"I don't think  in the last two or three hundred years we've faced such a concatenation
of  problems all at the same time.... If we are to solve the issues that are ahead of us,
we are going to need to think in completely different ways."
  Paddy Ashdown, High Representative for Bosnia and Herzegovina 2002 - 2006

"Kazakhstan will produce 13,900 tonnes of uranium this year and 18,000 tonnes in 2010, state nuclear company Kazatomprom said on Wednesday, raising earlier forecasts. The Central Asian state became the world's largest uranium producer this year and has been responsible for the bulk of global output growth in the last few years."
Kazakhstan raises 2009-10 uranium output targets
Reuters, 30 December 2009

"Manufacturers increasingly are moving production back to Britain as shoddy quality and higher freight prices are undermining the cost advantage of producing goods overseas. A report into the state of the manufacturing sector by the EEF and BDO, the accountants, finds that one in seven companies surveyed had moved production back to the UK from abroad in the past two years Many British manufacturers have outsourced production to countries with lower labour costs, in Eastern Europe or Asia, in the past decade, a trend that has accelerated as an increasing number of British companies have fallen into foreign ownership. But higher freight, energy and commodity costs have increased the expense of production overseas, while the recession has put pressure on companies to re-evaluate decisions on location. According to the EEF, the manufacturers’ organisation, 14 per cent of companies have moved production back to the UK because cost savings have not been as great as expected. Other reasons were that the quality of goods was not up to standard and that the speed of getting products to market was not fast enough....The EEF reports that nearly seven in ten companies agree that the UK is a competitive location for their manufacturing activities. Two years ago only 43 per cent of companies surveyed were positive about the UK’s business environment for manufacturing."
Companies begin moving production back to UK
London Times, 30 December 2009

"The declining flow of oil from Alaska's North Slope is creating anxiety among executives who run the trans-Alaska pipeline. Within a matter of years, they say, they will need to take costly steps to preserve the life of the 800-mile-long line. If they aren't successful, ice and wax could become a serious problem for the pipeline, increasing the risk of corrosion and spills. Alyeska Pipeline Service Co.'s sense of urgency isn't because the North Slope is running out of oil. The Slope's producing oil fields still contain enough oil to supply the pipeline for at least several more decades. Many other oil prospects on land and in the ocean remain unexplored.  So what's the problem? In the 1980s, at peak oil flows, a barrel of oil made the trip from Prudhoe Bay to Valdez in four days. Now it takes 13 days. The slower flow causes the temperature of the hot oil to cool faster. At some point, the oil temperature will dip below the freezing point of water along certain segments, unless Alyeska reheats the oil inside the pipe. As it gets colder, ice and wax may coat the insides of the pipeline. The colder oil might also increase the risk of buried segments of the pipeline jacking up in the ground, company officials said. The problems have been building for decades and will only become more pressing as oil production declines further. For example, Alyeska, owned by BP, Conoco Phillips, Exxon Mobil and two smaller companies, used to launch devices to scrape wax -- a component of the oil -- out of the pipe's interior every several weeks. Now it's every four to seven days. While ice formation is not yet a problem in the trans-Alaska pipeline, it was the alleged cause of Prudhoe Bay's second-largest oil spill from a smaller pipeline a month ago.  Alyeska officials said they don't know yet how soon they will need to make major upgrades to the trans-Alaska pipeline to deal with the colder oil temperature and how much it will cost. They hope to have some answers by the end of next year, when they conclude a $10 million study of the problem. One thing they do know: New oil production from undeveloped oil prospects in the Arctic will not come on line soon enough to sidestep the problem....Among Alyeska's earlier projects to adapt to declining oil flow was its $500 million project, finished this year, to replace the pumps that move the oil to Valdez. That project was plagued with cost overruns and other mishaps. The new pumps are now configured to work when the pipeline is transporting as little as 300,000 barrels per day. This year, the pipeline moved roughly 700,000 barrels per day, one-third of its peak flow in the late 1980s....Alyeska officials said they can prevent reduced oil flow from harming the pipeline but they conceded their research is taking them into uncharted territory. 'There's very little information elsewhere in the world on running pipelines in the Arctic at low temperatures,' said Mike Joynor, an Alyeska vice president involved in the $10 million study..... Alyeska officials believe they may see problems more worrisome than wax as soon as five years from now. They say that when the flow rate drops to only 500,000 barrels of oil a day, the oil temperature at certain points along the route north of Fairbanks could dip below 32 degrees. The small amount of water suspended in the oil could settle out and form ice crystals. Ice that coats pipe walls could create a hospitable spot for corrosion. Ice chunks that could form might batter pump-station equipment, regulators worry. Also, during a long pipeline shutdown, ice could plug sections of the line, making it difficult to restart the oil flow.Another problem might appear 15 to 20 years from now when the pipeline is projected to be moving just 300,000 or 350,000 barrels per day. At that point, the oil would no longer heat the ground around the buried sections of the pipeline enough to prevent the pipe from jacking up during frost heaves.... Due to the uncertainty about oil prices and the North Slope's production decline, it's hard to predict when the oil companies will decide it no longer makes sense to run the pipeline. The increased cost of piping the oil to the Valdez tanker port is just one part of their decision-making. Ultimately, the companies will determine whether the oil fields are generating the financial returns they want, state and federal officials said.... Some state politicians pushing to cut the oil industry's state taxes recently warned the trans-Alaska pipeline could shut down as early as 2018. But state officials think that's extremely unlikely. They point to recent oil industry filings with the federal Securities and Exchange Commission that say the pipeline could remain viable as late as 2050."
Less oil may spell problems for pipeline
Tacoma News, 28 December 2009

“Until recently, China was a net exporter of coal. Now it is an importer. Chinese coal production will peak in five to ten years, if not sooner. Australia is by far the biggest exporter of coal in the world, yet total Australian exports of coal represent only five percent of Chinese consumption. It simply will not be possible for Australia or any other country to supply China with the quantity of coal required.”
Dr John L. Perkins, Senior Economist, National Institute of Economic and Industry Research, Melbourne, Australia
Association for The Study Of Peak Oil USA, 28 December 2009

"Venezuela and China gave a new boost to their thriving economic ties Tuesday, signing a package of agreements that advances China strategy of locking in access to the South American country's vast oil reserves. After two days of talks in Caracas, the China National Offshore Oil Corporation will help the government of President Hugo Chavez develop the Boyaca 3 oil block in the Orinoco-belt, a large heavy-crude basin in Eastern Venezuela. The move is part of Venezuela's efforts to increase oil sales to China to 1 million barrels per day from the 400,000 barrels per day it says it currently supplies. Under Chavez, Venezuela has tried to curb oil exports to the U.S. and searched for new markets. Despite his efforts, the U.S. remains the main destination for Venezuela oil, with sales averaging around 1 million barrels per day. The China National Petroleum Corporation also moved forward by securing access to another oil block in the Orinoco region that could eventually produce 400,000 barrels of oil per day. The Chinese oil titan also agreed to build a refinery with Venezuela that will process crude from a joint oil venture between the two countries that operates the Junin 8 block."
Venezuela, China Sign Oil Deals
Wall St Journal, 23 December 2009

"Even as Indians were preoccupied with carving up States and people across the globe were looking with scepticism at the climate jamboree in Copenhagen, quietly China made some more inroads into Central Asia. On Monday, December 14, the Chinese President, Mr Hu Jintao, opened a pipeline linking a gas field in Turkmenistan with his country's Xinjiang region. The 1,833-km pipeline, snaking through Kazakhstan, Uzbekistan and Turkmenistan, is expected to reach its full annual capacity of 40 billion cubic metres by 2012-13 and will fuel China's ever-thirsty growth engine....The China project diverts supplies from the long-delayed pipeline that the European Union wanted to build from Turkey to Central Europe. Sitting on some of the largest oil, gas and metals reserves, Central Asia is in the eye of a brewing geopolitical storm that Russia, China and the West are hoping will blow their way. Though the Western oil firms were quick off the block to grab assets in the region, particularly in oil-rich Kazakhstan, after the Soviet collapse in the 1990s, they have not been able to match China that has advanced billions of dollars in loans or in picking up energy assets....to Moscow's relief, China, unlike the Western powers, has neither sought regime changes or democracy nor military bases in Central Asia. All of these would have made Russia uneasy. As politics hots up, the Russian President, Mr Dmitry Medvedev, will head to Turkmenistan for energy talks."
China puts Central Asia on tap
Business Line (India), 21 December 2009

"To provide more clarity on investor and price behavior, the CFTC released two months ago historical data dating back to 2006 on investor holdings in major U.S. commodity markets. Wall Street banks such as JPM and Barclays ( BCS - news - people ) Capital , another commodities powerhouse, have studied that data and concluded that speculators have little to do with the price moves in at least oil, if not other commodities. JPM said its analysis showed most of the oil market volatility over the last three years was closely related to inventories of crude oil and movements in the U.S. dollar -- the currency that oil and most commodities are traded in. It said 96 percent of the variance in weekly oil prices between 2006 and 2009 was due to inventory shocks that occurred when crude stockpiles suddenly tightened or relaxed. The balance of four percent could be attributed to so-called speculation, or pure position changes by investors. 'Large changes in positions do indeed move the market, but ...those effects are only lasting if there is an economic justification for that shift,' JPM said. 'Further, we also find that managed money will often enter the market to anticipate changes in fundamentals, showing that the market is working efficiently.' And while conventional theory often had market positions and prices moving in tandem, the CFTC data showed the exact opposite happened during the height of the oil rally in 2008. 'During the 12 months from summer '07 to summer '08, when oil moved from $80 to $145, net positions were steadily falling as financials experts anticipated a worsening of the economic fundamentals behind oil prices,' JPM said."
Speculators don't cause oil price swings - JPMorgan
Reuters, 17 December 2009

"The Organization of Petroleum Exporting Countries raised the estimate for the amount of crude its members will have to pump next year as world consumption recovers. OPEC, which produces about 40 percent of the world’s oil, predicts members will need to produce 28.61 million barrels a day to satisfy demand in 2010. That’s about 100,000 barrels a day more than last month’s projection and represents an increase in 30,000 barrels a day from 2009, the first annual rise in three years. 'Following two years of sharp declines, world oil demand is expected to return to growth in 2010,' OPEC’s Vienna-based secretariat said in a monthly report e-mailed today. 'Fundamentals will continue to be weak in the first half of the year before improving in the second half.' OPEC committed to reducing supply by 4.2 million barrels a day in a series of meetings late last year to combat shrinking demand. Members including Kuwait, Algeria, Libya and Qatar have said they don’t think supply quotas will change when the group meets in Angola on Dec. 22 because oil prices remain at levels members consider satisfactory."
OPEC Raises Forecast Demand for Its Members’ Crude Oil in 2010
Bloomberg, 15 December 2009

"Almost three-quarters of the money spent on Britain and Europe's energy sectors by 2030 will need to go towards renewable power, according to the International Energy Agency (IEA). Dr Fatih Birol, chief economist of the IEA, said that 72p in every pound of new investment ought to be spent on clean energy, such as wind and solar, to hit current targets on global warming. The remaining 28p would be spent on nuclear and fossil fuels."
IEA: 72p of every pound invested in energy needs to be spent on renewables
Daily Telegraph, 14 December 2009

"China's President Hu Jintao has opened a new pipeline that will deliver gas from Turkmenistan to his country. He was joined by the leaders of the Central Asian countries through whose territory the pipeline passes. Analysts say the pipeline marks a major advance of Beijing's influence in the region and a step forward in its drive for increased energy security. The new pipeline also breaks Russia's long-standing stranglehold on Turkmenistan's vast gas supplies. 'China is positive about our co-operation and the opening of this gas pipeline is another platform for collaboration and co-operation between our friendly nations,' Mr Hu said. The pipeline is expected to deliver 40bn cubic metres a year to China by the time it is running at full capacity in 2013. This is about half of China's current demand, says the BBC's Michael Bristow in Beijing....Turkmenistan is nearing the completion of another pipeline to Iran, and expressed an interest in supporting the EU-backed Nabucco project. President Hu and Kazakhstan's President Nursultan Nazarbayev unveiled the Kazakh section of the pipeline in Astana on Saturday. It is Kazakhstan's first export route that does not go through Russia."
China president opens Turkmenistan gas pipeline
BBC Online, 14 December 2009

"Building wind farms is even more important for keeping the lights on than tackling global warming, according to the chief executive of E.ON Renewables. At the Copenhagen climate change conference, Frank Mastiaux, who is aiming to make wind and solar a third of E.ON's business, claimed that increasing emphasis on renewables made sense from a commercial point of view given the inevitability of rising oil, gas and coal prices. 'I believe climate is not the most credible argument first for renewables,' he told The Daily Telegraph. 'I believe it looking after the climate is vital. But as a company that provides energy as its core purpose, I have the supply element in the front of my mind. We've seen situations in Europe where shortage of gas creates panic in the market. 'More people want energy – more people on the planet and the planet will get under stress.' He made an appeal to those influenced by the so-called 'Climategate' emails, which appeared to show experts manipulating data to exaggerate the extent of global warming, to consider security issues. 'There are still climate sceptics out there,' he said. 'They should do the math: work out people on the planet versus resources and just get renewables on your patch as soon as possible.' Yvo de Boer, UN executive secretary for the climate change talks, also emphasised the importance of energy security as a reason for companies to look towards renewable energy. 'The best thing that happened for the climate was when Russia closed off the gas pipelines to Ukraine,' he said."
Wind farms for security not the climate, says E.ON Renwables chief executive Frank Mastiaux
Telegraph, 13 December 2009

"A joint venture between the UK's Shell and Malaysia's Petronas oil companies has won the right to develop Iraq's giant Majnoon oil field. A total of 44 companies took part in a bid for 10 fields in the second such auction since the invasion in 2003. Shell and Petronas beat a rival bid from France's Total and China's CNPC. Although Majnoon is a huge oil field, with reserves of 13 billion barrels of oil, it currently produces just 46,000 barrels per day. Shell and Petronas have pledged to increase that output to 1.8 million barrels per day. Their venture, which includes a 20-year service contract, will receive a fee of $1.39 a barrel. In June this year, a winning bid to develop an Iraq oil field received $2 a barrel. Also on Friday, a consortium led by China's CNPC was awarded the contract for Iraq's Halfaya oil field. The consortium also includes Malaysia's Petronas and France's Total. It requested fees of $1.40 a barrel of oil extracted from the field, and projected output would reach 535,000 barrels per day. Halfaya, in southern Iraq near the border with Iran, is a much smaller field with reserves of 4.1 billion barrels of oil. Two of the fields on offer at the auction, East Baghdad and the Eastern Fields, failed to attract any bids.  Iraq's known reserves of conventional oil rank behind only Saudi Arabia and Iran. Its daily output is relatively small - about 2.4 million barrels - but it aims to triple that over the next few years. It needs the expertise of foreign companies to reach that goal of reviving its oil industry, which has been battered by years of war and sanctions. As much of its oil is relatively cheap to extract, analysts suggest the potential profits for foreign companies could be huge. 'This is an opportunity without precedent anywhere else in the world. The scale of reserves available for development and exploitation is without equal,' Peter Kemp from Energy Intelligence told BBC News. 'That is something that no oil company... can ignore.' But as BBC World Service's economics correspondent Andrew Walker points out, there are serious drawbacks for foreign contractors, most obviously the issue of security. 'Iraqi politics and an uncertain legal environment are also complications, creating doubts about the soundness of some oil contracts,' he says."
Iraq oil development rights contracts awarded
BBC Online, 11 December 2009

"Chinese leader Hu Jintao will mark a new milestone in Beijing's quest for control over Central Asia's energy resources when he inaugurates a new gas pipeline from Turkmenistan next week. China has already stepped up its presence in the region by handing out billions of dollars in loans, snapping up energy assets and building an oil pipeline from Kazakhstan. The new pipeline will add natural gas to the resources China buys from the region, which was for decades dominated by Russia but is now also close to the West. Hu will visit Kazakhstan and Turkmenistan from Saturday to Monday, and in Turkmenistan he will attend the formal opening of a gas pipeline connecting China to Central Asia, Chinese Vice Foreign Minister Wang Guangya told a news conference in Beijing. Another official at the briefing said China was open to other energy projects in central Asia, where the former Soviet states have been looking beyond Russia for fresh markets. 'In the energy sector, China is pursuing diversification of energy imports, while the Central Asian countries are pursuing diversification of exports,' said Zhang Xiyun, director-general of the Chinese foreign ministry's department for European-Central Asian affairs. 'This kind of cooperation will naturally continue and has room to develop further,' said Zhang, who mentioned Central Asian reserves of oil, natural gas and uranium. China already receives Kazakh oil by pipeline and continued to increase its share of its production through acquisitions this year, including purchase of an 11 percent stake in state-controlled KazMunaiGas EP for $939 million. It also entered the booming Kazakh uranium sector in April, when China Guandong Nuclear Power Co (CGNPC) and Kazakh state nuclear firm Kazatomprom announced plans to lift uranium output from their joint venture. 'China, unlike many other economies, is growing and will continue to grow,' Kazakh central bank chairman Grigory Marchenko said at a briefing on Thursday. 'They need resources for that. Geographically, it is easiest and cheapest to get those resources in Kazakhstan. Our geography is our destiny.'"
China's Hu to woo Central Asia energy suppliers
Reuters, 10 December 2009

"The start of work on a giant gasfield in the Russian Arctic will be delayed because of cost and financing problems, according to Total, the French oil company, one of Gazprom’s partners in the $20 billion (£12 billion) project. The final investment decision for the Shtokman field, which will extract gas from beneath the Barents Sea, was to be taken in the next few months, but Arnaud Breuillac, Total’s vicepresident for exploration in Central Europe, said that the decision would not be taken until the end of next year. 'In the current conditions, it is absolutely normal that the project is taking more time than was initially planned. Projects on a scale such as Shtokman are coming up against difficulties in attracting finance,' he said. A collapse in the price of natural gas has put financial pressure on Gazprom and forced the company to delay investments. The start-up of another Siberian gas project, Bovanenko on the Yamal Peninsula, has been delayed until late 2012. Gazprom had insisted that Shtokman, a project targeted at the lucrative European and American export markets, was a priority, but the economics appear to have gone awry....Shtokman is among the world’s biggest unexploited gasfields. With 100 trillion cubic feet in reserves it could supply Britain for 30 years, but the resource is remote. The gasfield lies 500 km northeast of Murmansk in the Barents Sea. Plagued by icebergs and too distant from shore for helicopters, the problem of building offshore platforms and laying pipelines has been a financial and logistical headache for Gazprom, Total and StatoilHydro, the third partner. However, Shtokman is of great strategic importance for Gazprom, as the resource is earmarked for export to Northern Europe via Nordstream, the proposed Baltic Sea pipeline. Nordstream has strong support in Germany with an important investment by E.ON. The first gas shipments along the pipe, which will link Russia directly to Germany, bypassing Poland, were expected in 2013. A second stage of the project envisages exports of liquefied natural gas (LNG) to America with the construction of a gas liquefaction plant in Murmansk by 2014."
Economic chill delays work on Gazprom’s giant Arctic gasfield
London Times, 9 December 2009

"The world’s electricity industry will set out a plan on Tuesday for rolling out the technologies needed to cut carbon dioxide emissions, showing how ambitious plans to tackle global warming could be achieved.Electricity generation accounts for about a third of the world’s carbon dioxide emissions from energy use, which in turn accounts for two-thirds of all greenhouse gas emissions. This is one of the sectors in which deep cuts in emissions are most practicable – the technologies for producing electricity without emitting carbon dioxide are either in use or close to deployment. Europe’s electricity industry has already committed to going carbon-free by 2050. Electrification also offers the prospect of cutting emissions from other sectors. Electric cars look a better bet than biofuels for greening road transport. Electric heat pumps, which carry heat into the home, are an alternative to burning coal and gas for warmth. However, low-carbon power is going to be more expensive, at least initially, and will require a huge investment in infrastructure as well as a steep improvement in energy efficiency. In short, there will have to be an entirely new type of electricity grid.... Even so, any transition to carbon-free generation will take decades. Low-carbon technologies are generally more expensive than fossil-fuel plants: in the case of some, such as offshore wind, they are a lot more expensive. At the same time, power generation will not always be available. The British government, which is backing Europe’s fastest expansion of wind power, is building into its plans for 2030 a huge margin of spare generation capacity which can be used when there is no wind.  Managing demand will become crucial. Lars Josefsson, who is chief executive of Sweden’s Vattenfall, one of Europe’s biggest electricity companies, and president of Eurelectric, the industry association, says: 'The key to Europe’s low-carbon future will be on the demand side.' If power supply is inflexible, it is particularly important that demand is flexible to balance the grid. A higher cost of energy will make consumers more worried about wasting it. The electricity system will probably have to be based on a “smart grid”, which uses information technology to manage flows of power around the network. This would include smart meters – which show consumers how much energy they are using and also allow flexible pricing – devices in homes that can send information and receive instructions, and even smart appliances, that would switch off automatically when not needed."
Industry looks to green electric future
Financial Times, 9 December 2009

