that technology revolutions occur about every 50 years. We
believe clean tech is at the beginning of a high-growth period, much like computing was in
the early 1970s,' says Milunovich."
World on cusp of clean tech revolution: Merrill Lynch
Canwest
News Service, 24 November 2008 |
"CBC News has obtained a government document that says reducing
greenhouse gases from Western Canada's oilsands will be much more difficult than some
politicians and the industry suggest. The ministerial briefing notes, initially marked
'Secret,' say that just a small percentage of the carbon dioxide released in mining the
sands and producing fuel from them can be captured. The
oilsands are the fastest-growing source of CO2 in the country, set to increase from five
per cent to 16 per cent of total emissions by 2020 under current plans. Capturing the gas and pumping it underground has been the key public
strategy for reducing the oilsands industry's contribution to global warming. The briefing
notes, obtained by CBC News under freedom-of-information legislation, are based on the
findings of a joint Canada and Alberta task force on carbon capture and storage. Little of the oilsands' carbon dioxide can be captured because
most emissions aren't concentrated enough, the notes say. For efficient capture, there must be a high concentration of CO2 coming
out of a smoke stack. 'Only a small percentage of emitted CO2 is 'capturable' since most
emissions aren't pure enough,' the notes say. 'Only limited near-term opportunities exist
in the oilsands and they largely relate to upgrader facilities.'...David Keith, a
professor of petroleum and chemical engineering at the University of Calgary, was the lead
scientist on the task force. He says he's frustrated that politicians and the industry
keep focusing on the oilsands when there are sources of greenhouse gases to capture more
easily and at less cost, including coal-fired power plants."
Secret advice to politicians: oilsands emissions hard to scrub
CBC, 24 November 2008 |
"There are now daily reports of oil production and refining projects
being cancelled due to low prices and lack of capital. The situation can only get worse. While worldwide oil consumption is dropping, it is not dropping as
fast as investment in new production seems to be dropping. All this will come to a head in a few short years when serious oil
shortages are bound to develop."
Price Forecasts
Peak Oil Review,
ASPO USA, 24 November 2008 |
"... the IEA reports that total world liquids production increased by
1.81 million b/d in October to 86.4 million b/d at a time when consumption is declining. Average OECD consumption in 2008 from January through September is
reported to be 1.11 million b/d less than in 2008. Most of this is from a 950,000 b/d drop
in US consumption. Chinese consumption during the
first 9 months of 2008 was up by only 50,000 b/d while Indian consumption was up by
200,000 b/d."
Supply and Demand
Peak Oil Review,
ASPO USA, 24 November 2008 |
"Barack Obama will unveil his economic team formally today in
response to mounting criticism that he can no longer wait until he takes office to
confront the rapidly worsening financial crisis....Mr Obama’s economic advisers
express fears privately that the US economy is not just heading for a deep and painful
recession, but a calamitous one. Unemployment is rising rapidly – it soared by
240,000 in October – the stock market is heading for its worst year in terms of
percentage losses since 1931, the car industry is on
the verge of collapse and President Bush’s $700 billion rescue package has proved
ineffective in freeing up the credit markets. Ken
Rogoff, the former chief economist at the International Monetary Fund, told The Times
that he expected the unemployment rate to continue soaring – it is currently 6.5 per
cent – and that there is a good chance that it could hit 10 per cent next year.
'Unemployment is a measure of how deep a recession is. And the US is in for a very, very
deep recession,' he said."
Crisis of 'historic proportions' forces Barack Obama to name his economic team
London
Times, 24 November 2008 |
"Britain is poised to expand its coal mining industry, despite fears
that the move will lead to a rise in climate change emissions and harm communities and the
environment. Freedom of information requests and council records show that in the past 18
months 14 companies have applied to dig nearly 60 million tonnes of coal from 58 new or
enlarged opencast mines. At least six coal-fired
power stations are planned. If all the applications
are approved, the fastest expansion of UK coal mining in 40 years could see southern
Scotland and Northumberland become two of the most heavily mined regions in Europe. The
demand for new mines is being driven by dramatic increases in the price of coal. This has
quadrupled in two years and has risen by 45 per cent since the start of this year.
Opencast, or surface, mines are much cheaper than deep mines, but those living nearby can
suffer years of pollution. The increase in mining will embarrass the Energy and Climate
Change Secretary, Ed Miliband, who is arguing that Britain must reduce carbon emissions.
Ministers must soon decide whether to approve a controversial new coal-fired power station
at Kingsnorth in Kent, the first in 30 years. 'Attention has been focused on the decision
at Kingsnorth, but over the past 18 months local authorities have approved more than 24
new opencast mines and 16 expansions of existing mines,' said Richard Hawkins, of the
Public Interest Research Centre (Pirc), which conducted the study...Nearly half of all British coal is mined using opencast methods
against just 12 per cent 10 years ago, but this is expected to increase significantly. In
2005, total UK production was 20m tonnes, with 9.6m tonnes coming from deep-mined
production and opencast accounting for 10.4m tonnes. Nearly 70 per cent of all the coal
burnt in UK power stations is imported from Russia, South Africa, Colombia and Australia. But coal prices have risen far above official projections. 'Part [of the
increase in applications] is certainly due to the increase in the world coal price, which
follows oil and gas,' said a spokesman for the Coal Authority, the body which regulates
the licensing of UK coal mines."
Coal's return raises pollution threat
Observer,
23 November 2008 |
"The sharp drop in the price of oil is worrying and could hinder
investment in the industry, Total Chief Executive Christophe de Margerie said on Sunday.
'I think it is beginning to get dangerous. I think that ... we are getting to a level that
will brake investment in a sector that is crucial,' Margerie told LCI television. He added
that recent highs of $140 a barrel were excessive, but said oil
should cost between $80-$90 a barrel to allow the industry to bring much-needed new fields
on line."
Fall in oil price getting "dangerous" -Total CEO
Reuters, 23
November 2008 |
"Brazil's biofuel industry just
months ago was being flooded with billions in new investments for vast new sugarcane
plantations and gleaming distilleries that churn out the cheapest ethanol on earth. But
the global financial crisis has put the brakes on that boom, drying up foreign investment
and domestic credit, stalling new projects and prompting cash-strapped ethanol producers
to indefinitely postpone expansions. 'I'm still
ready to play ball, but the ball disappeared,' said former Brazilian Agriculture Minister
Robert Rodrigues, whose plans for an ethanol start-up were recently put on hold as foreign
investors withdrew cash amid fears that a global recession would slow demand for fuel.
Heavily leveraged small and mid-sized ethanol operations are likely to be bought out by
their larger counterparts, if emergency credit lines from state-owned banks aren't enough
to stave off crushing debt obligations, participants at a recent biofuels conference in
Sao Paulo said. One large ethanol maker filed for bankruptcy earlier this month to
restructure $100 million in debt it could not pay."
Brazil's biofuel industry dries up
Associated
Press, 23 November 2008 |
"The advance of the cyclist stepped up a gear yesterday when
Halfords, the bicycle and car accessories chain, said it hoped to open 50 stores devoted
entirely to cycles. The company is putting more emphasis on bicycles as high fuel prices
and the economic downturn drive hordes of commuters on to the saddle. The number of
commuters cycling to work has increased by 3.3
million since the start of the credit crunch,
according to one survey."
Halfords hopes to open 50 bicycle-only stores as credit crunch sees cycling boom
London Times, 21
November 2008 |
"For years, the global wind
energy industry has been growing at a 25 per cent clip, driven by surging investment, a
slew of government subsidies and tax breaks. By 2007, total installed wind capacity had
grown from only six gigawatts globally in 1996 to 94 gigawatts. Now, however, comes an
abrupt reversal in fortunes. From Britain to Australia, developers are facing fierce
headwinds as the credit crunch bites and plunging oil prices undermine the economic
rationale of more costly renewable energy schemes.
In May, Shell provoked uproar when it withdrew from the world's largest offshore windfarm
- the London Array in the Thames Estuary - after the costs allegedly had risen from £1
billion in 2003 to £3 billion. Last month, BP followed suit, blaming the spiralling cost
of labour and materials on its decision to exit the UK renewables industry. Across the
Atlantic, FPL Group, America's largest wind-power operator, is cutting its spending next
year by nearly a quarter to $5.3 billion and new wind-power generation to 1,100 megawatts,
from 1,500. Industry executives complain of tough conditions, with bottlenecks in the
supply of key equipment such as wind turbine blades forcing up costs. Project finance is
also tougher to find and more expensive than it was a year ago, with bankers less willing
to lend because of falling oil prices and the turmoil in debt markets."
Stranded but not sunk amid a deepening financial storm
London
Times, 20 November 2008 |
"The six-year ban on uranium mining in Western Australia has been
lifted, newly elected Premier Colin Barnett
announced on Nov. 17, 2008. New mining leases will no longer exclude the hunt for uranium.
Australia is the world's second largest producer of uranium (19.7 million lb U3O8 in
2006), behind Canada (26.7 million lb). Between them they account for half the world's
production. With the hunt on again for new uranium producers in Western Australia, that
country may give Canada a run for the its top-ranked status. The change in policy will
benefit companies with advanced projects in Western Australia."
Western Australia lifts uranium ban
Canadian
Mining Journal, 19 November 2008 |
"Europe and the US are renewing efforts to loosen Russia’s
stranglehold over Caspian oil and gas exports, in spite of lingering fears about the
security of pipelines in the region in the wake of the war in Georgia. A declaration
signed by the European Commission, the US and 15 countries at an energy summit in Baku,
the Azerbaijan capital, on Friday, called for deeper co-operation in Caspian oil and gas
transport projects to improve international energy security. 'We consider it is important
to continue policies aimed at diversifying oil and gas supply routes from the Caspian
basin to European and world markets,' the declaration said. It
emphasised the importance of the stalled Nabucco pipeline to bring Central Asian and
Azerbaijani gas to Europe and of a pipeline linking Turkey, Greece and Italy with the
Caspian. Pipelines and railways carrying
Caspian oil and gas across the Caucasus to the west were halted briefly during the war
between Russia and Georgia last August, exposing the vulnerability of energy
infrastructure in the region. Mikheil Saakashvili,
the Georgian president, warned that Russia’s goal was to establish control over
Caspian energy infrastructure and resources. But
Samuel Bodman, the US energy secretary, said the war in Georgia had 'shown the importance
of energy resources diversification.' Kazakhstan, the Caspian country with the biggest oil
and gas reserves, attended the summit, but did not sign the declaration, possibly out of
deference to Russia, its main transport route to energy markets. However, Kazakhstan
signed an agreement to form a joint company with Azerbaijan to ship Kazakh oil across the
Caspian to enter the Baku-Tbilisi-Ceyhan pipeline to the Turkish Mediterranean. Sauat
Mynbaev, the Kazakh energy minister, said Kazakhstan 'held great hopes' for the $3bn
trans-Caspian export project that will transport 1.2m barrels a day of Kazakh oil to
western markets."
EU and US back Caspian call
Financial
Times, 17 November 2008 |
"The recession has already
started to erode power demand, with Britain's grid operator National Grid on Thursday
reducing its forecast for Britain's peak electricity demand this winter because of a drop
in industrial use. Of Britain's 2007 gas consumption
of 39.5 billion therms, or 1,000 terawatt hours, industrial and commercial users such as
ceramics and chemical sectors, accounted for about 35 percent. The power sector accounted
for 25 percent and householders used the remaining 40 percent for heating and cooking.
'The primary issue for gas demand going forward, (is that) most of the demand growth is
anticipated from power generation sector,' said another private analyst, who declined to
be named. 'Obviously in the event of economic slowdown, there will be less demand for
energy and therefore less demand for new power stations to be built ... From that
standpoint, there's a question of how low demand from power stations can actually go.' In
addition to a downturn in demand for electricity, analysts said the sharp drop in coal
prices and carbon emissions was encouraging power generators to burn more coal than gas,
which is also eating into gas demand. Gas demand from
Britain's power sector will rise in the longer term, analysts and industry officials said,
as many of the country's coal and nuclear plants are replaced by gas-fired power stations
over the next decade. Gas-fired plants require less
capital investment and are quicker to build than nuclear, while the future of coal-fired
generation in Europe is uncertain because of increasingly strict controls over carbon
dioxide emissions and pollution."
Recession, cheap coal to cut UK winter gas demand
Reuters, 17 November 2008
|
"Petro-Canada, the country’s third- largest oil company, has delayed
the C$25.3 billion ($20.6 billion) Fort Hills oil-sands mining project in Alberta because
of rising costs and falling oil prices. A decision
is expected in 2009, the Calgary-based company said in a statement today. Plans for an
upgrader, which would convert the sands into oil suitable for refining, are on hold.
Petro-Canada and partners Teck Cominco Ltd. and UTS Energy Corp. said they’re 'committed to retention of the leases'
and are in talks with the Alberta government on the current lease term. Energy companies such as Royal Dutch Shell Plc and EnCana Corp. are reducing plans to extract bitumen, the tar-like raw
material used for crude, as oil prices plummet. Oil
futures traded in New York have tumbled about 61 percent since July to a low of $54.67 a
barrel on Nov. 13. 'Their cost was the highest we’ve seen for an oil-sands project,
so in the current market conditions it just didn’t make sense to proceed,' Chris Feltin, an analyst at Tristone
Capital Inc. in Calgary who rates the stock 'market perform' and doesn’t own the
shares, said in a telephone interview. 'It’s not dead, but it’s definitely put
off for a while.' The total cost of the Fort Hills project was pegged at C$25.3 billion
and the cost of the upgrader at C$10 billion to C$12.5 billion, UTS said in a statement on
Nov. 5."
Petro-Canada Postpones C$25.3 Billion Oil-Sands Mine
Bloomberg,
17 November 2008 |
"Uranium One is planning
'significant' reductions in exploration expenditure across all its operations after a third quarter which saw net losses of $2 billion from continuing
operations. The Vancouver-based uranium company says it has taken a number of steps to
reduce or defer previously planned capital or corporate expenditure in response to the
current economic climate....Uranium One recently suspended operations at its 100%-owned
Dominion uranium project in South Africa and put the mine on care-and-maintenance pending
a possible sale or permanent closure, depending on the economic situation.....All
Kazakhstan's uranium producers have been affected by problems with supplies of sulphuric
acid, a vital feedstock for the in-situ leach process. Although the new 1.2 million tonnes
per year Kazakhmys Balkhash sulphuric acid plant started up in June, a lack of available
railcars has led to problems with distribution in the short term. Uranium One says its
Kazakh projects are likely to face sulphuric acid supply problems for the rest of 2008 and
the first half of 2009. In the longer term, the company is involved in a joint venture
with Kazatomprom and other affected parties to build a new sulphuric acid plant at
Zhanakorgan, near Kharasan."
Uranium One makes cuts after Q3 losses
World
Nuclear News, 17 November 2008 |
"Let me finish my remarks by just
forecasting a bit for the future. When we sat down to do this with some of our best and
brightest on the inside, we made it a global enterprise. We invested time with academics,
diplomats, and other governmental leaders around the globe to get their input and their
observations. And this report will be released in a week or so. I would commend it to you.
It will be on the web and it
will be published in hard copy. By and large, it says that the
potential for conflict over the next 15 to 20 years is going up not down. That’s
because of the competition for resources.... Production of oil in most of the countries that produce oil is
currently on the decline. We will see a shift away
from oil. But most likely, what we will see a shift to is coal and natural gas, unless there is a technological breakthrough that we don’t
know about currently. So
the pressure across the globe is going to change in the context of competition for natural
resources. We’re going to see not only
government groups compete for – governments compete for resources – we’re
going to see nongovernmental organizations, businesses, and terrorist groups also have
something to say about it."
Remarks by the Director of National Intelligence Mr. Mike McConnell
2008 MILCOM Conference & Symposium
San Diego Convention Center San
Diego, California, November 17, 2008 |
"Uranium One, which recently put its Dominion mine near Klerksdorp on
care and maintenance with the loss of about 1,000 jobs, has written down its assets by a
net $2 billion because of weak market conditions. It said on Friday it had taken other
steps, apart from suspending operations at Dominion, to postpone capital expenditure,
including deferring spending at the Hobson mine in the U.S., securing Mitsui as a partner
to help fund the development of its Honeymoon project in Australia, and cutting
exploration and corporate costs.CEO Jean Nortier said Uranium One had enough cash to
develop its priority projects in Kazakhstan and the U.S. The company held $98.9 million in
cash at the end of September, and had since drawn down $65 million from its credit
facilities. The company again cut its forecast production for this year and next year. Earlier this year, Uranium One cut its production forecast for
this year by a third to 3.15-million pounds and for next year by 15% to 6.8-million
pounds, because of slower than expected underground development at Dominion. Last month it
said it had stopped work at Dominion as the project was no longer economic at today’s
uranium prices and as a result of rising cost pressures. It expected to incur $32 million in closure costs and spend about $12
million a year on care and maintenance."
Uranium One forced To Pull In Its Horns
Resource Investor, 17
November 2008 |
"The European Commission's
Second Strategic Energy Review warns that net imports of fossil fuels will remain
constant until 2020 despite EU efforts to move towards a 'low carbon'
economy. Gas supply security takes centre stage in the review. 'Net imports of fossil fuels are expected to stay at roughly today's
levels in 2020 even when EU's climate and energy policies are fully implemented,' the
Commission says in a new 'action plan' on energy security and solidarity,
released yesterday (13 November) in Brussels...Energy
infrastructure, notably gas pipelines, and external energy relations top the list. The
Nabucco and Baltic Sea pipelines are listed as priority in the review, along
with four other projects. Energy Commissioner Andris Piebalgs recently toured
the Caspian region in an effort to secure a commitment to gas provision from
Azerbaijan for Nabucco (EurActiv 04/11/08).
Moscow, which has existing and extensive energy relations with Baku, is
competing with the EU for privileged access to Azeri gas. Concrete actions to address oil supply security are not listed in the
review, however. This is due to the liquid nature of oil market, says the text. In
contrast, 'gas supply depends mainly on fixed pipeline infrastructure,' it
adds....the review's central focus on gas rather than oil has angered some
green MEPs (see positions). The text may also raise eyebrows at Russia's state-owned
gas monopoly Gazprom, which has made efforts to assuage EU concerns about disruptions
in gas supply on the grounds that a vibrant European energy market is a
strategic interest for Russia. In addition to calling on member states to convey a
'single message' in external energy relations, Barroso, who travels to Nice today (14
November) for an EU-Russia summit, downplayed conerns that the document could
irk Moscow. 'This is not a package targeted at Russia,' he said, insisting that the
EU was in a state of 'positive inter-dependence' with the country. EU consumers
should nonetheless be aware of the risk that 'external supplier countries cannot
honour their commitments,' he said."
Fossil fuels central to EU's long-term energy security vision
EurActive,
14 November 2008 |
"Oil prices should be high enough to foster sustained investment in a
range of new sources including costly projects like tar sands, the head of the
International Energy Agency (IEA) said on Friday. 'The cost of investment is different by
region or country,' Nobuo Tanaka, executive director of the agency that advises 28
industrialised countries, said two weeks before producer group OPEC holds an emergency
meeting to discuss the oil market. 'In the oil sand or tar sand production, we'd say the marginal cost of a barrel is about $70-$80 (a barrel). On the other hand, in the Middle East producers, the cost is much less.
'We need to maintain the level of investment. I can't tell you what is the proper price
level, but I strongly believe that the price signal must satisfy these different needs in
the energy sector,' Tanaka told Reuters in an interview....As a representative of consumer
interests, the IEA voiced concern earlier this year about high oil prices. But it has also
repeatedly argued that excessively low prices could discourage investment in production,
with serious implications for supply in future, once the global economy recovers from the
slowdown. There have already been delays in expensive projects including oil sands schemes
in Canada, where oil is abundant but difficult to extract....The
IEA this week estimated the world needs investment of more than $26 trillion in the next
20 years to ensure adequate energy supplies, an increase of more than $4 trillion from
estimates in its 2007 World Energy Outlook... At a
symposium in Tokyo on Friday Tanaka repeated concerns that low prices could slow
investment in oil projects worldwide. 'There are concerns that as (oil) prices fall,
national oil companies and oil majors may backtrack high-cost and difficult projects,' he
said. 'The global economy may ultimately recover in a few years and push up oil demand. If
supplies do not catch up with that, there may be serious consequences.'"
Oil price must foster costly investment-IEA chief
Reuters, 14 November 2008 |
"The just released IEA report does not include [Saudi Arabia's]
Ghawar among the post-plateau fields, as production in 2007 was still less than 15 percent
below the peak of 5.6 million bpd reached in 1980. As per the ‘audit report’
compiled by Fatih and his team, Ghawar produced 5.1 million bpd of crude oil in 2007, down
from a peak of 5.5 million bpd in 1980 (when the field’s capacity was fully utilized
in response to the loss of Iranian production following the revolution.) and a recent peak
of 5.3 million bpd in 1997. The observed post-peak decline rate is thus a mere 0.3 percent
per year. Ghawar is still at the plateau phase of
production, the report underlined — and this
must get steam out of the peak oil bogey — one can’t help assuming. The IEA
report specifies that Ghawar has been developed in distinct stages, which have
progressively raised the field’s capacity keeping the field at plateau. The most
recent project involving the Haradh area in the southern part of the field was completed
in 2006, tripling capacity to about 900,000 bpd. This has helped to offset natural
declines in other parts of the field, the report agreed."
Kingdom stands vindicated after IEA report on Ghawar
Arab
News, 14 November 2008 |
"Production at the world's oil
fields will decline faster in coming years, putting more pressure on future oil supplies,
the International Energy Agency said on Wednesday. As current fields fade with age and the
industry moves offshore and into smaller fields, decline rates will accelerate, the agency
found, and more investment will be required to make up the shortfall. The Paris-based watchdog, which represents the interests of
energy-consuming nations, made its prediction in a detailed analysis of 800 of the world's
oil fields -- the first report of its kind. Its conclusions are likely to deepen the
pessimism about long-term oil supply that is taking root among some oil executives,
economists and market analysts."
IEA Says Fading Oil Production Threatens Supply
Wall
St Journal, 13 November 2008 |
"The spent uranium fuel is not waste. It is a source of free and
endless energy. President of “Kazatomprom” National Atomic Company Mukhtar
Dzhakishev said at a meeting with journalists in Almaty, Kazinform reports. 'States
usually leave processed fuel at their disposal. The Kazakh Tax Code has an item that we
can take back spent fuel of these reactors', the head of the National Atomic Company said.
Today the best thermal reactor in the world is a reactor of generation 3+, which is
produced by two companies – 'Areva' and 'Westinghouse'. The next generation of
reactors is the forth, fast neutron reactors. This reactor’s difference is in fuel
transmutation because of a great number of energy pathways. 70 per cent of fuel in this
reactor is spent fuel, which is taken from thermal reactors. 30 per cent of plutonium is
added to it and it works for several years. Then plutonium burns out and 30 per cent of
spent fuel transforms to plutonium again. Therefore, this reactor is independent in
gathering fuel....'I have always told about fast neutron reactors. Spent fuel is fuel of
these reactors. Because of it we suppose, that when a fast neutron reactor is created, and
we take part in this creation, we will return spent fuel of our uranium back to
Kazakhstan', 'Kazatomprom' President said. He noted that this spent fuel could be sold
again.'“And we can do it endlessly. If reserves of natural uranium end, we can sell
fuel for fast neutron reactors. From viewpoint of science and technology humanity has
solved wastes problem', M.Dzhakishev noted. It is
expected that a fast neutron reactor will appear in 2050. But the head of the company is optimistic. 'If we bring efforts and
specialists together, it might happen earlier – in 2030. In any case it is a near
term-perspective', he said."
World financial crisis not affect nuclear power industry: M.Dzhakishev
Kazinform, 13
November 2008 |
"Cameco CEO Jerry Grandey said Wednesday, 'The long-term fundaments
of uranium markets remain strong. New production is needed to meet growing demand.'
Meanwhile, Grandey told analysts that he believe global
uranium production may fall 5 million pounds short of originally projected macro forecasts
this year for a total of 120 million pounds.
Overall, however, Grandey suggested the production trend is up as junior uranium producers and others increase uranium production
from 6 million to 8 million pounds. Meanwhile, if
the current turmoil in today's markets persists, Grandey advised, 'the lack of investment will delay new uranium production and it will certainty strengthen prices in the longer term'"
New uranium production still needed to meet growing demand - Cameco
Mineweb,
13 November 2008 |
"Cameco's uranium results have been impacted by higher costs and
lower production. Uranium revenue of C$396 million ($322 million) for the quarter was down
on the similar period in 2007, mainly due to lower prices under market-related contracts,
while unit production costs had increased. Reduced
production across all Cameco's sites, including the Inkai project in Kazakhstan, is
reflected in a revision of forecast uranium production for 2008 to 8030 tonnes U3O8
(6810 tU), down from the previous figure of 8890 tonnes U3O8
(7540 tU). Fuel services have been adversely
affected by the closure of its uranium hexafluoride (UF6) plant at Port Hope
for over a year since the discovery of production chemicals in ground water, the company
said. Although the plant is now operating again, a contractual dispute with the company's
supplier of hydrofluoric acid (HF), a vital feedstock for the process, continues to cast
uncertainty over future production levels. The company says transport issues make it
unlikely that an alternative source will be secured until the second half of 2009, and
until then, it must buy HF on the spot market - an expensive and unreliable option.
Like most other companies, with the capital market for debt effectively shut down, Cameco
was re-examining its expenditures during the current budget planning process. 'However,
unlike most companies, we have exceptionally reliable revenue streams,' said Jerry
Grandey, Cameco's president and CEO. Commissioning of the uranium
production plant at First Uranium's Ezulwini uranium mine has been delayed and is not now
not expected until 2009, the company has announced.
The uranium plant at the South African gold and uranium mine had been expected to start up
in October 2008. In the company's quarterly results summary, First Uranium president and
CEO Gordon Miller said that despite construction delays he was still confident that the
plant would be commissioned early in 2009, and there would be sufficient capacity to
process all the ore available from the underground development within the fiscal
year."
Uranium companies weathering the storm
World
Nuclear News, 13 November 2008 |
"More than four out of five refinery construction projects face
cancellation as the worldwide collapse in fuel demand wipes out all but those developments
with strong government backing. In a report, Wood Mackenzie,
the industry consultant, concluded that only 30 of
the 160 refining projects announced since 2005, which should be completed in the next two
to seven years, would now go ahead."
Collapse in demand may halt refinery construction as margins fall
Financial
Times, 13 November 2008 |
"For the first time since 1998, the IEA has forecast a higher oil
price in the year 2030 than the current market price. In fact, the new price forecast for 2030 of $200 per barrel is not only
higher than all previous WEO forecasts, it is higher than all previous WEO 2030 price
forecasts combined. (1998-$17, 2002-$29, 2004-$29,
2006-$58, 2007-$65)."
The 2008 IEA WEO - The Oil Drum Initial Review
The Oil Drum, 13 November 2008 |
"The International Energy Agency (IEA) has
warned that massive investments are needed in the oil industry and alternative power
sources if the world is to avoid a shortage of fuel. In its outlook for 2008, the agency
predicts that demand from India and China will cause the price of oil to reach $US200 a
barrel by 2030. The agency's chief economist, Dr
Fatih Birol, has told ABC Radio's AM program that even though prices have fallen recently
the era of cheap oil is over. 'Once the economy recovers and the demand bounces back, we
think about 2010, 2011, we may be caught by surprise and this will be a nasty surprise,
which would mean that we can see prices which may be even higher than what we have seen
last summer,' he said."
Investment needed to avert fuel shortage: IEA
ABC
(Australia), 13 November 2008 |
"The long-anticipated 569-page IEA report on the world energy
situation was released Wednesday morning and the Internet is already filling with
commentary about it.... During the press conference that accompanied the release, Dr. Fatih Birol, the IEA’s chief economist, told reporters he
is worried that the numerous oil project delays announced in recent weeks could have an
effect on production by 2010. He pointed out that
the world will need about $450 billion worth of investment each year between now and 2015
to keep production up with demand."
Peak Oil Notes
ASPO, 13 November 2008 |
"Opec has made a scathing attack on a report from the International
Energy Agency which says that the world's existing oil producers face a 'huge challenge'
to keep up with a projected rise in global demand. The
report from the IEA, the respected Paris-based energy advisor to the Organisation for
Economic Co-operation and Development (OECD) club of wealthy nations, said that to
compensate for the depletion of existing oilfields, by 2030 the world would need to find
new production equivalent to 45 million barrels per day, or the output of four Saudi
Arabias, to maintain present levels of supply. It added that additional production
equivalent to six Saudi Arabias would be required if a projected rise in oil demand from
85 million barrels a day to 106 million was taken into account. The IEA, which based its findings on a landmark study of decline rates at
800 of the world's largest oilfields, said that there was, in theory, enough oil left in
the ground to meet demand. However, it would require investment of about $450 billion
(£300 billion) a year, with the bulk of this spent in the 13 member states of Opec, where
most of the world's remaining supplies lie.... The
dispute between the IEA and Opec goes to the heart of the debate over 'peak oil and how
much of the world's energy needs its existing oilfields can supply in the years ahead.