"Saudi Aramco, the world’s largest state-owned oil company, is drilling a record number of wells to find more resources and boost natural gas output to meet industrial demand, Oil Minister Ali al-Naimi said. Saudi Arabia’s state producer aims to discover a minimum 5 trillion cubic feet (142 billion cubic meters) of so-called non- associated gas reserves annually, he said at a conference in Dubai today. The country, which had gas reserves of 263 trillion cubic feet at the end of 2008, has opened areas for exploration in the south in partnerships with Royal Dutch Shell Plc, China Petroleum & Chemical Corp., known as Sinopec, OAO Lukoil and Eni SpA, al-Naimi said. 'We project that in 2010 proven reserves will be even higher,' al-Naimi said. The country is also increasing ethane production for the petrochemical industry and new facilities will add capacity to process about 400 million cubic feet of ethane a year by 2014, he said. Saudi Arabia is expanding and upgrading its oil and gas production and refining businesses at a cost of $100 billion to speed industrial growth and tap rising demand in Asia, al-Naimi said last month. Middle Eastern oil producers are turning to natural gas, a fuel previously burnt off as it was extracted along with crude, to fire the power plants needed to meet demand increases from growing populations and economies. Oil producers are also seeking to add new industries capable of using crude, gas and refinery byproducts."
Aramco Drills Record Number of Wells, Adds Gas Output
Bloomberg, 9 December 2009

"Fathih Birol, the chief economist of the International Energy Agency (IEA), believes that if no big new discoveries are made, 'the output of conventional oil will peak in 2020 if oil demand grows on a business-as-usual basis.' Coming from the band of geologists and former oil-industry hands who believe that the world is facing an imminent shortage of oil, this would be unremarkable. But coming from the IEA, the source of closely watched annual predictions about world energy markets, it is a new and striking claim. Despite repeated downward revisions in recent years in its forecasts of global oil supply in 2030, the IEA has not until now committed itself to a firm prediction for when oil supplies might cease to grow. Its latest energy outlook, released last month, says only that conventional oil (as opposed to hard-to-extract sources like Canada’s tar sands) is 'projected to reach a plateau sometime before' 2030.  Mr Birol’s willingness to acknowledge that conventional supplies may peak in a decade’s time points to a subtle shift in policymakers’ attitude towards the 'peak oil' debate. This debate is not about whether the supply of oil, a finite resource, could some day stop growing. Rather, it hinges on the timing of an end to increases in global oil production, and on what happens next. The most pessimistic peak-oil proponents think that global oil supply has peaked or is about to do so. Given projections of demand increasing well into the future, they fear economic disaster. By contrast, oil optimists like Cambridge Energy Research Associates (CERA), an energy-research firm based in Boston, argue that high prices will lead to improved technology that will enable oil firms to find new oilfields; make it economically feasible to extract oil under more challenging geological conditions or manufacture it from coal or natural gas; and increase the amount of oil that can be recovered from existing fields. This, they argue, will allow demand to be met for at least a couple of decades. After that, CERA reckons, 'supply may well struggle to meet demand, but an undulating plateau rather than a dramatic peak will likely unfold'. Until now official estimates from the IEA were far closer in spirit to those from the likes of CERA than the pessimists. Mr Birol’s statement suggests that the IEA has extended a tentative foot into the other camp. The reasons are not hard to find. After analysing the historical production trends of 800 individual oilfields in 2008, the IEA came to the conclusion that the decline in annual output from fields that are past their prime could average 8.6% in 2030. 'Even if oil demand were to remain flat, the world would need to find more than 40m barrels per day of gross new capacity—equal to four new Saudi Arabias—just to offset this decline,' says Mr Birol. A daunting task."
The peak-oil debate - 2020 vision
The Economist, 10 December 2009

"China is driving ahead with an ambitious programme to expand its atomic energy capacity over the next decade, raising questions about its ability to find the uranium it will need, at home or abroad. Total capacity reached 9.1 gigawatts by the end of 2008, and the government fully expects to hit its official 40 gigawatt target well before the 2020 deadline. China currently operates 11 reactors and has 17 under construction, but has 124 more on the drawing boards, according to industry group the World Nuclear Association (WNA). The expansion programme will cause its demand for uranium to rocket 10-fold by 2030, making it the world's second biggest consumer of the radioactive metal following the United States, according the WNA forecasts. Zhang Guobao, the country's senior energy official, has repeatedly stated that China intends to raise the bar 'by a large margin', and those in the know believe it should easily smash its existing targets....Concerns have been raised about the availability of sufficient fuel to feed the growing demand in China and elsewhere, but Pan discounted any immediate problems. He claimed there was 'absolutely no problem' finding the uranium to run 40 gigawatts of capacity, either within China's borders or through overseas acquisitions. Over the longer term, however, others concede that acquiring enough of the key ingredient in nuclear power generation could be a big challenge. 'The uranium market in the future faces a lot of uncertainties with not a small supply shortage,' said Zhou Zhenxing, who heads the uranium development unit at the China Guangdong Nuclear Power Corporation (CGNPC), the second of China's big nuclear firms....The need to feed such growing capacity has required the two state-owned giants to hunt the globe for new sources of fuel -- with CGNPC chasing uranium reserves in Kazakhstan, Uzbekistan, Australia and Namibia, and CNNC signing deals to explore and develop in Mongolia and Niger. China has been developing its own uranium mines since the 1950s, mainly in the remote northwest. But total output is a state secret, and it is unclear whether it will be enough to power the dozens of reactors due to go online before 2020. According to figures from the China Nuclear Industry Association, China has currently developed only a third of the uranium required to fuel 40 gigawatts of capacity by 2020, and exploration needs to be stepped up if China wishes to avoid being exposed to the volatile foreign market. 'The exploitation rate of Chinese uranium mines is actually very low right now, so there is room to improve the supply volume,' said He Kun, a professor at the Nuclear and New Energy Technology Research Institute at Tsinghua University. Zhou of CGNPC said his company alone would need more than 10,000 tonnes of uranium per year by 2020. With CGNPC likely to control about half of China's nuclear capacity by then, that would put total annual demand at around 20,000 tonnes, a massive increase on the 769 tonnes produced in 2008, according to World Nuclear Association estimates. Pan of CNNC conceded that there was an urgent need to develop new mines for the longer term."
China struggles to fuel its nuclear energy boom
Reuters, 10 December 2009

"Nearly one in 10 U.S. households runs on power from Soviet nuclear bombs. Now Russia hopes its Cold War arsenal, twinned with fast-growing uranium mines and enrichment capacity, will also be powering China, India and other booming economies when a 20-year nuclear fuel pact with the United States expires in 2013. Russia has expressed no desire to refresh the 'Megatons to Megawatts' programme, under which it will recycle the equivalent of 20,000 nuclear warheads and create enough uranium to power the entire United States for two years. Instead, the Kremlin is pursuing lucrative deals to supply fuel directly to power firms in the U.S. market, home to more than a quarter of the world's nuclear power generating capacity. Russian supplies from old warheads are currently key in the global uranium market, accounting for 13 percent of world supply, helping fill a gap from mined output. Analysts expect recycled Russian supplies to continue to flow after the U.S. deal expires in 2013, but falling to around two-thirds of present levels. 'Russia wants to expand its nuclear presence all over the world,' said Marina Alexeyenkova, analyst at investment bank Renaissance Capital. 'The economics of the 20-year contract to reprocess weapon-grade uranium are not so attractive to Russia.' Russia, holder of a tenth of the world's uranium reserves, is positioning itself as a major player in meeting growing demand from the nuclear power industry. The country already has a 15 percent share of the global reactor-building market. The expiry of the post-Cold War partnership with the United States, which is expected to earn Russia more than $8 billion, has fuelled concerns about a looming supply shortfall. But Russia has not shunned the U.S. market and its 104 reactors. Instead, it has this year signed a succession of deals to supply fuel directly to U.S. utilities, including PG&E Corp (PCG.N), Ameren Corp (AEE.N), Exelon Corp (EXC.N) and Luminant. [ID:nL31032609] The first deals prompted Sergei Kiriyenko, the former prime minister who now heads state nuclear giant Rosatom, to say Russia had 'broken through the wall' forbidding independent sales of Russian fuel to the U.S. market. They also effectively end the monopoly of U.S. government agent USEC Inc (USU.N) on imports of Russian uranium..... Analysts say direct deals could ultimately be more profitable for Russia than the existing programme, which was set up in 1993 to encourage a country still rebuilding after the Cold War to extract and use fuel from dismantled warheads. Russia is also seeking routes into other developed markets through partnership with companies such as Japan's Toshiba (6502.T) and Germany's Siemens (SIEGn.DE), as well as building a share of emerging economies in Asia. 'The Chinese market is booming, with plans to build over 70 new reactors by 2030. For Russia, it's strategically important to fix contracts in this particular market,' Alexeyenkova said. Max Layton, analyst with Macquarie Securities in London, said global supply concerns related to the expiry of the Russian-U.S. agreement were overplayed. 'The Russians will use it, sell it to the Chinese or sell it as part of other reactor packages,' he said. 'From a (global) supply-demand balance perspective, it doesn't matter whether they sell it to the U.S.'"
Russia looks beyond U.S. to conquer uranium markets
Reuters, 10 December 2009

"Vast coal deposits lying deep beneath the North Sea will be burnt in situ to generate up to 5 per cent of Britain’s energy needs, under new plans approved by the Government last week. The UK Coal Authority has awarded licences to Clean Coal, an Anglo-American company, to develop five offshore sites for a technology called Underground Coal Gasification (UGC). The method, which has not been used on a commercial scale in the UK, although it is widely used in Australia, taps the high energy content of coal while doing away with the costly and labour-intensive need to mine it first. Rohan Courtney, a former director of Tullow Oil who is chairman of Clean Coal, said that the potential for the technology was enormous. 'There are enormous amounts of coal lying beneath the North Sea which have never been accessed,' he said. 'This technology is going to open up the industry again in the UK.' The sites approved for use stretch up to 10km offshore from Sunderland, Grimsby and Cromer on the shores of the North Sea, Canonbie, near Annan in Dumfries and Galloway on the other side of Scotland, and Swansea Bay, outside the entrance to the Bristol Channel. The combined coal reserves are estimated to be at least one billion tonnes, equivalent to more than one sixth of all the coal consumed in an average year around the world. Global consumption of coal is about 5.8 billion tonnes a year. Total consumption in the UK is about 80 million tonnes a year. The technique uses two bore holes drilled into a coal seam. The injection well is used to ignite the coal and keep it burning by pumping down oxygen to supply the fire. The other is used to extract a methane-rich synthetic gas that can be used to generate electricity by driving an above-ground power station. Mr Courtney said that polluting carbon dioxide produced from the burning process could be stripped out and backfilled into the cavities created beneath the surface using a technology that was easier than the carbon capture and storage (CCS) method that is proposed for use by power stations. However, the methane gas produced will also emit carbon dioxide when it is burnt....Enormous deposits of coal are known to lie beneath the North Sea, extending from onshore deposits that have been mined in Britain. Offshore exploration for oil has also shown the presence of coal in many areas. Ms Bond said that, within 20 years, UGC could supply a large amount of Britain’s power needs, with some projects being developed far offshore using former oil platforms."
North Sea coal to be burnt underground
London Times, 9 December 2009

"The Japanese Government is working on a 'growth blueprint' that would exploit the prolonged weakness of the US dollar and mount a state-backed resource grab for rare technology metals around the world. If the plans, which are in their early stages, come to fruition, the Government would assist companies in buying the rights to mine rare earth minerals wherever they are up for grabs. Tokyo is understood to have placed a high economic priority on securing global rare earth rights for Japanese companies because of the looming prospect of a resource war with China. The metals most coveted by Japan are a collection of 14 lanthanides that make hybrid vehicles possible and will be critical to the future of electric cars because their strong magnetic properties allow for lighter motors....Over the past decade, Beijing has reached the point where it enjoys a 90 per cent global monopoly over the production of rare earth metals. As its high-tech industries have developed, it has consumed an increasing quantity of those produced domestically and significantly lowered export quotas to places such as Japan. Even large Japanese manufacturers have resorted to illegal quota-busting and source about a quarter of their annual supplies from illicit rare earth mines in China. As China has hardened its stance on exports, Japan has begun a frantic search for supplies elsewhere."
Government ready to back business in minerals race
London Times, 9 December 2009

"Petroleos Mexicanos, the state oil producer, said output at its Cantarell field will fall by about 5.2 percent next year, the slowest drop in five years. Production at Cantarell will fall to about 550,000 barrels a day next year from an average 579,990 barrels through the first 10 months of this year, Jesus Puente Trevino, adviser to Chief Executive Officer Juan Jose Suarez Coppel, said in an interview in Houston today. The company’s natural-gas production will drop to 6.2 billion cubic feet a day in 2010, he said. That represents a 12 percent drop from the average 7.05 billion cubic feet a day this year through October, according to data compiled by Bloomberg. Pemex is injecting gas and employing other recovery methods to stabilize a six-year drop at Cantarell, the third-largest in the world when it was discovered in the 1970s. The decline forecast for next year would be the slowest since production at the offshore field fell 4.5 percent from a year earlier in 2005, according to data compiled by Bloomberg."
Pemex Cantarell Oil Output to Drop Least in 5 Years
Bloomberg, 9 December 2009

"Scientists at the European commission have cast doubt on whether biofuels could ever be produced sustainably in significant quantities, dealing a blow to the aviation industry, which sees such fuel as a key way to reduce its emissions. The researchers argue that the greenhouse gases emitted in making biofuel may well negate most of the carbon dioxide savings made by replacing fossil fuels. Of particular concern is the uncertainty over emissions of the potent greenhouse gas nitrous oxide. The road transport industry is also keen to increase the use of biofuels, and an EU directive last year requires 10% of all road transport fuel to come from plants by 2020. Theoretically the fuels are carbon-neutral: when burned they only release the carbon dioxide they absorbed while the plants were growing. Campaigners argue biofuels are not as sustainable as they seem and say more biofuels would mean the destruction of virgin forests – and the release of their stored carbon – to create agricultural land. Heinz Ossenbrink, of the EC's Institute of Energy (IoE), said research carried out by EU-funded scientists increasingly pointed to a long-term problem for large-scale biofuels use, namely the emissions of nitrous oxide. This is about 270 times more potent than carbon dioxide as a greenhouse gas and is released through use of fertilisers to grow biofuel crops. 'Some of the older studies don't take that into account,' he said. 'We have now come to less positive values for biofuels.'"
Nitrous oxide concerns cloud future of biofuels
Guardian, 8 December 2009

"Kazakhstan's uranium output growth is set to moderate in 2010 after a leap in recent years that has made it the world's largest producer, analysts said, citing technological and economic considerations. The former Soviet republic, which sits on a fifth of global uranium reserves, plans to produce 13,800 tonnes this year, up from 8,500 tonnes in 2008. But 2010 production is seen at 15,000 tonnes, a much smaller increase. Analysts said the slowdown is partially due to technical bottlenecks such as the deficit of sulphuric acid which Kazakhastan's main state firm is trying to overcome by setting up its own production. Poorer ores at newly developed fields are another factor. 'Our main reason to question production estimates from Kazakhstan stems from the fact that a significant proportion of new mines is slated to come from the more geologically problematic Syrdarya uranium province,' Bart Jaworski, an analyst at brokerage Raymond James said in a note last month. Jaworski said this less developed region could contain high carbonate content which neutralizes acid before it can dissolve uranium, and abundant fine grain content which causes clogging of filters and deeper deposits. 'In addition to geological issues, leading concerns... include shortage of engineers and other skilled workers (and foreign worker restrictions), electricity shortages (already affecting operations) and uncertainty of the successful stewardship of Kazatomprom... which is now under new management.' Kazakhstan's uranium industry was shaken this year by the sacking and arrest of Kazatomprom's veteran chief executive Mukhtar Dzhakishev who has been credited with turning his company into top league producer. Dzhakishev has been accused of illegally selling uranium deposits for personal benefit, a charge he has denied. He has yet to face trial."
Kazakh uranium output growth set to decline
Reuters, 8 December 2009

"In the spring of 2003, more than a million people marched through the streets of cities across Europe and the U.S. to rail against U.S. plans to invade Iraq and oust Saddam Hussein. Amid the chants for peace was an angry accusation: the war was merely a grab by Western companies for Iraq's vast oil reserves. Nearly seven years on — and after more than 4,600 Americans and tens of thousands of Iraqis have been killed — Iraq's natural resources are only now emerging as spoils of war. As U.S. troops prepare to withdraw from the country next year, some of the world's biggest energy companies, among them ExxonMobil and Royal Dutch Shell, are racing to lock up multibillion-dollar deals with officials in Baghdad that will allow them to exploit the country's giant oil fields. The deals will not only allow Big Oil to return to Iraq for the first time since Saddam nationalized the industry in 1972. By modernizing a production system wrecked by conflict and embargoes, Iraq's exports could also get a huge boost, putting the country's parlous economy on firmer footing and allowing Iraq to take its place as an oil power almost equal to Saudi Arabia. Not just the fortunes of one war-torn country are at stake. Researchers believe that Iraq's untapped oil reserves total at least 115 billion barrels — the third largest in the world. When fully developed, Iraq's oil industry could significantly boost global crude supplies and even bring down oil prices. Tapping Iraq's oil is an industry event of historic proportions, says Alex Munton, a Middle East analyst at global energy consultancy Wood Mackenzie. 'There are very few examples in history you can point to and say, 'A similar thing happened there,' because there really have not been any,' he says. After a flurry of initial oil field – development deals were completed in November, Munton said, 'Iraq's future has just changed, absolutely.' ...After months of sticking to their demands, oil companies now are agreeing to Iraq's $2-a-barrel offer. In mid-November, Italian oil executives from ENI flew to Baghdad to sign a deal on Zubair, a southern Iraq field with about 4.1 billion barrels of reserves. ENI plans to pump about 1.1 million barrels a day from Zubair in partnership with California-based Occidental Petroleum and South Korea's Kogas. ENI was quickly followed by ExxonMobil and Royal Dutch Shell, which agreed to produce about 2.3 million barrels a day in another giant field called West Qurna. Combined with BP-CNPC's anticipated output from Rumaila, 'those three fields alone would be about 6% of total oil production in the world' when output targets are reached, says Munton, the Wood Mackenzie analyst....Even though Total dropped its bid in June for one of Iraq's fields, it is now considering several others on offer in a second round of bids, which Iraq's government has scheduled for mid-December; Iraqi oil officials say they expect about 45 companies to compete for 15 fields. Says Darricarrère: 'It is difficult for any major oil company not to be in Iraq.' But being there won't be easy, either, due to daunting technical and other challenges. Iraq's oil industry has limped along for years on creaking old equipment, patchwork pipeline networks and decayed, rusted port facilities; Saddam-era sanctions largely prevented the industry from upgrading to state-of-the-art equipment. The country produces just 2.5 million barrels a day, down from 2.8 million barrels before the U.S. invasion and a sharp drop from its high of 3.7 million barrels in 1979, when Saddam boosted production to finance his calamitous war with neighboring Iran. A government adviser recently told Britain's Independent newspaper that only about one-third of the 1,400 wells in southern Iraq are functioning. Oil Minister Hussein Shahrastani estimates it will cost about $50 billion to upgrade infrastructure needed to produce Iraq's target of 6 million barrels a day by 2017. 'Iraq's oil industry is in a dire state,' says Samuel Ciszuk, Middle East energy analyst for the consultancy firm IHS Global Insight in London....battles over how to carve up Iraq's oil revenues between the country's bitterly divided ethnic groups have stopped parliament from signing a national hydrocarbon law originally drafted in 2006. After previously insisting that they would not do business in Iraq without a legal framework governing central issues such as revenue-sharing, oil executives now are resigned to the fact that it may be years before a law is forthcoming. Neither companies nor government officials want to wait any longer to kick-start production. The Iraqi people are impatient for economic relief, and since more than 90% of Iraq's budget comes from oil revenues, nothing seems to offer more hope than the arrival of Big Oil."
Pump It Up: The Development of Iraq's Oil Reserves
TIME, 7 December 2009