This year's World Energy Outlook report slashed its assessment of how much oil the world
would be able to produce by 2030 by ten million barrels to 106 million per day and placed
more emphasis than ever before on the need to develop alternatives. Opec has traditionally
adopted a much rosier view of the prospects for future global oil production growth. For
years, it has also been accused of overstating its reserves for political reasons and to
discourage the development of alternatives. The IEA's report also gave warning that the
present economic slowdown could have damaging consequences for the world's energy supplies
by undermining crucial investment. 'We cannot let
the financial and economic crisis delay the policy action that is urgently needed to
ensure secure energy supplies and to curtail rising emissions of greenhouse gases,' Mr
Tanaka [IEA executive director] said. “We must usher in a global energy revolution by
improving energy efficiency and increasing the deployment of low-carbon energy.”
IEA report on oil gets angry Opec reaction
London
Times, 13 November 2008 |
"China’s crude imports for October increased by 7.5 percent over
September and by 28.2 percent over October 2007. There is speculation that Beijing may be using the low prices as a opportunity to start
filling its strategic reserve."
Peak Oil Notes
ASPO. 13 November 2008 |
"A supergrid of power
supplies to protect Europe’s energy from the threat of a Russian stranglehold will be
announced today. The building blocks of the proposed supergrid would be new cables linking
North Sea wind farms, and a network patching together the disparate electricity grids of
the Baltic region and the countries bordering the Mediterranean, according to a blueprint
drawn up by the European Commission and seen by The Times. EU states will also be
asked to pay for at least two ambitious gas pipelines to bring in supplies from Central
Asia and Africa. The
plans also call for a Community Gas Ring, or a network allowing EU countries to share
supplies if Russia turns off the taps. Analysts
estimate the two projects will cost billions of pounds. The
EU Energy Security Plan notes that Europe imports 61 per cent of its gas, a figure
projected to rise to 73 per cent by 2020. Russia sells about two-fifths of the total,
including the entire supply of several countries.
The proposals come a day before an EU summit meeting with Russia in France, which is
designed to reopen talks on a pact covering economic and energy links after the crisis in
relations caused by the war in Georgia in the summer. Europe must take 'the first steps to
break the cycle of increasing energy consumption, increasing imports, and increasing
outflow of wealth created in the EU to pay energy producers', according to the European
Commission document. Without referring specifically to Russia, it adds: 'Remaining
reserves and spare production capacity are becoming increasingly concentrated in a few
hands. 'With respect to the EU, this is of most concern with respect to gas, where a
number of member states are overwhelmingly dependent on one single supplier. Political
incidents in supplier or transit countries, accidents or natural disasters . . . remind
the EU of the vulnerability of its immediate energy supply.' Britain supports the first
step of the supergrid scheme to connect all the wind farms in the North Sea, which will
channel electricity into a central hub from the waters of several countries including the
Netherlands, Germany, Norway and the UK. Supporters argue that a shared system will make
each country less reliant on local weather conditions for renewable energy in the drive to
replace Russian hydrocarbons. Nick Medic, of the British Wind Energy Association, said:
'This follows an agreement between Norway and Holland to connect the two countries with an
undersea cable. The logic is that hydropower [in Norway] can offset the variability of
wind power [from Holland]. If the wind power goes up, you can switch off the hydro. It is
something that Denmark and Norway have also done for years. 'The proposed North Sea grid
means that if you have less wind in the British sector, you can access wind blowing off
the German coast.' An EU-wide network will mean that wind power becomes even more
reliable. Similar link-ups will be outlined today for the Baltic region and the
Mediterranean, with the long-term goal of a single European grid. The common EU gas ring will require construction of the southern
corridor pipeline to bring gas supplies from Azerbaijan and a trans-Saharan pipe for gas
from Nigeria. The EU faces tough competition, however, from Gazprom, the huge gas company
in Russia, which is already negotiating to buy supplies from both countries for rival
projects. All of these measures will run alongside
the EU goal of a 20 per cent increase in energy efficiency by 2020, as well as a 20 per
cent reduction in CO2 emissions and 20 per cent of energy to come from renewable sources,
the so-called 20-20-20 targets. The European Commission will spell out the urgency of
making progress with energy security, because of the dominance of Russia and because of
the economic uncertainties surrounding imports.”
Power supergrid plan to protect Europe from Russian threat to choke off energy
London
Times, 13 November 2008 |
"The International Energy Agency
is to call today for an energy revolution and a 'major de-carbonisation' of global fuel sources as the world
confronts tighter oil supplies caused
by shrinking investment. The energy watchdog is warning for the first time that oil output
could pass its peak as power shifts from 'super-majors' to national companies controlled
by producer states. It highlights a potential oil-supply crunch. The unprecedented wake-up
call comes as the European commission says in a report due out tomorrow that while
oilfields decline, the balance of supply and demand will become 'increasingly tight,
possibly critically so'. It adds: 'The need to
address climate change will require a massive switch to high-efficiency, low-carbon energy
technologies.' The commission report warns that oil supplies are limited,
with reserves and spare output capacity concentrated in a few hands. 'Recent severe price
rises and volatility on oil and gas markets reflect these changing trends', it says. Both
bodies express heightened anxieties that the west's energy requirements could be squeezed
as emerging economies such as China consume more oil and conclude long-term deals with
oil-rich states. This could be exacerbated by a restriction on investment by the
Organisation of Petroleum Exporting Countries (Opec) - possibly joined by Russia - to
boost revenues. Opec will control 51% of output by 2030 compared with 44% in 2007. The
IEA's latest World Energy Outlook predicts that global energy demand will increase 45%
between now and 2030 and oil prices will rise to $200 a barrel by then - or $120 at 2007
prices. It says the recent surge in prices to just shy of $150 this summer has highlighted
the 'ultimately finite' nature of oil and gas reserves. 'The immediate risk to supply is
not one of a lack of global resources, but rather a lack of investment,' the report says.
'Upstream investment has been rising rapidly in nominal terms but much of the increase is
due to surging costs and the need to combat rising decline rates - especially in
higher-cost provinces.' 'Expanding production in the lowest-cost countries will be central
to meeting the world's needs at reasonable cost.'...Global
oil demand and supply is projected to rise from 84m barrels a day to 106m in 2030, with
all of this increase driven by emerging economies, but the IEA sees conventional oil
output peaking before then. Most of the increased production will come from natural gas
liquids and non-conventional technologies such as Canadian oil sands....But it says the
increased output 'hinges on adequate and timely investment'. Up to 64m barrels a day of
extra gross capacity - the equivalent to almost six times that of Saudi Arabia today -
needs to come on stream between 2007 and 2030. Almost half of that is required by 2015,
with an extra 7m barrels a day over current plans approved within the next two years 'to
avoid a fall in spare capacity towards the middle of the next decade'. The IEA warns
bluntly: 'There remains a real risk that under-investment will cause an oil-supply crunch
in that timeframe.' It says a detailed analysis of
800 fields owned by 54 'super-giants' shows that the decline in production is likely to
accelerate as oilfields become depleted. This means that the global decline rate of 6.7%
for fields past their peak will increase to 8.6% in 2030 and may fall even faster, at
10.5%, without adequate investment."
After the credit crunch, the oil crunch: watchdog warns over falling supplies
Guardian,
12 November 2008 |
"Fresh sources of oil equivalent
to the output of four Saudi Arabias will have to be found simply to maintain present
levels of supply by 2030, one of the world's leading energy experts has said. Fatih Birol,
chief economist of the International Energy Agency (IEA), the developed world's energy
watchdog, told The Times that the depletion of existing oilfields meant that vast new
investments would be required to satisfy the demand for oil. Global oil production stands at about 85million barrels per day. Saudi
Arabia is the world's largest producer: it pumped an estimated 9.4 million barrels per day
during October. Dr Birol's warning of a looming
supply crunch emerged before the publication today of the IEA's 2008 World Energy Outlook,
which for the first time includes details of a comprehensive study of depletion rates in
the world's largest oilfields. Dr Birol, who has
been leading the analysis for the Paris-based IEA, which advises the Organisation of
Economic Co-operation and Development (OECD) on energy matters, said that the decline
rates varied by field and by region. He said that in non-Opec countries, such as the
United States, Britain and Mexico, depletion rates averaged 10 to 11 per cent a year. The
average across the 13 member countries of the Opec cartel, which produces 40 per cent of
the world's oil, was lower, at about 2 to 3 per cent. Dr Birol, a 50-year-old Turk who
worked for Opec in Vienna before joining the IEA in 1995, said that decline rates were
faster in the smaller fields than in so-called 'supergiants', such as Ghawar in Saudi
Arabia. Ghawar is the world's largest oilfield and pumps about five million barrels per
day, or roughly 6 per cent of global supplies. 'In Russia and the North Sea we are seeing
significant declines,' Dr Birol said, adding that the supergiants were still showing low
rates of decline. Dr Birol said he believed that there was enough oil in the ground to
meet increased demand but that it would be 'a huge
challenge' because of the scale of the investment required to develop new fields in remote
and inhospitable places, such as the Arctic or the deep ocean off Brazil. He said that the
challenge was particularly acute because, in addition to the replacement 45million daily
barrels needed simply to stand still, an additional 20million would be needed to keep pace
with surging demand, mainly from developing countries. 'It is possible, but it [will require] a major structural change,' Dr
Birol said. Almost all the growth in production will need to come from the national oil
companies of Opec states, as this was where the bulk of the remaining reserves were to be
found, he said. In today's report, the IEA predicts
that global oil production will increase from 85million barrels per day to 106million by
2030. However, the bulk of this increase would need to come from costly unconventional
fuels, such as liquefied natural gas, and the processing of bitumen-rich oil sands from
northern Canada into synthetic crude. Dr Birol also
emphasised that the twin challenges of meeting surging global demand for energy while
dealing with the threat of catastrophic climate change would require 'a global energy
revolution' over the next few years."
World needs four new Saudi Arabias, warns IEA
London
Times, 12 November 2008 |
"A lack of investment in new sources of oil risks a supply crunch
worse than the problems that pushed prices to $147 a barrel this summer, the developed
world’s energy watchdog said on Wednesday. The
International Energy Agency warned that cuts and delays in investment that were prompted
by the fall in oil prices and the credit crunch had put the world 'on a bad path'. Fatih
Birol, chief economist at the IEA, said: 'We hear almost every day about a project being
postponed. This is a major problem.' Oil prices have fallen as economies have struggled in
the credit crisis and demand has dropped, especially in the developed world. The IEA predicted that shrinking demand would be a long-term phenomenon
among members of the Organisation for Economic Co-operation and Development. 'We think
OECD oil demand has peaked. The OECD countries’ role in the energy world is becoming
less and less important,' said Mr Birol. Developing countries are expected to be the only
source of growth in oil demand until 2030, with China contributing 43 per cent and India
and the Middle East each about 20 per cent. The remainder will come from other emerging
economies in Asia. But meeting the demand growth is secondary to the big challenge of
compensating for the fast-declining production from the world’s older fields, the
IEA said. It suggested the oil price was too low to
guarantee the necessary investment and noted that high-cost ventures, such as
Canada’s tar sands, were producing oil at a cost of about $80 a barrel – more
than $20 higher than the prevailing oil price....The
main spur for the IEA’s focus on investment – and the oil price that it regards
as necessary to stimulate investors – has been its exhaustive study on the rates of
decline in production from 800 of the world’s biggest oil fields. The watchdog found that even after recent investment, production
from the fields was declining at an annual 6.7 per cent and that this rate was
accelerating. This means 45m barrels a day would have to be found and tapped in the next
22 years simply to meet an unchanged world demand. As it stands, however, the IEA expects
demand to rise from 85m b/d last year to 106m b/d in 2030, making the challenge that much
greater. Many of the fields experiencing the
sharpest decline in production lie in developed countries, including in areas such as the
North Sea and Alaska. This meant the west would become less and less of an influence in
terms of production, while Persian Gulf countries would become more important. The IEA
said most of the projected increase would come from members of Opec, whose world share
would jump from 44 per cent to 51 per cent by 2030. 'Their reserves are big enough for
output to grow faster, but investment is assumed to be constrained, notably by
conservative depletion policies and geopolitical factors,' said the IEA."
IEA warns of new oil supply crunch
Financial
Times, 12 November 2008 |
"Federal scientists have concluded that Alaska's North Slope holds
one of the nation's largest deposits of recoverable natural gas in the form of gas
hydrates, a finding that could open a major new front in domestic energy exploration.
Researchers have speculated for years that gas hydrates -- a combination of gas and water
locked in an icelike solid that forms under high pressure and low temperatures -- could
provide an important source of natural gas in the United States and worldwide. Today the U.S. Geological Survey will release a study estimating that 85.4 trillion cubic
feet of natural gas can be extracted from Alaska's gas hydrates, an amount that could heat
more than 100 million average homes for more than a decade. Brenda Pierce, manager of the
agency's energy resources program, called the find 'groundbreaking' and said, 'I don't
want people to think our problems are solved, but this has real potential.' Part of the
reserve's significance, federal officials said, is that gas companies will be able to tap
into it with existing technology. A coalition of American and international experts
conducted three tests on gas hydrates over the past five years in the United States and
Canada and demonstrated that the gas can be extracted by reducing the pressure that binds
them together. Gas hydrates have also been found in the Wyoming basin, Texas's western
Gulf basin, and the San Juan basin in New Mexico and Colorado, as well as in several
offshore areas. 'The assessment points to a truly significant potential for natural gas
hydrates to contribute to the energy mix of the United States and the world,' Interior
Secretary Dirk Kempthorne said in a statement. 'This study also brings us closer to
realizing the potential of this clean-burning natural gas resource.'....As conventional
sources of domestic natural gas continue to decline, energy companies are eager to exploit
what Myers called 'innovative supplies.' In August, ConocoPhillips received $11.6 million in funding from the Energy Department to test its gas hydrate production technology on the North
Slope, and company spokesman Charlie Rowton said yesterday that 'both globally and for the
domestic market, methane hydrates represent a potentially huge new source of natural gas.'
Even if industry manages to extract natural gas from
these reserves -- long-term tests on hydrates will take place between 2009 and 2011 -- it
will be years before companies will be able to send this gas to the lower 48 states. Such
shipments probably would take place via the natural gas pipeline that Alaska Gov. Sarah
Palin (R) has championed, which will not be complete for at least a decade."
Study Points to Major Source of Natural Gas in Alaska
Washington
Post, 12 November 2008 |
"The weak U.S. economy will
slash America's oil demand this year by 1.1 million barrels per day, or 5.4 percent, the
first time annual oil consumption will fall by more than 1 million bpd since 1980, the
federal Energy information Administration said on Wednesday. For 2009, total U.S. oil demand was projected to drop by an additional
250,000 bpd, or 1.3 percent, the Energy Department's analytical arm said in its new
monthly forecast. The current U.S. and global economic downturn has led to a decrease in
global energy demand and a rapid and substantial reduction in crude oil and other energy
prices,' the agency said. The EIA lowered its estimate for U.S. real gross domestic
product growth to 1.3 percent this year and projected GDP will decline by 1.4 percent in
2009. The U.S. average unemployment rate was expected to jump to 7.9 percent next year,
the EIA said. World real GDP growth was projected to slow from about 4 percent in 2006 and
2007 to about 2.5 percent this year, and to 1.8 percent in 2009, the agency said. Global
oil demand was expected to increase by only 100,000 bpd this year and remain virtually
flat next year, the EIA said....Between 2007 and 2009, oil consumption in
non-industrialized countries, especially China, Latin America and the Middle East, was
projected to rise by 2.3 million bpd, which will be offset by a 2.2 million bpd decline in
demand in industrialized nations, including the United States and the European Union, the
agency said. As a result of the sputtering economy and lower petroleum demand, the price
for the U.S. benchmark West Texas Intermediate oil will average $63.50 a barrel next year,
the EIA said. The agency said OPEC's planned oil production cut of 1.5 million bpd 'may
limit, but not reverse' the recent sharp drop in oil prices....'The condition of the global economy is expected to remain the
most important factor driving world oil prices,' the agency said."
U.S. 2008 oil demand to drop most since 1980: EIA
Reuters, 12
November 2008 |
"Coal,
the dirtiest source of fuel, will remain the world's main source of power until 2030 and
nuclear will lose market share, the International Energy Agency said on Wednesday.
Expectations of slower economic growth have led the IEA to downgrade its 2030 world
electricity demand forecast to 23,141 terawatt hours (TWh), but the share of coal
generated power would rise to 44 percent by 2015 from 41 percent in 2006. It would stay at
that level to 2030. 'Globally, coal-based
electricity is projected to rise ... to almost 14,600 TWh by 2030, giving rise to
significant increases in associated CO2 emissions,' the Paris-based agency said in its
World Energy Outlook. Most of the growth was expected in non-OECD countries, such as
China, which the IEA expected soon to become the world's biggest electricity consumer. Its
demand for power doubled between 2000 and 2006. The IEA urged stronger policies for carbon
capture and storage (CCS), saying the world was likely to make only a minor contribution
in the period. 'Market mechanisms alone will not be sufficient to achieve the
demonstration program on the scale required. Another challenge is financing the necessary
CO2 transport infrastructure,' it said. Despite a
global nuclear renaissance sparked by efforts to cut greenhouse gas emissions and mitigate
climate change, the IEA expected nuclear's share in power generation to drop to 10 percent
by 2030 from 15 percent in 2006. 'Over the past few
years, a large number of countries have expressed renewed interest in building nuclear
power plants,' it said. 'Few governments, however, have taken concrete steps to build new
reactors.' As of the end of August, China topped the list of countries with nuclear power
plants under construction, with 5,220 megawatts (MW), followed by India at 2,910 MW and
Korea at 2,880 MW. On a brighter note, the IEA predicted the share of renewable energy to
rise to 23 percent by 2030 from 18 percent in 2006."
Dirty coal to remain world's top power source: IEA
Reuters, 12
November 2008 |
"Leading Russian oil producers, including TNK-BP, BP's Russian
affiliate, are grappling with a collapse in profits from the export of Siberian oil. Heavy
export tariffs have almost wiped out the profit margin from selling crude oil outside
Russia, forcing Siberian producers to sell at prices as low as $10 a barrel on Russia's
domestic market. Fears are mounting that the profits
squeeze may speed the decline in Russian oil output, already down 6 per cent this year.
The profits crunch, caused by the collapse in the worldwide price of crude, is provoking
concern within Russia's oil community that capital expenditure budgets will have to be cut
if profits from oil sales do not recover. 'The tax burden is very tough,' Valeri Nesterov,
an oil analyst at Troika Dialog, the Moscow brokerage, said. 'The problem is that the
future of the oil sector might be jeopardised if the Government doesn't reduce the tax
burden.' ..... The problem has emerged because of the precipitous decline in the price of
crude from its peak in July of $147 a barrel to present levels of around $56 a barrel.
Profits will decline, but the main problem is that in order to sustain oil output they
need to maintain capital expenditure. It is nearly impossible to borrow money and, if your
profit falls, you have less money to invest, Mr Nesterov said....the syndicated lending
market in Moscow has virtually disappeared because of the sudden outflow of funds from
Russia in the continuing global credit crisis.
Alexei Kudrin, the Russian Finance Minister, said yesterday that the Government was
forecasting an average oil price in 2009 of $50 a barrel."
Producers in turmoil as Russian oil hits $10 a barrel
London
Times, 12 November 2008 |
"Crude oil futures traded solidly below $60 a barrel Wednesday in a
market gripped by concerns supply will outpace demand that's weakening in an economic
downturn. Oil's sharp turnaround came as demand slumped in industrialized countries and
investors sold off commodities to raise cash as they face a worldwide financial crisis. It
has stayed lower as forecasts for the world economy darken, with some analysts suggesting
world oil demand could contract next year for the first time since 1983. In China, a bulwark of world demand growth, the government this
week reported oil product imports in October fell to their lowest level in at least two
years....Oil's slide threatens to derail long-term investments in new supply. The
International Energy Agency, an advisor to 28 industrialized countries, on Wednesday
warned oil project delays recently announced by several companies raise the specter of new
crude supply problems by 2010. 'We see and hear about energy investments being delayed ...
This is a major worry and could lead to a supply crunch and much higher oil prices than
we've seen before,' IEA chief economist Fatih Birol said as the agency released its
long-term global energy outlook."
DJ OIL FUTURES: Nymex Crude Extends Decline On Demand Worries
DOW JONES NEWSWIRES, 12
November 2008 |
"Oil prices plunged below $56 a
barrel Wednesday as awful numbers from retailers and a dismal outlook from automakers lent
yet more evidence that the U.S. and the rest of the globe will slash its energy use. The
Energy Department said it expects U.S. consumption of petroleum to drop more severely than
any time since 1980 next year, with gasoline use dropping by another 3 percent. Its Energy Information
Administration on Wednesday said 2009 petroleum consumption is projected to sink by
a further 250,000 barrels per day, or 1.3 percent, more twice that projected in its
previous outlook. Also on Wednesday, the International Energy Agency said more than
a trillion dollars in annual investments to find new fossil fuels will be needed for the
next two decades to avoid an energy crisis
that could choke the global economy. Light, sweet
crude for December delivery fell nearly 6 percent, or $3.50 to settle $56.16 a barrel on
the New York Mercantile Exchange, the
lowest closing price since January 2007. Oil prices
have plunged more than 60 percent in four months from record highs near $150 in July.
'We're seeing a massive readjustment on a historic scale,' said Phil Flynn, an analyst at Alaron Trading Corp. 'We've never
gone through anything quite like this.'....Qatar's prime minister, Sheikh Hamad Bin Jassim Bin Jabr Al-Thani,
said Tuesday that 'fair' oil prices of between $70 to $90 per barrel would ensure that
expensive oil exploration could
continue and help to avert price spikes in the future....Flynn
said he expects the oil market will find a bottom of around $50 a barrel or slightly lower
before prices slowly work their way back up. 'At some point, prices will go back up, but
the big question is when, and that's when the economy bounces back,' he said. Rising demand in the developing world and surging production costs
prompted the International Energy Agency
Wednesday to nearly double its forecast for the price of a barrel of oil in 2030 to just over $200 in nominal
terms, compared to its forecast last year of $108 a barrel. Measured in constant dollars,
the agency pegs oil at $120 a barrel in 2030, up from last year's forecast of $62. Over
2008 to 2015, the IEA predicts the price to average $100. The Department of Energy said its current expectation of future oil
prices of $60 to $65 per barrel throughout 2009 assumes that OPEC's production cut may
limit, but not reverse, the recent sharp fall in oil prices. 'The
condition of the global economy is expected to remain the most important factor driving world oil prices,' the department said in
its outlook report. Total domestic petroleum consumption is projected to average 19.6
million barrels per day in 2008, down 1.1 million barrels per day, or 5.4 percent, from
the 2007 average — the largest decline since 1980. Gasoline consumption is projected
to decline by 280,000 barrels per day. Consumption of distillate fuels, those used by
industries from railroads to agriculture, is projected to decline by 250,000 barrels per
day, or 6 percent. In its Wednesday report, the IEA
predicted global energy demand will rise 1.6 percent per year on average between 2006 and
2030, but it expects demand for oil to rise from 85 million barrels per day currently to
106 million barrels per day in 2030 — 10 million barrels per day less than projected
last year...Flynn said commodities are going through a classic boom-to-bust cycle, and he
thinks the agency wants to make sure that people don't overreact to the slowdown. 'I think the fear of the International Energy Agency is that we're going to forget how
tight supplies can be when the world economy's on fire and go back to kind of a complacent
role in energy and create the stage for the next energy crisis years down the road,' he said."
Oil near $56 as global markets stumble
Associated Press,
12 November 2008 |
"Russia may scrap its Baltic Sea
gas pipeline project, Nord Stream, and build gas liquefaction plants instead if Europe
keeps delaying the pipeline, Russian Prime Minister Vladimir Putin said on Wednesday. 'Europe must decide whether it needs this pipeline or not,' Putin told
Finland's Prime Minister, Matti Vanhanen, at a meeting in Moscow. 'If you don't we will
build liquefaction plants and send gas to world markets, including to European markets.
But it will be simply more expensive for you. You are free to make the calculations
yourself,' he added. The European Union has identified the plan to pump Russian gas under
the Baltic Sea by to Germany -- involving Russia's Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), Germany's E.ON EONG.DE
and BASF (BASF.DE: Quote,
Profile, Research, Stock Buzz) and Dutch Gasunie -- as
a key project to ensure secure gas supplies for Europe. But EU lawmakers have called for a
new investigation into the pipeline's environmental impact and it has been criticised by
Poland, Lithuania and Estonia, angered at being shut out of a leading gas supply route. An
expert on Russian gas said Gazprom was unlikely to build any LNG plants quickly enough to
give it an export alternative to Nord Stream, which the partners hope to start laying next
year. Jonathan Stern, director of gas research at the Oxford Institute of Energy Studies,
added Putin may be warning the EU that it needs Nord Stream to reduce the risk associated
with importing gas from Russia across the Ukraine and Belarus. 'Essentially he is saying
'if you want to take the transit risk on Ukranie and Belarus then fine, but we don't want
you to blame us if there's a problem because we offered you Nord Stream and you couldn't
get your act together',' he said. 'That's the subtext of this.' Ukraine's ageing gas tranport network and its disputes with Russia
over the last few years over gas pricing have heightened concerns in Western Europe over
the reliability of gas flows across the country.
Nord Stream would bypass Ukraine by taking gas along the seabed of the Baltic from near St
Petersburg to the German coast north of Berlin."
Putin says Russia may scrap Nord Stream pipeline
Reuters,
12 November 2008 |
"The U.S. could soon find itself scrambling to make up 11 percent
in lost oil imports. Mexico, the third-largest foreign supplier of U.S. oil, faces the
real possibility of having to halt oil exports in four years, a former top Mexican energy
official was reported as saying Tuesday in Mexico’s El Universal newspaper. Rogelio Gasca Neri, the former head of Mexico’s federal electricity
commission, blamed the inability of the nation’s oil industry to produce enough oil
to meet rising demand. His prediction comes on the heels of the Mexican Congress last
month overturning decades of resistance to allowing private and foreign participation in
Mexico’s aging energy infrastructure. Neri’s comment, made in Mexico at a
business forum on reforms in the nation’s energy industry, also joins that of a
growing number of energy experts who see an end to Mexican oil exports coming soon. John
Padilla, director of finance and advisory for IPD Latin America, argues that with
Mexico’s oil production falling, and its demand for gasoline and other petroleum
products on the rise, Mexico could cease to be an oil
exporter around 2010 or 2011. 'Mexico, whether
it’s 2011, 2012 or 2015, the country is poised to become a net importer,' said Amy
Jaffe, associate director of the Rice University energy program....With a population
expected to top 110 million by 2010, Mexico’s thirst for gasoline and other refined
products is on the rise, although that growth softened as the credit crisis began gripping
the world’s economies. Mexico currently has 17.2?million cars on the road, up from
only 7.3 million in 1995, Padilla said."
Ex-official says Mexico may have to halt oil exports
Houston Chronicle,
11 November 2008 |
"Petroleo Brasileiro SA, the investor darling among the world's
largest oil companies in the first half of the year, has become the biggest loser.
Petrobras, as Brazil's state-controlled oil producer is known, is the worst performer
among the top 10 publicly traded oil companies since May. The
stock dropped 53 percent on concern falling energy prices and the global credit crisis
will block or delay efforts to tap the biggest offshore discovery in the Americas in three
decades. Earnings growth will slow from 80 percent
in the third quarter to 6.2 percent next year, according to the averages of analyst
estimates compiled by Bloomberg. 'The decline in oil prices and the current financial
crises will at some level impact Petrobras,' said Gianna Bern, president of Brookshire
Advisory & Research Inc. in Flossmoor, Illinois. 'Deepwater exploration is a very
high-cost, high-risk proposition, and $60 or $70 oil will prompt them to re-evaluate their
highest-priority developments.' .....Falling energy
prices may complicate efforts to exploit Tupi and neighboring offshore prospects. Drilling
wells and constructing platforms to pump crude and gas from deposits that in some cases
lie beneath six miles (10 kilometers) of sea and rock may cost $600 billion over the next
few decades, Julio Bueno, industry secretary for Rio de Janeiro state, said in a September
interview in London. 'Prices affect the economics of oil production, and there's a bottom
commodity price below which a company won't produce a resource,' said Don Goddard, a
geologist at Louisiana State University's Center for Energy Studies in Baton Rouge. Tupi
may cost $100 billion to bring into production and operate, according to Peter Wells,
director of U.K. research firm Neftex Petroleum Consultants Ltd. Petrobras had less than 1
percent of that amount in cash as of June 30."
Petrobras Goes From First to Worst Among 10 Biggest Oil Stocks
Bloomberg,
10 November 2008 |
"Oil
prices are a barometer of the world economy. Rising prices between 2003 and 2007 reflected
the best global economic growth in a generation. This high economic growth was brought
to an end not only by underpricing of risk, excess liquidity and over-confidence but also
by an increasingly unsustainable commodity boom - of which oil was a crucial part. Now, as
the world has dropped into recession, oil prices have fallen by more than half. This fall also reflects the power of price itself. For rising
prices set in motion decisions by consumers, governments and businesses that have changed
the course of demand. Now the recession is also weighing increasingly heavily on demand.
Of course, a price 'collapse' to the $60-$70 range is a collapse only if one forgets that
the average oil price in 2007 was $72 a barrel (and $66 in 2006). The tight balance between supply and demand was not the only factor
driving the increase in oil prices. The last explosion in oil and other commodity prices
began in the late summer of 2007, as a weakening dollar set off a 'flight to
commodities'."
What lower oil prices mean for the world
Financial
Times, 10 November 2008 |
"Investors sold out of the metal on concern a global economic
slowdown and credit freeze will curb construction of nuclear power plants. State-run Kazatomprom said Nov. 6 it will produce less than 12,000
metric tons of the metal used to fuel the plants, at least 826 tons less than estimated in
July. The world's biggest producer,
Saskatchewan-based Cameco Corp. said Nov. 5 it noticed a 'modest increase in water inflow'
at the McArthur River mine in Canada. Production wasn't affected, it said."
Uranium Advances 4% on Kazakh Output Cut, Deutsche Bank Fund
Bloomberg,
10 November 2008 |
"Traffic on Britain's roads is
decreasing significantly for the first time since the three-day week of the early 1970s, suggesting the car economy is heading for a crash, official figures
revealed yesterday. In a sign that the country is already in recession, fewer car and
lorry journeys on motorways, rural and urban roads were made over the last six months
compared to the same period a year ago. The Department for Transport (DfT) recorded two
consecutive quarters where road traffic has decreased year on year – the first time
for more than 30 years. If the trend continues to the end of the year, it will hugely
undermine the 'great car economy' championed by Margaret Thatcher. At the same time, sales
of new cars have fallen by 23 per cent and are at their lowest since 1996. The motor
industry is suffering across the world, with Volvo, the Swedish giant, selling just 115
heavy trucks over the past few months, compared to 41,970 during the same period last year
– a 99.7 per cent fall."
Traffic levels fall for first time in decades: Motor firms head for crash
Independent,
9 November 2008 |
"An impending shortfall in the supply of uranium
will become apparent in the next two years, within which time production of the mineral
from African resources will rise to significant levels, predicts resource consultant and
contractor MSA Geoservices associate Richard Wadley. 'The
forecasted uranium consumption up to 2015 exceeds the forecasted uranium production up to
the same period. In the short term, by 2015 or 2020, there will not be enough uranium
production from primary sources to meet the committed expansion in nuclear generating
capacity,' he explains....in Australia, which
contains about a quarter of the world’s known resources, prohibitive environmental
and political legislation towards uranium-mining inhibits the mining of the resource. An
example is that existing mines, like resources giant BHP Billiton’s Oympic Dam mine,
are allowed to expand, but not permitted to open new mines. Africa, however, with its
large resources of uranium is more likely to be allowed to develop these resources, and is
already becoming an increasingly signifi- cant uranium producer. Currently, South Africa,
Namibia and Niger are the only three uranium producing countries in Africa. By the end of
this year, new uranium producer Paladin Energy’s Kayelekera mine, in Malawi, will be
coming on line, making Malawi the next uranium producer to come on line in Africa....
Currently, there are about 440 operating nuclear plants around the world, with another 130
plants under construction. These are expected to be completed and to come on line over the
next five years. World uranium production has to supply these operating plants, as well as
the new ones that will be coming on line. Current
global consumption of uranium from the 440 operating plants is about 170-million pounds of
triuranium octoxide (U3O8) a year, with production at about 110-million pounds of U3O8 a
year. The deficit of 60-million pounds of U3O8 is being made up from the reprocessing of
US and Soviet nuclear warheads. U3O8 is the most
stable form of uranium oxide and is the form most commonly found in nature. Wadley says that consumption will definitely increase to over the
200-million pounds of U3O8 a year required, by as soon as 2015. The nuclear warheads are being reprocessed under a 20-year agreement
between the countries, which will come to an end in 2013. Currently, about 60%, or about
400-million pounds of uranium, has been reprocessed. 'Although both countries still
possess nuclear warheads, there is no indication of a new agreement to continue this
repro-cessing. Each of these countries wants to keep a small nuclear arsenal. Each country
will, however, continue to reprocess from its own stockpile, but not under any agreement,
and not in the same amounts currently being reprocessed. The
current shortfall in primary production that is being met by the reprocessing of the
warheads will, therefore, most likely not happen after 2013,' says Wadley. In 2015, when demand
will most likely increase to 200-million pounds a year of U3O8, primary production would
have increased to only 160-million pounds a year of U3O8. This increase in production will come from a number of the world’s
uranium mines increasing their production. Increased production will come from projects
such as uranium producers Cameco, Areva, Idemitsu Canada Resources and the Tepco Resources
joint venture at Cigar Lake mine, in Canada. The mine
had flooded and has been restored, with com- missioning to start in 2009. This project
should bring about 10-million pounds a year of U3O8 into production. In Australia, resource giant BHP Billiton’s Olympic Dam mine is
looking at a huge expansion of its current operations. In Niger, Areva will be opening a
new mine within the next two years. These and other
projects will bring in a likely 50-million pounds of U3O8 a year of new production, that
will take primary production to 160-million pounds a year, which is still short of the
projected required consumption for 2015. An additional challenge for uranium production is
that several current operations in places such as Canada, Niger and Kazakhstan, as well as
diversi- fied miner Rio Tinto’s Rössing mine, in Namibia, will be reaching
end-of-mine-life between now and 2015. New greenfield uranium mines take at least eight to
ten years to come into production. 'New explorers
have been searching for uranium deposits and collecting funds from investors, and by the
time these speculative explorations are proven, the shortfall gap would have passed. The
most likely candidates to fill in some of the production shortfall will be the
uranium-miners who are currently developing known deposits,' says Wadley....Wadley says
that the spot price of uranium has very little relevance to the real uranium market.
'About 85% of uranium is not sold on the spot market – it is sold under contract,' he
says. The spot price is based on the few transparent public sales of uranium that are
surplus to contractual requirement sales....Wadley says that the uranium spot price will
probably turn and rise again within the next year, because there is a genuine shortage
looming, which cannot be easily resolved. Contract prices will remain steady at current
levels, which will continue to be profitable for producers. In the long run, however,
there will be a shortfall in uranium production, which will lead to investments in the
development of new deposits."
Impending shortfall leads to rising African uranium production
Mining Weekly, 7 November
2008 |
"With the price of crude mired at half the peak of $147 it reached in
July, this may seem like an odd time to invest in oil wells. Despite trimming its output
along with other members of the Organisation of the Petroleum Exporting Countries (OPEC)
in an effort to prop up prices, that is just what the United Arab Emirates plans to do.
Short-term price movements, its oil minister insists, should not distract from the
world’s enduring thirst for oil. Indeed the
collapse of oil prices, one of the few reasons around for economic cheer, may be setting
the stage for another spike. Just now oilmen are
focused on the rapidly slowing demand for their product. Since
early October, reckons the boss of BP, a big oil firm, America’s consumption of crude
has fallen by perhaps 2m barrels a day, or about a tenth. Sales of cars in America fell
even more steeply last month—by 32%. There is
also gloomy news from emerging markets, which have been the driving force in the oil
markets of late. Demand for oil is growing much more slowly in China and India, for
example, and car sales are down in both countries. There
is even talk of global oil demand falling next year, for the first time since 1991. In the face of these grim statistics, OPEC decided last month to pump
1.5m fewer barrels a day (about 2% of global consumption), starting from November 1st.
Several of its members want another cut soon. The output of big Western oil firms is also
declining, thanks to decreasing output from their existing fields and a relative dearth of
new opportunities to replace them. Production
continues to fall in once-prolific spots such as Russia, Mexico and the North Sea. So far,
faltering demand has outweighed feeble supply, keeping the price near $70 a barrel. That
is below the level needed to justify further investment in the expensive projects open to
Western oil firms, such as extracting oil from the viscous tar sands of Canada. The boss
of Total, another big oil firm, puts the cost of developing new tar-sands operations at
$90 a barrel. Naturally enough, several firms have
delayed planned expansions and cut investment budgets. Some refiners are following suit.
The cost of production is no more static than the price of oil. Falling prices for
important raw materials, such as steel and natural gas, should help to bring down
development costs. By the same token, the cost of hiring some kinds of drilling rigs is
falling. The strengthening dollar also helps, points out Paul Sankey of Deutsche Bank,
since that tends to increase oil firms’ dollar-denominated revenue relative to
expenses in other currencies. But according to
Francisco Blanch of Merrill Lynch, the rising cost of capital is likely to outweigh all
these benefits. Tar-sands schemes, like most oil projects, are very capital-intensive and
so very sensitive to changes in financing costs. He believes that higher borrowing charges
could push the cost of new tar-sands developments as high as $150 a barrel by 2010. So if
demand for oil has started growing again by then, and if tar sands remain the source of
marginal production, then the oil price will have to rise back to this summer’s
levels to stimulate increased supply. 'The age of easy oil', warns the Emirati minister,
'is gone forever.'"
Well prepared
The
Economist, 6 November 2008 |
"Most of the decline in oil price from
$147 [in July] down to about $100 was directly related to the strengthening of the dollar.
So the oil price slide in July, August and the first part of September was mostly a
monetary phenomenon.Then we had the mid-September credit crunch and market meltdown. That
dragged the price of oil from $100 or so per barrel down into the $70s (with price
excursions down into the $60s). The demand weakness for oil has become clear in the past
six weeks or so."
Oil Prices Down…for Now
Whiskey &
Gunpowder, 6 November 2008 |
"Billions of pounds of
investment in the North Sea is under threat because of plunging crude prices, the impact
of the credit crunch and soaring costs, oil industry chiefs said this week. Of the 170 new
oil and gas exploration projects planned for the UK sector of the North Sea, up to 60
could be delayed indefinitely because they are no longer considered economic, Mike Tholen, economics and commercial director of Oil & Gas UK,
said. 'Around a third of these E&P [Gas Exploration and Production] projects feel very
uncomfortable at current oil prices,' he said. 'Where projects are marginal people will
bide their time.' He predicted capital investment in the North Sea, including the
development of new oil and gas fields and the drilling of appraisal wells, would plunge
next year. Weaker crude prices, which have more than halved since July and were about $69
yesterday, are forcing companies to reassess important new projects while many have been
left unable to access debt finance because of the credit squeeze. The problem has been
amplified because oil industry costs remain high despite the economic downturn. Mr Tholen
said capital investment in the North Sea, where
development costs are relatively high because of the hostile offshore environment, was
already set to fall by 11 per cent this year to £4.7 billion from £5.3 billion in 2007. But he said the decline next year could be much steeper than that....The
situation echoes decisions by Shell and BG, to put the brakes on big projects such as
expansions of the Canadian oil sands and the Karachaganak field in Kazakhstan. Oil &
Gas UK said the poor investment outlook was
particularly worrying as existing infrastructure serving the North Sea, such as pipelines
and platforms, has limited life before it is decommissioned."
Threat to North Sea oil from low crude price and access to finance
London
Times, 6 November 2008 |
"Shell’s decision to move large numbers of expatriate staff into
Iraq represents a long-awaited vote of confidence in the country. If its gas joint venture
goes ahead, it will be the first time a leading Western company has committed significant
resources to Iraq since the 2003 invasion. For Shell, the risks are worth taking. With the world’s third-largest reserves of oil, Iraq is very
attractive for Western oil companies eager to gain access to new reserves which are
increasingly difficult to find and gain access to elsewhere.... Iraq does appears to be gradually emerging from the turmoil. In the
Kurdish north, significant foreign investments are flowing in with Damac, the Dubai
property developer, planning a multibillion-dollar project in Erbil. New power stations
and gas plants have also recently been built with private money. Further south, the
situation remains more difficult but security is improving. Nevertheless, the narrow
escape of the country’s Deputy Oil Minister from an assassination attempt last week
highlights the continuing risks. Meanwhile, wrangling over an oil law is another hurdle
for the industry. The law is needed to create a legal framework for the distribution of
Iraq’s oil wealth, particularly from exports. There is deadlock on the issue between
the Kurdish Regional Government and Baghdad although most analysts believe that an
agreement will eventually be reached that could pave the way for the arrival of other big
oil companies such as BP, ExxonMobil, Total and others. The oil law is a less immediate
concern for Shell because the gas from its proposed project will be used, at least
initially, to meet domestic Iraqi needs. There remain many challenges in addition to the
obvious security threat, not least the need to contend with widespread corruption. But the slump in the oil price has only made Iraq more enticing. The
costs of extracting a barrel in Iraq could be as low as $10 compared with perhaps $90 in
Canada."
Shell’s risk in Iraq is worth taking
London
Times, 6 November 2008 |
"The global economy is tanking, U.S. forces remain tied up in Iraq,
Afghanistan is on a downward spiral -- one might wonder why anyone would want to be U.S.
president during these trying times. Recently, the nation's chief intelligence officer
weighed in, painting an even more somber picture of a far more complicated world. National
Intelligence Director Mike McConnell looked beyond the immediate future, focusing on what
his analysts are telling him about the challenges the world community is likely to face by
2025. It isn't pretty. Speaking to an annual conference of intelligence officials and
contractors, McConnell said demographics, competition for natural resources and climate
change will increase the potential for conflict. President-elect Barack Obama may get a
glimpse of some of those challenges on Thursday. McConnell is expected to lead Obama's
first top-secret intelligence briefing, according to U.S. officials familiar with the
process. According to McConnell's outlook, economic and population growth will strain
resources. 'Demand is projected to outstrip the
easily available supplies over the next decade,' he said at the annual conference. The
intelligence community's forecast indicates oil and gas supplies will continue to dwindle
and production will be concentrated in unstable areas, he said. And there appears to be no
relief at hand. McConnell
said studies have shown that new energy technologies -- such as biofuels, clean coal and
hydrogen -- generally take 25 years to become commercially viable and widespread."
New president faces increased risk of conflict, intel chief says
CNN,
5 November 2008 |
"BG
Group has deferred indefinitely a planned investment in Karachaganak, one of the biggest
gas and oil fields in Kazakhstan, in the most significant energy project delay yet
announced as a result of the global financial crisis. Karachaganak phase 3 had been
planned to come on stream by the end of 2012,
raising the field's production to 16bn cubic metres of gas a year and 335,000 barrels of
liquids a day, but BG has decided on a delay in the expectation that the cost will be
lower in the future. Frank Chapman, chief executive, told the Financial Times: 'We are
sitting here at the highest point of the cost cycle . . . We know the volume of activity
is going to fall, we know that is going to put pressure on the services and manufacturing
companies serving our industry and we know that's going to put downward pressure on
costs.'"
BG delays Kazakhstan investment
Financial
Times, 5 November 2008 |
"For the gas industry, peak gas output could come sooner than
expected, 'maybe not too different from peak oil,' Shell executive vice president John
Mills told delegates at the ADIPEC conference in Abu Dhabi on Wednesday. 'Globally, what people have woken up to is that there is a
prospect for the gas industry that its supply-demand crunch could come earlier than
anticipated,' he said. 'The Middle East will still
be increasing its gas exports right through that [peak in global gas supply], but the
picture in North America and Europe will be quite different,' he said."
Peak gas output could come 'earlier than we think':
Shell's Mills
Platts,
5 November 2008 |
"Saudi Aramco, the world’s
biggest oil company, is reviewing some of its long-term projects following the sharp
decline in oil
prices and a dramatic slowdown in demand growth for crude, a senior official said on
Tuesday. The official did not elaborate on details
of the review process, saying no firm decisions had been made. It was also unclear whether
the review could result in a decision to slow down the development of some of the
kingdom’s projects or simply a renegotiation of contracts with service
companies."
Saudi Aramco reviews projects
Financial
Times, 4 November 2008 |
"EU Energy Commissioner Andris Piebalgs will visit Turkey and
Azerbaijan from Wednesday (5 November) on the first leg of a high-level tour of
Central Asian countries involved with the bloc's
flagship Nabucco gas pipeline project. The visit,
which was initially planned for a larger number of supply and transit countries, was
finally restricted to Turkey and Azerbaijan due to calendar constraints, said Piebalgs's
spokesperson Ferran Tarradellas. The commissioner would also like to visit Kazakhstan
and Egypt in the short term, Tarradellas told EurActiv. However, Turkmenistan will not be
visited by the commissioner this time round, Tarradellas said. The country, which is home to the largest gas reserves of the
Caucasus, is being heavily courted by Russia to sell its gas to Gazprom at world market
prices. Moscow could then resell it to Europe as 'Russian' gas, according to the
strategy. The project for a pipeline to bring
gas from the Caucasus to Western Europe was named 'Nabucco' after Verdi's opera, which is
set in the ancient Mesopotamian city of Babylon, on the territory of today's Iraq. A future branch of Nabucco to Iraq, which holds the world's tenth
largest gas reserves, is seen by the Commission as 'very important'.... Recently, Russian Ambassador to
the EU Vladimir Chizhov dismissed the potential of the Nabucco project, and especially
plans to bring gas from Turkmenistan or Azerbaijan,
claiming the resources of the two Central Asian countries were insufficient. The only way
to fill the Nabucco pipeline was with Iranian gas, he said (EurActiv 30/04/08). Iran, which holds 15% the world's estimated
gas reserves, is not on the commissioner's list due to the uranium enrichment row
between Western countries and Teheran, which prevents the EU from developing the
project.... Meanwhile, Gazprom is pursuing its own diplomatic efforts. In a recent meeting
with Libyan leader Muammar Gaddafi, who visited Moscow over the weekend, the Russian state monopoly reportedly offered to buy all of
Libya's gas production in a deal similar to those it is trying to strike in the Caucasus. 'We think alike about gas and oil policies,' Gaddafi said, according to
the Interfax news agency. Asked if such a deal would hamper Nabucco, Tarradellas said
Libya already supplied gas to Italy directly or through Tunisia. Selling its gas to
Russia was 'not the most intelligent thing' for Libya to do, he
said. Libya also bought two billion dollars-worth of Russian-made fighter jets,
helicopters, antiaircraft missiles and tanks. Moreover, the Russian press reported that
Libya might offer to allow Russian ships to use the Mediterranean port of Benghazi as a
naval base."
EU’s Piebalgs on 'Nabucco tour' for gas supplies
EurActiv,
4 November 2008 |
"EU dependency on Russian gas
imports is currently 40% and is expected to rise considerably in the coming decades
unless supply sources are diversified and/or greater emphasis is placed on
locally-generated renewable sources of energy. The
Union, which is also strongly dependent on Russia for its oil, has already borne the brunt
of Moscow's 'pipeline politics', notably when the country cut gas deliveries to Ukraine
(in 2006 and again in 2008) and switched off the oil tap to Belarus, leaving several
European countries with brief supply shortages (EurActiv 11/01/07). The US has long been pushing for the
construction of oil and natural gas pipelines from the Caspian basin that would bypass
Russia, especially via Georgia. The Nabucco project for a 3,000 km pipeline, with a
planned capacity of 31 billion cubic metres per year, was launched to bring
Caspian gas to Western Europe, bypassing Russian territory. A branch of Nabucco is
expected to bring gas from North African countries, such as Egypt and Libya. But
Russian President Vladimir Putin ended his term by sealing a deal on the South Stream gas
pipeline, a project perceived as a rival to the EU's flagship Nabucco project (EurActiv 30/04/08). At the same time, Russia is offering deals to
countries from the Caspian basin to buy their gas 'at world market price'."
EU’s Piebalgs on 'Nabucco tour' for gas supplies
EurActiv,
4 November 2008 |
"While oil may be at its cheapest in months, prices deep in the
future reveal a market with serious concerns about long-term supply. As evidence, analysts
point to charts of crude oil futures. Oil for delivery years from now costs more than oil
for imminent sale, and the difference has widened. While front-month crude is down 53%
from its July peak, oil contracts for later delivery dates have fallen far less."
Supply Worries Persist in Oil Market, Just Not Now
Wall
St Journal, 3 November 2008 |
"The world
faces a growing risk of conflict over the next 20 to 30 years amid an unprecedented
transfer of wealth and power from West to East, the US intelligence chief has said.
Michael McConnell, the director
of national intelligence, predicted rising demand for scarce supplies of food and
fuel.... in a speech Thursday to intelligence professionals in Nashville, Tennessee.
'During the period of this assessment, out to 2025, the probability for conflict between
nations and within nation-state entities will be greater,' he said..... The economy will be in the midst of a transition from oil by
2025 but moving in the direction of natural
gas and coal, according to McConnell. New technologies and innovations could
provide solutions but existing technologies 'are inadequate for replacing the traditional
energy architecture on the large scale in which it's needed,' he said."
World faces growing risk of conflict: US intelligence chief
Agence
France Presse, 31 October 2008 |
"... major state-run corporations such as Gazprom and Rosneft, as well as
Russia's regional governments, have accumulated debts amounting to some $448 billion that
can't be paid without the help of the federal government."
Bailout Could Turn Tables on Russia's Oligarchs
TIME, 31 October
2008 |
"Royal Dutch Shell has become
the latest oil company to halt development of Canada's formerly booming tar sands
industry, amid soaring costs and plunging oil prices. The Anglo-Dutch oil group said that
it was deferring indefinitely an investment decision on the second expansion of its oil
sands project near Fort McMurray, in Northern Alberta. The announcement was made as Shell unveiled a 22 per cent surge in
third-quarter profits to $8.45 billion (£5.13 billion), despite a fall in production,
thanks to record oil prices during the three months to September 30. Extracting crude from the bitumen-rich Athabasca sands of northern
Canada is an energy-hungry, costly and environmentally controversial process that pays off
only with high crude oil prices....Although Shell
said that it remains committed to the industry and continues to build operations able to
produce 250,000 barrels of crude a day by 2010, it
has chosen to delay a secondary expansion that would increase the total to 350,000 barrels
per day. Shell would not comment on the expansion's
projected total cost, but Justin Bouchard, of the Raymond James brokerage in Calgary,
estimated that it would cost C$13 billion to C$16 billion (up to £8 billion), to build
new pipelines, new extraction plants and an enlarged bitumen upgrader in
Scotford....Compounding concern about investment in the industry, Total, the French oil giant, said this week that its Surmont and
Joslyn projects were economically attractive only with oil above $90 a barrel. Although Total insists that it remains committed to current projects, its
spokesman would not rule out future delays. Richard
Savage, of Mirabaud, the Swiss bank, said: 'It's a dilemma for the whole industry. People
are having to re-evaluate their investments. The move in the oil price is creating a big
cost squeeze.' Banks were increasingly reluctant to lend to projects whose profitability
relied on high oil prices, adding to debt-market pressure, Mr Savage said. At an estimated
173 billion barrels, Alberta's oil sands are the world's second-largest oil reserve,
behind Saudi Arabia, but producing oil from them requires complex production facilities
and vast amounts of energy....Canada's oil sands
industry is under pressure as high costs, plunging oil prices and turmoil in global
financial markets trigger a wave of project delays. This month alone, projects worth more
than C$40 billion (£20 billion) have been postponed. Petro-Canada, one of the largest
players, is deferring a C$10 billion investment decision on a new bitumen processing plant
. Suncor Energy, another big player, is postponing by one year the construction of a C$20
billion upgrader plant, which turns bitumen into a more easily refinable, synthetic
crude."
Shell halts Canadian sands development
London
Times, 31 October 2008 |
"China has been making extensive efforts to penetrate the Middle East
and Africa, especially by trading arms for oil. In recent years China has also stepped up
its efforts to acquire oil from Central and South America, again offering weapons in
exchange, as well as space technology. Its top targets are Venezuela
and Brazil."
China seeks oil for arms in Latin America
United
Press International, 31 October 2008 |
"Big oil companies are already finding it harder to maintain, let alone
increase, production. Chevron doubled
its third-quarter net profit, but said production fell 5.7% in the quarter, after
ExxonMobil reported an 8% production drop yesterday. Falling oil prices are only going to
accelerate that trend, analysts warn, at a time when OPEC is accelerating output cuts and
production declines at oil fields around the world is apparently increasing. Big oil as a whole needs oil prices of about $82 a barrel next
year to fund their plans for new investment in oil exploration and production, Credit
Suisse says in a new report. Right now, the
consensus forecast of about $75 oil means overall, oil companies will suspend some
marginal projects, as Shell has already announced with Canadian tar sands. If oil stays
around $60 a barrel, the funding shortfall for Big Oil will increase to more than $70
billion, CSFB says, as oil companies mothball a range of tricky new projects. That
represents about 20% of planned capital expenditure for big oil companies in 2009. Not
everybody would be affected equally. ExxonMobil can weather oil prices at $50 a barrel,
the bank says, while big Chinese oil companies are praying oil returns to record levels
north of $140."
Peak Oil: Are Oil Prices Destined to Rise Again?
Wall
St Journal Online, 31 October 2008 |
"The Queensland Conservation Council says
the State Government's ban on shale oil mining in north Queensland's Whitsunday region is
a step in the right direction. All shale oil
development relating to the McFarlane deposit, near Proserpine, will be banned for 20
years, under laws passed by Parliament yesterday. The
council's Toby Hutcheon says although a 99-year moratorium would have been preferable, he
is happy with the move. 'It's a really good step forward in the Government saying we don't
support industries that will pollute and industries that will increase greenhouse gas
emissions in Queensland,' he said."
Green group happy with shale oil ban
ABC News (Australia),
31 October 2008 |
"...credit markets have seized up and the price of a barrel of oil
has fallen nearly 60 percent since hitting record highs this summer. The picture now is
much bleaker for clean energy, and concern is widespread among business leaders who are
facing diminishing demand for environmentally friendly hardware and services. That should
make one of the chief messages to emerge from the annual Oil & Money Conference in London this week
– high-cost oil is here to stay – a source of optimism for the clean energy
sector. Despite the sharp dip in the price of a barrel in recent months, 'the low energy price age is over,' said Nobuo Tanaka,
the executive director of the International Energy Agency.
He said demand was likely to remain steady from parts
of the world like China and India, and that supply may not catch up with demand once any
recession had run its course. Low oil prices could mean less investment in infrastructure,
undermining future oil production. That message was
reinforced by Robert
Dudley, the chief executive of oil company TNK-BP,
who said production from Russia, the largest producer outside the Organization of the Petroleum Exporting Countries,
probably had peaked and may be headed into decline. In fact, projects to develop renewable
energies may make more sense than ever before, suggested Christophe
de Margerie, the chief executive of French oil company Total.
Mr. de Margerie said that when oil prices bounce back, they could reach unprecedented
levels, making it wise for investors to keep investing in alternatives. 'Do we stop being
clean because of this crisis?' asked Mr. de Margerie. Prices for oil could climb 'to the
sky,' he warned, and waiting to invest in low-carbon energy projects could triple their
cost."
‘The Low Energy Price Age Is Over’
New
York Times Online, 30 October 2008 |
"The International Energy Agency yesterday sought to play down a
report that it believes global oil production is falling faster than previously thought. The Financial Times said a draft of the IEA's annual world energy
outlook calculated world production would fall by 9.1% a year without extra investment. A number of oil-producing countries are reported to be finding it harder
to finance new projects because of the recent sharp fall in the oil price. 'The future
rate of decline in output from producing oilfields as they mature is the single most
important determinant of the amount of new capacity that will need to be built globally to
meet demand,' the FT quoted the draft report as saying, adding that the IEA believed it
would require a 'significant increase in future investments just to maintain the current
level of production'. The WEO is due to be published next month. Yesterday the IEA said
the FT article 'appeared to be based on an early version of a draft from several months
ago that was subsequently revised and updated'. It added: 'The numbers in the article can
be misleading and should not be quoted or considered to be official IEA results.' The oil
price peaked at $147 a barrel in July but has since slumped to less than half that figure
on fears of lower demand. 'I'm seeing a lot of
projects being postponed because the finance is no longer there,' Qatar's oil minister,
Abdullah al-Attiyah, told a conference in London this week. Members of Opec plan to invest
$160bn in the next few years on projects to expand capacity. 'If prices decline, most of
our projects will be either delayed or cancelled,' said
Opec secretary general, Abdullah al-Badri."