"China's position as a net importer of coal is unlikely to change although domestic supply is expected to increase next year, said an industry expert....China became a net importer of coal for the first time in the first quarter of 2007, with net import hitting 2.91 million tonnes."
China likely to remain net importer of coal in 2009: expert
Xinha, 6 December 2009

"Preventing runaway global warming may be twice as expensive as previously thought and Britain will have to incur billions of pounds of additional debt to cover its share of the cost, according to the world’s most influential climate change economist. Lord Stern of Brentford said that future generations would find it easier to pay off the debt than to cope with the consequences of climate change. He called for air passengers to pay a significant proportion of the cost through a new global tax on flights, and shipping should also contribute through a new tax on bunker fuel. The author of the 2006 Stern review on the cost of tackling global warming admitted that the latest science indicated that he had been too optimistic in that report. Cuts in CO2 emissions would have to be deeper and made more quickly to have a 50-50 chance of keeping global temperatures from rising more than 2C (3.6F) above pre-industrial levels.... Lord Stern’s 2006 report estimated that the cost of tackling climate change, including investment in renewable energy and other low-carbon technology, would amount to 1 per cent of global GDP. His latest analysis estimates the cost to be closer to 2 per cent, and possibly reaching 5 per cent. He concluded: 'This may turn out to cost more and we should be prepared to pay that. If it costs us 3 or 4 or 5 per cent [of GDP], it would still be a good deal.' The report says that if emissions continued rising at the present rate, there would be a 'significant probability' of global temperature rising by 5C or more by the end of the century. 'The human species has only been around for 200,000 years at most and has no experience of trying to survive under such conditions,' he said. 'It is highly likely that there would be massive movements of people, probably hundreds of millions, with the risk of conflict that would be severe, prolonged and global.' Lord Stern’s report recommends that the concentration of CO2 equivalent gases in the atmosphere should be capped at 500 parts per million (ppm) and, over time, fall well below 450ppm. His 2006 review said that 550ppm would be acceptable. He says that total emissions of CO2 equivalent should fall from 47 billion tonnes this year to 44 billion tonnes by 2020 and to well below 20 billion tonnes by 2050."
Global warming measures will cost ‘twice as much as predicted’
London Times, 2 December 2009

"Conventional oil refers to liquid hydrocarbons trapped in deep, highly pressurised reservoirs, which means that when the wells are drilled, the oil usually gushes to the surface of its own accord. Non-conventional oils are not so forthcoming, and need large amounts of energy, water and money to coax them from the ground and turn them into anything useful, like diesel or jet fuel. As a result, non-conventional oil production to date has been slow to expand - with current output of just 1.5 million barrels per day. Not only that, because they take so much energy to produce, they are responsible for higher carbon emissions per barrel than conventional...In a scenario most favourable to tar sands - high oil prices, growth in demand and a supportive regulatory framework - IHS CERA predicts output from the Canadian tar sands could reach 6.3 million barrels per day by 2035. That's a small fraction of forecast global demand, but to achieve even this, production would have to grow twice as fast as it ever has. That, says Forrest, 'is really pushing it'. So what of the other alternatives? Oil shale is the next large unconventional resource under consideration, with around 2.5 trillion barrels of 'oil equivalent' identified. It was used to produce oil before the oil industry took off in the late 19th century. To produce oil from it, you essentially need to speed up a geological process that takes millions of years. This is done by heating the rock to 500 °C until the kerogen decomposes into a synthetic crude oil and a solid residue....The IEA estimates shale oil would cost between $50 and $100 per barrel to produce, without taking into account any carbon-emissions pricing that may come into force. It expects no significant shale oil production this side of 2030.... Just as shale oil is nothing new, neither is making liquid fuels from coal. Two German researchers developed the eponymous Fischer-Tropsch process in the 1920s, heating coal to produce a gas of carbon monoxide and hydrogen, which is then catalysed to produce diesel and kerosene. The technology was exploited by oil-strapped, coal-rich Germany during the second world war, and by South Africa in the 1980s and early 1990s to beat sanctions imposed during apartheid. South Africa has the world's only major coal-to-liquids (CTL) plant operating today and China has recently built a demonstration plant in Inner Mongolia. So, could coal be the answer? Few doubt there is enough of the stuff to support a major expansion of CTL (New Scientist, 19 Jan 2008, p 38), and the fuels produced are of a high quality. The drawbacks are formidable: it takes about two tonnes of coal and up to 15 barrels of water to produce a single barrel of synthetic fuels. That makes it expensive. The IEA says that when it comes to US coal, to supply just 10 per cent of US transport fuel consumption would mean investing $70 billion, and raising coal production by 25 per cent - an additional 250 million tonnes per year....The gas-to-liquids process (GTL) emits much less carbon than CTL, because the feedstock is cleaner, but still more than conventional crude. That's because almost half of the 280 cubic metres of gas it takes to produce a barrel of GTL fuel is burnt during the conversion process. Three small plants account for global production of 50,000 barrels of synthetic fuels per day. That should quadruple in the next few years with the opening of two larger plants in Qatar and Nigeria....The IEA's chief economist Fatih Birol says non-conventionals can defer global peak oil to 'around 2030'. Others are not convinced. 'If everything goes well,' says Steven Sorrel, the lead author of the UKERC report, 'oil sands might produce 6 million barrels per day in 20 years' time, but by then we'll need to add at least 10 times that much capacity - without allowing for any growth in demand. It's very hard to see non-conventionals riding to the rescue.'"
Extreme oil: Scraping the bottom of Earth's barrel
New Scientist, 2 December 2009

"Some 60% of the 66,500 tonnes of uranium needed to fuel the world’s existing nuclear power plants is dug fresh from the ground each year. The remaining 40% comes from so-called secondary sources, in the form of recycled fuel or redundant nuclear warheads. The International Atomic Energy Agency, which is a United Nations body, and the Nuclear Energy Agency, which was formed by the rich countries that are members of the Organisation for Economic Co-operation and Development, both reckon that, at present rates, these secondary sources will be exhausted within the next decade or so. Once every two years the two agencies publish what is considered the best estimate of global uranium stocks, 'Uranium: Resources, Production and Demand', colloquially known as the Red Book. It estimates that there is enough unmined uranium to supply today’s nuclear power stations for at least 85 years for less than $130 per kilogram. But Michael Dittmar, a researcher at the Swiss Federal Institute of Technology in Zurich, thinks they are mistaken. He has studied the uranium supply and argues, in a recent series of papers, that shortages will drive the nuclear renaissance to an untimely end. Dr Dittmar has unpicked the most recent Red Book numbers on primary production and asserts that they are founded on an alarmingly weak basis. The Red Book is compiled from questionnaires, each of which is handled differently in the countries to which it is sent. The forms might be completed by any number of different government agencies, with added input from mining companies. All, of course, will have their own agenda about the matter. He concludes, 'The accuracy of the presented data is certainly not assured.' Dr Dittmar goes on to speculate about the accuracy of a great many figures, both of the amount of uranium that is known to exist, and estimates of how much more might be available. He predicts that shortages of uranium could begin as early as 2013. For its part, the World Nuclear Association, a nuclear-industry body, argues that if uranium becomes more expensive, mining companies will devise cleverer ways of extracting it—from rock, other elements or even from seawater. Its estimates put the demand in 2030 at anywhere between 42,000 and 140,000 tonnes. Although your correspondent suspects that Dr Dittmar is probably being overly pessimistic, he is inclined to agree with him that the Red Book’s precise assessments of what will be economically sensible over 85 years are far from accurate. But there are two other factors that could come into play. One is that there may eventually be enough economic incentive for the countries with weapons stockpiles of uranium to release much of it for warmth and peace. The other is that the International Energy Agency thinks that nuclear power could more easily weather a storm in fuel markets. A 50% increase in the price of uranium would, the agency predicts, cause only a 3% rise in the cost of the electricity it generates, compared with 20% for coal and 38% for gas. Either way, none of the figures take into account nuclear 'new-build'. Where there is an economic incentive to extract more of a resource, industry has a long history of developing technology to do it. Just do not bet on electricity from nuclear power ever becoming too cheap to meter."
A uranium shortage could derail plans to go nuclear to cut carbon emissions
Economist, 30 November 2009

"Advanced biofuels will not be in widespread use until about 2020, the chief executive of Royal Dutch Shell has said, puncturing hopes that they could be on the verge of a commercial breakthrough. Peter Voser, who took over at the head of Shell in July, told reporters at a briefing last week that it would take 'quite a number of years' before there is a commercially proven plant."
Shell reins back expectations
Financial Times, 29 November 2009

"Britain is to start piping gas directly from Russia for the first time in 2012, according to the chief executive of Nord Stream, the Kremlin-backed gas pipeline venture. In an interview with The Times in Switzerland, Matthias Warnig said that more than 4 billion cubic metres of gas a year had already been booked for the UK market through the pipeline, which is due to enter service by the end of 2012. That is equivalent to more than 4 per cent of total UK gas demand of about 94 billion cubic metres per year. Mr Warnig said the additional gas imports would help to offset a steep decline in production from the North Sea, which is due to fall by 6 per cent this year. ' 'The UK is switching from a gas exporter to an importer,' he said. 'By 2025 there will be a substantial import need ... Several billion cubic metres per year are already contracted for the UK through Nord Stream.' At present, Britain imports negligible quantities of gas from Russia but that is about to change. Construction of the €7.4 billion pipeline, 51 per cent-owned by Gazprom, the Russian gas giant, is due to start in April. It will be laid at a rate of three kilometres a day by special vessels starting from the German and Russian ends of the route. Russian gas destined for the British market would be piped through the Netherlands and Belgium, across the North Sea via pipelines that run to Bacton in Norfolk. Mr Warnig said that 22 billion cubic metres of the pipeline’s 55 billion cubic metre capacity had already been contracted out by its partners, which include E.ON and BASF of Germany and Gasunie of the Netherlands. Of that, he said, Gazprom UK had booked 4 billion cubic metres a year while another company, Wingas, had contracted a further unspecified amount for the UK. Britain will need to import 50 per cent of its gas supplies this winter from countries such as Norway, Qatar and Algeria, a sharp rise from 27 per cent in 2007. Britain was a net exporter as recently as 2004 but by 2015 will need to import three quarters of its supplies of the fuel. The growing dependency on imports is a result of Britain’s increasing reliance on gas for electricity generation. Almost 35 per cent of UK electricity comes from gas-fired power stations, up from less than 5 per cent in 1990....Russia is also keen to press ahead with a second gas pipeline running via the Mediterranean to Greece, Italy and Southern Europe. It has been dubbed South Stream, although it is running several years behind Nord Stream. America has also been backing construction of another pipeline called Nabucco, which would bypass Russia and deliver gas from Central Asia and Iraq to Europe."
Piped gas from Russia to boost Britain’s supplies from 2012
London Times, 28 November 2009

"The nuclear safety regulator has warned that two new reactor designs earmarked for use in Britain remain incomplete and could be rejected unless improvements are made. The Nuclear Installations Inspectorate (NII) said that it was concerned about several features of both the US-Japanese and French reactor technologies that had been proposed for use in a new generation of British nuclear power stations. The NII, which is part of the Health and Safety Executive, is conducting a safety review of the so-called AP-1000 reactor from Toshiba-Westinghouse and the European Pressurised Reactor (EPR) from Areva of France. Final approval of the designs is not due to be granted until 2011, but an update on progress said that significant questions remained unanswered. Kevin Allars, the director of new nuclear build design assessment at the NII, said that he was confident that both designs 'could be suitable' for use in Britain. However, he added: 'If they aren’t acceptable, or there are sufficient doubts in our mind whether they should be built in this country, then we will not issue a design acceptance confirmation. So far we don’t have a complete design yet from either . . . So we cannot rule it out.' In particular, he said that progress on the AP-1000 design was behind schedule because its parent company had been too slow in providing information about a range of issues. He said that the NII was concerned about the functioning of specialist valves controlling pressure at the heart of the reactor, while there were also worries about a proposal to use a 'modular' method of construction designed to cut costs....In July, The Times disclosed that the NII was concerned about the 'control and instrumentation' systems, the so-called brain of the reactor. Mr Allars said that, since then, Areva and EDF had submitted a proposal to resolve these concerns, which the NII said it had accepted 'in principle'. However, he added that it was 'too early to say' whether they would be sufficient to resolve the matter and that further details would be published next year."
Nuclear plans still flawed, says watchdog
London Times, 27 November 2009

"China Guangdong Nuclear Power Holdings Co., one of the country's two nuclear-energy firms, said it will need more than 100,000 metric tons of uranium between 2009 and 2020 to feed its growing fleet of nuclear-power plants, a huge jump from current demand levels that underscores the scope of China's nuclear-energy ambitions. Guangdong Nuclear Power's uranium needs will jump to 10,000 tons a year in 2020 from 2,000 tons this year, Zhou Zhenxing, chairman of the company's uranium-supply unit, said Thursday. Mr. Zhou, speaking at a conference, didn't detail how quickly the demand growth would accelerate within that period, although the company has several nuclear units expected to come online soon that will increase its demand. 'Domestic uranium output is [by] far not enough to meet our needs,' said Mr. Zhou, whose unit is called China Guangdong Nuclear Uranium Resources Co. The World Nuclear Association estimates that global uranium consumption is 65,000 tons a year. Guangdong Nuclear Power is expected to have 34 gigawatts of nuclear-power capacity in operation by 2020, accounting for more than 50% of China's total capacity, up from 3.94 gigawatts currently operational, Mr. Zhou said. China doesn't publish uranium-output data. However, the the World Nuclear Association says China's five operational uranium mines—two in Jiangxi province and one each in Shaanxi, Liaoning and Xinjiang—together produce about 840 tons a year. China has 11 civil nuclear reactors. It plans to build dozens more by 2020, bringing the nuclear sector's share to 5% of China's power-generating capacity, or about 70 gigawatts, from less than 2% now. In May, China's top energy official, National Energy Administration head Zhang Guobao, said longer-range plans would see China having more than 100 reactors in 20 years, matching the current level of the U.S. China now relies on imports for about half of its uranium needs, with supplies coming from Russia, Namibia, Australia and Kazakhstan. China National Nuclear Corp., the nation's top nuclear-power company in terms of power capacity and its dominant domestic uranium producer by output, said in August it aims to raise its domestic uranium production to 2,000 tons a year by 2020."
Guangdong Nuclear Power's uranium needs
Wall St Journal, 26 November 2009

"Director of Centre for Strategic Studies under Azerbaijan’s President Elkhan Nuriyev will visit the US. The center told APA that on December 2, Nuriyev will meet with Vice Chairman of The Cohen Group international consulting organization, Ambassador Marc Grossman, President of the Armitage International, Ambassador Richard Armitage and other political experts, inform the American diplomats and political analysts about the Center, discuss problems of regional security and prospects of the cooperation with other think tanks of the US. On December 4, Elkhan Nuriyev will make a speech at the regional conference on the theme 'Geopolitical state of the Caspian basin and America-Azerbaijan relations during Obama administration' organized by U.S. Azeris Network (USAN) in Chicago-Kent College of Law of Illinois Institute of Technology. The aim of the conference is to inform the U.S. experts about the geopolitical realities in the Caspian basin, Azerbaijan’s decisive position as the main source of the energy resources in the region and a transit country, role in the global energy security, importance of the strategic partnership between Baku and Washington, other security problems of the region. Representatives of Azerbaijani Diaspora in the US, leading experts of the Chicago University and officials will attend the forum. Elkhan Nuriyev will meet with heads of think tanks of the US, have discussions on the regional projects on scientific cooperation between the analytical organizations of the two countries."
Director of Centre for Strategic Studies under Azerbaijan’s President to visit US
Azeri-Press Agency, 25 November 2009

"Namibia currently produces around 5,000 tonnes of uranium oxide annually and there is room for more. 'Uranium oxide production rose sharply in 2008 pushing Namibia for the first time up from sixth to fourth biggest producer globally after Canada, Kazakhstan and Australia,' said Robin Sherbourne, an economist at Old Mutual financial services. In September, an Australian company Extract Resources announced new uranium deposits in the country. The deposits have an estimated 14.8 million pounds of uranium oxide production annually, for 20 years, at a capital costs of 704 million dollars, the company said."
Namibia's dwindling diamonds make way for uranium boom
Agence France Presse, 24 November 2009

"Growing world oil use will likely outpace the rate of new supplies in 2010, eroding the huge stockpiles of crude which have mounted around the world since the start of the global economic crisis. According to a Reuters poll of ten top oil-tracking analysts and organizations, oil demand is predicted to rise by 1.3 million barrels per day (bpd) next year to 85.9 million bpd. At the same time, the rise in production from outside the Organization of the Petroleum Exporting Countries and output of natural gas liquids (NGLs) from OPEC members is seen growing by just 800,000 bpd in total....'The key question for prices is supply,' Barclays C apital analyst Costanzo Jacazio said. '2010 is really a bridging year -- if the economies continue to perform as well as they have been doing during the early stages of the recovery, then I think by 2011 we'll be seeing the demand numbers at or above where they were in 2008.' Non-OPEC output is seen averaging 51 million bpd in 2010, up from 50.8 million bpd, while OPEC output of NGLs -- which are not subject to the producer group's production quotas -- are expected to rise to 5.6 million bpd, up by more than 20 percent since 2008. If OPEC members can maintain current adherence levels to present output quotas, with group output including Iraq assessed around 28.9 million bpd, crude oil inventories could fall by almost 150 million barrels next year. Demand for OPEC's crude is seen at 29.3 million bpd....The expected demand increase in 2010 will be the first year to show average growth since 2007, before record prices and the economic crisis slashed consumption. Global oil demand has fallen by almost 2 percent since 2007, when average annual consumption hit an all-time high around 86.2 million barrels daily. The steep drop in demand saw oil prices crash from record highs of almost $150 a barrel in July 2008 to below $33 a barrel in December last year. Since then prices have more than doubled to just below $80 a barrel as OPEC -- whose member countries pump more than one in every three barrels of oil -- tried to cut output quotas by 4.2 million barrels, or 5 percent of world demand. Demand growth is expected to be strongest in countries outside the OECD, with China leading the way. 'We see a healthy demand recovery of 1.5 million barrels next year, there's only so much you can contract,' said Sarah Emerson, director of Energy Security Analysis Inc. in Boston. '(Demand) growth in China next year should be significant and the U.S. will go from two years of contraction to growth.' The Chinese economy is expected to grow by around 8 percent in 2009 and may post even stronger growth next year. Implied Chinese oil demand in October was up more than 10 percent year-on-year, customs data showed on Monday. Inside the OECD, the United States is seen posting a small recovery in demand. But many analysts remain doubtful about the strength of growth with some arguing oil use may never revisit highs of earlier this decade in North America and Europe. 'We're not going to be in an environment when prices will shoot back to anything like $120 a barrel in 2010,' Jacazio at Barclays Capital said. '(But) we still see oil demand growth next year outpacing non-OPEC supplies and NGLs combined.'"
World oil demand growth to outpace supply in 2010: poll
Reuters, 24 November 2009

"What could support prices even further is the fear that the world’s uranium resources might not be as plentiful as the World Nuclear Association predicts – an optimistic 83 years of reserves. Michael Dittmar, from the Swiss Federal Institute of Technology in Zurich, last week published a report claiming that without more access to military stockpiles, western uranium supplies are likely to be exhausted by 2013. The world’s nuclear plants today use 65,000 tons of uranium each year, with about two-thirds coming from mines and the rest from secondary sources such as reprocessed fuel and re-enriched uranium previously earmarked for warheads. Many analysts are unconvinced by this analysis, claiming an almost limitless supply of uranium if miners make the effort to find it, but huge investment will be needed to extract and process it into a useable form. This year alone, spending on uranium exploration is down 20pc on 2008. The big producers, such as Canada’s Cameco and Energy Resources of Australia have been hit both by flooding at their key mines and a lower uranium price on weak demand for electricity during the recession. There are other supply risks. If global production is to be increased, the world will have to start relying on the politically uncertain regions of Niger, Namibia and Kazakhstan. Nuclear may be the most reliable form of low-carbon generation, providing a more stable source than wind or hydro power and less carbon dioxide than fossil fuels, but the world’s biggest uranium exporters will not be able to provide all of the world’s extra supplies."
Time to join the nuclear bandwagon
Daily Telegraph, 22 November 2009

"Electric cars and unreliable wind power could bring down Britain’s electricity network, National Grid said as the Government launched a £30 million grant scheme to promote the installation of charging points for plug-in cars. Steve Holliday, National Grid chief executive, said that without smart meters in homes and an intelligent system to balance supply and demand, the network would be unable to cope....A big part of the solution to the potential peak demand overload, said Mr Holliday, would lie in the car’s battery, which would act as a power source for the grid, in peak periods. A smart meter would enable a household to supply power to the grid from a car battery between 5pm and 7pm, when lighting, heating and domestic appliance use creates peak demand. The power flow would then reverse during the night when the battery would be charged up cheaply at low electricity tariffs. The cost of installing smart meters could be as high as £500 per household, according to estimates from Ernst & Young, the accounting firm. It believes that it would cost 50 per cent more than Government estimates of a £9 billion bill for hooking up every home in the UK to a smart grid..... Government plans for Pluggedin-Places — up to six cities or regions with charging points for electric cars — were outlined yesterday by Lord Adonis, the Transport Secretary. He called for a series of civic and private sector partnerships to compete for £30 million in government grants. Groups of investors will be asked to match the government funds. 'Our aim is for electric and lowcarbon cars to be an everyday feature of life on UK’s roads in less than five years,' Lord Adonis said. Charging points have so far proved expensive to install. A public/private project to build 73 charging points cost the Government £500,000. A fleet of 1.5 million electric cars on the roads in 2020 would create annual demand of 6 terrawatt hours, equivalent to the output of a large power station running 24 hours a day or 2 per cent of current electricity demand. National Grid reckons that it would take seven hours to charge a typical 22 kwh battery from a household 13 amp socket. However, if a typical commuter drove for only half of the potential 60-mile range, the battery would be half full before charging in the evening, a store of electricity that could be available to the grid."
Government gears up £30m to promote charging points
London Times, 20 November 2009

"Developing countries now emit more greenhouse gas than rich countries, according to a study that will intensify demands for all countries to set targets for cutting emissions. Total emissions from burning fossil fuels in developing countries, including China, India and Brazil, have more than doubled since 1990 and are continuing to rise rapidly. By contrast total emissions from developed countries, such as the US, Japan and Britain have hardly changed over the same period. Last year developed countries were responsible for 46 per cent of global emissions, with developing countries responsible for 54 per cent. The figures, published by an international team of scientists, will put pressure on developing countries to set stricter targets for slowing the increase in emissions. China and India are refusing to agree to any cap on their emissions and are instead offering vague targets for cutting emissions per unit of GDP. China overtook the US in 2006 as the world’s biggest emitter of greenhouse gases and has extended its lead each year since then. The study, published in the journal Nature Geoscience, compared the total emissions of 38 developed countries with those of all other countries. The authors, led by Professor Corinne Le Quéré, of the University of East Anglia, concluded: 'Since 1990 the growth in fossil fuel CO2 has been dominated by countries that do not have emissions limitations. Among [developed] countries growth in some has been offset by declines in others.' The study said that the increase in emissions from developing countries was in part due to their manufacture of goods for export to rich countries.  Professor Le Quéré said that emissions per person remained much higher in rich countries, which supported only about a billion of the world’s population of 6.7 billion. However, explosive growth in emissions in some countries, especially China, meant that the gap was slowly closing. China emitted 4.8 tonnes of CO2 per person in 2007, a rise of 138 per cent since 1991. India emitted 1.2 tonnes, up 79 per cent, and Brazil 2.1 tonnes, up 30 per cent. The UK’s emissions fell 12 per cent over the same period to 9.3 tonnes per person and US per capita emissions fell by 1 per cent to 19.9 tonnes. Professor Le Quéré said that the study did not take account of historic responsibility for greenhouse gases in the atmosphere. She said that developing countries were responsible for only 20 per cent of cumulative emissions since 1751. 'Emissions in rich countries have only stabilised because they have reached a certain stage of development which other countries have yet to attain.' The study also found that the growth in global emissions from fossil fuels had accelerated from 1 per cent a year in the 1990s to an average annual rate of 3.4 per cent between 2000 and 2008. The growth continued last year during the global economic downturn, though at a reduced rate of 2 per cent. Coal has overtaken oil as the biggest source of emissions, largely because many developing countries, including China, have vast domestic reserves of coal but have to import oil.”
Greenhouse gas emissions study highlights need for tighter national targets
London Times, 18 November 2009

"One in 12 of the world’s largest crude oil tankers are being used to store oil rather than move it from place to place, according to research by a London shipbroker. The trend follows a spike in oil futures prices that has created incentives for traders to buy crude oil and oil products at current rates, sell them on futures markets and store them until delivery."
Tankers store oil as futures prices rocket
Financial Times, 17 November 2009

"IHS Cambridge Energy Research Associates, the consulting firm founded by the oil historian Daniel Yergin, has resolutely been on the optimistic side of the peak oil abyss. In a new report released this week, the firm once again explains why it believes that oil supplies will keep growing for the next two decades. After that, the firm says, production will reach 'an undulating plateau,' meaning it will remain more or less flat for a couple more decades after that. The report, called 'The Future of Global Oil Supplies: Understanding the Building Blocks,' shows how oil supplies will reach 115 million barrels a day around 2030, up from 92 million barrels today. They will remain at that level through 2050. (The report sets a lower peak level than in recent years, IHS said, because the recession had led companies to reduce their investments and demand is not expected to rise as high as previously thought.) Any long-term forecast is by definition tricky. But analysts at IHS said they have coaxed production data from more than 450 fields around the world, including in OPEC, as well as projects outlined by oil companies to develop new reserves. They found that the average decline rate in oil fields is 4.5 percent, less than many pessimists assume; second, 60 percent of world production still comes from nearly 550 so-called giant fields that are not in danger of suddenly plummeting; and finally, the world’s oil endowment is much bigger than many estimates about peak oil allow for. The ultimate point of the report, said Peter Jackson, the study’s main author, was to point out that while geological issues are important, future oil production will be mostly driven by the 'above ground elements of the equation.'  'Looking ahead, we can see that the upstream industry faces many challenges,' the report said. 'The longer-term problem lies not below ground, but in obtaining the investment and resources that the industry will need to grow supply significantly from current levels.' This analysis of these risks parallels what many executives have been warning: that limited opportunities to invest in new supplies could lead to an oil shock in the next decade. The chairman of Hess Corporation, John Hess, recently told an oil conference in London that last year’s record price 'was not an aberration; it was a warning.' The chief executive of France’s Total, Christophe de Margerie, has also sounded the alarm, saying that the world would be hard pressed to pump more than 90 million barrels of oil a day by 2015 because of geopolitical constraints. Steve Andrews, the co-founder of ASPO-USA, the domestic chapter of the Association for the Study of Peak Oil, said the optimism of IHS is misplaced and 'irresponsible.' But his analysis also tracks with the concerns about how much the world can produce. 'In the theoretical world where Exxon could drill in Saudi Arabia, in Iran and in Iraq, as well as offshore California, you know we could get considerably higher production,' said Mr. Andrews. 'But there is what we call practical peak oil. It’s the real world.'”
No Peak in Oil Before 2030, Study Says
New York Times, 17 November 2009

"A leading academic institute has urged European governments to review global oil supplies for themselves because of the 'politicisation' of the International Energy Agency's figures. Uppsala University in Sweden today published a scathing assessment of the IEA's annual World Energy Outlook, saying some assumptions drastically underplayed the scale of future oil shortages. Kjell Aleklett, professor of physics at Uppsala and co-author of a new report 'The Peak of the Oil Age', claims oil production is more likely to be 75m barrels a day by 2030 than the 'unrealistic' 105m used by the IEA in its recently published World Energy Outlook 2009. The academic, who runs a Global Energy unit at Uppsala, described the IEA's report as a 'political document' developed for consuming countries with a vested interest in low prices. The report from Aleklett and others, including Simon Snowden from the University of Liverpool, says: 'We find the production outlook made by the IEA to be problematic in the light of historical experience and production patterns. The IEA is expecting the oil to be extracted at a pace never previously seen without any justification for this assumption.' There is particular concern about high future production rates from 'unconventional' sources such as tar sands, with the Uppsala report saying there is a lack of information about the figures in the 2008 Outlook and largely repeated in the latest one. 'We must therefore regard the IEA production figure as somewhat dubious until it is explained more fully,' added the Swedish report, which is to be published in the journal Energy Policy. The Uppsala findings come days after the Guardian reported that IEA whistleblowers had expressed deep misgivings about the way energy statistics were being collected and interpreted at the Paris-based organisation. Insiders questioned whether US influence and fears of stock market 'panic' were encouraging the IEA to downplay the potential for future oil scarcity. Aleklett, whose latest work was funded by the state-owned Swedish Energy Agency, said he had experience of similar internal worries about the IEA."
Oil: future world shortages are being drastically underplayed, say experts
Guardian, 12 November 2009

"Planning is not the only obstacle to a rebirth of nuclear power in Britain. The technology’s torturous economics are, if anything, even trickier. The trouble is that, whereas the fuel is cheap, nuclear-power plants themselves are very expensive to build and the pay-off from that investment is slow. It is hard to know the true cost of a modern nuclear plant. Most Western reactors that are still running were built years ago (Britain’s newest, Sizewell B, is 14 years old). Two new reactors of the type Britain may choose are being constructed in Finland and France. Discouragingly, the Finnish reactor, originally priced at €3 billion (£2.1 billion at the time), is three years late and around €2 billion more expensive than expected. The French plant is also thought to be over budget, by around 20%. To the industry’s opponents, all this is proof that nuclear electricity is uneconomical....Nuclear energy’s best hope lies in carbon pricing, which forces fossil-fuel plants to pay for the environmental cost of the carbon they generate. The price of carbon under Europe’s emissions-trading scheme is currently around €14 (£12.65) per tonne, far short of the €50 that power-industry bosses think would make nuclear plants attractive. People in the industry are arguing for a price floor. Since that would boost every form of low-carbon generation equally, setting one would allow ministers to observe their no-subsidy pledge, and still see the reactors built; but the floor would have to be set high to make a difference."
Splitting the cost
The Economist, 12 November 2009

"It is very hard for the average person in the street to come to a sensible conclusion on peak oil. It's a subject that prompts a passionate polarisation of views. The peak oilists sometimes sound like those extraordinary Christians with sandwich boards proclaiming that the end of the world is nigh. In contrast, the the international economic establishment – including the International Energy Agency (IEA) – has one very clear purpose in mind at all times: don't panic. Their mission seems to be focused on keeping jittery markets calm. Faced with these options the majority of people shrug their shoulders in confusion and ignore the trickle of whistleblowers, industry insiders and careful analysts who have been warning of the imminent decline in oil for over a decade now.... the 2008 edition of World Energy Outlook, the annual report on which the entire energy industry and governments depend. It included the table also published by the Guardian today... What it made blindingly clear was that peak oil was somewhere in 2008/9 and that production from currently producing fields was about to drop off a cliff. Fields yet to be developed and yet to be found enabled a plateau of production and it was only 'non-conventional oil' which enabled a small rise. Think tar sands of Canada, think some of the most climate polluting oil extraction methods available. Think catastrophe. What made this little graph so devastating was that it estimated energy resources by 2030 that were woefully inadequate for the energy-hungry economies of India and China. Business as usual in oil production threatens massive conflict over sharing it. Now, this all seemed pretty gigantic news to me but guess where the World Energy Outlook chose to put this graph? Was it in the front, was it prominently discussed in the foreword? Did it cause headlines around the world. No, no, no. It was buried deep into the report and no reference was made to it in the press conference a year ago. The fear is that panicky markets can cause enormous damage – panic-buying that prompts fights over resources, which in turn could lead to power cuts in some places and other such mayhem. But so far in facing this huge challenge, our political/economic system seems unable to cope with reality. We are forced to carry on living in an illusion that we have so much time to adapt to post-oil that we don't even need to be talking or thinking much about what a world without plentiful oil would look like. Reality has become too dangerous."
Too fearful to publicise peak oil reality
Guardian, 10 November 2009

"The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying. The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves. The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies. In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production. Now the 'peak oil' theory is gaining support at the heart of the global energy establishment. 'The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,' said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. 'The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this. 'Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,' he added. A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was 'imperative not to anger the Americans' but the fact was that there was not as much oil in the world as had been admitted. 'We have [already] entered the 'peak oil' zone. I think that the situation is really bad,' he added....as far back as 2004 there have been people making similar warnings. Colin Campbell, a former executive with Total of France told a conference: 'If the real [oil reserve] figures were to come out there would be panic on the stock markets … in the end that would suit no one.'"
Key oil figures were distorted by US pressure, says whistleblower
Guardian, 9 November 2009

"The UK could run out of gas within six hours this winter, the Observer has learned. The revelation has sparked a row between the Conservatives and Labour over who is doing more to keep the heating on. Last winter, the UK was left with only three days of reserves when foreign energy companies started exporting gas to supply their European customers after Russia cut supplies that used a pipeline through Ukraine. A spokeswoman for Ed Miliband's energy and climate change department said that under a civil contingency act he had the power to halt exports from the UK if the Queen had signed the order. Charles Hendry, the shadow energy minister, told the Observer that the current minimum requirements on companies to keep gas in storage were not tough enough to safeguard the security of the UK's energy supplies. Labour hit back this weekend, accusing the Conservatives of 'blighting progress' on building more gas storage facilities by blocking planning reforms proposed by the government. If its storage facilities are full, the UK has enough gas supplies for about 16 days, based on average demand. France's storage capacity would last a maximum of 91 days and Germany's 73 days. But National Grid has told energy companies that they only need to fill tanks by a minimum of 2.3% this winter. If all gas imports to the UK ground to a halt, for example if Gazprom turned off supplies to Europe, and supplies from the North Sea were disrupted, this amount would keep the country's households and businesses supplied for just six hours on a cold day. In France, regulators require companies to keep their facilities at least 85% full from November. Unlike France and Germany, the UK has direct access to dwindling gas fields in the North Sea which provide about half the country's gas needs and ensure some security of supply. National Grid also said the government had powers in an emergency to order North Sea operators to boost production. But fields are already operating at 90% capacity. UK energy companies do not have access to storage facilities in Europe, unlike their foreign counterparts. National Grid said its minimum requirement for gas storage was based on ensuring the smooth and safe operation of the network, rather than security of supply. It said it had the power to slow the rate of withdrawal of supplies, but admitted it could not order companies to replenish stocks once tanks became depleted. Businesses could be cut off to keep households supplied, it added. The system assumes the market will deliver sufficient supplies by sucking in gas to the UK when demand is high."
Winter crisis could see UK 'run out of gas in hours'
Observer, 1 November 2009

"Less than half the population believes that human activity is to blame for global warming, according to an exclusive poll for The Times. The revelation that ministers have failed in their campaign to persuade the public that the greenhouse effect is a serious threat requiring urgent action will make uncomfortable reading for the Government as it prepares for next month’s climate change summit in Copenhagen. Only 41 per cent accept as an established scientific fact that global warming is taking place and is largely man-made. Almost a third (32 per cent) believe that the link is not yet proved; 8 per cent say that it is environmentalist propaganda to blame man and 15 per cent say that the world is not warming. Tory voters are more likely to doubt the scientific evidence that man is to blame. Only 38 per cent accept it, compared with 45 per cent of Labour supporters and 47 per cent of Liberal Democrat voters."
Global warming is not our fault, say most voters in Times poll
London Times, 14 November 2009

"Rio Tinto's listed uranium subsidiary, Energy Resources of Australia, says low uranium prices and the effects of the financial crisis are hampering global mine development, setting the scene for a uranium shortage further out.  ERA chief executive Rob Atkinson said current spot prices of $US45 a pound did not appear to factor in coming demand and current supply issues. A number of developing mines around the world (not ERA's) were 'very much' greenfield sites, Mr Atkinson told The Australian. 'With the very weak American dollar, and also with the difficulties still in getting capital, there is a high likelihood a number of these projects won't get up.' Uranium prices have hovered between $US40 and $US50 a pound for most of the year after a steady slide from a 2007 record high of almost $US140."
Uranium shortage ahead, says ERA
The Australian, 14 November 2009

"Only a quarter of people believe that climate change is the most serious problem that the world faces, according to a poll for The Times. The finding suggests that the public is unconvinced by the Government’s message that climate change is 'the moral issue of our times' and that we must embrace urgently a low-carbon lifestyle. The poll, undertaken last weekend, found that only two in five people in Britain accept as an established scientific fact that global warming is largely man-made. The high degree of scepticism undermines the Government’s position at the UN climate change summit in Copenhagen next month. Gordon Brown will struggle to persuade developing countries that he has public support at home for drastic measures to reduce carbon emissions. Developing countries are threatening to walk out of the summit unless rich nations, including Britain, commit to making much greater cuts in carbon emissions than they are currently promising. The poll results indicate that voters are not yet convinced of the need for significant sacrifices and will resist new green taxes. Conservative voters are consistently less likely to be worried about global warming than other groups and are less supportive of measures to reduce emissions. There is also a small gender gap, with women slightly more supportive of new green taxes than men. Overall, 83 per cent accept, from what they have heard, that the Earth’s climate is changing and that global warming is taking place, with 15 per cent disagreeing. Even among the majority that believes in global warming, only half believe that it is 'now an established scientific fact that climate change is largely man-made'. Among the public as a whole 41 per cent agrees that it is established that climate change is largely man-made. Tory voters are more dubious, at 38 per cent, than Labour and Liberal Democrat supporters (at 45 and 47 per cent). A third of the public (32 per cent) agree that climate change is happening but believes it has not yet been proven to be largely man-made, while 8 per cent think that the view that climate change is man-made is environmentalist propaganda. Fifteen per cent believe that climate change is not happening....On specific policy options the poll shows an increase in support compared with three years ago for new taxes on air travel intended to reduce the number of flights people take, and for raising the cost of motoring to encourage people to drive less. Compared with November 2006, there has been a reduction in support for a much higher tax on cars that use a lot of petrol and emit high levels of carbon dioxide. There is now a clear majority of 57 to 40 per cent in favour of new air travel taxes, up from a split of 50/46 per cent in 2006. The highest support is among women, professionals and managers, and Liberal Democrat voters. Despite an increase in support, a majority still opposes increases in the cost of motoring, by 53 to 44 per cent. By contrast, despite a reduction in support, a big majority of 68 to 29 per cent support much higher taxes on cars that use a lot of petrol. Men (64 to 34 per cent) are much less enthusiastic than women (72 to 24 per cent). A very big majority (87 to 11 per cent) support new building regulations for all new houses to meet the highest standards of insulation by making more use of renewal energy such as solar power, even if this increases the cost of new homes. Middle-class people back such a change much more than working-class groups. The public clearly opposes, by 52 to 41 per cent, calls for the cost of meat to be raised because the farming of cows and pigs is a key contributor to methane emissions, a cause of climate change. Opposition is highest among men and Conservative voters. Voters very strongly support, by 69 to 26 per cent, proposals to set limits on carbon dioxide emissions and to make companies pay for their emissions, even if this results in higher prices for manufactured goods and energy."
Widespread scepticism on climate change undermines Copenhagen summit
London Times, 14 November 2009