Energy agency plays down fears of 9% fall
Guardian,
30 October 2008 |
"The world is facing a dangerous 'oil crunch' in as little as five
years, and the Government needs to starting working on solutions now to avoid major
economic and social problems, a cross-industry group warned yesterday. 'Peak oil' is the
point at which the rate of extraction exceeds the discovery of new supplies, with
considerable economic and political consequences for energy-hungry countries reliant on
oil for everything from energy to pharmaceuticals to agricultural fertilisers. Timetables
vary, but the taskforce of eight companies, including Stagecoach,
Virgin and Scottish & Southern Energy, is
predicting the end of cheap and easy oil supplies as
early as 2012. Even
Royal Dutch Shell, commissioned to write a balancing view for the group's report, is
forecasting a plateau of supply as production moves to more difficult sources such as
ultra-deeplayers and tar sands. 'We are going to
reach a peak in the early part of the next decade,' said Will Whitehorn, the
cross-industry group's chairman and president of Virgin Galactic. 'If we are going to
avoid a crunch we need to invest now.' The group believes a national energy plan should urgently implement accelerated energy conservation and more
investment in renewable resources. Jeremy Leggett,
executive chairman of taskforce member Solarcentury, said: 'The difference between the
credit crunch and the oil crunch is that we have five years in which we could try to
engineer a soft landing, by beginning the restructuring ahead of time.' The gloomy predictions are supported by the latest data from the
International Energy Agency, which suggest that annual oil production worldwide is falling
faster than expected."
UK companies urge steps to head off global 'oil crunch'
Independent,
30 October 2008 |
"Debt has become a nasty four-letter word in recent months and those
companies who have it are getting the cold shoulder from investors. On Wednesday,
Blackmont Capital analyst George Topping sounded a dull alarm about the short term debt
saddling Cameco Corp.'s balance sheet. The uranium
miner financed the $347-million Kintyre uranium
deposit acquisition made in August mainly with short term debt due in mid 2009. As a
result, Mr. Topping told clients in a note that Cameco now has $550-million in short-term
debt and $750-million of long term debt. Meanwhile, the bulk of its cash, the analyst
added, is held by Cameco subsidiary, Centerra Gold Inc. 'The agreement of lenders is
required to roll the debt over,' he wrote. 'We are
concerned that this debt may constrain capital spending if credit markets remain closed,
as Cameco is not strongly free cash flow positive.'"
Cameco debt adds risk: Blackmont
National
Post (Canada), 29 October 2008 |
"Robert Dudley, the outgoing chief executive of TNK-BP, said that
Russia’s oil production looked set for a protracted decline, in part due to lack of
investment. In only his second public appearance since he was forced to leave Russia in
July amid a bitter struggle for control of TNK-BP between BP and
its Russian billionaire partners, Mr Dudley said Russian
oil production looked to have reached its peak in August."
Russian oil at its peak, says Dudley
Financial
Times, 29 October 2008 |
"Robert Dudley, chief executive of oil company TNK-BP, said Wednesday
that Russia's oil production has likely reached its
peak and is now headed for a slow decline, due in
part to lack of investment. Dudley, who will leave TNK-BP in early December after a
long-running dispute between shareholders of the Anglo-Russian joint venture, said oil
production had probably touched a high in August. 'There isn't going to be a precipitous
decline. It's very mature oil fields and there'll probably be a gentle decline as we move
on,' Dudley told reporters on the sidelines of the annual Oil and Money conference in
London. 'But I believe we are ... at the top of a broad curve or cycle right now until
other things happen.' Dudley also said that while the oil industry was strong globally, Russia faced particular problems, notably the decline of some
production as West Siberian oil fields mature.
Russia is the largest oil producer outside of OPEC and declining production is bad news
for a resource-based economy where revenues from the oil industry account for about 25
percent of gross domestic product. Dudley said the decline, a consequence of lower
investment over the past five years, would last 'some time.' 'The
onshore oil renaissance is over,' he said, adding that Russia needed to shift its focus to
potential reserves in other parts of Siberia and the Arctic offshore to sustain long-term
growth. But investment in those remote areas, which are difficult to access and have
little existing infrastructure, is likely to prove difficult in the straightened funding
environment created by the global credit crunch, he said. Dudley added that the tax regime in Russia, one of the toughest in the
world for oil producers, would not aid the necessary investment. He noted that Gazprom and
Rosneft, the two state-owned companies that are the country's major oil producers, had
around $60 billion in debt at the start of the year. 'There are clouds on the horizon, and
they are serious,' he said."
TNK-BP CEO says Russia oil output likely peaked
Associated Press, 29
October 2008 |
"Kuwait Oil Company faces a
challenging task in realizing 'Vision 2020' by achieving the target of producing up to 4
million barrels of oil per day by 2020, said a top official at KOC Monday. Delivering a keynote speech as the guest speaker of the October General
Meeting of the American Business Council - Kuwait at Movenpick Al-Bida Hotel, Ibrahim A
Faraj, Team Leader Contracts, Commercial Group, KOC said the demand for Kuwait oil is
expected to grow in the coming years prompting KOC to
focus more on heavy oil production. Demand for
Kuwait oil is projected to grow up to 4 million bpd by 2013 while our oil production is
expected to decline to the level of 2.5 million. To meet this shortfall, we will have to
focus on heavy oil,' Faraj said. He said KOC is on track to produce half a million bpd of
heavy oil by 2008. "We propose to increase our heavy oil production to 700,000 bpd by
2020. This is one of our main challenges,' Faraj explained. Mechanically, KOC produces 2.4 million bpd of oil and 1.2 billion standard cubic
feet of associated gas currently. It seeks to boost its oil production to 4m bpd by 2020
and add 20 billion to its proven oil reserves.
Burgan oilfield, which is the second largest in the world, is the main oilfield in Kuwait
and 95 percent of oil being produced in Kuwait comes under the jurisdiction of KOC. Kuwait
has 10 percent of the world's total oil reserves which signifies the importance of the
country in the global oil industry, Faraj noted. KOC is one of the ten subsidiaries of the
Kuwait Petroleum Corporation (KPC) which was established in 1980. The KOC, the oldest
company, was established in 1934 even before the formation of the parent company. All KPC
subsidiaries are responsible for producing hydrocarbon resources in and outside Kuwait, he
said.... KOC is mainly responsible for exploration, production, drilling, storage and
transportation of oil up to the tankers, he said. 'We
are also planning to increase oil recovery from the current 40 percent to 60 percent. We
also plan to produce one billion sqft of free gas by 2013,' he said. Outlining the strategy to meet the challenges KOC faces in
realizing its stated goal, he said, 'Everybody has to line up with KOC in partnership to
realize our vision 2020. We are enhancing our competence as the
production of oil has become increasingly difficult today. We are roping in international contractors, manufactures and employing
experienced and skilled manpower to achieve our goal,' he pointed out. He said KOC has to go in for non-conventional drilling system and
adopt prudent water management system. Similarly, it
has to develop Kuwait's hydrocarbon reserves, infrastructure and operational capability to
best meet market opportunities. At the same, it must give emphasis to the more technically challenging reserves in North and West Kuwait and maintain production capacity in South and East Kuwait."
Kuwait Oil Company foresees challenges ahead for 'Vision 2020'
Kuwait
Times, 29 October 2008 |
"The oil volumes and money offered to state companies Rosneft,
Russia's biggest oil producer, and Transneft, its oil pipeline monopoly, will depend on
individual projects, Mr. Sechin, a deputy prime minister and chairman of Rosneft, told
reporters. 'It's still early to speak of the credit agreement but work will be spread over
production, refining, sales and transportation,' he said, adding that the details would be
hammered out by Nov. 25. His comments came
after a signing ceremony in Moscow for a pipeline carrying oil from East Siberia to China.
In attendance were Prime Minister Vladimir Putin and his Chinese counterpart, Wen Jiabao.
Under the pipeline deal, Transneft and China's CNPC will build a link between both
countries' trunk pipelines from next year, which will carry up to 15 million tons a year,
or 300,000 barrels per day. The extra supplies would meet 4 per cent of China's current
annual demand, without relying on importing Middle East oil by tanker. Under the cash-for-oil swap, Rosneft and Transneft could together receive
up to $20 million to $25 billion in loans from the Chinese in return, Reuters reported,
citing industry sources. The deal 'would provide a very welcome, and very large, dollop of
liquidity to both companies amid a deep global liquidity crisis,' analysts at Alfa Bank, a
Moscow-based investment bank, wrote in a note to investors yesterday. Rosneft has debts of
more than $21 billion, while Transneft owes nearly $8 billion."
Russia strikes lucrative oil deal with China
Daily
Telegraph, 29 October 2008 |
"Global passenger car sales fell by about 1m – or 6 per cent
– to 16.2m in the third quarter, General Motors said on Wednesday, as it reported a
drop nearly twice that level in its own quarterly sales. America’s largest automaker,
which narrowly outsold Toyota worldwide last year, said it had sold more than 2.1 m
vehicles globally during the third quarter, down 11.4 per cent on the third quarter of
2007. This brought its total sales in January to end-September to around 7m, down 5.8 per
cent on a year ago....Michael DiGiovanni, GM’s head of global marketing and industry
analysis, spoke of the 'tremendous snowballing effect around the world from financial
turmoil' in the third quarter....GM is burning through about $1bn a month as it reels from
the weak US economy and this year’s spike in petrol prices, which together caused a
collapse in demand for its biggest and most profitable vehicles. The company is talking to
Chrysler about a possible merging of their businesses, and to the US government about
possible financial aid."
Global car sales fall 6% in third quarter
Financial
Times, 29 October 2009 |
"French oil company Total has announced its plans to exploit tar sands and other renewable energies in
central African country of Congo. Company's
Sustainable Development and Environment Manager, Jean Michel Gires told 6th Global Forum
on Sustainable Development in Brazzaville that Total has interest in both oil and gas
production but said it is extending its production to tar sands. 'Total is taking an
interest in other latitudes, because we have a presence on the issue in Venezuela, Canada
and Madagascar,' Mr Gires said. He said Total is interested in other opportunities in
Madagascar and other European countries. 'This is a long-term project and we must find
good technology, good schemes to develop these extra heavy oils without polluting and
impacting too notoriously on the environment,' he said. He said oil sands have distinction
of being developed on land, while oil activity takes place on shore and offshore."
French oil company plans to exploit tar sands in Congo
Afrol News, 29 October 2008 |
"Suncor Energy Inc., the world's
second-largest oil-sands producer, cut its production forecast by about 2 percent after
equipment failures curbed third-quarter output and profit fell short of analysts'
estimates. The Calgary-based company reduced its 2008 oil-production target to 235,000
barrels a day from a June estimate of 240,000 to 250,000 barrels.... Last week, the company slashed its 2009 capital budget by 33
percent and delayed work on the Voyageur project in Alberta, citing the 55 percent drop in
oil prices from the record in July, and the collapse of world financial markets. Suncor plans to spend C$6 billion next year, down from a September
estimate of C$9 billion, and expects to maintain budgets of about C$6 billion a year
through 2012, George said during an Oct. 23 conference call with investors. The company is
spending an estimated C$7.5 billion this year."
Suncor Cuts Forecast After Profit Misses Estimates
Bloomberg,
29 October 2008 |
"Owners of offshore vessels and rigs will be put under pressure to
reduce their prices to prevent delay or cancellation of deepwater oil projects, as
developers see their profits fall this quarter. Leading oil and gas producers are
already shelving some high-cost onshore energy projects as oil prices have fallen 60% from
$147 per barrel in mid-July to nearly $60 this week, and next in line are most expensive
offshore developments. With oil at $60 per
barrel, some deepwater projects in Brazil, the Gulf of Mexico and West Africa are looking
uneconomic in a market when drilling rig and offshore vessel rates are at record levels, so something has to give, said Matthew Simmons, chairman of investment
group Simmons & Co. 'Oil sands and gas shales in North America and deepwater
projects do not work at $60 oil. The problems are oilfield service costs are too high and
we need to change this for projects to go ahead,' Mr Simmons told Lloyd’s List
at the Oil & Money Conference in London on Tuesday. 'Rig costs are so high and we
cannot get enough spare capacity to lower costs. Even if more rigs are built, it is hard
to recruit people, so crew costs are high.' Deepwater-capable drilling rigs are being
hired out at $600,000 per day and oil companies are willing to pay more than $130,000 per
day for subsea support vessels and $300,000 day rates for rig towing anchor
handlers. The price of subsea equipment such as the flowlines and wellheads needed
for deepwater projects have also soared, but equipment and service prices will soon come
under pressure. 'When oil prices increase everything goes higher including oil
services and when oil prices fall service costs will decrease, so at $65 per barrel we
expect costs will also go down as well,' said Paolo Scaroni, chief executive of Italian
oil firm Eni. The oil price fall and tight
financial markets have prevented companies from finding credit to undertake their oil and
gas field development plans. Brazil has already acknowledged that the lower oil price
is delaying its plans to develop the deepwater pre-salt discoveries, which would require
new fleets of offshore vessels, drilling rigs and oil producing ships. Qatar Energy
Minister Abdulla Bin Hamad Al-Attiyah said no banks were offering finance for energy
projects any more, whereas even four months ago they were jumping over one another to give
out their cash. 'I see that a lot of projects will not be taken on and some in the
downstream and upstream will be postponed,' Mr Al-Attiyah said. United Arab Emirates
Minister of Energy Mohamed Bin Dhaen Al Hamli said that if low oil prices persist, them
'there will not be enough investment for the future'. 'It is very difficult to find
finance to help invest in large projects, its especially true for gas projects,' he said
at the London conference. There is also concern that a cut back in project
developments will in the long-term lead to less stability in energy markets, more volatile
prices and potential for energy shortages. Organisation of Petroleum Exporting
Countries secretary-general Abdalla Salem El-Badriof said: 'We want to invest, but at
these oil prices we will not be able to invest and there will be shortages in supplies in
the future.' The fall in oil prices is good for consumers in the short term as energy
costs are lower, but there may be problems in the long term. 'We need to get
investment in energy now, otherwise we will have a tough mid-term situation and a supply
crunch might come sooner and will be more acute. Supply may not catch up when demand is
recovering,' said International Energy Agency executive director Nubuo Tanaka. To
prevent projects from being delayed, oil prices need to rise or service costs have to
fall. Mr Al-Attiyah said oil prices of $70-$80 per
barrel would be good for producers in Opec."
Record rig costs will jeopardise deepwater oil projects
Lloyd's
List, 28 October 2008 |
"Shell, BP and other producers
may slash investment in hard- to-exploit fields, such as oil sands in Canada, which are costly and need higher oil prices to make them economically
viable, Beaney and Parker said. Companies may also cut spending on alternative energy
projects to focus on delivering hydrocarbon fuels to the markets. 'Investment in
alternative energy becomes less attractive' at current oil prices, Credit Suisse's Parker
said. `The breakeven for tar sands in Canada is
around $60 to $65 a barrel,' making profitability `very marginal, whereas just four, five
months ago it looked very attractive indeed.'"
Shell, BP May Post Higher Profit; Plans Under Review
Bloomberg,
27 October 2008 |
"New initiatives to turn motoring greener and create thousands of
jobs were announced today by the Government. Transport Secretary Geoff Hoon invited car
companies to bid for the opportunity to participate in a £10m project to run electric car
and ultra-low carbon vehicle demonstration projects, overseen by the Technology Strategy
Board. The project will also see around 100 electric cars provided to various towns and
cities to allow families and other motorists the opportunity to give feedback on the
practical steps needed to make greener motoring an everyday reality. Building on an
announcement made by Prime Minister Gordon Brown in July this year, today's plans could
lead to the creation of 10,000 new British jobs and help preserve many thousands more. The
green-motoring initiative is part of a wider Government plan to make the most of the
low-carbon economy, with estimates that around a million green jobs could be generated by
2030. The Government also said today that up to £20m had been dedicated to UK research
into improving technology that could make electric and other green cars more practical and
affordable. This follows the publication of new
research which concludes that, correctly managed, the UK power system could support
widespread use of electric cars and their charging needs without requiring large numbers
of new power stations."
Green motoring schemes announced
Independent,
27 October 2008 |
"Output from the world’s oilfields is declining faster than
previously thought, the first authoritative public study of the biggest fields shows. Without extra investment to raise production, the natural annual
rate of output decline is 9.1 per cent, the International Energy Agency says in its annual
report, the World Energy Outlook, a draft of which has been obtained by the Financial
Times. The findings suggest the world will struggle to produce enough oil to make up for
steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and
meet long-term demand. The effort will become even more acute as prices fall and
investment decisions are delayed. The IEA, the oil watchdog, forecasts that China, India
and other developing countries’ demand will require investments of $360bn each year
until 2030. The agency says even with investment, the annual rate of output decline
is 6.4 per cent. The decline will not necessarily be felt in the next few years because
demand is slowing down, but with the expected slowdown in investment the eventual effect
will be magnified, oil executives say. 'The future rate of decline in output from
producing oilfields as they mature is the single most important determinant of the amount
of new capacity that will need to be built globally to meet demand,' the IEA says. The
watchdog warned that the world needed to make a 'significant increase in future
investments just to maintain the current level of production'. The battle to replace mature oilfields’ output could even offset the
decline in demand growth, which has given the industry – already struggling to find
enough supply to meet needs, especially from China – a reprieve in the past few
months. The IEA predicted in its draft report, due to be published next month, that demand
would be damped, 'reflecting the impact of much higher oil prices and slightly slower
economic growth'. It expects oil consumption in 2030
to reach 106.4m barrels a day, down from last year’s forecast of 116.3m b/d. The projections could yet be revised lower because the draft report was
written a month ago, before the global financial crisis deepened after the collapse of
Lehman Brothers. All the increase in oil demand until 2030 comes from emerging countries,
while consumption in developed countries declines."
World will struggle to meet oil demand
Financial
Times, 28 October 2008 |
"Mr Hayward highlighted the pressures facing the industry as a result
of the fall in the oil price, which has fallen from a peak of over $147 per barrel in July
to $62
yesterday. He said the world was entering 'a period of softness' in the oil price as a
result of the global economic downturn, but BP was 'well positioned to cope'. He said
BP’s balance sheet was strong and 'we have committed less of our portfolio to high-cost options like tar sands and gas conversion than some of
our peers'”.
BP warns of more job losses
Financial
Times, 28 October 2008 |
"The International Energy Agency
(IEA) is concerned about potential delays to upstream oil projects as a result of the
recent sharp fall in crude prices, its head said on Tuesday. International benchmark U.S. crude prices have fallen sharply to below
$65 a barrel from the peak above $147 struck in July, due mainly to a drop in demand amid
economic slowdown caused by the financial crisis. Oil industry officials and analysts have
said the low price may clog investments in upstream projects needed to maintain world
supplies. 'Discussion that price of oil should be high enough and there will not be
incentives to sustain upstream investment ... if the price of oil is too low? Yes, we are
concerned about it,' IEA's head Nobuo Tanaka told Reuters at a sidelines of a conference
in London. 'We have seen this financial crisis. The
supply side, as well as the demand side, has been hit badly by the financial crisis.' The IEA is energy adviser to 28 industrialised countries and, as a
representative of consumer interests, has expressed concern about high oil prices this
year. Tanaka did not specify the level of oil prices that would sustain enough investment.
'We may see lots of impact on small upstream projects. There have been some talks that big
projects may also get delayed. We are concerned about it,' Tanaka said. 'Supply will
become very tight again in next several years.'"
IEA concerned about oil project delays -Tanaka
Reuters, 28 October 2008 |
"Opec stands ready to cut production again this year if oil prices
continue to fall, its secretary-general said yesterday. 'Opec will not hesitate to
act to stabilise the price,' Abdullah al-Badri said during a visit to London. 'We are
watching the market very carefully and we have another meeting in December in Algeria.'
The remarks came three days after the cartel of 13 producer countries agreed to greatly
reduce production by 1.5 million barrels a day in an attempt to support crude prices.
Since July prices have more than halved, delighting consumers but alarming the governments
of Opec member states, which rely heavily on oil revenues. Mr
al-Badri said that the rapid slide in oil prices, which continued falling yesterday to a
17-month low of under $62 a barrel, was having a destabilising effect and was undermining
investment in the global oil industry. 'There must be an incentive for producers,' he
said. 'When we have low prices, there will be no new [exploration] activities, no new
investment, no training, no oil services companies and no new technology. This low price
will affect investment and future supply. We fear that a lot of [new oil production]
projects will be cancelled or delayed.' He said that
Opec was investing in 120 new oil projects worth a total of $160 billion (£102 billion)
that would raise its overall production capacity by five million barrels a day by
2012."
Opec set to cut production to stabilise price
Times,
28 October 2008 |
"After years of growth, Russia's
once mighty oil machine is feeling the strains of declining production and energy prices
as the industry copes with the worst economic crisis in Russia in a decade. Oil companies that coasted on high commodity prices, Soviet-era
infrastructure and easy Western bank credit have quickly fallen on hard times. Foreign
investors have pulled out and company share prices have wilted. Is this the end of the
Putin boom? 'We're watching Russia very carefully,' David Fyfe, a senior oil market
analyst at the International Energy Agency in Paris, said by telephone. Just this month, the state-controlled oil company Rosneft was
compelled to meet a margin call on bank debt. Already, one Siberian oil company is
unlikely to be able to roll over debt, and creditors could seize its assets, industry analysts say. Output is
declining this year, for the first time in a decade.....In contrast with the current decline in output, Russian production
increases in the early years of this decade were so rapid that they entirely offset growth
in demand from China. The growth rate flattened in 2005, contributing to the spike in
oil prices that followed, as emerging market demand continued to swell. Now price and
output are dropping together. The global credit crunch caught the Russian oil
industry at a particularly delicate time, just as companies were embarking on major
debt-financed capital projects. For all their billions of dollars in revenue, the
companies have been rendered vulnerable by high taxes - they paid a total effective tax
rate of about 62 percent at a crude price of $101 a barrel; and this at a time when they
faced heavy investment needs. Gazprom, for example, is building rail
and pipelines on the Yamal Peninsula of northern Siberia, an expansion into the Arctic
projected to triple the company's annual capital outlays to 969 billion rubles, or $36.5
billion, by 2010...As the oil giants have started to hurt, the
government has shown some signs of responding to their pain. At a Sept. 24 meeting
requested by Lukoil, Gazprom, Rosneft and TNK-BP, Sechin, the first deputy prime minister
for energy, promised them $9 billion at interest rates below inflation to roll over
financing from Western banks, the Russian business newspaper Kommersant reported."
Russia's oil boom: Miracle or mirage?
International
Herald Tribune, 28 October 2008 |
"The government is to announce
tomorrow that it will include rapidly growing aviation and shipping emissions in Britain's
commitment to curb its carbon footprint by 80% by 2050. Ed Miliband, the energy and climate change secretary, will bow to
pressure from environmentalists and rebel Labour MPs by announcing he will accept an
amendment to include these emission sources in the climate change bill which is due to
become law next month. The decision not to include aviation and shipping, which account
for 7.5% of all emissions, was seen as a gaping hole in the government's legislation,
which is the first measure of its kind in the world. Up to 86 MPs threatened to back an
amendment in the Commons tomorrow, tabled by Elliot Morley, a former environment minister,
to include these sources. The government has not been able to calculate exactly which
emissions from international flights and shipping lanes will be attributable to Britain's
carbon footprint. But even if an international agreement is not reached, acceptance of the
amendment will force Miliband to explain where Britain stands on curbing aviation and
shipping emissions."
Minister bows to calls on climate change bill
Guardian,
27 October 2008 |
"A recent research note from
Barclays Capital argues that if oil prices stay below $90, large amounts of expected oil
production capacity will not be built, and 'the world faces a serious supply-side crunch
as little as two years away'.... Like low oil
prices, high oil prices are a mixed blessing. On the one hand they spur conservation:
America is now consuming almost a million barrels per day less than a year ago. On the
other, they cause recessions: oil price spikes have precipitated every major downturn
since the Second World War. What's needed, then, is a 'Goldilocks' oil price – say
$100 per barrel – high enough to sustain capacity and moderate consumption, but not
so high that the economy tanks. But Opec, for all its fearsome reputation, has never had
the discipline to keep oil prices high for long. Even if the cartel cuts enough officially
to compensate for falling demand, its members always cheat on their quotas. What is more
certain is that whenever the economy revives, Opec will again struggle to raise output
– the cause of the recent spike to $157. Non-Opec oil production is expected to peak
around 2010, and the cartel is likely to reach its geological limits soon after. We are
condemned to a sickening rollercoaster of oil price spikes and economic slumps until we
finally rid ourselves of our dependence on petroleum."
You're wrong, PM. We need higher oil prices
Independent
On Sunday, 26 October 2008 |
"The price of Brent North Sea crude fell to $61 yesterday, the lowest
level since March last year, even after the Organisation of Petroleum Exporting Countries
(Opec) decided to cut output by 1.5 million barrels a day in an attempt to shore up
prices.....Robert Laughlin, an analyst at the trader MF Global, said: 'The world-wide
demand for energy is getting worse every day. If we continue to get this drip-drip of bad
news, I think we will get close to $50 a barrel by December. We’ve
seen demand [drop by] 2 million barrels per day since the beginning of August. This cut isn’t enough and Opec will definitely have to go further to
stop the slide'....The United States, the world’s biggest consumer of oil, criticised
the move, calling the cut an antimarket decision. The White House’s deputy press
secretary said: 'The high oil prices from the past year contributed to the slowdown in
demand and the subsequent down-turn in the economy, and we would ask that everyone keep
that in mind.' Fears of recession have pulled oil down from a high of $147 a barrel in
July. Analysts said that $50 a barrel was not an unreasonable price for oil, which traded
within a range of $40 to $60 a barrel for most of 2007....The
latest weekly report from the US Department of Energy shows that demand for oil has fallen
in 38 of the past 42 weeks. US demand is down nearly 10 per cent over the past four weeks,
year on year."
Opec cuts output as oil heads back down towards $50 a barrel
London
Times, 25 October 2008 |
"International air cargo and
passenger traffic fell sharply in September, in a
sign airlines and exporters are both in 'dramatically difficult' straits, the International Air Transport
Association (IATA) said on Friday. IATA also repeated its forecast that airlines would
lose $5.2 billion in 2008, warning that falling demand and financing problems had eclipsed
the benefits of lower oil prices. 'The industry crisis is deepening along with the crisis
in the global economy,' said Giovanni Bisignani, head of the group that represents 230
airlines....Cross-border air freight -- a leading
indicator for the health of world trade -- was 7.7 percent lower last month than in
September 2007, in the biggest monthly drop since the dot-com bubble burst in early 2001, IATA said. Asia-Pacific carriers reported a 10.6 percent year-on-year
decline in air cargo, while European air freight traffic fall 6.8 percent and in North
America it shrunk 6.0 percent. Fewer people also opted to fly internationally in
September, the month when financial market turmoil dominated headlines worldwide,
according to the IATA data which excludes domestic flights. Fewer
people also opted to fly internationally in September, the month when financial market
turmoil dominated headlines worldwide, according to the IATA data which excludes domestic
flights. The 2.9 percent year-on-year drop last month was the first decline recorded since
the SARS epidemic in 2003, when the previously
unknown respiratory ailment spread through air travel from Asia to Canada and elsewhere.
Latin America was the only region that saw an increase in passenger traffic last month,
with demand up 1.7 percent."
Air cargo, passenger traffic down sharply in crisis
Reuters, 24 October
2008 |
"The
full force of the global financial crisis has finally hit the oil sands, delaying two of
Canada's largest energy projects and tempering Alberta's economic boom. Suncor Energy Inc. said yesterday that it is slashing its expected
spending in 2009 by one-third because of uncertainty over oil prices and credit
availability. Part of the reduction will affect the $20.6-billion Voyageur oil sands
project the company is developing, meaning its upgrader will be delayed by one year.
Meanwhile, the consortium behind the $23.8-billion Fort Hills project, led by
Petro-Canada, said it could also delay building its planned upgrader, instead constructing
only its planned oil sands mine in order to get crude to market more quickly and
cheaply."
Oil sands projects slashed as credit crisis hits Alberta
Globe
and Mail, 24 October 2008 |
"A Churchillian effort will be needed if Britain is to meet its
target of getting 15 per cent of its energy needs from renewable sources by 2020, Peers
have warned. And it will require a massive shake-up of how power is produced and
distributed across the energy industry, the European Union Committee says in a new report.
Britain gets only about two per cent of its energy
from renewable sources, mostly from wind farms and will be hard-pressed to meet the 15 per
cent target imposed by the EU, the report concludes. Much will depend on the Government
being able to persuade the public to use less power and to begin thinking about producing
their own electricity at home - so called micro generation. To achieve this planning laws
will have to be shunted aside and Ministers given more powers to drive through renewable
energy schemes even when there is local opposition.