"Britain has no chance of meeting its main carbon-reduction target because it lacks the engineering and manufacturing capacity to deliver the required renewable energy, a study has found. The Government has made a legally binding commitment to cut emissions by 80 per cent by 2050 but has failed to set out how this could be achieved. The study by the Institution of Mechanical Engineers says that the target, the central plank of Britain’s negotiating position at the UN climate change summit in Copenhagen next month, is 'an act of faith' with no grounding in reality. Britain would need to build the equivalent of 30 nuclear power stations by 2015 to be on course to meet the target, the study says. On Monday the Government said it hoped that private companies would build ten by 2025. The institution calls on the Government to accept the 'uncomfortable reality' that the 80 per cent target, mandated in the Climate Change Act, is unachieveable. It says: 'Given the magnitude of the engineering challenge and the pace of action required, the institution concludes that the Climate Change Act has failed even before it has started. It seems likely that the Act will have to be revisited by Parliament or simply ignored by policymakers.'.... The study estimates that, even using optimistic assumptions about annual rates of carbon reduction, the earliest the target for 2050 could be achieved is 2100.”
Government’s emissions target is unachievable, says study
London Times, 13 November 2009

"RIA Novosti quoted the national nuclear power company Kazatomprom as saying that Kazakhstan's uranium output increased 61% YoY in January to September 2009 to 9,535 tonnes. The company said in a statement that for the year as a whole, Kazatomprom expects to receive a net income of KZT 49 billion."
Kazakhstan uranium output up by 61pct
Steel Guru, 12 November 2009

"A leading academic institute has urged European governments to review global oil supplies for themselves because of the 'politicisation' of the International Energy Agency's figures. Uppsala University in Sweden today published a scathing assessment of the IEA's annual World Energy Outlook, saying some assumptions drastically underplayed the scale of future oil shortages. Kjell Aleklett, professor of physics at Uppsala and co-author of a new report 'The Peak of the Oil Age', claims oil production is more likely to be 75m barrels a day by 2030 than the 'unrealistic' 105m used by the IEA in its recently published World Energy Outlook 2009. The academic, who runs a Global Energy unit at Uppsala, described the IEA's report as a 'political document' developed for consuming countries with a vested interest in low prices. The report from Aleklett and others, including Simon Snowden from the University of Liverpool, says: 'We find the production outlook made by the IEA to be problematic in the light of historical experience and production patterns. The IEA is expecting the oil to be extracted at a pace never previously seen without any justification for this assumption.' There is particular concern about high future production rates from 'unconventional' sources such as tar sands, with the Uppsala report saying there is a lack of information about the figures in the 2008 Outlook and largely repeated in the latest one. 'We must therefore regard the IEA production figure as somewhat dubious until it is explained more fully,' added the Swedish report, which is to be published in the journal Energy Policy. The Uppsala findings come days after the Guardian reported that IEA whistleblowers had expressed deep misgivings about the way energy statistics were being collected and interpreted at the Paris-based organisation. Insiders questioned whether US influence and fears of stock market 'panic' were encouraging the IEA to downplay the potential for future oil scarcity. Aleklett, whose latest work was funded by the state-owned Swedish Energy Agency, said he had experience of similar internal worries about the IEA. 'The Organisation of Economic Cooperation and Development (OECD) gave me the task of writing the report, Peak Oil and the Evolving Strategies of Oil Importing and Exporting Countries. This report was one of those discussed at a round-table meeting that was held in the IEA's conference room in Paris. At that opportunity, in November 2007, I had a number of private conversations with officers of the IEA. The revelations now reported in the Guardian were revealed to me then under the promise that I not name the source. I had earlier heard the same thing from another officer from Norway who, at the time he spoke of the pressure being applied by the USA, was working for the IEA.'"
Oil: future world shortages are being drastically underplayed, say experts
Guardian, 12 November 2009

"In the 19th century it was European colonialists who scrambled for Africa’s riches. Today it is Asia’s emerging powers who are trawling the continent for raw materials to fuel their economies. This week, China promised African countries £6 billion in cheap loans after signing a series of multibillion-dollar deals to swap resources for infrastructure. India was not far behind. 'The whole world is out to grab Africa’s resources, not just China,' said Patrick Smith, the publisher of the fortnightly newsletter Africa-Asia Confidential. India is keen to export its pharmaceuticals, technology and industrial hardware and to import African copper, cobalt, diamonds, gold and oil.... Both Asian powers — like the US and others — are eager for a share of African oil to secure and diversify their energy supplies. Last year 16 per cent of China’s oil came from Angola, while 10 per cent of India’s came from Nigeria. When India bid for oil concessions in Angola, Africa’s largest oil producer, it found the market had already gone. Chinese state companies had secured monopolies by working for years in joint ventures with Angolan government-controlled companies, and by mixing politics with business in oil-for-infrastructure deals. By 2009, it was estimated that China had given loans worth up to $20 billion (£12 billion) to fund Angola’s post-war reconstruction, cementing a relationship that has paid off for China in millions of barrels of oil. A report in August by the Royal Institute of International Affairs (RIIA) on Asian involvement in the Nigerian and Angolan oil industries noted that 'China’s deeper pockets have certainly put a brake on India’s ambitions.'”
China and India engaged in 21st century ‘scramble for Africa’
London Times, 12 November 2009

"Global oil demand will grow in the fourth quarter of 2009, its first year-on-year increase in fuel use since the second quarter of 2008, the International Energy Agency said on Thursday.
In its monthly report, the Paris-based adviser to 28 industrialised economies, raised its global oil demand estimate for 2009 to 84.8 million barrels per day (bpd). Next year oil demand is expected to average 86.2 million bpd, following stronger-than-expected preliminary data in North America and buoyant demand in non-OECD Asia and the Middle East, the report said."
Global oil demand to see growth in Q4 - IEA
ArabianBusiness.com, 12 November 2009

"A looming glut in supplies of natural gas will trigger sliding prices and weaken Russia’s grip over Europe’s energy supplies, the International Energy Agency (IEA) said yesterday. In its 2009 World Energy Outlook, the IEA said that the surplus in global supplies could hit 200 billion cubic metres per year by 2015 — equivalent to more than three years’ annual gas production from Britain’s part of the North Sea. Fatih Birol, chief economist with the IEA, said that the glut was emerging because of slumping global energy demand amid the recession and booming American production of gas from 'unconventional sources', so-called 'tight gas' and 'shale gas'. New technology that uses hydraulic pressure to blast previously unreachable gas out of rock formations was driving a 'silent revolution' in the US energy market, with 'far-reaching implications' for the rest of the world. 'This is a gamechanger that will put downward pressure on spot prices,' he said. The United States is the world’s largest gas market, with annual consumption of about 653 billion cubic metres, but, until only two years ago, it was expected to have to import growing quantities of the fuel from overseas. However, production of unconventional gas in America has quadrupled since 1990 and now accounts for more than half of the total. The IEA said that the trend had raised doubts about the wisdom of huge investments that have been made around the world in recent years in liquefied natural gas (LNG) production and transport. 'Gas suppliers to Europe and Asia-Pacific will come under increasing pressure to modify their pricing terms and cut prices to stimulate demand.' Mr Birol said that the glut would have a host of other effects and would 'call into question Russia’s ambitions' to start selling LNG to other countries. Britain is the world’s fourthlargest consumer of gas, after the US, Russia and Iran. The UK burns about 91.4 billion cubic metres of the fuel every year."
World gas glut will weaken ‘Russian grip on Europe’
London Times, 11 November 2009

"Spain was celebrating its commitment to renewable energy yesterday after wind turbines dotted across the country produced more than half of all its electricity for the first time. High winds across Spain on Sunday meant that for over five hours, over 53 per cent of the country’s power came from wind energy. The towering white wind turbines which loom over Castilla-La Mancha — home to Cervantes’s hero Don Quixote — and which dominate other parts of Spain, set a new record in wind energy production. Most of the wind power was used immediately, 6 per cent was stored and 7.7 per cent was exported to France, Portugal and Morocco. In the past decade Spain has relentlessly invested in wind power, along with other renewable sources, making it the third-biggest supplier after the United States and Germany. Luis Atienza, president of Red Eléctrica which runs Spain’s electricity grid, said: 'This makes us proud. There is no other country of our size which has completed and bettered a renewable energy production of over 50 per cent in such a timescale.'...José Luis Rodriguez Zapatero, Spain’s Prime Minister, a strong believer in renewable energy, has hinted his Government may phase out nuclear plants. The move has provoked opposition from within the nuclear industry, his own party and from the opposition conservative Popular Party. Spain began its wind power push in 1997, but five years ago critics believed it could not produce more than 14 per cent of the country’s electricity. Wind farms have produced 17,700 megawatt-hours (mWh) of electricity so far this year, but renewable energy industry figures believe this figure could rise to 40,000mWh by 2020. Spain’s Socialist Government invested €991 million (£890 million) in wind power in 2007. Already it has reaped a return on its investment; in 2007 it saved €1 billion on fossil fuels, according to the Spanish Environment Ministry. José Donoso, president of the Spanish Wind Energy Association, said: 'A few years ago no one would have predicted these figures but we believe we can go on rising. It will be good for the environment and reduce our importation of fossil fuels.' Red Electrica said this year wind power is expected to produce 13 per cent of all electricity, hydroelectric power 10 per cent and solar power 2.5 per cent. Spain’s solar industry is one of the fastest growing in the world."
Spain’s wind turbines supply half of the national power grid
London Times, 10 November 2010

"Here's the bad news about the global recession's potentially coming to an end: the recovery could spark a massive energy crisis with increased demand for fossil fuels from China and other developing countries, tighter oil supplies and skyrocketing oil prices. And this is just in the near future. The longer-term picture looks even more daunting. If the world continues to guzzle oil and gas at its present pace, global temperatures will rise by an average of 6°C by 2030, causing 'irreparable damage to the planet.' The warning from the International Energy Agency (IEA), an intergovernmental energy watchdog based in Paris, could add extra weight to the negotiations leading up to the climate-change summit in Copenhagen next month, when leaders will attempt to come to an agreement on a successor to the Kyoto Protocol's limits on greenhouse-gas emissions.....But the energy crisis may be even more critical than what the IEA is saying. According to a report in the Guardian on Tuesday, the agency, under pressure from the U.S., has in past reports deliberately underestimated just how fast the world is running out of oil. The newspaper quoted an unnamed senior IEA official as saying that the U.S. encouraged the agency to 'underplay the rate of decline from existing oil fields while overplaying the chance of finding new reserves.' The official questioned the prediction in last year's World Energy Outlook that oil production could be raised from the current level of 83 million bbl. a day to 106 million bbl. a day, saying the estimate was higher than is feasible. This year's report lowers that prediction to 105 million bbl. a day. But critics of the IEA have long said the world has passed its peak in oil production and that such levels are unrealistic. A chief economist for the IEA, Fatih Birol, disputed the Guardian's report. 'I don't see any particular encouragement from the U.S. or any other of our governments,' he told TIME on Tuesday. He said the accusations about the IEA's downplaying of the world's tightening oil supplies surprised him, since 'we have said that oil production is declining in existing fields sharply,' he said."
After the Recession, an Energy Crisis Could Loom
TIME, 10 November 2009

"Ten nuclear power stations are to be built in Britain at a cost of up to £50 billion as the Government tries to prevent the threat of regular power cuts by the middle of the coming decade. The nuclear industry welcomed the plans, but critics said that ministers had acted too late to avoid an energy crunch caused by the closure of ageing coal-fired stations. Although the sites were known to be in line for development, the announcement signals the Government’s increasing ambition for nuclear power. Ed Miliband, the Energy Secretary, intends that construction of the stations should be quick enough to help to meet Britain’s 2050 target of reducing carbon emissions by 80 per cent while bolstering energy security as North Sea gas supplies decline. The announcement comes after a radical shake-up in planning laws. Under powers awarded to the Government last month, local authorities have been stripped of the right of veto over new nuclear plants and other key energy projects. Decisions will instead be taken by the Infrastructure Planning Commission, which was created to slash the period required to secure consent for energy projects from seven years to one year....None of the plants, which will cost at least £4 billion each, will be ready before 2017 — too late to replace eight coal-fired stations earmarked for closure by 2015. Greg Clark, the Shadow Energy and Climate Change Secretary, branded Mr Miliband’s statement a 'declaration of a national emergency for our energy security'.  He said: 'Every one of the measures contained in this statement should have been brought forward ten years ago when they had the chance to secure the investments that are so desperately needed to keep the lights on, keep prices down and cut carbon emissions. Why did they leave it so late?'.... Sam Laidlaw, the chief executive of Centrica, owner of British Gas, which is a partner with EDF, welcomed the changes. He said: 'Britain has a power generation gap looming from 2015 onwards which will need to be filled by new low-carbon replacements, particularly nuclear, and speed of decision making is very important. The current planning system has been a significant barrier so moves to streamline the process are welcome.' Each new reactor will generate up to 1.6 gigawatts — enough to power a city the size of Manchester — and should last for 60 years. The first is likely to be built by EDF Energy at Hinkley Point, Somerset, and should come into service by the end of 2017. New reactors at Sizewell, Suffolk, Wylfa, Anglesey, and Oldbury, Gloucestershire, are also likely to be among the first wave. Hartlepool, Co Durham, Bradwell, Essex, Heysham, Lancashire and three sites near Sellafield, West Cumbria, were also named. Ministers have ruled out construction of a new plant at Dungeness, Kent, citing the risk it faced from rising sea levels. Mr Miliband indicated three greenfield sites that might be suitable later on, although he cautioned that there were “serious impediments” to all of them. They are Kingsnorth, Kent, and Owston Ferry and Druridge Bay, both in the North East. About 13 per cent of Britain’s electricity was generated from nuclear power reactors last year and the Government wants to raise this to 25 per cent by 2025."
Ten nuclear stations to be built in bid to prevent energy shortage
London Times, 10 November 2009

"Families will pay a new levy on electricity bills for at least the next 20 years to fund technology designed to capture the carbon from coal-fired power stations. The Government is planning to raise £9.5 billion from the levy to subsidise up to four carbon capture and storage (CCS) demonstration plants. Details of the first plant will be announced early next year. The Department for Energy and Climate Change said yesterday that uncertainty over the commercial viability of CCS meant that public support might have to continue beyond 2030. The Government is promoting CCS to justify approving new coal plants to replace the eight due to close by 2015 under European rules on air pollution. Burning coal produces far more carbon than burning gas for the same amount of electricity but ministers want to build new coal plants to reduce Britain’s dependence on imported gas....The department said the CCS levy, likely to start in 2011, would be about £17 a year per household. It said that the cost could be higher if its assumptions about the cost of CCS proved too optimistic. The initial levy, which will be imposed on electricity suppliers but passed on to consumers, will run for 15 years. This will pay for the first phase of CCS, under which new coal plants will have to capture the carbon from only about a quarter of their generating capacity. Ed Miliband, the Energy and Climate Change Secretary, said that the levy could be continued beyond the 15-year period to subsidise CCS for the entire output of the four plants."
Government impose ‘carbon capture levy’ to fund coal-fired power plants
London Times, 10 November 2009

"The world is closer to a peak in oil supply than International Energy Agency estimates admit, UK newspaper The Guardian reported in its Tuesday edition, citing an unidentified 'whistleblower' at the IEA. The IEA, which advises 28 industrialized countries on energy policy, is scheduled to release its World Energy Outlook on Tuesday. It 2008 Outlook forecasts world oil supply will rise to 106 million barrels per day in 2030. 'Many inside the organization believe that maintaining oil supplies at even 90 million to 95 million barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further,' the Guardian quoted the IEA source as saying. Fatih Birol, the IEA's chief economist, could not immediately be reached by Reuters for comment on the Guardian article, which appeared on the newspaper's front page. While the Paris-based IEA has repeatedly warned that a lack of investment could lead to a strain on supply, it maintains that there is enough oil in the ground. Its 2008 World Energy Outlook said global oil output was 'not expected to peak before 2030.' The peak oil theory -- that supply has reached or will soon reach a high point and then fall -- has long been confined to the fringes of informed opinion within the industry. There is also growing interest in peak demand, the view that oil supply will reach a high point because of policies to curb fuel use as part of efforts to counteract global warming, not a lack of supply."
IEA 'whistleblower' says peak oil nearing: report
Reuters, 9 November 2009

"A huge expansion of nuclear power was signalled by the Government today as it named 10 sites where new power stations could be built. Energy Secretary Ed Miliband said that despite increases in renewable energy a boost to nuclear power would be needed to meet the nation's energy needs. The first is set to be operational by 2018 and, by 2025, nuclear electricity generation could amount to around 40 per cent of new energy provision. Nine of the new sites are in England, including three in Cumbria, with the 10th in Anglesey, North Wales. And Mr Miliband said a streamlined planning process would mean a clear timetable of one year from the acceptance of an application to a decision. Mr Miliband said a faster planning system would save UK industry up to £300 million a year in 'unnecessary expense'. One third of future generating capacity must be given consent and built by 2025, said the minister, adding: 'While there are already proposals to build more energy infrastructure, more is needed to bring about the shift to a low-carbon future.' Mr Miliband said a series of policy statements published by the Government today included a clear direction towards a 'massive expansion' in renewables, a new nuclear programme based around 10 sites, as well as moves to introduce clean-coal technology. The 10 sites named today are at Braystones, Sellafield and Kirksanton, all in Cumbria, Heysham in Lancashire, Hartlepool, Co Durham, Sizewell in Suffolk, Bradwell in Essex, Hinkley Point in Somerset, Oldbury in Gloucestershire and Wylfa in Anglesey."
Ten new nuclear sites named as Government aims for 'massive expansion' in energy
Daily Mail, 9 November 2009

"The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying. The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves. The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies. In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production. Now the 'peak oil' theory is gaining support at the heart of the global energy establishment. 'The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,' said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. 'The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this. 'Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,' he added. A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was 'imperative not to anger the Americans' but the fact was that there was not as much oil in the world as had been admitted. 'We have [already] entered the 'peak oil' zone. I think that the situation is really bad,' he added....John Hemming, the MP who chairs the all-party parliamentary group on peak oil and gas, said the revelations confirmed his suspicions that the IEA underplayed how quickly the world was running out and this had profound implications for British government energy policy. He said he had also been contacted by some IEA officials unhappy with its lack of independent scepticism over predictions. 'Reliance on IEA reports has been used to justify claims that oil and gas supplies will not peak before 2030. It is clear now that this will not be the case and the IEA figures cannot be relied on,' said Hemming....The IEA was established in 1974 after the oil crisis in an attempt to try to safeguard energy supplies to the west. The World Energy Outlook is produced annually under the control of the IEA's chief economist, Fatih Birol, who has defended the projections from earlier outside attack. Peak oil critics have often questioned the IEA figures. But now IEA sources who have contacted the Guardian say that Birol has increasingly been facing questions about the figures inside the organisation. Matt Simmons, a respected oil industry expert, has long questioned the decline rates and oil statistics provided by Saudi Arabia on its own fields. He has raised questions about whether peak oil is much closer than many have accepted. A report by the UK Energy Research Centre (UKERC) last month said worldwide production of conventionally extracted oil could "peak" and go into terminal decline before 2020 – but that the government was not facing up to the risk. Steve Sorrell, chief author of the report, said forecasts suggesting oil production will not peak before 2030 were 'at best optimistic and at worst implausible'. But as far back as 2004 there have been people making similar warnings. Colin Campbell, a former executive with Total of France told a conference: "If the real [oil reserve] figures were to come out there would be panic on the stock markets … in the end that would suit no one."
Key oil figures were distorted by US pressure, says whistleblower
Guardian, 9 November 2009

"Britain's biggest developer of offshore wind farms has hired Rothschild to sell stakes in its projects because it cannot afford to build them. The move by Dong Energy, the Danish power giant, casts fresh doubt on the government’s carbon-reduction plans just six months after it ramped up subsidies to keep the offshore wind sector afloat. Nuclear power and offshore wind are the main pillars of the government’s plan to slash pollution. Ed Miliband, energy secretary, will underline their importance when he delivers the national policy statement on energy tomorrow. Construction costs, however, have soared. Dong has plans to develop wind farms with a capacity of 3 gigawatts, enough to supply more than 2m homes, but they will cost more than £10 billion to build — twice the price just three years ago. 'The issue is that these projects require enormous amounts of capital and it’s getting very difficult to justify,' said an industry source. 'The enthusiasm there once was has diminished.'"
Future of wind farms in doubt
London Times, 8 November 2009

"This year's Petroleum Geology Conference in London included the following item on the agenda: Peak Oil: Advancing the topical debate over the timing of peak oil & gas 'The aim of the Geological Society's Peak Oil evening meeting is to further discuss and debate the timing and impact of Peak Oil & Gas. Have we become so efficient at exploring and producing petroleum resources that we are we already there as Colin Campbell ASPO) would argue? Or will technology solutions and a move to more unconventional deposits save the day as Mike Daly (BP) and Glen Cayley (Shell) would suggest? And let's not forget gas. Malcolm Brown (BG Group) sees a longer future for gas but will the progressive use of gas as a substitute for oil hasten its decline? Lots of questions, but do we really have the answers? Come along to the Geological Society on the evening of Tuesday 15th April and join in the debate. Our four invited speakers will present their case, to be followed by a panel discussion.' The debate took place as planned, but with a change in speakers from the original announcement. BP chief geologist David Jenkins argued for the motion that peak oil is "no longer a concern," and Jeremy Leggett argued against, incorporating the UK Industry Taskforce on Peak Oil and Energy Security conclusions into his case. At the end of the debate, approximately five hundred oil-industry geologists voted. Only about a third voted in favor of the motion 'Peak oil is no longer a concern.' The debate has been written up in November's issue of Petroleum Review."
Geologists Vote that Peak Oil is a Concern
The Oil Drum, 8 November 2009

"British families could be forced to pay up to £227 extra on their annual energy bills to help to fund a new generation of nuclear power stations under plans proposed by the French company expected to build most of them. EDF Energy, which wants to build four reactors in Britain at a cost of about £20 billion, was accused of holding the Government to ransom last night, after an executive told The Times that none would be built unless the Government agreed to underwrite part of the cost. Speaking before a government announcement on Britain’s energy future on Monday, Humphrey Cadoux-Hudson, managing director of EDF Energy’s new nuclear business in Britain, said the nuclear programme would proceed only if the Government ensured that consumers paid more for electricity from fossil fuels, such as coal and gas, which is cheaper but produces more greenhouse gas, making nuclear more competitive. To fix the market in favour of nuclear energy he proposed a minimum price on the permits that energy companies need to buy to emit carbon dioxide. The cost of permits was too low — at about €14 per tonne — for energy companies to be encouraged to invest in nuclear rather than gas-fired power stations, which are far cheaper and quicker to build. He said that a price of €25-35 per tonne of carbon dioxide was necessary to make construction of nuclear stations profitable. 'A floor price for carbon is needed ... The waste product of fossil fuel generation needs to have a cost,' he said. Matthew Sinclair, research director at the TaxPayers’ Alliance, strongly rejected the proposals. He said: 'There is no way that the Government should even think of acceding to EDF Energy’s demands for a floor price on carbon.' Mr Sinclair claimed that the cost to British consumers would be about £4.2 billion to £5.9 billion per year, or £162 to £227 per household, and that it would hit poor and vulnerable households hardest. Ben Ayliffe, a campaigner for Greenpeace, accused EDF of holding the Government to ransom over the new build programme. 'They have got them by the short and curlies ... Even with the full resources of the French Government behind them, it seems they cannot make the economics of new nuclear stack up.' With supplies of North Sea gas rapidly running out, on Monday the Government will disclose an approved list of sites for new nuclear plants, each of which would churn out enough electricity to power a city the size of Manchester for 60 years. By 2015 it hopes that at least eight will be under construction, with the first, at Hinkley Point, Somerset, due to enter service in 2017."
EDF Energy wants Britain to fix the market if it builds nuclear plants
London Times, 7 November 2009

"Georgia plans to launch a Russian-language television channel targeting ethnic minorities across the Caucasus, in its latest challenge to Moscow's influence in the strategically important region. Russia and the West are vying for influence over the region, a strategic crossroads at the threshold to Central Asia and criss-crossed by pipelines carrying oil and natural gas to the West. The head of Georgia's public broadcaster, Gia Chanturia, said the company planned to launch the first regional channel in the Caucasus. 'Its main goal is to talk about national minorities living in this region,' he told Reuters. Moscow is unlikely to look kindly on a Georgian-run channel broadcasting to its southern republics, where it has fought two wars against Chechen separatists in the past 15 years and faces a growing threat from Islamist insurgents. Chanturia said the plan was in its early stages, and was spurred in part by the situation after pro-Western Georgia's five-day war with Russia in August last year. 'In a way the creation of this channel is linked with the processes in our country after the war last year and in the region in general,' he said. He said the channel would probably begin broadcasting via the Internet before moving to satellite. Chanturia flatly denied media reports that fugitive Russian tycoon Boris Berezovsky would finance the project, saying the claims were, 'if not strange, then very stupid.' Berezovsky wielded huge political influence in Moscow in the 1990s before falling foul of then-Russian president and now Prime Minister Vladimir Putin. He now lives in self-imposed exile in London. Berezovsky also denied involvement, telling Reuters by telephone: 'This is not true. I repeat, it is not true.' Chanturia said the channel would be funded from the Georgian budget and would contain news from across the region. Russia crushed a Georgian assault on the breakaway pro-Moscow region of South Ossetia last year after days of deadly clashes and months of rising tensions between Moscow and staunch U.S.-ally Tbilisi. Georgian media reports say the project will involve a number of high-profile Russian journalists known for their criticism of the Russian leadership."
Georgia Plans Russian-Language Regional TV Channel
Reuters, 5 November 2009

"Iraq has struck a deal with a consortium led by US oil giant Exxon Mobil, and including Royal Dutch Shell, to develop the West Qurna 1 oil field. This is the second major deal the country's oil ministry has agreed with overseas oil firms this week. The latest deal, which needs cabinet approval, is designed to boost oil production at the Qurna oil field from 280,000 to 2.1 million barrels a day. Earlier this week, Iraq struck a similar deal with Italian firm ENI. Under the terms of the deal, ENI will lead a consortium to develop the Zubair oilfield in southern Iraq. The deal, which also needs cabinet approval, calls for the group to extract 200,000 barrels of oil a day, rising to 1.1 million a day within seven years. Last month, Iraq signed off a deal with Britain's BP and China's CNPC. The two oil companies will develop the giant southern oilfield in Rumaila. The project aims to almost triple output at the 17-billion-barrel field - increasing it by two million barrels a day. These agreements are the first major oil deals Iraq has signed with international oil companies since the US-led invasion of 2003. Iraq has the world's third-largest oil reserves, but production has yet to reach full potential. The country's total daily output of about 2.4 million barrels is lower than it could be, because of sanctions against former Iraqi governments, lack of investment and insurgent attacks, analysts say."
Iraq in third overseas oil deal
BBC Online, 5 November 2009

"What was the industry that powered Britain towards prosperity in the 1980s, and made us one of the most dynamic and successful nations in the Western world? I'll give you a clue: it was described by a prime minister as 'God's gift' to the British economy; its revenue stream pumped ever larger amounts of cash into the Exchequer – and its subsequent collapse has helped send the public finances spiralling towards disaster. If your first reaction was 'the City', think again. The answer is North Sea oil. One of the peculiarities of British politics – and economics – is the reluctance to take into account the critical contribution of oil to the economy. We spend so much time droning on about our excessive reliance on the financial sector that we tend to ignore this elephant in the room. But the truth is that, for the past quarter of a century, Britain has been a petro-economy. In 1999, we were producing more oil than Iraq, Kuwait or Nigeria. The following year, we pumped out almost twice as much natural gas as Iran – a country with reserves that are the envy of the world. The result is that while we are apt to attribute the sudden spurt in Britain's prosperity in the mid- to late-1980s to a deregulated and reinvigorated City, it owed far more to the massive windfall from the North Sea. Take a look at the numbers. In 1979, when Margaret Thatcher came to power, the amount Britain owed, as a nation, was £88.6 billion. In the subsequent six years, taxes from the North Sea (which had been pretty much non-existent previously) generated an incredible £52.4 billion. This was no temporary windfall: last year, thanks to record oil prices, the Treasury had its largest ever haul from the North Sea, at £13 billion. This colossal sum equates to more than 3p on the basic rate of income tax – and it was thanks in great part to such revenue that Labour was able to sustain public spending in recent years without a drastic increase in interest rates or having to pass the extra costs on to consumers in the form of higher taxes. The benefits went far beyond the public finances. Were it not for the cushion provided by oil exports, the deficit in Britain's current account – its international ledger – would have been one of the worst in the Western world. Moreover, much of the massive rise in business investment in the years before the financial collapse was due entirely to spending in the North Sea. In short, without oil, recent history would have been vastly different. Growth would have been weaker, consumer spending less and the public finances decidedly more parlous. That's not to say Britain would have been an economic pygmy – just that oil is a luxury that has permitted us to live much more comfortably. There are two problems, however. The first is that the stuff is running out. Production of North Sea oil has halved in the past decade; Britain has gone from being comfortably self-sufficient in oil and gas to being a net importer. This means the UK is now doubly sensitive to an increase in oil prices, and to any potential breakdown in energy supplies: witness Russia's brief and terrifying interruption of most of Western Europe's gas imports a couple of years ago. The second issue is that since the oil arrived, we have treated it not as a luxury but as a staple of economic life. Unlike the Norwegians, who diverted a slice of their North Sea revenues into an investment fund designed to provide for them when the oil started to run dry, chancellors of every political hue treated North Sea taxes as current income. This was a mistake. Norway's prudence has helped it withstand this crisis and establish itself as the Switzerland of the 21st century. Even worse, treating the oil money as a permanent asset rather than a temporary benefit has left us ill-prepared for its decline. But declining it is."
North Sea oil is dragging us into the red
Daily Telegraph, 5 November 2009

"Will it be China that finally pays the huge bills for repairing and rebuilding Afghanistan and Iraq — and reaps the rewards? It’s looking that way: as the US and Britain look for an exit from the battle zones, China is digging in. From its point of view, the wreckage of other governments’ half-completed wars offers a chance to strike deals on terms that look cheap on all but the most apocalyptic views of the course of those conflicts. To some involved in development on the ground, that has benefits, if China will risk money where others fear to tread. But to many in Washington, it looks as if China is winning the benefit of the struggles of the US and its allies. This week, China National Oil Corporation finally secured its place in Iraq. Together with BP, it signed the first big oil deal since the 2003 invasion. China’s oil companies set up a presence in Iraq soon after the invasion. Those observing their deliberations say that they were not indifferent to the security of their employees compared to Western companies — and were very keen not to be thought indifferent — but had the clear competitive advantage of being able to take a more relaxed approach to the legal uncertainties of title to Iraq’s oil revenues. As it happens, that extra tolerance was not necessary, as BP’s part in the deal shows. For all the public protests that greeted the sale, the Baghdad Government had finally addressed some key questions that had stymied investment. But China’s willingness to contemplate a rougher environment underpinned its presence during the worst turmoil, analysts say. The Afghan copper mine deal struck two years ago, and just now getting under way, has come during an even worse stage of violence. But some analysts think it will prove extremely lucrative for China — the source of continuing controversy. In November 2007, the China Metallurgical Group won the right to develop the Aynak copper field south of Kabul, in a former al-Qaeda stronghold. China’s bid of $3 billion came with a pledge to build a coal power plant and the country’s first freight railway. Analysts reckon the field is one of the world’s largest undeveloped copper reserves. In the words of one senior Obama official, US geological surveys of Afghanistan’s untapped riches are 'a good reason why it should not be considered a poor country'. Senior Afghan officials, including the Ambassador to the US, have said that bidding was above board and that the Chinese company won partly because it could start work earlier. But US and Canadian companies have complained at the secretive process, suggesting that it was tilted towards China. Analysts suggest that the deal undervalues the mine. Chinese officials have not commented on allegations of bias, but say that their project will bring infrastructure and jobs soon, despite insecurity."
As allies struggle in battle, China moves in to do business
London Times, 5 November 2009

"The International Energy Agency next week will make a 'substantial' downward revision to its long-term forecast for global oil demand, a person familiar with the matter said, marking the second year running the group has slashed its view of the world's thirst for oil. The forecast of slower growth in oil demand puts the IEA increasingly in a camp of contrarians bucking the popular view that crude demand will grow briskly in a postrecession world. That view holds that long-term demand will grow at a fast clip because of rising emerging-market wealth and consumption in places like China and India. The IEA, which advises rich nations, such as the U.S., on energy matters, is set to use its closely watched annual World Energy Outlook report to forecast that improved energy-efficiency measures in developed nations, as well as climate-change legislation, will help to slow the rate of global oil consumption. A person familiar with the Paris-based IEA's plans said 'demand-management policies' are having more impact than previously expected in the developed world, which accounts for about 55% of world oil consumption. The IEA outlook, a guidepost for industry trends, is scheduled to be released Nov. 10. A drop in industrial activity from the recession is also a big factor in the revision. Baseline assumptions used in the previous long-term outlook have to be adjusted down to account for the tough economic conditions of the past year. Last year, the IEA shaved 10 million barrels a day off its long-term forecast and projected consumption in 2030 would hit 106 million barrels a day, or about 25% above current levels. It isn't clear how that compares with the cuts expected in this year's forecast by the IEA....Various analyst estimates maintain that the roughly 2% a year average growth rate in world oil consumption seen earlier this decade -- the biggest reason for crude prices hitting a record $147 a barrel last year -- may turn out to be an anomaly and that annual growth in the neighborhood of 0.5% to 1% is more the norm. Still, a lot more energy, including nuclear power and raw crude, will be needed to power rising economic activity in China, the world's second-biggest oil consumer after the U.S., and other markets. Cost savings gleaned from more-efficient products and processes may yield more commerce and, thus, more demand for oil. And there is this: The world has seen previous periods of energy-efficiency gains almost vanish after new oil supply hits the market and pressure prices lower, as happened in the 1990s. Some analysts believe crude could rise to $200 a barrel within a few years from today's $79 level. They say a speedier-than-expected economic recovery could make open consumers' wallets to higher crude prices. Still, price increases are bound to reinforce conservation. 'There is a market assumption today that we will head back to the old days of rapid oil demand, but we think we are heading into new days,' in which the growth in consumption will be more subdued, said Dan Yergin, chairman of IHS Cambridge Energy Research Associates. Mr. Yergin says several factors are prompting companies and consumers to make the most of their energy dollars. Among them: the sting of record oil prices in recent years, the threat that political obstacles in many oil-producing states will slow delivery of new barrels to the market, and the battle against climate change. The energy-research group said last month it thinks oil consumption in the industrialized world peaked in 2005. Mr. Yergin believes the same will probably happen globally in two decades. Deutsche Bank says global demand will peak by 2016 as consumption reaches around 90 million barrels a day, versus about 85 million currently, due to efficiency gains and technology improvements in electric vehicles."
World Need for Oil Expected to Ease
Wall St Journal, 4 November 2009

"After a year in which Europe slashed its imports of Russian natural gas, OAO Gazprom says it sees signs of a turnaround, with European demand now exceeding precrisis levels. Analysts, however, said Gazprom's customers had simply started buying bigger quantities of Russian gas late in the summer to take advantage of lower prices, not necessarily because the European economy was recovering. In a statement, Gazprom said its sales to Europe since July exceeded sales in the same period of 2007 and 2008."
World Need for Oil Expected to Ease
Wall St Journal, 4 November 2009

"... this month Scientific America[n] is back on track with a cover story entitled 'A Plan for a Sustainable Future - How to get all energy from wind, water and solar power by 2030.' tells us that currently the world is consuming about 12.5 trillion watts of all forms of energy at peak consumption. In 20 years, the demand will be up 16.8 trillion watts given growth in population and living standards. U.S. peak demand in 2030 would be 2.8 trillion watts of all forms of energy. Interestingly enough that would decline to 1.8 trillion if the U.S. automobile fleet were converted from gasoline and diesel to far more efficient electric power. If you are worried about enough sun and wind, you shouldn't be, as suitable wind locations will be able to provide 40-85 trillion watts, solar an additional 580 trillion watts and water power in one form or another, two trillion more. The hardware numbers the authors arrive at to replace fossil fuel are impressive, - 3.8 million 5-megawatt wind turbines, 490,000 tidal generators, 720,000 0.74 megawatt wave converters, 1.7 billion .003 megawatt rooftop photovoltaic systems, 5,300 geothermal plants, 900 1.3-megawatt hydroelectric plants, and to top it off 49,000 concentrated solar 300-megawatt power plants and 40,000 commercial photovoltaic power plants. Total cost would be on the order of $100 trillion. Interestingly the authors do not consider an effort of this magnitude beyond the capacity of the world's industrial, manufacturing and construction resources. They note the massive transformation that took place during World War II when nearly every industrial nation on earth was switched over to producing war material. Producing four million wind turbines and over 20 years (200,000 per year) and the other installations required is not beyond a global civilization that has the capacity to produce 80 million automobiles each year. Three hurdles to a transition away from fossil fuels have been identified. The first is whether there will be enough specialized materials - particularly exotic ones such as neodymium, tellurium, indium and lithium that would be necessary for the magnets of wind turbines, photovoltaic cells and high capacity vehicle batteries. While a solution to this is not immediately obvious, the authors seem to believe that alternative ways of making the necessary components plus recycling should be sufficient to produce and sustain the necessary hardware. A major feature of the plan is the mix of solar, wind, water, and geothermal power that if harmonized in large-scale smart grids should be able to fill the demand for electrical energy around the clock despite the intermittent nature of wind, solar. With hydro (including tides, waves, and flowing rivers) and geothermal providing a base, wind and solar would provide the bulk of the load in a post-carbon world depending on the time of day and wind and sun conditions. An important requirement for such a mix would be a grid capable of moving power from areas where the sun is shining or the wind blowing adequately at any given moment to deficit areas. Another important consideration is that costs of renewables are dropping and those of fossil fuels are growing. Wind is already competitive with the cost of coal generated electricity is some areas. The better grades of coal are depleting and will have to be replaced by lower energy coals that have to be moved long distances. In the authors' opinion, sequestering carbon from coal and nuclear power are non-starters due to the costs and energy involved in building and operating the facilities. The last major hurdle to this fossil-fuel-free utopia is the political will. The status quo (fossil fuels) is deeply entrenched, with massive resources to fight change. So far the need for a transition is to most largely theoretical in that there are no shortages and fossil fuels are not yet prohibitively expensive. In America, gasoline is still affordable by most, the seacoasts are not yet routinely flooding and the crops are still growing. Recent polls are showing more and more people are becoming skeptical that reducing carbon emissions from fossil fuels is really a priority in view of the current economic difficulties."
The Peak Oil Crisis: A Plan For Renewables
Falls Church News-Press, 4 November 2009

"A combination of oil, luxury property investments and behind-the-scenes African diplomacy had more to do with Simon Mann’s release than anything that his own government could have done. Call it a deal, an understanding, a nod or a wink, but however you put it the release of Mann and his accomplices suits a number of interested parties very nicely. In 2005 62 black South African mercenaries finished their sentences — served in Zimbabwe, where they were arrested — for their part in the alleged coup attempt in Equatorial Guinea. Since then South Africa has been quietly working to free four of its white citizens, held with Mann, in the notorious Black Beach prison in Malabo, Equatorial Guinea. Both sides wanted the issue cleared up before President Zuma arrived in Equatorial Guinea today on a state visit. He will be accompanied by his energy, foreign and state security ministers — the biggest delegation to visit the country — with the aim of strengthening ties. 'South Africa is keen to promote economic relations in the areas of agriculture, mining, energy, tourism and infrastructure development,' the President’s office said yesterday. South Africa, which faces a critical shortage of energy, particularly wants oil and gas deals and the rights to exploit suspected mineral riches on land. The flip side is that most of Equatorial Guinea’s ruling elite — particularly its 'first family' — have huge investments in South Africa, including properties in Cape Town, Johannesburg and Pretoria. President Obiang is a regular visitor. South Africa was deeply angered at being used as yet another springboard for yet another coup against a fellow African nation — Mann implicated Thabo Mbeki’s Government in his “confession”. But even while backing Mann’s extradition to Equatorial Guinea it quietly pushed for a proper trial, receiving an unofficial assurance that the Briton would not receive the death sentence and would go home early if he told all. In this it got the support of the US, President Obiang’s closest ally since his country found its vast oil reserves. The South Africans also argued that the plot was orchestrated in Britain and Spain by big financiers, backed unofficially by their governments, to get access to oil reserves because too much was going to the US, and the mercenaries were small fish in a big pond."
African diplomacy helps to free Simon Mann rather than government help
London Times, 4 November 2009