The Committee chairman, Lord Freeman, said: 'The target is achievable but only through a
tremendous national effort on a Churchillian scale. 'Priorities will have to be changed
and will involve everybody from the consumer producing electricity at home to the big
power companies.' The Government is criticised in the report for not tackling energy
efficiency in its Renewable Energy Strategy and it calls for a 20 per cent energy
reduction target by 2020. The report claims 41 per
cent of the UK's energy use is for heating and cooling and says renewable heat
technologies and micro-electricity generation should form a key part of the strategy. It calls for bigger grants to give homeowners the incentive to install
the new technology needed to start generating their own electricity. The committee warns
that the rush to meet the 2020 target through wind farms might lead to more cost-effective
technologies - such as wave and tidal energy - being ignored and it says a 2030 target
should also be set to give alternative technologies more time to develop. It says the
Government should not rely on the proposed Severn Barrage to provide enough energy to meet
its targets as, assuming it is approved, it won't be operational until 2022. And it says
the length of time that will be needed to make a decision on the Barrage cannot be
repeated in future projects if it hopes to meet its targets. It agrees that renewable
energy produced abroad should be bought in to help the UK meet its target subject to a
limit of 10-15 per cent, and as long as it did not hamper the development of the
renewables industry."
Renewable energy - 'Massive shake-up needed to meet targets'
Daily
Telegraph, 24 October 2008 |
"Azerbaijan is planning to
divert its oil and natural gas export routes to Europe with increasing shipments to Russia
and Iran, a move possible to raise concerns in the West. In early August when clashes erupted between Georgia and Russia,
Azerbaijan has responded by reducing its reliance on trans-Caucasus oil pipelines,
increasing shipments to Russia and starting to sell crude to Iran. Baku, which has
cautiously nurtured ties with the West to counter strong Russian influence, initially
portrayed the changes as temporary measures when the brief war between Georgia and Russia
broke out in early August and the oil and gas routes across the Caucasus to the Black Sea
and Turkey were shut down.But Azerbaijan has since decided to keep shipping some oil
through Russia and Iran even though the fighting stopped more than a month ago. 'We
don’t want to insult anyone ... but it’s not good to have all your eggs in one
basket, especially when the basket is very fragile,' said Elhar Nasirov, the
vice-president of Socar, Azerbaijan’s state oil company. Nasirov said Azerbaijan
would continue exporting oil to Russia and Iran, even though gas and oil shipments through
Georgia had resumed, because of the increased risks in the Caucasus. 'We knew there was a
risk of political turmoil in Georgia. But we did not expect war,' he was quoted as saying.
Elmar Mammedyarov, the foreign minister, told the Financial Times: 'We are trying to be
friends with everybody, at the same time as acting in accordance with our national
interests.' The small amount of oil that Azerbaijan is diverting to Russia is symbolically
important to the Kremlin, which is determined to reassert control over Caspian energy.
Azerbaijan forged close relations with the US in the 1990s when Russia was weak and
allowed in western oil companies. Nearly 1 million barrels a day of oil – about 1 per
cent of world output – now crosses the Caucasus, much of it through the US-backed
Baku-Tbilisi-Ceyhan pipeline. Gas is shipped to Turkey via the south Caucasus pipeline.
But US efforts to persuade central Asian countries to use these pipelines have met with
mixed success and may now be derailed. Kazakhstan,
which temporarily evacuated its oil port at Batumi on the Georgian Black Sea during the
conflict, held talks this week with Moscow on new export pipelines to Russia."
Azerbaijan diverts EU oil, gas to Russia and Iran after Georgian crisis
HotNewsTurkey, 24
October 2008 |
"The world's biggest publicly funded project to make transport fuels
from algae will be launched today by a government agency which develops low-carbon
technologies. The Carbon Trust will today announce a project to make algal biofuels a
commercial reality by 2020. The plan could see up to £26m spent on developing the
technology and infrastructure to ensure that algal biofuels replace a signficant
proportion of the fossil fuels used by UK drivers.....The
Carbon Trust forecasts that algae-based biofuels could replace more than 70 billion litres
of fossil fuels used every year around the world in road transport and aviation by 2030,
equivalent to 12% of annual global jet fuel consumption or 6% of road transport diesel....The second phase of the project will start in around a year and
involves scaling up the algae-growing operation. The Carbon Trust will build multi-hectare
open ponds to act as laboratories for the most promising algae technologies identified in
the early stages of the challenge. Due to the UK's gloomy weather, these will most likely
be built abroad. 'If you I've got 12 months a year of warmth and sunshine, your algae farm
just produces much more biomass. In a world where costs will be important, UK algae farms
would have a real problem, said Trezona. This phase of the project could see the Carbon
Trust, and interested partners from industry, investing up to £20m."
UK announces world's largest algal biofuel project
Guardian, 23
October 2008 |
"The global banking crisis will hurt new oil development projects and
is already forcing many companies to drop oil projects, OPEC President Chakib Khelil said
Thursday. The banking crisis is crimping project financing for foreign oil companies
operating in OPEC and non-OPEC nations, Khelil said. Even if oil prices return to $90 a
barrel, that wouldn't be enough in some cases to secure adequate financing for projects,
he said, speaking at a Vienna press conference....OPEC's president said he doesn't think a
return of oil prices to $90 a barrel would curb economic growth. On the other hand, he
said, international oil companies need high oil
prices to continue to finance their projects. Projects such as Canada's Athabasca
oil-sands development need oil prices to be at least $90 a barrel to proceed, Khelil said.
OPEC member Angola's deepwater oil projects 'need around $70'-a-barrel oil prices, Khelil said. 'OPEC countries that have resilient banking systems haven't
been affected by the financial crisis because most of those projects have been locally
financed,' Khelil said. 'Those OPEC countries whose projects are being financed by foreign
banks definitely will be affected.' Referring to fellow OPEC member Nigeria, Khelil said,
"I think most projects in Nigeria are financed by foreign banks. Whenever you have a
foreign company operating in a country, they will be affected."
OPEC President: Many Oil Projects Hit By Banks Crisis
Dow
Jones Newswires, 23 October 2008 |
"Christophe de Margerie,
Total’s chief executive, has been warning for more than a year that political hurdles
such as sanctions meant the world would not be able to produce more than 95m barrels a day
of crude oil. But as the credit crunch delays expensive projects and lower oil prices
dissuade oil-rich nations from investing in tapping more of their riches, oil executives
are privately warning that even 95m barrels could prove optimistic. That is a stark
reassessment. The world consumes 87m barrels a day of oil and will have to find a lot more
energy if China, India and other developing nations are to pull themselves out of poverty.
For now, all eyes are on falling demand and tumbling oil prices but the International
Energy Agency has warned that the glacial pace at which supplies are being added will have
far-reaching economic consequences. In its latest report, the IEA, said: 'Most large
international oil companies and state producers should weather the financial storm.
However, investment is being affected at a number of highly leveraged companies in
locations such as Russia and the Caspian.' Russia’s two energy giants, Rosneft, the
state oil company partially listed in London, and Gazprom, the natural gas monopoly,
depend heavily on debt to finance operations and evidence is mounting that they are
scaling down their investments....Chief executives
of some of the world’s biggest international energy companies meeting in Venice this
month privately voiced concerns that the credit crunch-driven belt-tightening and new
spirit of government intervention in business were ominous for the oil industry. Mr de
Margerie said: 'All projects which are under way will be completed.' But he also warned
that, if the oil price fell to $60 a barrel and stayed there, 'a lot of [new] projects
would be delayed'. France’s Total has been one
of the most forthright companies about the cost of its newest and most expensive ventures,
noting that its Canada oil sands projects need an oil price just shy of $90 a barrel to
develop while reducing the environmental impact. Its developments in the deep waters
of Angola require prices of about $70 a barrel to achieve a rate of return of 12.5 per
cent. Analysts said Nigerian deepwater projects, which together with Angola make up the
most important areas of growth in west Africa and involve all the world’s biggest
international energy groups, demand similar oil prices because of their high cost. Many of these projects have yet to receive final investment decisions,
making them more susceptible to delays in times of economic uncertainty. Expensive liquified natural gas projects, which are often financed
by banks, may also be delayed and capacity additions put on hold, analysts said. BP has shelved plans for its $500m Delaware LNG facility, arguing 'market
conditions do not support such a project near term'. It is not just the big oil
companies’ investments that count. In the US, small oil and gas companies produce 82
per cent of the country’s natural gas and 68 per cent of domestically extracted oil.
Struggling with a less solid balance sheet than their much bigger peers, many are
struggling to finance their operations. Meanwhile,
the willingness of refiners to add capacity is also being tested, meaning that the bottleneck that helped drive oil prices to $147 a
barrel this summer will not be solved as quickly as the industry had begun to believe
before the credit crunch. Eni, the Italian oil company, has announced that it has scrapped
a doubling of the capacity of its Taranto refinery after cutting back its capital
expenditure plans for refining and marketing. But perhaps the most worrying area, at least
in the long term, is Brazil, where Petrobras, the national oil company, last year
discovered what could become the biggest new oil frontier to open up in almost a decade.
The company has delayed its highly anticipated strategic review to assess the impact of
the credit crunch. Petrobras is expected to need
upwards of $500bn to finance the development of its giant subsalt fields, which 'may be
further delayed as share prices tumble and amid restrictions on the availability of state
development bank funding', the IEA has warned. Delays in developing the field and other
projects in Russia, Angola, Nigeria, Australia and elsewhere, mean there will not be
enough oil available once the world economy is ready to get back on its feet, several
energy executives said."
Falling oil poses threat to supplies
Financial
Times, 22 October 2008 |
"The petroleum potential of Africa, a key contributor of oil barrels
to thirsty markets, is beginning to look dimmer because of the credit crunch and a host of
endemic challenges. Certainly, Big Oil's continental land grab will continue. Countries
such as Angola and those around the Gulf of Guinea continue to lease tantalizing
exploration blocks in the deep waters off the Atlantic coast. That region has been the
hottest play in a scramble that has doubled the acreage under exploration licenses in
sub-Saharan Africa to an area 10 times the size of France in the past three years....But the astronomical costs involved in developing those fields,
combined with escalating violence in the oil-rich Niger Delta, the relatively short life
span of West Africa's producing basins, unpredictable market prices, and an expected
culling of cash-poor small players means Africa's days as a reliable supplier of
additional oil may be numbered. 'We have benefited
from additional oil volumes from Africa, but given the production profile of offshore
fields, we need to see significant new discoveries to sustain that trend,' says Fatih
Birol, chief economist for the International Energy Agency in Paris. 'It's not clear that
will happen.'...The continent is responsible for
about 12% of global oil production of around 85 million barrels a day. But Africa's contribution has been crucial to tight oil markets given the
continuing slide in production in non-OPEC countries such as Russia and Mexico. The IEA expects non-OPEC producers will add new supplies of just
150,000 barrels a day this year, down from the agency's original expectations of around
one million barrels a day. Other analysts say
non-OPEC supplies could actually fall this year....Even
before the credit crunch took hold, experts had been warning of challenges to maintaining
Africa's upward trend in production, particularly in sub-Saharan Africa and the
continent's two OPEC members, Nigeria and Angola. Consultancy Wood Mackenzie sees
production in West Africa beginning to fall as soon as 2013. PFC Energy in Washington
estimates that trend could take hold after 2014 when West African production peaks at 7.1
million barrels a day, compared with the current 5.8 million barrels a day. But even those
modest gains could prove to be elusive. In Nigeria,
which competes with Angola to be Africa's largest producer, deepening rebel and criminal
violence targeting Western oil companies in the oil-rich Niger Delta is severely crimping
supply. Nigerian Foreign Minister Ojo Maduekwe said
last week Nigeria currently was producing just 1.5 million barrels of oil a day. That
surprised observers who had pegged Nigerian production at closer to two million barrels a
day. The violence is also driving up costs. Chief
Tunde Afolabi, chief executive of Nigerian oil company Amni International, says his
production costs in the delta are 250% higher than those offshore once he factors in
security outlays and kidnapping insurance for his employees. The credit crisis and the
falling price of oil will only deepen the Nigerian state oil company's chronic funding
shortfalls...In Angola, China's largest single oil
supplier, oil production recently fell to around 1.7 million barrels a day from a high
about two million barrels a day earlier this year, the country's oil minister said last
week, blaming an accident in one offshore block.
Such supply pinches may be transitory as new fields come on line, but they highlight the
region's production challenges. Geology and project economics are a longer-term concern.
The nature of oil reservoirs in West Africa's key offshore fields means production peaks
quickly. Major oil companies have a financial incentive to pump oil fast, and that speeds
decline rates and shortens a field's life."
Africa's Potential to Sate World's Oil Demand Dims
Wall
St Journal, 22 October 2008 |
"As the secretary-general of Opec flew into Moscow yesterday to talk
about oil, Alexei Miller, the chairman of Gazprom, was jetting out of Tehran after
concluding talks about gas with Iran and Qatar. We need not worry that Russia is about to
join the oily club. Today's visit by Abdullah al-Badri is a formality, but the talk of a
gas cartel is a different matter. A combination of
leading gas exporters, no matter how tentative, could pose a serious economic threat to
Europe. We should first discount the hoopla from
Gholam Hossein Nozari, the Iranian Oil Minister, who proclaimed yesterday that the talks
between Russia, Iran and Qatar had reached 'a consensus to set up a gas Opec'. No such
thing is likely - we can forget any notion of horse-trading gas production quotas —
but what we can expect, and what we ought to fear, is the exchange of information about
prices, development schedules and investment plans. Mr Miller said as much: 'We have
agreed to hold regular — three or four times per year — meetings of the 'big gas
troika' to discuss key issues of gas market developments.'...Russia,
Iran and Qatar are the world's top dogs in gas, accounting for 56 per cent of the world's
known reserves, according to the BP Statistical Review of World Energy 2008. Russia is
already the world's leading exporter, but Qatar is in the throes of development and Iran
has barely tapped its potential. So chaotic is the Islamic Republic's energy
infrastructure, and so hamstrung by American sanctions, it is forced to import gas from
Turkmenistan. Iran would like to be a big gas
exporter and Mr Miller's presence at the talks in Tehran is recognition by a key player
that Iran will not remain a bystander for long. Qatar is about to launch a winter convoy
of vessels laden with liquefied natural gas (LNG), destined for the UK. Iran wants to export gas to Europe via the proposed Nabucco
pipeline through Turkey and the Balkans; yet so far, hunger for gas has not been
sufficient for European states to sign up Iran and risk the outrage of Washington. Sooner
rather than later, the European Union will snub Washington and Iranian gas will move west,
threatening Russian hegemony."
Gas cartel could have a significant impact on Europe
London
Times, 22 October 2008 |
"Britain now has enough offshore
wind farms to provide power to 300,000 homes, an energy conference has heard. The
completion of the latest wind farms off the Lincolnshire coast has taken the industry past
the 3 gigawatts capacity mark. Total wind capacity from onshore and wind farms at sea is
enough to provide power for the equivalent of 1.5m homes, the British Wind Energy
conference was told. In a special video message
played at the London conference Gordon Brown said Britain had the best wind and wave
resources in Europe and had now overtaken Denmark as the largest producer of offshore wind
in the world. He said over the next 12 years the North Sea would become to offshore wind
what the Gulf of Arabia is to oil production. The Prime Minister also pledged that the
economic crisis wouldn't derail Government plans for cleaner and cheaper forms of energy.
'You may have heard some people say that these difficult economic times should or will
reduce the Government's commitment to building a low carbon economy. They should not and
will not,' he said. 'On the contrary, the investment and jobs we will create from our
commitment to low carbon energy is one of the drivers that will bring us new prosperity.' Within the next decade offshore wind farms in Europe will be
producing 40GW of power and about 50 per cent of the total will be in British waters. Mr
Brown told the conference that there was a potential £100bn market for renewable energy
which would create huge opportunities and create 160,000 jobs."
Wind farms: Britain has enough offshore to provide power to 300,000
Daily
Telegraph, 22 October 2008 |
"A global green 'New Deal' is needed to transform the world's
economies, according to a new UN report. But it would be aimed at a fundamental
restructuring of economies weaning away dependence on oil and towards cleaner and more
sustainable sources of energy. The Green Economy Initiative from the UN Environment
Programme (UNEP) calls for global economies which invest in better care and management of
the Earth's natural resources such as rainforests and oceans. Rather than more boom and
bust cycles and the continued asset stripping of dwindling resources, the new green system
would nurture and re-invest in them. It would refocus the global economy, create growth,
trigger a 21st century employment boom and at the same time combat climate change, it is
claimed. Launching the report in London Achim
Steiner, UNEP executive director, said the worldwide financial crisis had created an
historic opportunity to replace a system which had seen the world's GDP double between
1981-2005 but which had resulted in 60 per cent of the Earth's ecosystem being degraded
while 2.6bn people were still living on less than $2 per day. He said the financial, food
and fuel crises of 2008 had been caused by speculation and a failure by governments to
regulate markets but they were also part of a wider market failure which was eating away
the world's natural resources. The system was also
over-reliant on a finite amount of fossil fuels - coal, oil and gas - which were often
subsidised. 'The flip side of the coin is the enormous economic, social and environmental
benefits likely to arise from combating climate change and reinvesting in natural
infrastructure - benefits ranging from new green jobs in clean teach and clean energy
businesses up to ones in sustainable agriculture and conservation-based enterprises,' he
said. Mr Steiner said that even though the world's focus was on the financial crisis, the
pressing problems of food, fuel, energy and especially climate change had not altered and
the world had no alternative but to reach a deal at the climate conference in Copenhagen
next year. 'We need to accelerate towards a green economy. We are talking about nothing
less than the transformation of our economies in effect a global green New Deal,' he
said."
UN announces green 'New Deal' plan to rescue world economies
Daily
Telegraph, 22 October 2008 |
"Gazprom
on Wednesday warned that the credit crisis could make it more difficult to obtain
new borrowings and refinance its existing debt as it reported a sharp rise in
first-quarter profits on higher gas tariffs and larger export volumes....Credit default swaps on Gazprom’s debt, a kind of insurance
against debt default and measure of perceived credit risk, rose sharply on Wednesday to
1,400 basis points, according to Markit, a data provider. That means it would cost $1.4m
to insure $10m of Gazprom’s debt for five years. A figure of more than 1,000 is
widely seen as a sign of a company at risk of default....The company has already asked for $1bn in state funds as part of a
rescue package being disbursed by the government to fund investment projects. However
fears have been growing over the stability of the Russian economy. Gazprom is facing big demand for investment when costs across the industry
have been soaring. It also cannot delay its big projects because the gas is already
committed to export customers, or is needed to replace declining fields for the domestic
market, analysts say. Developing the Shtokman gas field off the north coast of Russia, a
technically challenging project, has been estimated at $15bn-$20bn, but will be 'much more
expensive than people might think,' according to Christophe de Margerie, the chief
executive of Total, one of Gazprom’s likely partners in the development. Fields and
pipelines in Russia’s far east for supplying China and Korea could cost about $100bn,
Gazprom has suggested, while opening up the deserted Yamal peninsula in the north of
Russia, the location of vast gas reserves, could cost $200bn, according to an estimate
from Shell. Falling steel prices will help curb those costs, but the demand for capital
spending is still huge....Gazprom has a monopoly on Russia’s gas exports, and its
prices in European markets follow the cost of oil with a six- to nine-month lag, and so
will keep rising until about the turn of the year."
Crisis could hit Gazprom refinancing plans
Financial
Times, 22 October 2008 |
"Uranium One Inc. shut its
Dominion mine in South Africa and may seek a buyer for the operation as prices for the
nuclear fuel slip to a two-year low. The company
slid 19 percent in Johannesburg trading. The operation, based on South Africa's largest
uranium deposit, needs a 'sustained recovery' in uranium prices and 'significant
additional capital investment' to become economically viable, the company said in a
statement to the Stock Exchange News Service in Johannesburg today. Uranium One is in
talks with the National Union of Mineworkers over the future of staff at the mine. Prices have slumped 50 percent this year, partly on concern that
the credit crunch will slow the development of new nuclear power projects."
Uranium One Closes Dominion, May Put Mine Up for Sale
Bloomberg,
22 October 2008 |
"Uranium One assured the investment community after announcing it has put its 'flagship' Dominion mine in South Africa on hold it had sufficient cash liquidity to see its remaining projects in the
United States and Kazakhstan through. However, the company could not give a clear picture
yet of its cash burning rate going forward. CEO Jean Nortier said during a conference call
from North America that Dominion would still require capital expenditure of between
$150m-$200m up until 2011-2012 before it would generate sufficient returns to pay back
capex and operational expenditure. He said Uranium One's capital expenditure would now be
much lower compared to what it would have been with the Dominion mine in production going
forward. The initial cost of putting Dominion on a care and maintenance plan would be
$300m, after which it would cost the company about $1m per month to maintain the operation
in a 'care and maintenance' state. The lower capital expenditure also came as Uranium
One had completed the majority of its construction projects in Kazakhstan and its US
projects were small and required 'smaller amounts' of capex. Nortier said he could
not yet provide the group's 'cash burn rate' going forward, but stressed the company
had 'more than enough' cash flow to see it through this period of evaluating
Dominion's options."
We have enough cash after Dominion doom – Uranium One
MoneyWeb,
22 October 2008 |
"Few countries have been as
hard-hit by the global financial crisis as Russia.
The Russian stock exchange has lost 70 per cent of its value since May. But the effect on
Russia's main companies has been dramatically magnified by the huge borrowings of the
oligarchs, the men who bought controlling shares in Russia's industries during the flawed
post-communist privatisations of the 1990s. Many of these moguls borrowed heavily against
the rising value of their shares, and have lost billions in paper fortunes. As a result
they are facing huge margin calls, and have to repay or refinance $120 billion before the
end of next year. There is only one source rich enough to save them - the State. Could
Russia's lurch into the wilder shores of capitalism end as suddenly as it began, with the
reintegration of key industries under state control? The Russian Government has offered up
to $50 billion to tide them over, but some oligarchs have such large debts that a firesale
looks inevitable. Oleg Deripaska, Russia's richest man whose fortune is estimated at $28
billion, may have to apply for state refinancing: he has to repay to Western banks some $2
billion of a $4.5 billion loan by November. The owner of a majority holding in the Rusal
aluminium company, he also has large stakes in Western car and construction companies.
Some of these interests have already been sold; others will have to go. Speculation is
also swirling around companies such as Vladimir Yevtushenkov's Sistema and Mikhail
Fridman's Alfa Group, whose troubles have already led to lay-offs at Alfa Bank. Others who have indicated that they would apply for loans include
Lukoil, the second-largest oil firm, one of Russia's
largest steelmakers and its second-largest bank."
Bear market
Times,
21 October 2008 |
"The run-up to Peak Oil was a major factor in the current economic
crisis, and the changes emerging from the crisis may help us deal better with the
challenges of the coming decade. The financial problems that emerged in the summer of 2007
led to the collapse of Bear Stearns in March, the nationalization of Fannie Mae and
Freddie Mac, and a cascade of subsequent events, policies, and impacts that continues as
this is being written. The nature of the crisis started from the fact that the large
financial institutions – banks, hedge funds, pension funds, and such – have
created and used a lot of securities that are either mispriced or hard to value.
They’ve taken a lot of home loans that are 'sub-prime' (the borrowers had little
income or wealth compared to the loan size; there was too much loan-to-value; future
payments would be beyond the borrowers’ ability to pay, etc), put them together into
large packages (mortgage-backed securities, or MBS), secured high ratings for the bonds
(higher than the component loans justified), and sold them to domestic and foreign
lenders/investors looking for high, secure yields. At the same time, another industry was
created selling 'insurance' on whether these or other loans might default, and the
resulting 'credit default swaps' were unregulated. As long as the system worked, it
worked well – as long as we kept clapping, Tinkerbell lived. The models used by the
regulators, the rating agencies, and the borrowers and lenders assumed that the past
records of defaults would continue. The old patterns failed, and now no one knows how much
anything is worth or how big the losses will be. Yet while all these financial instruments
were being created, there were plenty of voices pointing out that American home prices
would peak in 2005 or so, and that the quality of loans was declining rapidly. According
to the October 15, 2008, Washington Post, sub-prime mortgages made up 8.0 to 8.6% of all
mortgages from 2001 to 2003, but 18.5 to 20.1% from 2004 to 2006. The dollar value of
subprime MBS rose from $121 billion in 2002 to $401 billion in 2004 and about $500 billion
in 2005 and 2006. Why the big jump in junk? The US
balance of payments deficit has grown rapidly during this decade, and one of the big
drivers of that has been the rising cost of imported oil and other petroleum products. In
2002 we spent $102 billion importing oil, but that figure rose to $300 billion in 2006,
and to $328 billion last year. Those imports (along
with Jim Kunstler’s salad shooters and all the other things we buy) had to be
financed, to the tune of $2 billion a day by last year. We convinced the Chinese,
Japanese, and many others that our MBS were safe because they were sorta guaranteed (wink,
wink) by Freddie Mac and Fannie Mae. We needed the oil, so we needed product to sell to
finance our 'addiction.' Our suppliers wanted bonds, the government deficit
wasn’t large enough, so we created an endless supply of MBS to sell. Nobody –
the government, the American people, the Wall Street crowd, mortgage brokers, home
builders – wanted to take away the punch bowl, or look too closely at what was being
produced. Rising oil import volumes multiplied by rising prices contributed to the crisis
we are now experiencing. Those who understand the Peak Oil concept anticipate that the
aftermath of the current peak (whether that occurred globally in 2005 or will happen in a
few more years doesn’t matter much) will be long-term pressure on the productive
capacity of our economy, both from high prices and absolute supply constraints....In the
Twentieth Century we finally figured out how to create a system to maximize the
exploitation of cheap resources, through loosely-regulated multi-national corporations.
Unfortunately, we perfected the system just as the cheap resources were disappearing. We
do not have a model for how to optimize the use of scarce resources in a non-growing
economy. The current crisis creates the opportunity and the incentives to begin addressing
that problem."
Peak oil and the current economic opportunity
ASPO-USA, 21 October 2008 |
"Preliminary reports show OPEC exports dropping anywhere from 350,000
to 600,000 b/d during September. Platts reports increasing signs that crude and products
are becoming more difficult to sell on the world market, suggesting that an oversupply is
developing. The nearly 50 percent drop in oil prices during the last three months has been
for the most part attributed to the belief that the recession will eventually lead to
major reduction in demand for oil products. Some have blamed the decline on speculators
being forced out of the markets, however, last week new reports suggest that additional
factors may be involved. One report concludes that investors pulled $210 billion out of US
hedge funds during the third quarter forcing the funds to dump assets, including oil,
thereby forcing down prices. Another new factor is the credit crisis which has reduced the
availability of credit to oil traders and shippers all along the supply chain from the oil
producers’ ports to the consumers. This has resulted in a drop in demand for oil by
traders who can no longer get financing and has left the market largely in the hands of
the major oil companies and very large retailers, such as WalMart, who have the size and
liquidity to force prices lower. Lines of credit are being reduced to smaller traders and
letters of credit that guarantee oil shipments are becoming difficult to obtain. While in
the short term the lack of freely available credit may be forcing prices down, it will not
be long before the situation forces production cutbacks, shortages, and eventually higher
prices....Russia's crude output declined 0.6%
year-on-year in January-September to 2.7 billion barrels, the country's top statistics
body said on Wednesday."
Peak Oil Review
ASPO-USA,
20 October 2008 |
"Ed Miliband, the new Secretary of State for Energy and Climate
Change, is drawing up plans for a 'big shift' in the way Britons heat and power their
homes, The Independent on Sunday can reveal. The plans – which are scheduled to be
published at the end of next month – are expected
to include tough targets for cutting energy use in the country's 26 million homes, notoriously the worst insulated in Europe, and generous incentives to
make it easy for householders to meet them. The
drive has the full backing of the Prime Minister, who has decided that promoting energy
saving should be a top priority for the Government because it will create employment, save
families money as fuel prices rise, combat climate change and make it easier for Britain
to achieve energy security. Yesterday Mr Miliband,
who is already shaking up his department's priorities in order to place much more emphasis
on reducing demand for fuel, told the IoS: 'Over time
we need a big shift in the way we use and conserve energy and the Government must play a
part in making this happen.' Senior officials will
present him with the first draft of the plans on Wednesday, in the middle of the
Government's official Energy Saving Week. They will focus on reducing energy wastage from Britain's housing stock, which is responsible for 27 per cent of
the entire country's emissions of carbon dioxide.....
Last week Mr Miliband accepted a recommendation from
the official Committee on Climate Change to increase Britain's target for reducing carbon
dioxide emissions from 60 to 80 per cent by 2050.
But if the country is to have any chance of meeting this – the most radical
commitment so far made by any nation in the world – it will have dramatically to
improve the energy efficiency of existing homes, since 85 per cent of them are expected
still to be in use by the middle of the century. Gordon Brown took the first step towards
achieving this last month by making cavity wall and loft insulation available half-price
to every household – and free to the poor and to pensioners. Firms report a sharp
increase in demand as a result. But he, and Mr Miliband, realise that further measures
will be needed..... New ways to enable people to fund the improvements needed to make
their homes energy efficient. Most energy-saving measures more than pay for themselves
over time, but most families still find it hard to find the initial sum of money needed to
buy equipment and install it. The UKGBC report suggests that the Government, banks or the
energy companies should offer 100 per cent, interest-free loans that could be repaid
through local taxes, the energy bill or the mortgage. One imaginative idea is that
householders should pay back a proportion of the money they actually save on fuel bills
from making the improvement, keeping the rest as an incentive. But the loan would have to
be tied to the property not the individual, staying in place when a home changed hands.
Other financial incentives could include reducing the rate of VAT charged on home
improvements and offering rebates of council tax, income tax or stamp duty to owners of
energy efficient homes. Much better advice and information to householders on how to make
their homes more energy efficient. A wide consultation by the UKGBC found that the most
important obstacles to them taking action are 'a lack of knowledge about what can be done
to upgrade a home, and confusion about where to find reliable advice, installers and
information'. This might be best achieved through a
'whole home energy plan', which lays out how to make it energy efficient, what measures
should be made when, how to get the money needed and how to ensure aftercare. There would also need to be some scheme for formally accrediting
installers. A drive to train builders and tradesmen to enable them to carry out green
refurbishment projects, often at the same time as they are doing other building work on
the property. The improvement of the energy
efficiency of British homes is potentially a huge source of income and employment: the
UKGBC report calls it an 'enormous business opportunity', worth an estimated
£3.5bn-£6.5bn a year, and likely to create 'tens of thousands of new 'green-collar'
jobs'. Experts believe Mr Miliband is shaking up the notoriously conservative
official attitude to energy, which has placed a low priority on efficiency. He is seen as
a great improvement on his predecessor, the arch-Blairite John Hutton, who was
particularly focused on building new nuclear and coal-fired power stations. Paul King, the UKGBC's chief executive, said: 'Ed Miliband's first few
days have shown that he is determined to push the agenda forward. I believe he will be
looking to set bold targets for existing houses.' Downing Street said Gordon Brown regards
energy conservation as 'a very high priority' not least because it will provide
much-needed jobs and enable people to keep fuel bills down."
Miliband's blueprint for greener homes
Independent
On Sunday, 19 October 2008 |
"A major threat to Britain's ambitions for renewable energy will
emerge this week when wind industry leaders admit that targets set for 2020 are looking
increasingly unrealistic.They will use a high-profile conference in London to warn Gordon
Brown that there is little chance of achieving the government's goal - of wind generating
one third of all UK electricity within 12 years - without a huge injection of public
money. It comes as an Observer investigation reveals that planning delays, long delivery
times, escalating costs, 10-year hold-ups in connection to the national grid and technical
problems in building offshore windfarms all threaten to derail Brown's ambitions. The
result could be electricity shortages by 2020, failure to meet climate change and energy
targets and possible hefty fines from Europe. The developments will come as a blow to the
government. Last week Ed Miliband, the new minister for climate change, said Britain would
increase its target for reducing greenhouse gas emissions by 2050 from 60 to 80 per cent.
Brown will tell delegates at the annual conference of the British Wind Energy Association
(BWEA) this week that the UK industry is now a world leader. But others will claim that
there is a severe shortage of engineers and companies are reviewing their commitments to
wind energy because of spiralling costs. Britain is
legally committed to generating 15 per cent of all energy from renewables by 2020. This
means that wind power, which presently contributes about 4 per cent of UK electricity,
must expand to generate 36 per cent within 12 years. No country has tried to switch its
electricity supply so quickly on this scale, and to achieve it the industry will need to
build nearly 15,000 turbines, generating 35 gigawatts (GW) of electricity, on land and at
sea. Many experts say it is technically feasible to meet the targets, but there is a
growing conviction that the plans were rushed through so quickly by the government that it
will now take substantial new money and guarantees to work....One major problem is
planning laws, which have been holding up dozens of projects for years. Stephen Tinsdale,
head of communications at Npower renewables, said: 'It can cost up to £200,000 just to
put an application in, and you can expect it to take three to four years to go through
planning. Two-thirds of all applications are refused. On top of that, there are conditions
from the Ministry of Defence over radar and conditions by local authorities on when we can
and cannot erect them. England has very few places left where you can build large farms.
There are potential delays at almost every stage.' New laws should make planning speedier for the industry, but the
Infrastructure Planning Commission, which will handle applications for all large farms and
should be set up next year, has not been tested yet either in practice or in the courts.
Another problem facing companies is getting connection to the National Grid. Some
companies in Scotland have been told to join a 13-year queue and are being asked for
deposits of millions of pounds before the grid will agree to connect them. Currently, 115
Scottish renewable schemes, totalling 9GW of mostly wind power, are waiting to plug into
the grid before they can supply electricity. Some already have planning permission but
have to wait many years to connect. 'It is plausible to meet the target, but it is very
deeply challenging,' said a spokeswoman for National Grid. 'We have signed agreements to
connect 16GW of renewable generation throughout Great Britain, but over 75 per cent of
this total is stuck in the planning system. 'Urgent reform to the UK's planning laws and
energy regulation are needed. We're fully aware that some dates are later than some people
would like. We will try to work with developers to bring the dates forward wherever
possible.' But in an unpublished paper submitted to the government, National Grid says
that, while it is possible to connect new offshore farms in time, the onshore target of
14GW of wind is 'not credible'. 'This is an area where we are not optimistic. We believe
that only 12.9GW is credible,' says the paper. The real prize for governments looking for
major increases in wind capacity is a series of giant 5-6GW farms with hundreds of the
biggest turbines 10 to 20 miles offshore. The first are being planned to be built after
2014 in the Bristol Channel, the Wash and off Wales and Yorkshire. But wind companies are
having increasing doubts about their financial viability. While they are technically
feasible, they are already more than twice the cost of onshore farms and the price is
spiralling upwards. Signals that UK offshore farms may not be profitable came in June when
Shell pulled out of the consortium planning to build Britain's biggest offshore farm, the
London Array in the Thames Estuary, in favour of developing more profitable wind projects
elsewhere. Then last week the government of Abu Dhabi stepped in to help the project after
Royal Dutch Shell withdrew."
UK wind farm plans on brink of failure
Observer,
19 October 2008 |
"The [Cuban] government
announced there may be more than 20bn barrels of recoverable oil in offshore fields in Cuba's share of the Gulf of Mexico, more than twice the previous
estimate. If confirmed, it puts Cuba's reserves on par with those of the US and into the
world's top 20. Drilling is expected to start next year by Cuba's state oil company
Cubapetroleo, or Cupet....However there is little prospect of Cuba becoming a communist
version of Kuwait. Its oil is more than a mile deep
under the ocean and difficult and expensive to extract. The four-decade-old US economic embargo prevents several of Cuba's
potential oil partners - notably Brazil, Norway and Spain - from using valuable
first-generation technology. 'You're looking at three to five years minimum before any
meaningful returns,' said Benjamin-Alvarado."
20bn barrel oil discovery puts Cuba in the big league
Guardian, 18 October 2008 |
"....the extraordinary recent volatility of oil prices poses a
danger. Oil producers are unable to plan long-term
projects in these circumstances. When growth
at last resumes, oil supplies may not be able to keep pace - thereby stifling recovery at
an early stage."
The Axis of Diesel
London
Times, 18 October 2008 |
"Andy Inglis, chief executive of BP
Exploration and Production, said in a speech in Texas that there were about 40 years of
proven oil reserves and 60 years of natural gas. He added that the task facing the
industry was making sure that supply would rise adequately to meet demand....Mr Inglis,
speaking at Rice University in Houston this week, said: 'The really big strategic issue
for all oil and gas companies is matching the Earth's resource endowment on the one hand,
with the capability - technology, skills and know-how -' required to bring those resources
to market on the other. I think it is true to say that we may have reached a period of
'peak capability', at least in the short term. 'As far as I am concerned, peak capability
bears a far closer relation to the facts than so-called 'peak oil' Mr Inglis said: 'For international oil companies, and increasingly national oil
companies too, new resources are harder to reach and tougher to produce. Resources are now
found in reservoirs which lie at greater water depths, at higher temperatures and
pressures and require complex drilling and completion designs. 'Bringing them into
production is going to be difficult. It will require that capability gap to be filled.'"
Capability is issue 'not lack of oil and gas', says BP boss
Press and Journal
(Aberdeen), 18 October 2008 |
"While wholesale oil and gas prices have dropped sharply, British
electricity prices remain high because of an acute supply shortage as Britain’s
ageing power network becomes increasingly unreliable. Large energy companies tend to buy
gas using a range of short and long-term contracts, most of which are linked to the price
of crude. Global oil prices have more than halved since July 11, when they touched a
record high of more than $147 a barrel. Prices have been driven down by fears that a
global recession will sap energy demand. Yesterday the price of a barrel of Brent crude
slid under $67 a barrel – the lowest for more than 15 months. The falls prompted
Opec, the oil producers’ cartel, to call an emergency meeting next week in Vienna. Centrica said there was a lag of six to nine months between oil
and gas price moves under the terms of its contracts, meaning suppliers would not benefit
fully from recent falls until next year....The cost
of a barrel of oil depends on how and where it is produced. Oil
from the free-flowing and easily accessible fields of Saudi Arabia such as Ghawar, the
world’s largest, can cost as little as $5 a barrel. In contrast, oil extracted from
the tar sands of Northern Canada might cost as much as $80 a barrel. The quality of the oil is also critical. North Sea Brent crude is a
lighter grade that is easier and cheaper to refine than the heavy, sour Soroush and Norouz
crudes produced by Iran."
Gas prices plummet but consumers still paying full whack
London
Times, 17 October 2008 |
"....the Department of Energy's weekly report showed crude oil
supplies rose 5.6 million barrels to 308.2 million barrels last week, and U.S. fuel demand
was at its lowest level since June 1999. Crude oil fell below $70 a barrel. So what's
happened today to all those 'peak oil' arguments being made just a few short months ago?
Do they suddenly become obsolete, meaningless and another casualty of the global credit
crisis?....The world's utter dependence on oil remains unchanged. Oil is still a depleting
asset. New oil finds of any significance are still extremely rare, and even then, not
large enough to move the needle. For example, the biggest oil discovery for the past eight
years, the huge 'Tupi' oil field offshore of Brazil, is estimated to contain up to 8
billion barrels of oil. Nevertheless, with global oil consumption currently running around
86 million barrels per day, the Tupi field is only sufficient to meet less than 100 days
of global demand! In the face of this forthcoming global recession, the International Energy Agency (IEA) has been dropping its demand
forecasts for oil, their most recent report saying they expect oil demand of 87.6 million
barrels per day in 2009....assuming oil demand grows
around 1% per annum, it all depends on the marginal cost of discovering a new barrel of
oil. A report by Sanford C. Bernstein said the
marginal cost of supply is currently estimated to be about $75-$80 a barrel. That should set a long-term floor of around that level. With oil at $70
today, we're already beneath that floor, meaning the upside to the oil price should be
greater than the downside, in the longer-term."
Why Oil Prices Will Rise Again
Motley
Fool, 17 October 2008 |
"The wider question is what impact falling crude will have on nonOpec
oil output. Russia’s budget depends on a $70 per barrel price, according to Aleksei
Kudrin, the Finance Minister. But Russian oil output is already falling because of weak
investment, as is Mexican production. The major
Western oil companies can probably stomach prices dipping temporarily to $60 for a few
months and still pay their dividends, but a prolonged slump at $50 per barrel would lead
to the scrapping of investments followed by another cycle of shortages and soaring prices."
Opec hawks want to cut oil production to keep up price
London
Times, 17 October 2008 |
"A stunning aspect of the current economic crisis is that most
economists didn't see it coming and remain bewildered by its causes. Treasury Secretary
Paulson said just over a year ago that the business environment was the best of his
career. Paul Greenstein wrote recently that the crisis struck with little forewarning, as
if unleashed by a 'secret signal' sent out in 2007 that slammed the economy with soaring
energy and food costs, and the free-fall of housing prices. The current economic crisis
was indeed unanticipated by most economists, but the trigger may be hiding in plain sight
- peak oil. Oil engineer M. King Hubbert predicted in 1956 that U. S. oil production would
peak in 1970 and then decline. He was right, and we have since depended mainly on foreign
oil. Hubbert also predicted that peak global oil production would follow in 2000. Global
oil production has been flat since May of 2005, when the current economic storm clouds
began to gather. Is peak oil that secret signal that eludes economists? They initially
dismissed it as misinformed alarmism; economic theory holds that scarce oil will increase
prices, stimulate exploration, enhance reserves, and reduce prices. That's what happened
in the U. S., creating a secondary oil production peak in 1980 - but the accelerated
pumping of finite oil only hastened the subsequent decline of U. S. oil production. I
interviewed Hubbert in his Virginia home in the early 1980s, shortly before his death. An
oil painting of Don Quixote graced his dining room wall. But Hubbert was no Don Quixote;
his prediction of peak oil is confirmed in 33 of the 48 largest oil producing countries,
and is predicted in the remaining 15 countries within six years. Global production is a
simple sum of national production; peak oil has probably already occurred. Peak oil can
explain a lot about our current economic malaise. Oil supplies are static at peak
production, meaning that the slightest increase in demand (China) or disruption of supply
(hurricane Ike) makes price spike. Gasoline prices become volatile, but on the average
climb relentlessly. One-sixth of energy is used to produce and transport food, so energy
price spikes elevate food price. Consumers must pay more for energy and food as high
energy costs squeeze wages and the job market; therefore the largest single expense,
housing, becomes harder to meet, contributing to foreclosures and the housing market
meltdown. Sound familiar? Economics of course goes in cycles. Oil and gasoline pices will
go up and down - but on a rising baseline. And of course the current economic crisis has
many facets. Most economists see the bursting of the housing bubble as the cause, prompted
by irresponsible lending and borrowing. Then there is the second layer of the related
financial crisis and credit crunch. But these may be the mere effects of a penultimate
cause - peak oil."
W. Jackson Davis, professor emeritus, University of
California at Santa Cruz
Bewildered by peak oil economics
Denver Post, 16 October
2008 |
"Australia's Paladin Energy has warned that the uranium mining
industry is not immune to the global financial crisis. In its latest quarterly report the
company notes, 'The impact of the credit tightness on
the supply side of the uranium business will probably cause the deferral or cancellation
of some planned uranium projects, especially those
at the high end of the cost curve, and reduce the money available for exploration
companies, which will only exacerbate the supply-demand imbalance in the future.' However,
Paladin said, 'Reactor construction and forward planning for new plants continues strongly
in China and other major Asian countries as well as in Russia. Demand for uranium in the
medium to long term remains extremely strong.' Paladin announced that output at its Langer
Heinrich mine in Namibia during the quarter ending 30 September had reached full capacity
of 2.6 million pounds U3O8 (1000 tU) per year."
Paladin warns of impact of credit crunch
World
Nuclear News, 15 October 2008 |
"With just two exceptions, China
has officially halted all of its coal-to-liquids (CTL) projects due to environmental and
economic concerns. In a notice posted on its website
on Sept 4, the National Development and Reform Commission (NDRC) said that, apart from two
projects operated by the Shenhua Group, none could go ahead before receiving official
approval, because CTL is 'a technology-, talent- and capital-intensive project at an
experimental stage with high business risks'. The two Shenhua projects are one it has
already launched in the Inner Mongolia autonomous region and an indirect coal liquefaction
project in Ningxia Hui autonomous region jointly invested by Shenhua Group and South
Africa's Sasol Limited. Direct CTL is differs from indirect CTL, in that it converts coal
directly to liquid fuel, bypassing the process of gasifying coal into syngas.... The
commission also called on local governments not to approve any new coal-to-oil projects.
The new restriction presents coal giants such as Yanzhou Mining Group, which already has
several CTL projects under construction, with a big challenge, said China Coal Information
Institute President Huang Shengchu. Sasol said on Sept 7 it had suspended its indirect
coal liquefaction project with Shenhua in Yulin, Shaanxi province. The project had been
expected to cost US$5-US$7 billion and achieve an annual capacity of 3.6 million
tons....Some local governments and enterprises have already started coal-to-oil projects,
including major coal mining groups such as Inner Mongolia-based Yitai Group,
Shandong-based Yanzhou and Shanxi-based Lu'an. China is a country with rich coal reserves,
which satisfy 70 percent of the country's energy needs. 'The main reason China sought to
obtain oil from coal was to help ensure energy security,' said Shenzhen-based Fortune
Securities analyst Zhang Ke. The Shenhua plant that is already operational is expected to
convert 3.5 million tons of coal into 1 million tons of oil products annually. That's the
equivalent of about 20,000 barrels a day, while China's daily oil consumption in China is
around 7.2 million barrels. Inner Mongolia had been planning to turn half of its annual
coal output into CTL and other chemicals by 2010, requiring around 135 million tons of
coal. However, CTL 'is not suitable to be developed on a large-scale basis due to
environmental concerns', said Zhang. Environmentalists are concerned about the huge
amounts of water required by the process and its large carbon dioxide emissions.....Every three to five tons of coal can be converted into one ton of
oil products such as diesel for cars, while in the process about 10 tons of water is
needed to produce every ton of oil products,
according to a report by Bohai Securities. Many regions with large coal reserves have
long-term drought problems, meaning that CTL projects would put great pressure on the
local environment. In addition, this lack of water would also limit the long-term
development of the CTL industry. Though CTL technology was developed about 100 years ago,
it has been only used by Germany and South Africa when those two countries had
difficulties obtaining oil."
Is it the end of the line for coal-to-oil in China?
Chinaoilweb,
15 October 2008 |
"Pipelines vital to Iraq’s oil
industry are in such poor condition they could rupture at any time, choking off the supply
of oil from the region and devastating the country’s economy, according to the US
State Department. A previously undisclosed notification to the US Congress, obtained by
the Financial Times, says the ageing underwater pipelines, which link storage facilities
near Basra to offshore tanker fuelling terminals, are in urgent need of back-up or
repair.... Iraq produces 2.2m barrels of oil a day,
300,000 b/d less than its average before the US invasion in 2003. Iraq pumped as much as
3.7m b/d before the outbreak of war with Iran in 1979."
US warns on ageing Iraqi oil pipelines
Financial
Times, 15 October 2008 |
"The cost of food in the U.K.
is rising at a faster rate than elsewhere, putting more pressure on an economy already
squeezed by the credit crisis. A 12.7% increase in food prices in September from a year
earlier helped to drive overall inflation last month to 5.2%, its highest level in 16
years, the Office for National Statistics reported Tuesday. Amid the global banking
crisis, the high food prices are further crimping Prime Minister Gordon Brown's ability to
adjust economic policy. Because they add to inflation, they affect the Bank of England's
ability to bring down rates, and take more money out of consumers' pockets. Though Mr.
Brown's handling of the banking crisis has boosted his standing from its lows a month ago,
food prices are politically damaging: They're immediately visible and can make people feel
poorer quickly. Because it has a small farming sector, Britain imports more of its food
than other major economies, making it vulnerable to movements in commodity prices and its
currency. The U.K. runs a trade deficit in food equal to 1% of gross domestic product,
compared with a balance in the U.S. and a surplus in countries like France. While the rate of food inflation is starting to decline as
commodity prices ease, it remains higher than that of almost all of Britain's neighbors.
In August, the last month for which comparable figures exist, food prices rose 14.5% --
twice the rate in France and Germany, and well above the 6.1% increase in the U.S....Because the U.K. imports so much food, prices have been hit by both
the rising cost of fuel and the falling value of the pound. Almost 70% of the U.K.'s food
comes from the European Union, and the pound has fallen 15% against the euro since August
2007. Chatham House, a London think tank, said in a recent report that Britain may have
maxed out its ability to produce more food, a phenomenon it calls 'peak food' after the
'peak oil' theory that the world is running out of oil."
U.K.'s Rising Food Prices Hamper Economic Policy
Wall
St Journal, 15 October 2008 |
"China, the world's second-largest energy user, increased crude oil
imports by 10 percent in September to meet rising demand from refineries. Imports climbed
to 15.03 million metric tons, or 3.66 million barrels a day, last month, the Beijing-based
Customs General Adminsiration of China said on its Web site today. The rate of increase
compares with an 11.5 percent gain in August and a 7 percent decline in July. Chinese oil
companies are expanding refineries to meet fuel demand from the world's fastest-growing
major economy. China's processing capacity increased at least 5 percent in the third
quarter as the nation's two biggest oil companies, PetroChina Co. and China Petroleum
& Chemical Corp., boosted capacity in Qingdao and Dalian. Imports in the first nine
months rose 8.8 percent to 135 million tons, the customs said today. The country increased
crude-oil imports to 140 million tons, the customs said in a separate statement yesterday,
suggesting purchases reached a record 20 million tons in September. Exports were 580,000
tons, it said today. Crude oil imports may keep rising in the next few months as the
country takes advantage of falling prices to increase stockpiles, Li Yujin, an oil analyst
with China International Chemical Consulting Corp., said by telephone from Beijing.
Crude oil prices have fallen 44 percent from
a record $147.27 a barrel reached on July 11 because of concerns the global credit crisis
will damp economic growth and oil demand. Crude oil
for November delivery rose 2.35 percent to $83.10 a barrel at 12:49 p.m. Singapore time.
Oil-product imports reached 2.55 million tons last month and gained 16.5 percent to 31.28
million tons in the first nine months. Fuel exports rose 3.7 percent to 12.3 million tons
during January to September and stood at 1.38 million tons last month."
China Increases September Oil Imports 10% on Demand
Bloomberg,
14 October 2008 |
"Even with most forecast showing growing energy needs in the world, leasing of US federal controlled land in Colorado, Utah, and
Wyoming for commercial oil shale development may still be many years away, as discussed Oct. 13 at the 28th Oil Shale Symposium at the Colorado
School of Mines in Golden, Colo. Terry O'Conner, with Shell Unconventional Oil, Denver,
explained the current progress in leasing oil shale lands administered by the US Bureau of
Land Management. He said federal law and regulations have two separate paths for leasing
these lands. One path is with research, development, and demonstration (RD&D) leases
with the right to expand into a preference right lease (PRL). The other path is commercial
leasing....BLM has issued six RD&D leases, five in Colorado and one in Utah. Shell
obtained three of these leases. O'Conner said Shell plans to demonstrate three different
types of technologies on these leases but will not start work on them until it obtains
results from its Mahogany pilot that is on a private lease possibly by yearend 2009 or in
2010. On the Mahogany project Shell uses a situ conversion process that relies on a
freeze curtain to prevent ground water contamination. Regarding commercial leasing,
O'Conner explained that the process is guided by Section 369 (d) and (c) and includes
multiple steps that precedes the lease sale. This has taken much longer than anticipated
by EPACT 2005, he said.....He also said the EPACT 2005 contemplated the PEIS to support
regulations and competitive leasing program but as written it supported changes to 12
resource management plans, with multiple, sequential EISs to follow. This could lead to
finalizing the regulations in 5-10 years with leasing
starting toward the end of the next decade, O'Conner
said."
Western US commercial oil shale leasing still years away
Oil
and Gas Journal, 14 October 2008 |
"Woodside Petroleum Ltd. and
Chevron Corp. are among liquefied natural gas producers in the Australian region that may
delay committing to new projects costing more than $70 billion because of lower oil prices
and difficulty in raising finance, analysts said. The most-expensive projects, such as
Woodside's proposed Browse LNG and Chevron's Gorgon off northwest Australia may be worst
affected, said Di Brookman, an oil and gas analyst at Citigroup Inc. in Sydney. Most
projects not already approved will probably 'slide in time,' said Stuart Baker, an energy
analyst at Morgan Stanley. Australia is expected to
show the biggest growth in LNG production capacity through 2022, according to the
International Energy Agency. Inpex Holdings Inc., BG Group Plc, ConocoPhillips and
Petroliam Nasional Bhd are among other companies proposing to build more than $60 billion
of LNG plants in the country. 'All these big LNG projects, they all need external
financing, debt and equity, and that's going to be tough,' said Melbourne-based Baker.
'Historically the industry had just assumed oil prices would hang in and the money would
flood in. Well the game has just changed in the past two weeks'....Any delays in project
approvals will push out a forecast shortage of LNG supply beyond a current estimate of
2015, Brookman said. 'If we have any slippage in a lot of the projects that are earmarked
at the moment then we'll continue to have that shortage for longer,' she said.''
Woodside, Chevron May Delay LNG Projects on Turmoil
Bloomberg,
13 October 2008 |
"The credit crunch is set to unleash a 'forest fire' of consolidation
across the oil industry as smaller exploration companies struggle to refinance debts,
according to industry experts. 'Right now, if you are a pure exploration play in need of
cash, then you have no hope. You are in dire straits,' Richard Griffith, director of
equity research at Evolution Securities, said. As smaller companies struggle to refinance
debt in the market turmoil, stronger companies are well placed to bolster their reserves
by snapping up weaker rivals...Those with existing production and cashflows stand to
benefit, including mid-sized groups such as Cairn Energy and Tullow, as well as giants,
such as Shell and BP."
Consolidation likely as small oil explorers seek cash
London
Times, 13 October 2008 |
"As oil prices zoomed toward an unheard of $147 a barrel this summer,
it seemed every analyst prediction that oil would approach $200 was a self-fulfilling
prophecy, until suddenly it was not. Instead of $200, oil is now $80. Instead of
going up, the U.S. has seen the greatest destruction
in demand since the oil-shocked 1970s. Drivers have
dramatically cut down on driving since November."
$200 oil? That's so 2008
Associated
Press, 13 October 2008 |
"The biggest ever sale of oil assets will
take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up
for offer in London.BP, Shell and ExxonMobil are all expected to attend a meeting at the
Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.Access is
being given to eight fields, representing about 40% of the Middle Eastern nation's
reserves, at a time when the country remains under occupation by US and British forces.
Two smaller agreements have already been signed with Shell and the China National
Petroleum Corporation...Al-Shahristani is expected to reveal some kind of 'risk service
agreements' that could run for up to 20 years, with formal offers to be submitted by next
spring and agreements signed in the summer....The
Baghdad government says it aims to increase crude oil production from 2.5m barrels a day
to 4.5m by 2013, but faces internal opposition from
regional governors and political opponents."
Iraqi government fuels 'war for oil' theories by putting reserves up for biggest ever sale
Guardian, 13 October
2008 |
"Questions surrounding oil shale led to its
omission from a new study analyzing the economic and the environmental trade-offs of
unconventional fossil fuels. The RAND Corp., a nonprofit research group, issued the study
last week. It ended up focusing on oil sands and coal liquefaction, also known as
coal-to-liquids. 'Although oil shale is also an important potential unconventional fossil
resource, we do not address it in this report because fundamental
uncertainty remains about the technology that could ultimately be used for large-scale
extraction, as well as about its cost and environmental implications,' RAND said in the report summary."
RAND study omits oil shale because uncertainty remains
Grand
Junction Sentinel, 11 October 2008 |
"Declining to offer Iceland a quick €4 billion loan [during its
banking collapse] is one of the worst decisions the US and European countries have made in
the financial turmoil. It is a false economy that will prove diplomatically expensive. Not
that Iceland is the world’s most attractive credit risk, it hardly needs saying. The
chance that it will lack resources to repay a foreign currency loan would be a
conventional reason for saying no (although its Government says firmly that it will be
able to meet the terms). But the collective refusal, including, it seems, a rebuff by
other Nordic countries, has allowed Russia to offer the deal. It doesn’t take much to
work out what Russia is thinking. A former superpower, in search of territory and allies,
which planted its own flag last year on the seabed of the North Pole – what better
prize could it want than a Nato member that has just been rebuffed by fellow allies? Come
to that, what is the point of the US and Britain courting Georgia and Ukraine at such high
diplomatic cost if they are so casual about older allies? The €4 billion snub is
going to take some repairing....Russia’s
interest could not be clearer. Iceland’s mid-Atlantic location makes it a hugely
desirable ally, as Nato appreciated. Russia has its eye on oil and gas below the North
Pole (the point of the flag-planting stunt)."