"A giant mechanical digger gouges out a chunk of topsoil, grass and tree stumps, extending a neat furrow that stretches into the distance. Dozens of similar furrows run parallel with the regularity of a ploughed field. Yet no crop could grow in the pitch-black surface exposed by the machine working 1,000ft below our helicopter. This is the edge of a fast-expanding open-cast mine in the Canadian tar sands, one of the world’s most polluting sources of oil. It takes only a few minutes to fly across the 200 sq miles (520 sq km) of mines, processing plants and man-made lakes of toxic water. But Canada has so far extracted only 2 per cent of a resource that it hopes will turn it into a global energy superpower. BP and Shell are among dozens of oil companies preparing to raise production from 1.3 million barrels a day at present to 2.5 million by 2015 and 6 million by 2030. Canada faces a dilemma as it prepares for next month’s UN climate summit in Copenhagen. It wants to present itself as environmentally responsible but also wants the profits from the tar sands, which cover an area of Alberta’s natural coniferous forest larger than England. The sands contain 174 billion barrels of proven reserves, the world’s second-largest reserves after Saudi Arabia. With improved techniques, Canada hopes to extract between 315 billion and 1.7 trillion barrels. A Co-operative Bank study calculated that, even if all other carbon dioxide emissions stopped, fully exploiting the tar sands would still tip the world into catastrophic climate change by raising global temperatures more than 2C above pre-industrial levels. Extracting each barrel of crude from the sticky mass of sand, clay and bitumen produces two to three times as much CO2 as drilling for a barrel of conventional oil. The tar sands boom faltered a year ago as the oil price fell below the $60 a barrel at which the extraction process is profitable. Now, with oil at about $80 a barrel, hundreds of fortune seekers arrive each day in Fort McMurray, the oil equivalent of a gold rush town.....Canada knows, however, that the biggest long-term threat to its tar sands industry is not dead ducks but international regulations on greenhouse gas emissions. Most of the crude is exported to the United States, where several states are considering banning it because it is so carbon-intensive. America’s dependence on tar sands is a sensitive issue in Washington, and Barack Obama’s ambassador to Canada toured the mines last month and questioned the companies about their carbon emissions. Alberta’s latest proposal to rid tar sands of their dirty image is a C$2 billion subsidy for carbon capture and storage (CCS) facilities. Shell plans to install CCS by 2015 at an upgrading plant but admits that it would reduce carbon emissions from its tar sands production by only 15-20 per cent. Mel Knight, the energy minister for Alberta, which receives C$12 billion a year in revenue from its oil and gas industries, told The Times: 'There has to be at least a hundred years of production in the oil sands and CCS will make this more palatable. My feeling is we will reach a steady state of five million barrels a day. The oil sands are critical [to] the global supply of energy. The world needs the energy and there’s no alternative that we can see.' Shell plans to increase production from 155,000 barrels a day to 255,000 next year. BP is designing a plant with an initial output of 60,000 barrels a day, rising to 200,000 within a decade. Canada has offered belatedly to cut its current CO2 emissions by 20 per cent by 2020 but wants to be forgiven for ignoring the target set at Kyoto a decade ago. Its emissions were 26 per cent above its 1990 levels by 2006: the Kyoto target was a 6 per cent cut."
It’s a dirty business — the new gold rush that is blackening Canada’s name
London Times, 4 November 2009

"Vast amounts of oil lie in the bitumen-rich sands of Northern Canada, but whether oil companies choose to spend billions extracting them will hinge on decisions made 6,000 miles away in Denmark next month. Even at the best of times, squeezing crude from Alberta’s tar sands is an environmentally fraught process that is economic only with very high oil prices. The cost of oil production can be $70 (£43) per barrel compared with only $5 for the onshore oilfields of Saudi Arabia or Kuwait. The prospect of a successful climate deal in Copenhagen threatens to hit the industry with a cost that could drive it out of business: international carbon regulation. Like all big economies, Canada will be expected to agree to make cuts in its CO2 emissions of at least 20 per cent by 2020 and up to 80 per cent by 2050. A key goal of the UN meeting is to create an effective global trading scheme for carbon emissions — a tool that would place a firm price on greenhouse gases produced by industry. A weak trading system of this kind already exists in Europe but governments want to create a bigger and bolder scheme that would penalise the use of high carbon fuels and drive global investment into cleaner energy. As one of the most carbon intensive fuels around, the Canadian oil sands industry would be one of the biggest losers. So much energy is needed to heat raw bitumen into a usable crude that an oil sand operator typically uses up the equivalent of one barrel of oil for every three barrels it extracts. For the same energy expenditure you would expect 100 barrels from a conventional Middle East oil well. There is a lot at stake. The Canadian Government collected more than C$30 billion from oil sands–related activities from 2000 to 2008 and about 240,000 jobs rely on the industry. Powerful interests inside and outside Canada are determined to find a sustainable method of producing oil from the tar sands."
Copenhagen talks could leave oil industry with a sinking feeling
London Times, 4 November 2009

"The biggest energy innovation of the decade is natural gas -- more specifically what is called 'unconventional' natural gas. Some call it a revolution. Yet the natural gas revolution has unfolded with no great fanfare, no grand opening ceremony, no ribbon cutting. It just crept up. In 1990, unconventional gas -- from shales, coal-bed methane and so-called 'tight' formations -- was about 10% of total U.S. production. Today it is around 40%, and growing fast, with shale gas by far the biggest part. The potential of this "shale gale" only really became clear around 2007. In Washington, D.C., the discovery has come later -- only in the last few months. Yet it is already changing the national energy dialogue and overall energy outlook in the U.S. -- and could change the global natural gas balance. From the time of the California energy crisis at the beginning of this decade, it appeared that the U.S. was headed for an extended period of tight supplies, even shortages, of natural gas.... The companies were experimenting with two technologies. One was horizontal drilling. Instead of merely drilling straight down into the resource, horizontal wells go sideways after a certain depth, opening up a much larger area of the resource-bearing formation. The other technology is known as hydraulic fracturing, or 'fraccing.' Here, the producer injects a mixture of water and sand at high pressure to create multiple fractures throughout the rock, liberating the trapped gas to flow into the well. The critical but little-recognized breakthrough was early in this decade -- finding a way to meld together these two increasingly complex technologies to finally crack the shale rock, and thus crack the code for a major new resource. It was not a single eureka moment, but rather the result of incremental experimentation and technical skill. The success freed the gas to flow in greater volumes and at a much lower unit cost than previously thought possible.... In the last few years, the revolution has spread into other shale plays, from Louisiana and Arkansas to Pennsylvania and New York State, and British Columbia as well. The supply impact has been dramatic. In the lower 48, states thought to be in decline as a natural gas source, production surged an astonishing 15% from the beginning of 2007 to mid-2008. This increase is more than most other countries produce in total.... With more drilling experience, U.S. estimates are likely to rise dramatically in the next few years. At current levels of demand, the U.S. has about 90 years of proven and potential supply -- a number that is bound to go up as more and more shale gas is found. To have the resource base suddenly expand by this much is a game changer. But what is getting changed? It transforms the debate over generating electricity. The U.S. electric power industry faces very big questions about fuel choice and what kind of new generating capacity to build.... It could also mean that more buses and truck fleets will be converted to natural gas. Energy-intensive manufacturing companies, which have been moving overseas in search of cheaper energy in order to remain globally competitive, may now stay home... So far only one serious obstacle to development of shale resources across the U.S. has appeared -- water. The most visible concern is the fear in some quarters that hydrocarbons or chemicals used in fraccing might flow into aquifers that supply drinking water. However, in most instances, the gas-bearing and water-bearing layers are widely separated by thousands of vertical feet, as well as by rock, with the gas being much deeper.... Unconventional natural gas has already had a global impact. With the U.S. market now oversupplied, and storage filled to the brim, there's been much less room for LNG. As a result more LNG is going into Europe, leading to lower spot prices and talk of modifying long-term contracts. But is unconventional natural gas going to go global? Preliminary estimates suggest that shale gas resources around the world could be equivalent to or even greater than current proven natural gas reserves. Perhaps much greater."
America's Natural Gas Revolution
Wall St Journal, 3 November 2009

"The British oil giant BP will today take control of Iraq’s biggest oilfield in the first important energy deal since the 2003 invasion. The move has created uproar among local politicians invoking resentful memories of their nation’s colonial past. The agreement to develop the Rumaila field, near the southern city of Basra, will potentially put Iraq on the path to rivalling the riches of Saudi Arabia within a decade — if the Government can fend off corrupt officials, continuing terrorist attacks on pipelines and political uncertainty. Many Iraqi MPs say that the deal is illegal, and that the constitution should give them, not the Oil Minister, the final say over the country’s vast resources. BP will develop the field, believed to hold about 17 billion barrels of oil, with CNPC, a Chinese oil producer and supplier. Along with other agreements to be signed this year, BP’s presence is forecast to increase Iraqi production from 2.5 million barrels a day to 7 million in about six years. Ownership of the field will remain in Iraqi hands — as the Government has been at pains to point out — with the contract giving the companies $2 for every barrel extracted. Industry critics have branded the return derisory, but say that BP is eager to get a foothold in Iraq. After years of stagnation, Iraq appears determined to exploit natural resources to fund infrastructure improvements. It is the world’s 11th-biggest oil producer, with the potential to climb to third place or higher. 'With an extension of the pipeline network they could reach the [output level of] the Saudis,' said Ben Lando, of the website Iraq Oil Report. Saudi Arabia is the world’s second-largest producer at nine million barrels a day, behind Russia at ten million barrels....BP has not been criticised directly, but its involvement will revive memories of past exploitation by the British. It is believed widely that Britain created and controlled the country for the benefit of British exporters. This week several MPs wrote a letter of protest to Christopher Prentice, the British Ambassador in Baghdad, saying that BP’s move was undermining democracy by circumventing parliamentary approval of the Rumaila deal."
Outcry against 'colonial' takeover by BP of Rumaila oilfield in Iraq
London Times, 3 November 2009

"The Organization of Petroleum Exporting Countries raised crude-oil production last month to the highest level in 10 months as members took advantage of higher prices, a Bloomberg News survey showed. Output averaged 28.76 million barrels a day in October, up 80,000 barrels from September, according to the survey of oil companies, producers and analysts. The entire gain came from the 11 OPEC members with quotas, all except Iraq. The 11 countries pumped 26.31 million barrels a day, 1.465 million barrels above their target. Iraqi output was unchanged. OPEC cut output quotas by 4.2 million barrels to 24.845 million barrels a day last year as fuel demand tumbled during the worst recession since the 1930s. The group, which left the targets unchanged at a Sept. 9 meeting in Vienna, is set to meet again on Dec. 22 in Luanda, Angola. 'They are looking at prices near $80, and a stronger economic picture, and have decided it’s a good time to earn a bit more,' said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. Crude prices have more than doubled from a four-year low of $32.40 a barrel reached at the end of last year, which caused OPEC to make production curbs. Oil has traded between $65 and $82 since Aug. 1. ...OPEC had 5.74 million barrels a day of spare capacity last month, down from 5.82 million in September, the survey showed. Saudi Arabia can increase daily output by 2.65 million barrels, the most of any member. OPEC’s two West African members, Nigeria and Angola, had the biggest production increases last month."
OPEC Output Rose in October, Bloomberg Survey Shows
Bloomberg, 2 November 2009

"Exxon Mobil Corp., the world’s biggest oil company, agreed to pay C$250 million ($231 million) for UTS Energy Corp.’s stakes in three oil-sands prospects in western Canada. UTS expects after-tax proceeds for its 50 percent stakes in the leases east of Alberta’s Firebag River to be about C$200 million, the Calgary-based company said today in a statement. Vancouver-based Teck Resources Ltd. owns the other 50 percent of the Alberta leases, which cover a combined area equal to half the size of Sacramento, California."
Exxon Mobil to Pay $231 Million for Oil-Sands Stakes
Bloomberg, 2 November 2009

"A stretch of coastline on the Texas-Louisiana border provides a startling glimpse of Europe’s energy future. There, where Lake Sabine empties into the Gulf of Mexico, a giant port was completed last year. Built at a cost of $1.5 billion (£900m), it was meant to be a vital new part of America’s energy infrastructure. Giant tankers from places such as Qatar and Sakhalin island in Russia’s far east were meant to dock there to inject their cargoes of liquefied natural gas (LNG) straight into the national pipeline network. The Sabine Pass terminal was meant to take about one ship a day but since it opened for business 18 months ago only 10 ships have come in. 'This big shiny new terminal was one of the ones built as the answer to declining US gas production and increasing demand,' said Steve Johnson president of Waterborne Energy, a Texas energy consultancy. 'Now it’s in mothballs.' It is much the same story at America’s eight other LNG import terminals. They are running at only 10% of capacity. 'We have had so much new production come on stream that all of a sudden the role of these terminals has changed dramatically,' said Johnson. 'They are getting the world’s leftovers.' The reason is shale gas — a new and abundant source of natural gas, trapped in rock formations. Oil companies have known about it for decades but always dismissed it because it was too expensive and difficult to extract. In the past few years new technologies that pump water underground to fracture the rock and free the gas have been perfected. The breakthrough has opened a new frontier for the energy industry and turned long-held assumptions about the world’s dwindling supplies on their head. Suddenly, America is awash with gas. Tony Hayward, chief executive of BP, said it had created a 'a revolution in the gas fields of North America'. In a report this summer, the US potential gas committee increased its estimates of American reserves by a third. The Department of Energy now predicts that shale gas could meet half America’s demand within two decades and turn the country into a net exporter. The gas price has reacted accordingly, crashing by 60% in the past year, severing the long-standing link with the oil price. The revolution in America has set off activity elsewhere. In August Conoco Phillips signed a deal to explore 1m acres in Poland. Shell has bought licences in Sweden, and Exxon Mobil has large holdings in Germany and Poland. France recently launched a licensing round. Other projects are under way in Argentina, Australia, China and India. Paul Wheeler, managing director at the Jefferies International investment bank, said: 'There is a landgrab going on in Europe. It will change the game if the big oil companies crack the geological code of unconventional gas in Europe. The resulting gas production would make Europe more self sufficient and put the brakes on Russian gas becoming a more potent instrument of political influence.' Burning gas produces far lower carbon emissions than oil or coal. For governments struggling to hit pollution targets, that is important. So is security of supply. Countries are scrambling to get new supplies. Companies in Britain have spent billions on new LNG terminals on the Isle of Grain in Kent and at Milford Haven in Wales to make up for the North Sea’s decline. Croatia and Poland are also working on plans to build new port capacity. Construction on the £7 billion Nabucco pipeline from Turkey to Austria — meant to reduce Europe’s dependence on Russia — is set to begin next year. Opinion remains divided over whether the American experience can be repeated. Researchers at Texas A&M University estimate world reserves could increase ninefold. Nick Grealy, an energy consultant who runs the No Hot Air website, said shale gas was a 'millionaire ticket that can be shared by everybody'. Critics say the prospects are far less promising. They argue that shale reserves rapidly peter out once they are accessed and that the variable nature of rock formations makes it difficult to always use the same technology, making it expensive and unpredictable.”
Shale gas blasts open world energy market
Sunday Times, 1 November 2009

"From one end of the known world to the other, which is to say from Boston to Washington and some points in between, there is a consensus among the well informed that one part of a national energy plan is in place. Thanks to the discovery and mapping  of huge reserves of gas in shale formations, we have an alternative to dirty old coal, and, possibly, imported oil for transport fuel. A 40 per cent increase in the country's gas reserves! You can thank advanced American technology for that. Well, you can thank advanced American something, but along with the technology you can also thank the advanced American ability to extract money from investors. The key element of this national characteristic is the willingness to listen carefully to determine what people with money want to hear, and then tell them that. Again and again. Shale gas, the latest magic solution being financed with other people's money, now appears to be costing more, and has much less certain prospects, than Wall Street, Washington, or their consultants around Boston, were counting on. The historic problem with raising money from outside investors to pay for oil and gas drilling is the lack of consistent co-operation on the part of geology. Time and again, with all the three dimensional seismic imaging, reservoir engineering, and so on, people drill wells to 5,000 or 6,000 metres only to get a dry rock collection. Finding oil and gas requires a significant amount of trial and error. Bankers, brokers, and institutional investors do not want to hear this. They want to hear that the businesses they invest in are predictable. The production of natural gas dispersed through shale rock plays well to this characteristic....Now shale gas fields have gone from having about 15 per cent of the total gas exploration and production spending committed to them to well over half. Enormous reserves have been found. But how much can be produced economically, and how quickly? The leading shale sceptic analyst is an independent geologist, Art Berman, often described as a 'radical'. Rather soft spoken, though, he says: 'I hope I'm wrong about shale.' The problem, as he sees it, is that the standard industry analysis about shale well Estimated Ultimate Recovery, or lifetime production, is too optimistic. 'They have fantastic initial rates, but the question is whether the (rate of production) persists as they say.' For example, he says, in deep shale formations 'the rock collapses as gas is produced, and crushes the proppant. And as the fractures are drained you have to frac and frac and frac.' Expensive. Dan Pickering, director of research at the Houston investment firm of Tudor Pickering Holt, counters: 'Berman's decline curve analysis is looking too early in the production curves to judge where the decline (rate) will actually be. As for rising decline rates, I think exploitation techniques have improved, so rising decline does not necessarily mean worse economics.' Ben Dell, of Bernstein Research in New York, whose work is respected by both sides in the debate, says: 'The average well deteriorates more in quality, and more wells fail, than people believe. Still, I think a rise in prices would make more (shale prospects) economic. Plenty of plays work at $9 per mcf [1,000 cubic feet].' This less-than-expected productivity in the leading gas sector tells Mr Dell that US gas production will decline on the order of 10 per cent next year, leading to $8-$9 gas, or $3 to $4 more than the forward curve anticipates. Wall Street and Washington had better do more due diligence, right quick, on the shale gas industry's insider debate."
Shale gas numbers may not add up
Financial Times, 1 November 200

"A new U.S. oil pricing benchmark is rapidly taking shape, threatening to further erode the dominance of the Nymex crude futures contract. Argus Media said Wednesday its Sour Crude Index will be adopted by Saudi Aramco to set prices for oil sold in the U.S., in a move away from a formula tied closely to light, sweet crude futures traded on the New York Mercantile Exchange."
New Oil Price Benchmark Gathers Steam as Saudis Sign On
Wall St Journal, 29 October 2009

"America's thirst for oil is a gathering threat to its national security – and the risk will grow further as the world's population touches 7 billion, a military adviser to the Pentagon told the Senate today. In a second day of debate on energy, Democratic senators today pivoted from the economy to national security to try to make the case for a climate change bill. The threat to Americans' security ranged from the here and now – with troops in Afghanistan and Iraq tied down by their reliance on gas-guzzling equipment – to years into the future when extreme temperatures and rising sea levels could lead to a widespread social breakdown. 'We have never before on this planet had close to 7 billion people which we will have in 2011. We have never had the unprecedented level of per capita energy use multiplied by that 7 billion people,' Dennis McGinn, a member of the Military Advisory Board, composed of senior retired admirals and generals, told the Senate. 'We have a whole host of indicators, warnings and trends that tells us climate change is bad for national security.' He said the country would face risks on multiple fronts. 'America's current energy posture constitutes a serious and urgent threat to national security – militarily, diplomatically and economically.' The Pentagon is already beginning to focus more acutely on the threat posed by climate change. Military research labs are exploring new energy-saving devices, and other ways of conserving fuel in the battlefield. The conflicts in Afghanistan and Iraq have made planners acutely conscious that fuel dependence is putting US forces at risk. The US marines corps recently ordered an energy audit of its operations in Afghanistan, in a bid to reduce enormous fuel costs. 'We are tied down by fuel. Fuel is a real day-today concern for our forces in the field who are tethered to that fossil fuel tail,' said Kathleen Hicks, the deputy undersecretary of defence for strategy."
Thirst for oil poses threat to US national security, says military adviser
Guardian, 28 October 2009