Cold shoulder for Iceland allows rival to court new ally
London
Times, 10 October 2008 |
"Oil prices fell almost $9 a barrel on Friday to their lowest level
in more than a year as the slowing global economy led the International Energy Agency to
cut its forecast for global demand....The decline came after the energy agency, which is
based in Paris, cut its forecast for 2008 global demand by 240,000 barrels a day. The agency now estimates daily demand this year of about 86.5
million barrels, an increase of 0.5 percent from last year — the slowest growth in 15
years. It also cut its forecast for 2009 demand by 440,000 barrels a day, to 87.2 million
barrels, a 0.8 percent increase over this year’s demand....Olivier Jakob, an oil analyst at Petromatrix in Zug, Switzerland, said
in a research note that oil prices would probably not stop falling until the rout in the
stock market ended."
Oil Closes Below $78 as Demand Forecast Is Cut
New York
Times, 10 October 2008 |
"Oil fell more than $4 a barrel to a one-year low on Friday,
depressed by expectations global demand growth will shrink if the credit crisis pushes the
world economy into recession. Economic weakness spurred the International Energy Agency to
cut its forecasts for world oil demand growth for 2008 to its lowest rate since 1993....The IEA, which advises 28 industrialised nations, cut its world
demand growth forecast for 2008 to 0.5 percent -- the lowest in percentage terms since
1993. But the IEA's latest monthly Oil Market Report
warned against too much focus on demand and said the credit crisis was also impacting
supply, which at some stage could support oil prices."
Oil drops to $82, lowest in a year
Reuters, 10 October
2008 |
"Majors oil companies are pouring money into Libya, home to Africa's
biggest petroleum reserves, but it is unclear whether the desert country can achieve its
goal of almost doubling output within four years. Tripoli
wants to increase output to 3 million barrels of crude oil per day by about 2012 from 1.7
million now, raising extra revenues to help rebuild infrastructure that is crumbling after
years of sanctions. Libya's peak oil output was around 3.3 million bopd in the late 1960s
but analysts said that, with output at mature fields declining, it might be hard to push
production above 2 million. Much of the planned
increase relies on enhanced oil recovery -- raising output at existing fields -- and the
proportion of water to oil being produced at some of those fields is extremely high, a
consultant to Libya's oil industry said. 'Fields towards the end of their life are very
difficult to handle,' said the consultant, who asked not to be named. 'You get
unrealistically optimistic claims as to what may be achievable when most engineers know
it's just not economically feasible."
Doubts cloud outlook for Libyan oil bonanza
Reuters, 10
October 2008 |
"The plunge in oil prices toward
$80 a barrel will curtail oil companies' spending on new projects, limit production growth
and perpetuate the industry's tendency for boom and bust....The fall in oil prices, coming on top of the credit crisis which
partly caused the drop, is expected to end this trend. 'It's certainly going to impact the
number of projects that go ahead,' John Brannan, president of the integrated oil division
of EnCana Corp told a conference in London this week. High cost projects will be cut first
and all eyes are on Canada's oil sands projects. Christophe
de Margerie, chief executive of France's Total said last month that $90 a barrel crude was
needed to generate a 12.5 percent return on his oil sands plans. Increasingly tough economics, due to rising costs and regulatory delays,
had already prompted the Canadian Association of
Petroleum Producers to cut its 2015 oil sands production forecast by around 600,000
barrels of crude a day (bpd) to 2.8 million bpd, compared with around 1 million bpd today....Analysts say deep water oil projects, which have delivered millions of
extra barrels per day of production in the past decade, were also at risk. 'Some of the deep water projects we see in Nigeria and Angola have breakeven
prices of $80/barrel or slightly higher,' Derek
Butter, head of corporate analysis at Wood Mackenzie, said...North American gas companies
have also been cutting back on capital expenditure (capex) plans following falls in U.S.
gas prices, analysts at Citigroup said this week in a research note. With share prices
having fallen sharply in the sector, companies may prefer to buy rivals than invest in new
capacity....Even if companies want to invest in new projects, their ability to do so may
be limited. Oil companies have used record profits to boost dividends, something that
companies are usually slower to cut than capex. BP's second quarter dividend of 14 cents a
share compares with 7.1 cents a share in the same quarter of 2004. Oil companies will need crude around $78 a barrel in 2009 to meet
dividend and spending obligations, analysts at JP Morgan said. With a Brent crude price of around $82 a barrel on Thursday and
double-digit inflation in industry costs, this gives companies little leeway. Increased borrowing costs due to the credit crisis -- from
which oil and gas companies were largely insulated until now due to high oil prices -- may
compound the impact. Traditionally, multi-billion dollar projects such as LNG terminals
are majority financed largely by borrowings from banks or even the oil companies
themselves. While bankers say they remain happy to lend to the sector, the combined impact
of lower profits from these projects and higher borrowing costs may make them
unattractive. The increasing role national oil companies play in global oil production may
temper any overall drop in capital spending as their investment decisions are largely
politically driven. However, analysts point out the Western oil majors still account for
most investment. Exxon says its capex plans of $125 billion over the coming five years
compare with $210 billion for all of the Organization of the Petroleum Exporting
Countries....executives predict that any drop in investment now will lead to less spare
capacity in energy markets in future and therefore higher prices when the global economy
recovers, continuing the industry's cyclical pattern."
Oil drop may hit supply growth, keep boom and bust
Reuters, 9
October 2008 |
"U.S. crude oil production this year is expected to fall below 5
million barrels per day for the first time since shortly after World War Two, the
government's top energy forecasting agency said on Tuesday. The lower output is due to
hurricanes Gustav and Ike, which at one point shut in almost all the 1.3 million barrels a
day in oil production in the Gulf of Mexico, according to the U.S. Energy Information
Administration. About 45 percent of Gulf oil output is still offline weeks after the
hurricanes struck. In its latest monthly forecast, the
EIA said combined offshore and onshore U.S. oil production should average 4.96 million
barrels per day this year, down 100,000 barrels per day from last year and the lowest
level since 1946. Oil output is forecast to recover
to 5.29 million barrels a day in 2009, but will still be far from U.S. peak production of
9.6 million barrels a day in 1970, the EIA said."
US oil production at lowest level since 1946-gov't
Guardian, 7 October 2008 |
"Canada's oil sands companies are
facing a rough ride as crude prices continue to fall, putting a squeeze on high-cost
producers around the world, and the crises in credit and equities markets make it
difficult to finance expansions.Reflecting dire concerns about a global economic slowdown,
crude prices plunged more than 6 per cent yesterday, dropping below $90 (U.S.) a barrel
for the first time since last February....a bigger issue for smaller companies - or those
without production to provide cash flow - is financing their expansion plans."
Oil price drop tarnishes fortunes of oil sands
Globe
And Mail, 7 October 2008 |
"Over the last 18 months, natural gas prices have continued to rise
steadily in both established and new markets 'not only a reflection of higher demand, but
also of a delayed supply response,' said Nabuo Tanaka, executive director of Paris-based International
Energy Agency, in his introduction of the 2008 Natural Gas Market Review. 'Investments uncertainties, cost increases, and delays continue to
be a major problem in most gas markets and are continuing to constitute a threat to
long-term security of supply,' Tanaka stressed. These factors no doubt will be compounded by the world financial
turmoil, which has erupted since the review was published and which will forcibly result
in a credit squeeze for energy investments....Ian
Cronshaw, head of IEA's Energy Diversification Division, who designed and managed the
review, was already concerned that increasing gas demand, especially for power generation,
was not being met by sufficient investment. While he said projects currently under way
will proceed, he also said the lag in LNG investments
beyond 2012 'is a concern for all gas users in both the IEA and non-IEA markets.' The review pointed out other issues that pose a threat to long-term
supply security: the escalation of engineering, procurement, and construction costs (EPC);
the tight engineering market; and the growing
propensity of producing countries to reserve a greater share of gas production for their
own growing domestic markets. High natural gas
prices, which also are pushing up electricity prices because of the close link being
established between gas and power, have not slowed demand in consuming markets either
inside the IEA or nonmember countries. In the US gas demand grew by 6.5% in 2007 and about
4% in first-quarter 2008. In Japan, growth in 2007-08 was 9% on the back of a 50% lower
nuclear power utilization. In Europe, gas consumption was dampened by warm weather but in
early 2008, growth jumped to more than 8%, most notably in Spain, where first-half 2008
demand increased by 20% despite an economic slowdown. To meet this growing demand LNG
trade is on the way to playing a stronger role in regional markets within the Organization
for Economic Cooperation and Development (OECD) countries in the short and medium term,
forecasts the review. While LNG is already pivotal in
OECD Pacific, it is expected to reach 20% in Europe, where imports will account for over
half of total supplies. In North America, indigenous
production will still supply more than 90% of expected demand by 2015, yet LNG imports are
expected to more than double 2007 levels. Increasing LNG trade will globalize regional gas
markets, a trend that seems irreversible, says the review....Examining gas supply, IEA's
review sees worldwide gas resources more than sufficient to meet global demand, which it
establishes at 3.689 trillion cu m by 2015, up from 2.854 trillion cu m in 2005, always
subject to timely investment....Noted, also, were the
many delays in pipeline infrastructure development last year globally as well as increased
costs. Particularly mentioned were Nabucco and Nord
Stream in Europe and the Alaska pipeline in North America. In LNG there are similar
trends, as many projects are planned but not all are going ahead. In this area, the review
notes the unprecedented and major expansion in regasification capacity worldwide, which
risks being underutilized for it greatly exceeds liquefaction capacity. On the other hand,
concedes the review, this could be a source of flexibility."
IEA: Long-term gas supply security a threat as demand rises
Oil
and Gas Journal, 7 October 2008 |
"British companies are being forced to pay over four times more for
their electricity this winter than competitors in France and in excess of 70 per cent more
than in Germany. The discrepancy will increase concerns that Britain's crumbling power
infrastructure is a growing threat to the country's competitiveness and comes as Ofgem
today announces its report into competition in the energy market....The high UK prices are
the result of the closure of a number of ageing
nuclear and coal-fired plants for repairs, which has reduced generating capacity. Prices
are expected to fall towards the end of the year as nuclear plants at Dungeness, Heysham
and Hartlepool return to service. National Grid
insisted this week that there was sufficient capacity to meet demand this winter."
UK electricity price four times more than France
London
Times, 6 October 2008 |
"Natinonal Grid will buck market conditions this week when it unveils
a £17.5 billion capital-expenditure programme, one of the biggest in the UK corporate
sector. The debt-fuelled £3 billion-a-year plan, details of which will be given at an
investor day on Tuesday, represents a £1.5 billion increase on a previous forecast that
projected a total spend of £16 billion between 2006 and 2012. Having already invested
£5.4 billion in the past two years, the company now expects to spend £12 billion more to
upgrade gas and electricity networks here and in the US up to 2012. Chief executive Steve Holliday said the beefed-up programme reflected the need to
overhaul the UK’s gas and electrical-distribution grid.... National Grid expects to spend between £5 billion and £9 billion -
beyond the basic spending programme - over the next 20 years to hook up the new power
sources to the grid. Much of this will go on bringing
offshore wind farms onshore and managing the spikes and troughs of wind production. Holliday expects little trouble in raising the billions the programme
will require. About 95% of the company’s assets are regulated, meaning its returns
are set by the regulator and grow in tandem with the value of its assets. Investors see it
as a safe bet."
National Grid in £17.5bn upgrade
Sunday
Times, 5 October 2008 |
"'We have moved into a new
energy world. The volatility of the global oil price has had a major impact on the world
economy at the same time as we are obliged to make major cuts in CO2. It no longer makes
sense to have one department responsible for energy demand and another for energy supply.' This is how a senior UK government insider explained the widely praised
decision on Friday to create a new Department for Energy and Climate. Three factors were
in play, the insider said: uncertainty about future energy supplies and prices; the Climate Change Bill becoming legally binding with an
expectation that it will point to an 80% CO2 reduction by 2050; and the need to secure an international climate agreement. 'Our only
response to the combination of these is to bear down on energy demand,' the source said.
'So we have had to bring demand into the same place as supply.' The new department to be
headed by Ed Miliband will bring under the same roof the energy team from Berr (Department
for Business Enterprise and Regulatory Reform) and the climate team from Defra (Department
for Environment, Food and Rural Affairs)....Clearly, bringing together civil servants
under the same roof is no panacea. Some of the demands of energy security and climate
change will be very difficult to reconcile."
Marrying energy demand and supply
BBC Online, 3 October 2008 |
"The good news is that we are heading for a glut of natural gas.
After a couple of years of squeeze and soaring prices, the market is looking soggy and on
Tuesday the spot price tumbled, falling by more than 10 per cent, according to ICIS Heren,
the gas price assessor. .....Gas prices have been shivering for a while. We have new sources of supply, liquefied natural gas (LNG) is
arriving from Algeria at the Isle of Grain in Kent and more LNG from Egypt and Qatar will
soon be filling storage tanks at Milford Haven in Wales. More importantly, Norway is
delivering huge quantities of fuel through a pipeline across the North Sea. Prices should fall further, says Niall Trimble, of the Energy Contract
Company, a gas industry consultant who predicts a slump starting in 2009. Currently, the
futures market looks quite expensive, with gas in next year's first quarter at almost £1
a therm, falling to 75p in the summer. Mr Trimble points to emerging oversupply caused by
flat consumer demand and falling industrial demand. Manufacturing has moved to the Far
East and the high cost has deterred industrial consumers. New supplies from Norway are
killing price peaks and Mr Trimble reckons that gas will average 85p per therm this winter
and will continue to fall as low as 55p by next summer. New supplies from Norway are
killing price peaks and Mr Trimble reckons that gas will average 85p per therm this winter
and will continue to fall as low as 55p by next summer.... The bad news is that volatility
is likely to last because we are now at the mercy of importers and conditions in foreign
markets. The market's structure has changed: gas utility buyers once nominated volumes
under long-term contracts with North Sea producers at indexed prices. The spot market dominates in Britain, accounting for three
quarters of the gas sold and suppliers and importers are changing their behaviour,
reacting to fluctuating prices. For example, in
February last year the price plunged to 15p a therm and within days supplies of Norwegian
gas diminished, pushing the price back up to 20p a therm. Such speculative behaviour is
likely to increase; we are not only linked by pipeline to markets in continental Europe
but by increasing trade in cargoes of LNG. Algerian gas heading for the Isle of Grain can
change direction if the price in Massachussetts or Zeebrugge is better. Gas should get a
bit cheaper this winter, but not for long."
Gas glut will provide respite in volatile market
London
Times, 3 October 2008 |
"Councils face having to cut jobs and services over the next few
months to meet a £1billion deficit caused by inflation and soaring
food and fuel prices. A report from the Local
Government Association today will show that higher than expected inflation alone will lead
to a £500million shortfall in each of the next three years. Councils were given
three-year budgets from last April based on inflation running at 2.7 per cent, rather than
4.7 per cent as it is now. In addition, councils have already had to spend £374million
more than expected in fuel costs and £80million more on school food, the report
says."
Local Government Association report reveals £1bn councils shortfall
London Times,
3 October 2008 |
"The International Energy Agency (IEA), a watchdog for rich
countries, expects LNG trade almost to double between 2006 and 2015, to 393 billion cubic
metres a year. But regasification capacity is growing much faster. Existing terminals can
take in 617 billion cubic metres a year, says the IEA, and others under construction
should increase that to 846 billion cubic metres by 2010...Most
LNG is still sold under long-term contracts that underpin the huge investments required
for liquefaction plants. But the surfeit of regasification capacity has created
opportunities to divert cargoes to the most lucrative market. Last year, for example, an earthquake in Japan forced the closure of
several nuclear plants, leading to a surge in demand for gas for power generation. Several
LNG shipments were diverted from the Atlantic to Asia to take advantage of the higher
prices on offer there. As a result, the number of shipments arriving at an American
terminal belonging to BG, a big gas firm, fell from 48 in the second quarter of the year
to one in the fourth....The prohibitive expense of building liquefaction plants will
prevent any completely speculative developments, says Umberto Quadrino, the boss of
Edison. But some global gas giants are committing to buy ever more LNG from liquefaction
plants without lining up subsequent buyers, which will let them sell it to the highest
bidder instead. The proportion of LNG in the hands of such middlemen will rise from 12% to
25% when all the plants now under construction start running, says Michael Stoppard of
Cambridge Energy Research Associates, a consultancy.....Meanwhile, America has recently
reversed a steady decline in domestic gas production, thanks to new technology that allows
firms to tap previously inaccessible gas trapped in coal, shale and some types of
sandstone. Gas production in America grew by 4.3% last year, and by 9% in the first
quarter of this year. This unexpected spurt will delay America’s emergence as a big
importer of LNG by a decade, in Mr Stoppard’s view. And America is not the only
country with big reserves of “unconventional” gas. Firms in Australia and Canada
are rushing to adopt the same technology. Any country with lots of coal, including China,
India, Russia and much of Europe, should be able to increase gas output in the same way.
Several firms in Australia even plan to use such gas to make LNG."
A more liquid market
The
Economist, 2 October 2008 |
"Crude-oil prices may fall as low as $50
a barrel next year, about half current levels, in
the 'unlikely' event of a global recession, weighing on shares of petroleum producers,
Merrill Lynch & Co. said. Such a scenario, where global growth in Gross Domestic
Product falls to 1.5 percent, isn't the base-case forecast, the bank said today in a
report. Merrill cut its 2009 average price estimate
for West Texas Intermediate, the U.S. benchmark oil grade, by 16 percent to $90, citing falling demand and the start of new fields in Organization of
Petroleum Exporting Countries.... Oil demand growth in China and India, the world's
fastest- expanding major economies, may slow down in 2009, Merrill said. China's crude-oil
demand may rise by about 270,000 barrels a day, or about 3.4 percent, while India may
consume 40,000 barrels, or 1.4 percent, more crude a day in 2009, the bank said. India's
crude-oil use last year rose by 6.7 percent to 2.74 million barrels a day and consumption
in China climbed 4.1 percent to 7.85 million, according to BP Plc's Statistical Review of
World Energy 2008. 'Against our initial expectations,
some of the emerging markets are not keeping up either,' the Merrill analysts said. A
decline in prices to $50 would impede investment decisions on projects, said Anthony Nunan, assistant general
manager for risk management at Mitsubishi Corp. in Tokyo. 'You're already seeing some
delays because of the credit issues now,' Nunan said. 'Longer-term, this is bullish
because it adds to the already chronic supply problem.'...A 'string' of fields in Saudi Arabia, Qatar and elsewhere within OPEC is set to increase capacity within the exporting group by
about 3 million barrels a day in the next 18 months,
the analysts said. In addition, refinery expansions and new projects will add about
900,000 barrels a day of distillate and 700,000 barrels a day of gasoline production
capacity, they estimate. The long-term cycle for oil
prices 'remains intact' because of under-investment in the industry, the Merrill analysts, based in Sydney and Melbourne, said. 'We argue
that structural under-investment in the energy sector remains a key concern and once the
economy re-emerges from its current decelerating trend, energy demand will likely start to
strengthen and place upward pressure on prices that could structurally break above $150 a
barrel as economic activity recovers,' Merrill said."
Oil May Fall to $50 in Global Recession, Merrill Says
Bloomberg,
2 October 2008 |
"Cameco Corp will likely slow
down some of its smaller projects to control costs and preserve capital to get through the
current financial market crisis, the uranium
producer's chief executive said on Thursday. Citing credit markets that have become
'almost unavailable', CEO Jerry Grandey said the world's top uranium producer would
instead focus on progressing key projects, such as Inkai in Kazakhstan, Cigar Lake in
Canada and Kintyre in Australia, and a plan to raise U.S. production. 'Those projects that
are the ones that allow us to grow ... those are going to move forward,' Grandey said in
an interview. '(But) some of the nice-to-do projects will probably slow down,' he
said."
Cameco may slow small projects amid crisis
Reuters, 2 October
2008 |
"Wholesale electricity prices surged higher yesterday amid mounting
fears that the UK could face a supply shortfall next month. The forward price of
electricity for November hit highs of £133 per megawatt hour, up more than £10 since
Friday, when the same contract was trading at about £122.75. The price of power has risen
sharply since National Grid published figures last
week predicting an unusually thin margin between electricity supply and demand. For the
week starting November 10, National Grid gave warning that the margin of spare capacity
could be as slim as 0.8 gigawatts - the equivalent of one mid-sized coal-fired power
station or the electricity consumed by a city the size of Nottingham. 'The market is very close to its safety limit,' Andrew Horstead, of the
energy consultancy Utilyx, said. In an average week in March, the margin of spare capacity
is more than 12 times higher - about 10GW - rising to more than 16GW in July or August.
National Grid denied that there was a risk of domestic consumers facing blackouts next
month, asserting that there was a built-in cushion of capacity below the stated safety
margin. However, Mr Horstead said that the unexpected loss of a plant because of a
technical glitch could expose industrial customers to the threat of temporary power cuts. The warning has compounded fears
about the growing instability of the UK power network. Last
month National Grid was forced to issue three coded requests for power suppliers to bring
on extra capacity because of unexpected power shortages - the same number that was issued
during the whole of last year. The notifications of insufficient system margin, or NISMs,
were issued on September 4, 14 and 17. In May two relatively minor technical glitches
within two minutes of each other triggered the most serious disruption to Britain's energy
supply network in more than 20 years, producing blackouts that affected hundreds of
thousands of homes. Peter Atherton, a Citigroup utilities analyst, said that the squeeze
next month had arisen because a large number of ageing UK power stations were out of
service for maintenance - a growing trend in the industry. Three older nuclear plants
operated by British Energy at Hartlepool, Dungeness, in Kent, and Heysham, in Lancashire,
are undergoing repairs and are not scheduled to return to full service until the end of
the year. European rules restricting the use of some of Britain's biggest coal-fired power
stations are an additional factor. Seven of the UK's older, more heavily polluting coal
plants are set to close by 2015 because they do not meet tough new emissions standards
under the European Union's Large Combustion Plant Directive. That will amount to the loss
of nearly 12GW of generating capacity of a total of about 80GW. Peak demand averages about
62GW. Strict limits govern the number of hours these plants can operate before then. The
rules have increased instability in the network by reducing the margin of spare capacity
and the ability of the National Grid to respond rapidly in times of crisis."
Wholesale price of electricity surges amid fear of supply shortfall
London
Times, 2 October 2008 |
"...there are [energy] constraints on the supply side
– either because access is restricted like in oil markets or because trading isn't
fully developed like in coal markets. As long as there is no global economic recession and
growth remains relatively strong, this mixture will be the background....the
oil market, for example, has only two million barrels of spare capacity at the moment
and operates at almost full capacity. So every little interruption causes these violent
reactions, and we should see volatility increase in the short term, because the market is
dominated by a cartel and because the cartel has the only free spare capacity, we should
also expect this to be possibly downwards. We saw [a downturn in demand for oil]
already in 2007 and 2008, and independent of the financial crisis, when oil demand fell in
the OECD. It only increased in two groups of countries: the oil-exporting countries and
the fast-growing emerging market economies, mostly in Asia. The consumer in OECD countries
was the first to get squeezed out, and this was before the financial crisis. On top of
this we now expect some impact of slower economic growth.....We
have clearly seen evidence of demand destruction. At
the moment we are in a situation where we produce almost a million barrels per day
more than a year ago, and where demand is almost a million barrels per day less
than a year ago. It's most visible in the US,
where August demand slowed by 830 thousand barrels per day due to lower demand in
transportation.....demand
forecasts are coming down everywhere, and we should expect oil demand growth in 2008 to be
no more than 500,000 barrels per day, maybe less, which is much lower than historical
standards. And next year who knows, it depends on economic developments....global demand overall increased
last year. It fell in OECD countries but increased in non-OECD countries more than it
decreased in OECD countries. So it will depend on the global economic outlook and on
countries such as India, China and so on....It's very important to understand
that according to everyone who looks at this market: speculation is not driving
prices. Financial investors are no fools. They observe the same kind of market
fundamentals and interactions as we do, and then they invest. They jump on the train
but they don't determine the direction of the train.
Last year when oil prices went up so much, it was in the wake of OPEC cuts, and
undiminished large demand in a period of record economic growth in developing countries.
Financial speculation was a consequence of that tight situation but it was not a cause of
it. But investors always have the capacity to
accelerate or decelerate price movements. This is what happens now. Last year they accelerated it by investing en masse. Oil markets are no
different from other markets – as soon as investors have a one way bet, existing
movements can be accelerated. Now, after the market realised that OPEC is producing
more and demand is falling off, and prices accordingly go down, this will probably be
accelerated by investors.....There is enough oil if you're willing to accept the costs
– including the environmental costs for sources like tar
sands.There is an access problem. Which means that
on the back of these high prices it becomes more and more difficult for oil companies to
go and do what they do best, which is to, in response to high oil prices, maximise
production.One has to recognise that that is a potential problem, because the reaction to
high oil prices is different between companies and governments. Oil companies will
try to maximise output to maximise profits when oil prices are high, and they will do so
in competition with each other even to their own long-term detriment, meaning even if
they create excess capacity and economic cycles. A government is different in that it
will try to maximise the long-term revenues from its rent. You will hardly ever see
governments engage in price competition with each other. And they will try to keep all the
rent in their countries, meaning limiting access to foreign companies, and all of this
slows down the investment rates.We now live in a world where a cartel no longer controls
40% of production, the cartel makes movements and the rest of the world reacts. Now there
is another 40% to 50% controlled by governments in one form or another, and that slows
down the supply response. But that is an above ground problem, a political problem, which
means that we cannot invest in many countries. Latin America and Mexico are examples.
Russia is another example....Renewables are still not important enough to play a role in
the global energy balance but they do play an increasingly important role
locally. The global production of ethanol last year was equivalent to only 0.7% of
global oil production. Now 0.7% is not enough to relieve these tense markets or to
sway them one way or another, but if you look at the main producing countries –
Brazil and the US – then it is enough to make a difference in gasoline
markets and in refining.If you look at power generation from wind, solar and geothermal,
it is somewhere between 1% and 1.5% of global power generation. Again, it's not enough to
make a major difference for carbon emissions, but it is enough to make a difference
locally – Portugal, Spain, Denmark and Germany – these all have more than 10% of
their national electricity produced from renewables, and in the OECD as a whole I
think it's more than 10%."
Christof Rühl, chief economist BP
BP: 'We should see volatility increase'
EurActiv.com, 1 October 2008 |
"Crude oil prices fell Wednesday on news that U.S. demand for
gasoline and oil both fell in September. The Energy Information Administration said domestic oil consumption had declined 7.1 percent in September,
compared with 2007. Gasoline consumption also
declined, down 4.5 percent, EIA said. 'Demand is just terrible,' Tom Bentz of BNP Paribas
Commodity Derivatives told The Wall Street Journal. 'That's what's been behind the sell
off,' he said."
Crude oil prices fall as demand slips
United
Press International, 1 October 2008 |
"Russia’s nuclear industry has enough uranium reserves for 60
years ahead, even with taking into account the new nuclear plants that haven’t been
constructed yet, said a top-ranked source with Russia’s state corporation Rosatom.
'Even if not a single kilogram of uranium is sold to us,' the source specified. 'The state
corporation has piled up heavy stocks of the natural uranium at storage facilities.
Besides, we are firmly the third worldwide in explored reserves of uranium… We have
good potential for developing deposits in Kazakhstan, where they have big reserves of
uranium and where its mining is much cheaper than in other regions of the world. We intend
to develop uranium fields in other states, where it is economically profitable for us, and
we have taken definite steps already,' the source said, adding that 'we have excessive
capacities of uranium enrichment for energy purposes and we want to remain open to clients
that are willing and can buy uranium to advance their nuclear energy industry but cannot
enrich it themselves.'”
Russia Has Enough Uranium for 60yr
Kommersant, 26 September 2008 |
"Oil prices should ease in coming months but extreme weather
conditions and labour disputes in the industry could create new supply bottlenecks, the
head of the international energy agency (IEA) said on Monday. However, no dramatic
bottlenecks were to be expected between now and 2010 because oil supply was relatively
generous compared to demand, IEA Executive Director Nobuo Tanaka said at an event on
renewable energy sources in Berlin. But after 2010,
and above all after 2013, the situation would become more difficult because there was no
immediate prospect of new reserves coming on to the market and this would affect prices, he added. 'The era of low prices is over,' he said."
Oil prices to ease - IEA chief
ArabianBusiness,
29 September 2008 |
"A Canadian plan to ban the
export of tar-like bitumen from the Alberta oil sands to countries that do not match
Canadian efforts to cut emissions of greenhouse gases could affect shipments to Asia, Prime Minister Stephen Harper said on Friday. Canadian company Enbridge
Inc is proposing to build a pipeline to Canada's west coast from Alberta to allow oil
sands derived crude to be shipped to Asia. Asked by reporters whether the plan could
affect future exports of bitumen oil to Asia, Harper replied: 'Well, it could, it
absolutely could.'"
Canada says oil sands exports to Asia could be hit
Reuters, 26
September 2008 |
"ConocoPhillips, the second-largest U.S.
oil refiner, and Calgary-based EnCana Corp. began construction this week on a $3.6 billion Illinois
refinery expansion to boost Canadian heavy-oil processing. The Wood River refinery will
more than double its capacity to refine heavy oil from Canada's
oil sands into fuels such as gasoline and diesel to
240,000 barrels a day in 2011, EnCana said today in a statement. Crude-oil processing
capacity at the plant will increase 16 percent to 356,000 barrels a day. The venture
between the companies plans to more than double total heavy-oil production from Canadian
tar sands to 180,000 barrels a day by 2012, EnCana said. Foundation-piling installation at
Wood River, near St. Louis, began this week after the project received U.S. regulatory
approval, EnCana said. The expansion includes a 65,000 barrel-a-day coker to process the
tar-like oil. Output of so-called clean products with less pollution will rise 32 percent
to 330,000 barrels a day and production of asphalt, a cheaper product, will be eliminated.
Canadian oil sands contain as much as 173 billion barrels of economically recoverable oil,
a reserve second only to that of Saudi Arabia, according to the Canadian Association of
Petroleum Producers. The group has forecast that
production will rise to almost 4 million barrels a day in 2020 from 1 million barrels now."
ConocoPhillips, EnCana Start U.S. Refinery Expansion
Bloomberg,
24 September 2008 |
"Crude-oil supplies to China
from Kazakhstan via a cross-border pipeline may rise 30 percent this year as energy demand increases in the world's fastest-growing major economy.
The China-Kazakh pipeline may transport 6.5 million tonnes of crude from the Central Asian
country this year compared with 4.77 million tons in 2007, Guo Yi, vice president of
PetroKazakhstan, a unit of China National Petroleum Corp, said. The oil link will
reach its full annual capacity of 10 million tons by October 2009 once China National
Petroleum finishes building a branch pipeline from Kenjiyak to Kumkoil in Kazakhstan, Guo
said."
Kazakhstan to boost crude supply to China
Bloomberg,
24 September 2008 |
"Crude oil fell after a government report showed that U.S. fuel
consumption declined. Fuel demand averaged 19.5
million barrels a day during the past four weeks, down 5.3 percent from a year earlier, the Energy Department said today in a weekly report. Oil and gasoline
supplies dropped as refineries cut operating rates to the lowest in at least 19 years, the
department said."
Crude Oil Falls After Report Shows U.S. Fuel Consumption Drop
Bloomberg,
24 September 2008 |
"BHP Billiton, the world's largest mining company, is positioning
itself to supply China with uranium for 'decades'' as the country ramps up its nuclear
plant program in a carbon conscious world...BHP Billiton's Olympic Dam copper, gold and
uranium mine in South Australia, about 560 kilometres north of Adelaide, houses the
world's largest known uranium resource. The company supplies uranium to utility customers
in the United Kingdom, France, Sweden, Finland, Belgium, Japan, South Korea, Taiwan,
Canada and the United States. BHP Billiton does not have any supply contracts with
China.... Olympic Dam produced 4144 tonnes of uranium
in the 2007/08 financial year, with the company investigating a potential expansion of the
mine, which could increase annual output to 19,000 tonnes. In its annual report today, the company unveiled a 22.6% upgrade in the
uranium reserves to 283,800 tonnes and a four per cent increase in resources to 2.33
million tonnes."
BHP wants to sell uranium to China for decades
Australian
Associated Press, 24 September 2008 |
"Kazakhstan has the support of leading companies to create an
international uranium exchange that would help set a transparent market price, a top
Kazakh industry official said on Thursday. Kazakhstan is home to a fifth of global uranium
reserves and wants to surpass Australia and Canada to become the world's top producer in
two years. Its economy heavily dependent on oil, Kazakhstan also sees uranium was a way to
diversify. Mukhtar Dzhakishev, head of Kazakh uranium company Kazatomprom, said global
companies such as France's Areva, Cameco Corp and Russian firms had largely agreed to his
proposal to set it up as soon as next year..... Kazatomprom
expects to produce 8,800 tonnes of uranium this year, rising to 11,000 tonnes in 2009 and
by 2010 it forecasts 15,000 tonnes. By 2015-2016 it expects to produce 27,000 tonnes to
fill the shortfall in the market. Demand for uranium
is booming as China, India and Russia build new reactors, and the West seeks to diversify
energy sources and reduce greenhouse gas emissions."
Kazakhstan says wins support for uranium exchange
Reuters, 18 September
2008 |
"Today the V International Scientfic-Practical Conference 'Current
problems of uranium industry' opened in Almaty. The organizer of the event is the National
Atomic Energy Company 'Kazatomprom', with participation of LLP 'Institute of high
technologies', Kazinform reports.According to the President of 'Kazatomprom', Mukhtar
Dzhakishev, the conference is held in the age of the so-called 'nuclear renaissance', when
the world is taking the widespread interest in the development of atomic energy. Problems
of impending deficit in natural uranium, conversion and enrichment processes, production
of fuel assemblies and capacities for the construction of reliable and safe atomic
stations can not be resolved by one country. In order to avoid a global deficit of energy,
issues of development of all links of the nuclear-fuel cycle must be resolved by means of
widescope international cooperation. M. Dzhakishev
noted that starting from 2015-2016 the deficit in natural uranium will start to grow. 'Kazakhstan sets an ambitious task to supply atomic energy with the
maximum amount of uranium which we can extract. This program was announced a long time
ago', - underlined M. Dzhakishev. Over 280 leaders of industrial enterprises, scientists
and specialists from 8 countries of the world – Russia, Japan, France, Czech
Republic, Germany, Australia, Uzbekistan, Kyrgyzstan and Tajikistan – take part in
the conference. The need to organize this conference was justified by the ambition of the
world nuclear companies to unite efforts in the scientific and technical sphere as well as
by Kazakhstan’s responsibility before the world community as the largest uranium
producer."
Kazakhstan sets a task to supply atomic energy
Kazinform, 18
September 2008 |
"The
UK will experience prolonged power cuts in about five years unless urgent action is taken
now, a report warns. It said a third of generation capacity was due to be decommissioned
by 2020, but was not being replaced fast enough. The
report, by nuclear supporting Fells Associates, said new
reactors would not be ready in time, and questioned
spending on renewable energy. Energy Secretary John Hutton said the report overstated the
risks and that the issue was a national priority. The report was commissioned by
Sheffield-based industrialist Andrew Cook, who voiced concern about a 'fearful void' in
energy policy. The report - A Pragmatic Energy Policy for the UK - was compiled by Fells
Associates, a network of energy and regulatory specialists. Co-author Candida Whitmill
said the so-called 'energy gap' would also have severe economic consequences. 'The current
credit crunch is a head cold compared to the double pneumonia this country will suffer if
we don't implement an energy policy urgently,' she told reporters. 'That is why security of supply now takes priority over everything, even
climate change. If we are going to cope with climate
change, it is going to cost money; if we want to protect the environment, it is going to
cost money; and if we want to change to a low-carbon economy, it is going to cost money.' The report identified a number of factors that would combine to
create the energy gap. It said the main impact would be the loss of 23 gigawatts (GW) of
electricity generation capacity between now and 2020. The UK's ageing nuclear reactors,
which currently provide about a fifth of the nation's electricity, are set to be
decommissioned over the coming years. Current projections show that by 2023, the UK will
have only one nuclear reactor in operation. And an EU Directive that requires the most
polluting coal- and oil-fired power station to close would result in the likely loss of a
further 12GW generation capacity."
Britain 'faces power cuts threat'
BBC Online, 17 September 2008 |
"One of Britain's biggest investors will launch a campaign this week
to persuade Shell and BP to drop their plans for heavy investment in oil sands and shale
projects in North America. Co-operative Asset Management is concerned that the huge
environmental costs of producing crude from oil sands or shale could change the economics
of these so-called 'unconventional' fuel sources, putting the oil companies and their
investors at risk of a huge wasted investment. Paul Monaghan, head of sustainability and
social goals at the Co-op, points to research showing that extracting
oil from shale creates eight times as many emissions as conventional oil production, while
oil sands produce three times as much. While these
sources are economic at current oil prices, a fall in crude or a rise in the price of
carbon under the trading system could make them much more expensive. 'The worry is that,
within five years, it will be unstoppable,' said Monaghan. 'I think it is stoppable now.'
The Co-op will enlist the support of other large institutional investors at a seminar
outlining the issues this week. Niall O'Shea, a responsible shareholding analyst, said:
'We believe that companies investing heavily in unconventionals are too focused on
short-term profit and their strategy is too defensive. They
are becoming increasingly expensive to produce.'
Shell is already committed to a $16bn (£8.9bn) project aimed at generating 15 per cent of
its production from unconventionals, while BP's investment is around $6bn. The amount of
oil available is huge - the Canadian sands alone, situated largely in the province of
Alberta, have around twice the total reserves of Saudi Arabia. The companies say that the higher emissions will be mitigated by
carbon capture and storage schemes, but O'Shea says these will not be in operation until
2020. 'Oil sands [production] will be out long
before that.'"
Abandon oil sands, urges big investor
Observer,
14 September 2008 |
"Total,
the French oil company, said on Thursday that oil prices had slipped to within sight of
the threshold below which some of its most expensive projects will no longer be
commercially viable. Total’s extra heavy oil
sands project in Canada requires an oil price of just below $90 a barrel to achieve a 12.5
per cent internal rate of return, while Total’s developments in the deep waters off
Angola need about $70 a barrel, the company revealed
in a mid-year presentation. International oil prices on Thursday traded at $102.10 on the
New York Mercantile Exchange....Richard
Lines, head of petroleum economics at Wood Mackenzie, the industry consultants, said
companies were making the same internal rate of return on big, capital intensive projects
at $100 a barrel as they were four to five years ago at $40 because costs had risen so
dramatically and fiscal terms deteriorated. Mr de Margerie said: 'It is our [challenge] to go into areas to spend
money where there are concerns about climate change.' He noted many oil fields that are
cheaper and less environmentally damaging to tap were becoming off limits to international
oil companies because countries wanted to develop them on their own or leave them for
future generations. That lack of access has driven Total, and many of the
world’s biggest energy groups, into the Alberta oil sands, a mining operation
requiring large amounts of energy and water. Total and its peers are unlikely to abandon
it because of a short-term drop in the oil price but Mr Lines notes that the final
investment decisions in Alberta over the next two to three years would be made more
difficult at current oil prices. In fact, the number
of developments worldwide given the go-ahead has shrunk as costs have risen, he said. 'Few
projects have been given final investment decisions over the last two to three years
because their economics have been so marginal and the overall risks have gone up,' adding this would impact the amount of oil supply in the market."
Oil price fall may squeeze project profitability
Financial
Times, 12 September 2008 |
"Runaway costs
and an acute shortage of skilled workers are putting future oil developments at risk and
could keep upward pressure on the oil price, the chief executive of Total said yesterday.
Christophe de Margerie said that key projects planned by the French oil multinational
could fall below acceptable rates of return if oil prices continued their sharp
decline. .... According
to Total, the price at which oil achieves a return of 12.5 per cent has risen from less
than $20 a barrel in 2004 to $70 a barrel today. 'We need a price of $70 per barrel
to make it work in Angola,' Mr de Margerie said. 'For heavy oil, it is not far off $90 per
barrel.' His comments came as the price of Brent
blend, the benchmark crude oil, sagged below $100 a barrel yesterday.... Deep-water oil
exploration, such as Total's projects in Angola and the recent large discoveries by
Petrobras in Brazil, have been hit by the soaring cost of steel contracting and the lease
rates on high-tech drillships, which has risen to more than $500,000 (£286,000) a day.
Analysts estimate that the value of Iara, a giant discovery announced yesterday by
Petrobras, will be only $5 a barrel because of the heavy costs. 'It is one of the reasons
why oil prices probably won't come down,' an analyst for a leading investment bank said.... Mr de Margerie said he expected that global oil output - 87
million barrels a day at present - would continue to be constrained by politics and
conflicts and would not rise to 130 million barrels per day (bpd) to meet demand
predictions from the International Energy Agency. He
said: 'We still keep our target that peak production will be below 100million bpd. The
figure we are using is much more 95 million bpd than 100 million.'"
Skills shortages could force up the price of oil
London
Times, 12 September 2008 |
"The discovery of another multibillion- barrel oilfield off the coast
of Brazil sent the share price of BG Group soaring yesterday as stock markets worldwide
focused on the emergence of a new Latin American petrostate. BG owns a quarter share of
Iara, the new find in the Santos Basin off the coast of Rio de Janeiro. Petrobras, the
Brazilian national oil company, which owns the majority share of Iara, said that the field
contained between three billion and four billion barrels of recoverable oil. The Iara find follows the discovery last year of Tupi, a massive
oilfield in the same licence area that might contain up to 30 billion barrels. Petrobras
estimated that between five billion and eight billion barrels of oil could be recovered
from Tupi.....Analysts were cautious yesterday
regarding the value of the new discovery, estimating that the present value of the future
barrels produced at Iara might be worth between $4 and $5 each, which, in share-price
terms, adds between 50p and 70p, even assuming an oil price of $100 a barrel. 'There is a
huge difference between oil in place and what you can get out of it,' one analyst said.
'We are talking about building installations in many thousands of feet of water, a hundred
miles offshore in the Atlantic Ocean.' Estimates of
the cost of the infrastructure needed to exploit the giant Tupi field are as high as $60
billion (£34 billion), and the excitement over the
finds in the Santos Basin has had political repercussions."
Shares in BG Group soar on discovery of Brazilian oilfield
London
Times, 12 September 2008 |
"A top-level delegation from
Opec will travel to Moscow next month to forge closer ties between the oil producers’
cartel and Russia. Speaking at a meeting of Opec oil
ministers in Vienna, Abdullah al-Badri, the group’s secretary-general, said that he
and other officials would hold a joint workshop with the Russians on global oil supply,
demand and market issues. Russia already attends Opec meetings as an observer and was
represented this week by Igor Sechin, the Deputy Prime Minister, who said that the Moscow
talks would focus on 'global energy security' matters and ensuring stable prices."
Opec plans closer links with Russia to control half of the world’s oil supplies
London
Times, 11 September 2008 |
"The economic downturn has prompted the Agency to lower its forecasts
for global oil demand by 100,000 b/d to 86.8 million
b/d during 2008 and 140,000 b/d to 87.6 million b/d during 2009. OECD stockpiles rose by an unseasonal 47 million barrels during July
giving some credence to the claim of overproduction in the face of faltering demand. The
IEA is still forecasting that the demand for oil will increase by 800,000 b/d in 2008 and
900,000 b/d in 2009 due to a four percent increase in demand by non-OECD consumers such as
China and India."
Peak Oil Notes - September 11
ASPO-USA, 11 September 2008 |
"The IEA cut its estimate for global oil demand this year and next on
Wednesday, saying consumers mainly in the United States are changing their lifestyles in
response to high prices. Oil demand in North America
'shrank for the seventh month in a row, by 2.9 percent year-on year in July,' the IEA said on the basis of preliminary data. Sharp revisions to June
data meant that North American demand in June fell by 5.3 percent on a 12-month
comparison. The oil price rise and economic slowdown had been 'devastating' for US
consumers. Overall North American demand, which grew
by 119,000 barrels per day last year, would fall by 748,000 barrels this year, it
forecast. The International Energy Agency's monthly
report, written before OPEC cut output by 520,000 barrels per day, said that OPEC supplies
had already fallen in August by 195,000 barrels per day....The head of the oil industry
and markets division at the IEA, David Fyfe, commenting on the OPEC decision, told AFP:
'Anything that removes supply from the system could be potentially difficult. That said,
market fundamentals have eased.' But commenting on the oil price, he said 'we would note
that 100 dollars per barrel is still pretty high in anyone's language' and 'removing
supply from the market may prove counter productive.' He said: 'There's a growing body of
evidence that high prices in conjunction with weakening economic conditions, are having an
impact on people's lifestyles which could last'...Global demand will still expand this
year and next, the IEA said, but it cut back its estimate of the growth by 100,000 barrels
per day this year and 140,00 barrels per day next year from its estimates only a month
ago. Economic slowdown and substitute energies were factors, and businesses were making
fundamental changes to the way they operated. 'Demand in the US may be poised for a more
permanent, rather than transient, downward trend,' the report said. 'Sustained high prices
and sluggish economic activity are arguably likely to reinforce the current wave of
structural adjustments, which could further reduce US consumption per capita in the medium
to long term. Anecdotal evidence of this transformation includes the marked shift to more
efficient vehicles, changing mobility and driving habits, signs that suburban living is
gradually losing its appeal, and ongoing modifications in business practices.' The IEA, an
offshoot of the Organisation for Economic Cooperation and Development (OECD), provided the
following data and estimates. World oil demand this
year would average 86.8 million barrels per day, an increase of 700,000 barrels per day or
0.8 percent from the 2007 level. Next year demand would total 87.6 million barrels per
day, an increase of 900,000 barrels per day or 1.0 percent from the 2008 level. But demand in the advanced OECD countries was expected to fall this year
because the impact of slowing economies and high oil prices 'was more marked than
expected, notably in the United States.'"
IEA Says Oil Demand Slowing As US Changes Lifestyle
Agence France Presse, 11
September 2008 |
"When and how global oil production will peak has been debated,
making it difficult to anticipate emissions from the burning of fuel and to precisely
estimate its impact on climate. To better understand how emissions might change in the
future, Pushker Kharecha and James Hansen of NASA's Goddard Institute for Space Studies in
New York considered a wide range of fossil fuel consumption scenarios. The research, published Aug. 5 in the American Geophysical Union's
Global Biogeochemical Cycles, shows that the rise in carbon dioxide from burning fossil
fuels can be kept below harmful levels as long as emissions from coal are phased out
globally within the next few decades. 'This is the
first paper in the scientific literature that explicitly melds the two vital issues of
global peak oil production and human-induced climate change,' Kharecha said. 'We're
illustrating the types of action needed to get to target carbon dioxide levels.'....To
better understand the possible trajectory of future carbon dioxide, Kharecha and Hansen
devised five carbon dioxide emissions scenarios that span the years 1850-2100. Each
scenario reflects a different estimate for the global production peak of fossil fuels, the
timing of which depends on reserve size, recoverability and technology. 'Even if we assume high-end estimates and unconstrained emissions
from conventional oil and gas, we find that these fuels alone are not abundant enough to
take carbon dioxide above 450 parts per million,' Kharecha
said. The first scenario estimates carbon dioxide levels if emissions from fossil fuels
are unconstrained and follow along 'business as usual,' growing by two percent annually
until half of each reservoir has been recovered, after which emissions begin to decline by
two percent annually. The second scenario considers a situation in which emissions from
coal are reduced first by developed countries starting in 2013 and then by developing
countries a decade later, leading to a global phase out by 2050 of the emissions from
burning coal that reach the atmosphere. The reduction of emissions to the atmosphere in
this case can come from reducing coal consumption or from capturing and sequestering the
carbon dioxide before it reaches the atmosphere."
NASA Study Illustrates How Global Peak Oil Could Impact Climate
NASA, 10
September 2008 |
"The
UK will have a low supply of stored gas this winter because countries in Asia and Spain
are outbidding us, according to leading energy companies. At an Ofgem conference in
London, E.ON, RWE's Npower business and British Gas owner Centrica said liquified natural
gas (LNG), which can be transformed for domestic use, is going to the countries who are
prepared to pay more. The UK is building more
storage facilities for LNG because its supply of gas from the North Sea is declining.
Cassim Mangerah, head of gas portfolio supply at Centrica, said it was not a waste of
money for the facilities to be built in the UK, but they would not be used to full
capacity this winter.' Supply of LNG is going to be tight, especially if we have a harsh
winter. 'But unlike countries like Japan, we have other sources of gas too,' he said. The UK gets a large proportion of its gas supply from Norway but
this is also volatile because there are no long-term contracts for importing gas. Mr Mangerah added that 'we see the level of Norwegian supply to the UK as
critical,' to UK gas prices this winter. 'Just because we have the capacity doesn't mean
we can attract the gas,' said Mark Owen-Lloyd, head of power trading at E.ON. The price of wholesale gas is likely to remain at current high
level throughout 2009, the experts said. Wholesale prices, which are closely linked to the
retail prices paid by consumers, have almost doubled along with oil prices in the past 12
months. Jon Page, head of energy marketing at RWE
Npower, said there was some evidence that consumer demand would decrease as energy bills
go up."
Britain is being outbid for gas on the global market, energy experts say
Daily
Telegraph, 10 September 2008 |
"The European parliament will tomorrow reaffirm binding targets for
biofuels in transport and for renewables in energy use in the face of growing political
resistance. MEPs on the parliament's key industry committee will set a mandatory target of
5% of biofuels in transport by 2015, rising to 10% by 2020....second-generation
biofuels would provide 1% of the overall 5% target and, in the second stage, 4% of the 10%
target. The original scheme was for biofuels to provide 5.75% of transport fuel by 2010."
Europe to reaffirm biofuels targets
Guardian, 10
September 2008 |
"Your excellent article on carbon capture and storage (CCS) projects
('How a new power station could make coal the fuel for the future,' Sept 9)
notes that the capacity of the pilot plant in Germany
is ten tonnes of carbon dioxide per hour. Put this into the context of global emissions
from all fossil fuels, which are half a million times greater, or five million tonnes per
hour. Even with full commercialisation, we will
therefore see in the future thousands of CCS plants worldwide injecting carbon dioxide
into thousands of depleted reservoirs of oil and gas, and even coalmines. With
hydrocarbons in greater abundance than is generally known, the stark choice will have to
be a curtailment of its use, unless linked to CCS projects, or other ways of using the
carbon dioxide to reduce life-cycle emissions of the feedstock. This will have to be
accompanied by numerous non-hydrocarbon developments, in nuclear, solar, wind, tide,
geothermal and biomass, and new ways of storing electricity and hydrogen. Time is running
out. There have to be bold, decisive actions at governmental and industrial level, rather
than dithering, which has characterised the lack of progress in the UK."
Richard Pike, Chief Executive, Royal Society of Chemistry
London
Times, 10 September 2008 |
"Carbon capture and storage is not the only solution to climate
change in the offing but it is regarded widely as the best. If
it can be made to work....Introducing CCS technology
would come with a financial cost: it is expected to add at least 20 per cent to the price
of electricity. Such a rise would, however, be about the same as that expected if enough
money were invested in renewable sources to reduce society's dependence on fossil fuels
significantly. Furthermore, Sir Nicholas Stern, in his seminal report on the costs of
climate change, calculated that if the world is to prevent temperatures rising by more
than 2C, the absence of CCS will increase mitigation costs by 60 per cent."
Analysis: The 'magic bullet' of energy supply
London
Times, 9 September 2008 |
"It has been condemned as one of the main causes of global warming
but is coal about to enjoy an extraordinary rebirth as the fuel of the future? The first power plant in the world that will take the toxic
emissions from coal and bury them deep in the ground opens today, carrying with it the
hopes of scientists and environmentalists around the world. If the power station in Spremberg, eastern Germany, is able to produce
affordable electricity without polluting the atmosphere, it could mark the start of a new
era for a fossil fuel whose days appeared numbered. Carbon capture and storage (CCS)
technology is designed to separate carbon dioxide from other chemicals during the process
of generating electricity and siphon it off to be buried safely in disused oil or gas
fields, where it can be stored indefinitely.... Adding CCS technology to power plants is
widely agreed to be the only realistic hope of making the necessary inroads into carbon
dioxide emissions without resorting to the politically unacceptable option of turning the
lights out. Fossil fuels are the biggest source of carbon dioxide emissions yet 80 per
cent of the world's energy depends on them. The
International Energy Authority calculates that CCS could account for almost a third of the
CO2 reductions needed by 2050. The official opening takes place today but the pilot plant
has been operating for more than a week. It captures about ten tonnes of CO2 each hour for
storage in an old gasfield."
How carbon capture and storage (CCS) could make coal the fuel of the future
London
Times, 9 September 2008 |
"Stressing the need to employ
new mining technologies, a top PSU official said India is likely to run out of its 60-70
billion tonnes of coal reserves by 2040-41 if the demand continues to grow at the present
pace. 'The demand for coal will reach two billion
tonnes mark by 2016-17. We need to grow at the rate of 17-18 per cent from the present 6-7
per cent to meet this growing demand,' Coal India Ltd (CIL) Chairman Partha S
Bhattacharyya said at the ICC Coal Summit here. 'We need to employ new mining technologies
to go deeper to explore the untapped resources, otherwise by 2040-41 our present coal
blocks will run out of reserves due to the growing demand from consuming industries,' he
said. 'The demand (for coal) by power sector for 2011-12 has been pegged at around 730
million tonnes but the production target for the 11th Five Year Plan is at around 680
million tonnes,' he said."
'India's coal reserves may exhaust by 2040'
Press Trust
of India, 8 September 3008 |
"Royal Dutch Shell is to become
the first western oil company to sign a deal with the Iraqi government since the US-led
invasion of 2003, agreeing a plan to capture and use gas in the Basra region that could be
worth up to $4bn. It also emerged on Monday that
Iraq’s oil ministry had written to oil companies saying it had abandoned its
controversial plan to award short-term technical support contracts to a small number of
them to work on its oil fields. Shell’s project is intended to make use of the gas
flared off by the oil industry in the south of Iraq. In that region alone, an estimated
700m cubic feet of gas is burned off every day for safety reasons: roughly enough to meet
the demand for power generation in the entire country. The Iraqi government wants Shell to
put in the infrastructure to capture that gas and make commercial use of it, both
domestically and for export. Assem Jihad, oil ministry spokesman, told the Financial Times
that following a green light from the cabinet, the ministry was inviting Shell to Baghdad
next month to sign the deal. 'Europe is looking for
supplies of gas from Iraq,' said Mr Jihad. 'Security
used to be a deterrent but now companies feel that security has improved and this will
encourage others to come in.' He added that the project would be run as a joint venture,
with Shell taking 49 per cent and the oil ministry 51 per cent. The length and value of
the contract have yet to be determined but reports in Iraq suggested it could be worth
$3bn-$4bn. Shell said: 'We are delighted with the government’s decision and look
forward to signing the agreement in the near future.' The Shell deal follows news last
month that Iraq had revived a big oil deal first negotiated between China and the
government of Saddam Hussein, for China National Petroleum Corp to develop the al-Ahdab
oilfield. That deal represented the first important commitment to Iraq by a foreign
company since its industry was nationalised in 1972. However, Iraq has cooled on its plan
to sign deals with a few western oil companies, including Shell, ExxonMobil and BP, to
offer technical support and advice on its biggest fields. Mr Assem said that after delays
and differences with the companies over the length of contracts, the ministry was now
inclined to bypass that stage and focus on longer-term development contracts."
Shell in Iraqi gas deal worth up to $4bn
Financial
Times, 8 September 2008 |
"China has secured Baghdad's
first post-Saddam Hussein oil deal by reviving a 1997 concession to exploit reserves on
the al-Ahdab field south of the capital. The two
countries are expected to formally sign an agreement later this month that will earn the
state-controlled China National Petroleum Corp (CNPC) a fixed price for every barrel it
produces in Iraq. While China opposed the Iraq war and stood back from post-war
rebuilding, Beijing has quietly outflanked its global rivals to grab a large slice of
Iraq's oil industry. The pioneers of its overseas quest for fuel are already exploring
vast tracts in the Kurdish north of the war-torn nation. With an extensive foothold in the
only part of the country where new oil wells have been built since 2003, Chinese firms are
already believed to have more personnel than their American rivals. America contested
every step of China's drive to expand its oil industry in central Asia and Africa for more
than a decade, viewing the push overseas as a boost for Beijing's diplomatic standing.
Beijing's success in the latest battleground represents a double blow for Washington whose
troops are still fighting daily for Iraq's security. With
the return of stability, Baghdad hopes that its output can triple to six million barrels
per day....As the American military presence in Iraq
shrinks, the al-Ahdab deal is one of a host of signs that Beijing is well-placed to rival
US ties to post-war Iraq."
China marches past USA to stake a claim to Iraq's oil
Sunday
Telegraph, 7 September 2008 |
"There are currently around 440 reactors operating and some 30
nuclear plants under construction in the world. China alone aims to expand output to
produce 60 gigawatt by 2020, from 9 gigawatts, and to meet this target it would have to
build four new reactors a year through 2015....This year and up to 2010 the market should
see a surplus of uranium, said analyst Max Layton at Macquarie Bank. But in 2011 the uranium market was seen turning into deficit, lasting
for three years as new reactor build would put pressure on demand via the ordering of
start-up material for reactors coming on-stream in 2014 and 2017."
Nuclear revival needs constructors to deliver
Reuters, 5 September 2008 |
| "A cyclist can travel 1,037km (644 miles) on the energy equivalent of
one litre of petrol.&q | |