"The head of the Energy Information Administration (EIA) told Congress today that the agency will report later this week that US proved natural gas reserves increased from 2007 to 2008 by 3%.  That is slower growth than the 13% increase in proved gas reserves seen the year before, the EIA's Richard Newell told the Senate Energy Committee at a hearing on natural gas.  Reuters quoted Newell as saying that technology has 'led to large increases in available reserves by expanding the types of resource rock that can be drilled economically,' particularly with shale rock formations.  So far, the Barnett shale in Texas has been developed the most, but other shale formations, such as Haynesville in Louisiana, may produce more gas supplies and the Marcellus shale in the North-East is much bigger, Newell said. Proved reserves are those volumes of gas that geological and engineering data show with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, according to the EIA. 'Estimates vary, but the US probably now has between 50 and 100 years' worth of recoverable natural gas which is accessible with technology available today,' BP America chief executive Lamar McKay told the Senate committee."
EIA sees boost in US gas cache
Upstream Online, 28 October 2009

"Britain is facing an energy shortfall by 2015 over its exposure to six risky Russian gas developments, if the UK becomes much more dependent on imports from abroad, according to Ofgem. Alistair Buchanan, chief executive of the energy regulator, has found that Europe could be under-supplied by 41bn cubic metres in six years’ time, if key Russian projects – many already delayed – fail to deliver. This will affect the UK if it relies on a significant expansion of gas-fired power stations to replace retiring coal stations, while nuclear plants are not operational until 2020 and energy demand rises in a strong global economy. It would narrow to a 33bn cubic metre shortfall of gas by 2020. Europe will also need three new pipelines from Russia and Eurasia – Nord Stream, South Stream and Nabucco – plus two other major fields at Shtokman and Yamal in Siberia to meet its needs. 'Of these six big projects – three pipelines and three gas fields – virtually none have yet locked in the full financing needed to proceed and or complete,' Mr Buchanan said, ahead of giving a lecture at the Cass Business School. 'The UK has a cliff edge coming up in the middle of the next decade and we’ve got to take a view on how uncertainties in Russia rank in our stress-testing.' Regional tensions between Russia, Turkmenistan, Azerbaijan and Turkey mean that there are many shifting alliances and projects competing for finite funding. There is also a risk that Russian producers could divert supplies to China. 'Turkmenistan will have to deliver a phenomenal amount of growth and there are severe doubts around the financing of pipelines and fields to bring the gas west. A dash-for-gas scenario takes a Britain that used to have its own energy into a world where macro-geopolitics is a way of life,' he said. The Government insists that gas imports will not rise in the next decade due to energy efficiency. However, the Prime Minister’s special energy adviser, Malcolm Wicks MP, has warned that 'such projections are inevitably uncertain and experts have estimated higher import dependence'."
Britain faces gas shortage in six years due to Russia
Daily Telegraph, 28 October 2009

"E.ON, the energy group that shelved plans for a new coal-fired power station at Kingsnorth, Kent, is drawing up plans to build a new gas-fired plant of the same size in Nottinghamshire, leading to fears that Britain will be over-reliant on imported natural gas. An E.ON spokesman said that the group had begun a 'scoping study' to construct a 1,600 megawatt gas-fired power plant — enough to power two million homes — at High Marnham, on a site where a coal-fired station was closed in 2003. The plans, unveiled quietly last month, also appear to counter E.ON’s claim that it had ditched the plans for Kingsnorth because of a shortage of UK electricity demand. It has also stoked concerns that Britain is becoming increasingly reliant on gas for electricity generation, even as supplies of the fuel from the North Sea are rapidly being depleted. This winter, Britain will have to import half its natural gas, against 5 per cent in 2004, when it ceased to be a net exporter for the first time. Nick Campbell, energy analyst at Inenco, said: 'If suppliers continue to choose gas-fired units over clean coal and perhaps even nuclear, this raises questions over security of supply as the UK is set to become more reliant on liquefied natural gas as the global economy recovers.'....Gas-fired stations are relatively cheap and quick to build and provoke less public hostility than coal or nuclear. The share of Britain’s electricity produced by burning gas has risen from 2 per cent in 1992 to 35 per cent as ageing coal and nuclear plants have been retired from service. Several gas-fired stations are under construction in the UK, including in Pembroke, West Wales, and in West Burton, Nottinghamshire. E.ON has submitted a statement outlining its High Marnham plans to Nottinghamshire County Council. A full planning application is likely next year."
E.ON plant plans raise fear of gas-dependent Britain
London Times, 27 October 2009

"Opec, the oil producers’ cartel, has said that it may increase oil production this year if prices continue to rise. José Botelho de Vasconcelos, the Angolan Oil Minister who is the present president of Opec, said that oil prices of between $75 and $80 per barrel were at an optimum level for both consumers and producers. However, he said that any further rise towards $100 per barrel threatened to sabotage the nascent global economic recovery. 'I think a balanced price is always better. You know that, if necessary, some countries are open to injecting more oil into the market and that will be done . . . We need to maintain the balance.' The comments echo similar recent remarks from Abdalla Salem el-Badri, Opec’s secretary-general..... Yesterday, new figures illustrated that China’s apparently unquenchable thirst for oil had grown at its fastest pace in more than three years last month as the country’s economy continued its recovery. Chinese crude demand increased by 12.5 per cent during September — the fastest rate of increase since June 2006 — to 8.17 million barrels per day. The rise of 460,000 barrels per day compared with demand in August was the sixth consecutive monthly increase. Last week global crude prices hit their highest level for more than a year at $82 per barrel.....The pick-up in oil demand from China tracked a rise in Chinese car sales of nearly 84 per cent last month from a year earlier to a new high at 1.02 million units, according to China’s Association of Automobile Manufacturers. China is the world’s second-largest oil market after the United States, which consumes just over 19 million barrels per day....Weaker oil prices this year are putting pressure on oil companies to further trim spending plans. In a research note, Fred Lucas, a Cazenove oil analyst, suggested that BP’s management might use today’s results to hint at the potential for lower capital expenditure in 2010."
Opec signals rise in oil output as global price rallies
London Times, 27 October 2009

"A proposed green tax to cut carbon emissions would lead to an £800 increase in the average annual household energy bill over the next decade. Plans put forward by the Green Fiscal Commission (GFC), a Government-supported think tank, would see the tax on gas and electricity rise every year. By 2020, the new levy would amount to 80 per cent of the cost of the average gas bill and 30 per cent of the average electricity bill. The tax forms part of a £150 billion package of proposed measures, including a tripling of fuel duty over the next decade and a tax of up to £3,300 on new cars. The GFC says that the scheme is essential to shifting Britain onto a lower carbon lifestyle and meeting international targets on cutting greenhouse gas emissions. However, critics claim that asking customers to pay even more for energy will push many hard-up families to breaking point.  The planned green tax on new cars was also condemned by motoring groups yesterday.....The price of an average annual gas bill is £808 while the price of an average annual electricity bill is £445, according to the price comparison website uSwitch.com. It means the tax on gas and electricity bills could reach £779.90 a year, more than 60 per cent of the current £1,239 annual dual fuel bill. Will Marples, a spokesman for uSwitch.com, said: “Unprecedented levels of investment will be required in Britain’s energy infrastructure over the next few years, with an estimated £230 billion needed to be funded largely through increases to customers bills over the next 15 years. 'A green tax on top of this could push bills to unmanageable levels for consumers.' Another suggestion in the GFC report was that households should be forced to install insulation and other energy-saving measures when they build extensions or redecorate their homes....By shifting tax onto high-carbon activities like driving and energy use and cutting taxes on low-carbon activities and levies like National Insurance, the Commission argues it is possible to produce a new green tax framework that is neutral overall in terms of the total burden on taxpayers. 'This is not just about reducing emissions, but helping the UK to develop low-carbon competitiveness,' Mr Ekins said....The report also suggests a £300 tax on new cars, increasing annually to £3,300 by 2020."
Green tax proposals 'would increase household energy bills by £800 a year'
Guardian, 27 October 2009

"Carbon capture technology will not solve the climate change threat posed by the expansion of tar sands developments, a damning new report warns today. The study produced by The Co-operative Financial Services and WWF-UK debunks the idea, lauded by oil companies and the Canadian government, that carbon capture and storage (CCS) will significantly counter the high levels of greenhouse gases emitted in the production of oil from tar sands deposits in Alberta, Canada. The production of tar sands oil is a highly energy intensive process and emits on average three times more CO2 than conventional oil production. Canada’s proven tar sands reserves are 173 billion barrels of oil, second only to Saudi Arabia. The report examines the potential for CCS to prevent CO2 from entering the atmosphere as a result of tar sands production and concludes that the process could not possibly achieve what has been claimed. The study finds that whilst the amount of CO2 emitted during production needs to be reduced by around 85 per cent to make tar sands oil comparable with conventional oil, even the most optimistic forecasts for CCS see production emissions reduced by 10 to 30 per cent at selected locations by 2020 and 30 to 50 per cent across the industry by 2050. The study said that even under the most optimistic scenarios for the application of CCS, the projected production emissions from tar sands developments would be greater than the whole of Canada’s 2050 carbon budget were it to reduce emissions by 80 per cent compared with 1990 levels, as the climate science requires. It also warns that the maximum potential of CCS would be insufficient to reduce lifecycle emissions of tar sands oil to levels needed to meet emerging international low carbon fuel standards such as those in California and the EU."
Carbon cannot significantly reduce tar sands emissions, says new report
Christian Today, 26 October 2009

"A report examining the impact of a global biofuels program on greenhouse gas emissions during the 21st century has found that carbon loss stemming from the displacement of food crops and pastures for biofuels crops may be twice as much as the CO2 emissions from land dedicated to biofuels production. The study, led by Marine Biological Laboratory (MBL) senior scientist Jerry Melillo, also predicts that increased fertilizer use for biofuels production will cause nitrous oxide emissions (N2O) to become more important than carbon losses, in terms of warming potential, by the end of the century. Using a global modeling system that links economic and biogeochemistry data, Melillo, MBL research associate David Kicklighter, and their colleagues examined the effects of direct and indirect land-use on greenhouse gas emissions as the production of biofuels increases over this century. They report their findings in the October 22 issue of Science Express. Direct land-use emissions are generated from land committed solely to bioenergy production. Indirect land-use emissions occur when biofuels production on cropland or pasture displaces agricultural activity to another location, causing additional land-use changes and a net increase in carbon loss. No major countries currently include carbon emissions from biofuel-related land-use changes in their carbon loss accounting and there is concern about the practicality of including such losses in a system designed to reduce fossil-fuel emissions. Moreover, methods to assess indirect land-use emissions are controversial. All quantitative analyses to date have either ignored indirect emissions altogether, considered those associated from crop displacement from a limited area, confused indirect emissions with direct or general land-use emissions, or developed estimates based on a static framework of today's economy. Using a modeling system that integrates global land-use change driven by multiple demands for land and that includes dynamic greenhouse-gas accounting, Melillo and his colleagues factored in a full suite of variables, including the potential of net carbon uptake from enhanced land management, N2O emissions from the increased use of fertilizer, environmental effects on carbon storage, and the economics of land conversion. 'Our analysis, which we think is the most comprehensive to date, shows that direct and indirect land-use changes associated with an aggressive global biofuels program have the potential to release large quantities of greenhouse gases to the atmosphere,' says Melillo."
Biofuel Displacing Food Crops May Have Bigger Carbon Impact Than Thought
Science Daily 25 October 2009

"To date, the debate on 'peak oil' has had little influence on UK energy policy. But a combination of strong demand growth, erosion of spare capacity and ominous warnings from analysts has heightened concerns. Global production increased only marginally between 2004 and 2008, despite record high prices. While the recession has reduced demand, prices remain around $80 per barrel and the cancellation and delay of upstream projects could lead to shortages when the economy recovers. Two physical features of oil resources make a peak in global production inevitable. First, the rate of production from individual fields tends to rise to a peak or plateau relatively early in a field's life and then decline, largely as a result of falling pressure. As a result, some 4pc of global production capacity needs to be replaced each year, simply to maintain production at current levels – that's equivalent to a new Saudi Arabia coming on stream every three years. With demand rising and decline rates increasing, production is becoming progressively more difficult to maintain. Around half of global production capacity will need to be replaced before 2020. Second, most of the world's oil is located in a small number of large fields. Although there are some 70,000 fields worldwide, around half of global production derives from only 110 of them, and as much as a fifth from only 10 fields. Around 500 "giant" fields account for two-thirds of all the oil that has ever been discovered. Most of these giants are relatively old, many are well past their peak of production, most of the rest will begin to decline within the next decade or so and few new giants are expected to be found. This combination of features will drive the global peak. At some point, the additional production from the newer, smaller fields will be insufficient to compensate for the decline in production from the ageing giants. This process has been observed in more than 100 regions worldwide, with the peak typically occurring well before half of the resources have been produced. Economic and political circumstances profoundly influence the timing, and the complex interactions between supply and demand make a 'bumpy plateau' more likely than a sharp peak. But, at some point, decline becomes inevitable....even under optimistic assumptions about the size and future development of the resource, a global peak before 2030 appears likely. Under more realistic assumptions, the peak could occur much earlier – or may already have passed. Given the scale of investment required and the associated lead times, there are doubts whether non-conventional resources can substitute. For example, the most bullish forecasters expect the Canadian oil sands to provide 6m barrels per day by 2030, which is less than the capacity lost every two years as a result of depletion. More importantly, developing such resources will make it impossible to avoid dangerous climate change. The depletion of oil resources requires urgent attention if the worst consequences are to be avoided and if only climate-friendly solutions are to be deployed. There are numerous opportunities on the demand side, such as improving vehicle fuel efficiency, developing electric vehicles and investing in public transport. These changes are under way but may need to proceed much faster than is currently envisaged. At present, however, neither the UK Government nor the major opposition parties appear to take this issue seriously. This needs to change."
The rise and fall of oil production
Daily Telegraph, 24 Ocotober 2009

"Uranium giant Cameco Corp. (TSX:CCO) says it has resumed efforts to drain water from the troubled Cigar Lake mine, which has been flooded for three years. Cameco stopped pumping in August 2008 when it discovered that water was still flowing in, although the source of the problem wasn't known at the time. But Cameco said Friday the inflow was stopped by placing an inflatable seal between the shaft and the source of the inflow and then backfilling and sealing with concrete and grout. The level where the flooding occurred is 'not part of future mine plans,' the company said. Cameco said it will take six to 12 months to dewater and secure the mine, and it will provide an estimated production start date after the water has been pumped out and the condition of the underground development has been assessed. Cameco operates and owns 50 per cent of the project, which has the potential to be one of the world's biggest uranium mines."
Cameco says dewatering of flooded Cigar Lake uranium project has resumed
Canadian Press, 23 October 2009

"The number of people falling behind with fuel bills soared by nearly 50pc during the past six months, a charity warned today. Citizens Advice said it had seen a 46pc increase in the number of people contacting it during the six months to the end of September who had fuel debts, compared with the same period of the previous year. It said the rise continued a trend seen in recent years, with the number of people who were in debt to their fuel supplier jumping by 82pc since 2005/2006. The majority of people who owed money on their energy bills in 2008/2009 were of working age, with only 5pc of people aged over 65. Eight out of 10 people who were behind with their energy bills had incomes which were half the national average, with 32pc living off less than £400 a month, while a quarter of people with fuel debt had a disability."
The number of people behind with their energy bills increases by 50 per cent
Daily Telegraph, 21 October 2009

"Chinese annual car production has topped 10 million for the first time as carmakers boost output to meet growing demand, state media has said. The 10 millionth car produced this year rolled off the First Automobile Works Group assembly line in Changchun, the official Xinhua News Agency reported. Despite the downturn and falling sales at most global carmakers, demand for cars in China is booming. State incentives, such as tax cuts on small cars, have boosted sales. Like many other governments around the world, China has also introduced subsidies to trade in older vehicles. Previously, only the US and Japan had produced 10 million cars in a single year.  Domestic Chinese car sales overtook those in the US for the first time in December of last year, and this trend has continued.  Global carmakers are now increasingly targeting China as a key growth market."
China car output 'breaks record'
BBC Online, 20 October 2009

"Abdalla Salem El-Badri , secretary-general of OPEC, blamed governments for failing to keep speculators in check, pointing out that there was no shortage of oil supplies around the world. 'I'm not an advocate of banning speculation, but they should not be going wild,' he said. 'If they go wild, everybody goes wild.' Mr El-Badri said that supplies currently kept on floating storage platforms would have to be used up before OPEC's members lifted production, which has been sharply scaled back over the last year. He said he was not comfortable with oil returning to prices above $100 per barrel when there was still plentiful supply. But those sharing a platform at the Oil & Money conference in London, including Nobuo Tanaka, director of the International Energy Agency, Tony Hayward, chief executive of BP, and Paolo Scaroni, dismissed the suggestion, pointing to economic recovery and a weak dollar behind increasing prices. 'The market is driven by fundamentals of supply and demand,' Mr Hayward said. However, oil industry executives agreed that $80 oil allowed more capacity for investment in new fields, where fossil fuels are difficult to extract. Mr El-Badri said several OPEC members were now reviving long-term projects. 'We, OPEC, are ready to invest,' he said. Energy companies increasingly are being pushed towards gas and oil fields in new places, such as shale-gas in the US, coal-seam gas beds in Australia and shale formations in the Middle East, since much of the world's reserves are in politically difficult countries."
OPEC and corporations disagree as oil hits 12-month high of $80 per barrel
Daily Telegraph, 20 October 2009

"Throughout the 20th century, an abundant supply of low-cost energy was the driving force behind the spread of global prosperity and development. Today, satisfying ever-growing energy demand in a sustainable way has become the world’s biggest challenge. According to BP’s projections, we will need about 45 per cent more energy in 2030 than we consume today. That will require industry to invest some $25 to $30 trillion — more than $1 trillion (£600 billion) a year for 20 years. We need a more diverse energy mix — involving greater use of nuclear power and of renewable sources as well as fossil fuels — to enhance energy security and tackle climate change. But we also have to face a few facts. First, the transition to a lower-carbon economy is a journey that will take decades. Second, it is not clear right now how we are going to get there....You might say that this is what you would expect to hear from the chief executive of one of the world’s largest oil and gas companies. But BP is also a significant investor in renewable resources such as wind, solar power and biofuels. The reality is that the technology, infrastructure and regulatory framework for alternative energies will take decades to be deployed at scale. At present, all of the world’s wind, solar, wave, tide and geothermal power account for only about 1 per cent of total energy consumption. Looking ahead, even the boldest forecasts say they will meet less than 10 per cent of demand in 2030. The sheer scale of the energy industry makes a rapid transition inconceivable. It takes 30 years, for example, to turn over the capital stock in the power generation sector and 15 years in cars. That is why it is so important to establish and start implementing a road-map for the transition now, based on an understanding of the existing infrastructure, changing technology and economic incentives. It is all about smart choices — about ensuring that the money we invest is spent to best effect. In many cases, such choices can be made on the basis of what we know now, rather than technologies still in development. And the smartest and most effective choice we can all make is to use energy far more efficiently. Take transport, responsible for 25 per cent of UK CO2 emissions. By far the most effective path to a lower- carbon road transport industry lies in making internal combustion engines more efficient. Smaller, more efficient petrol and diesel engines, combined with increasing use of hybrid technologies, will produce significant carbon savings in the next two decades. Increasing use of biofuels will help. By extracting CO2 from the atmosphere as they grow, some biofuels can reduce greenhouse gas emissions by 80 per cent compared with conventional petrol, according to recent studies. At BP we believe that biofuels could provide more than 10 per cent of global road transport fuel by 2030. To put this into perspective, the combination of advanced hybrid cars and quality biofuels offers comparable CO2 savings to running battery-powered electric cars from the existing UK electricity grid — but at less than half of the additional cost..... gas, the cleanest fossil fuel with less than half the carbon emissions of coal..... is abundantly available to the UK. Indigenous gas provides 73 per cent of UK consumption today and could still make up as much as 30 per cent in 2020. Gas is also widely available from non-UK suppliers, ranging from Norway to North Africa, as well as from the global market for liquefied natural gas. Any concerns about security of supply can be addressed by diversifying suppliers and building more storage capacity. Gas is also a necessary complement for renewable sources, given that gas-fired generators — unlike nuclear and coal-fired plants — can be readily switched on and off to back up intermittent wind and solar power."
Tony Hayward is chief executive of BP - Act now if you don’t want the lights to go out
London Times, 19 October 2009

"Wulf Bernotat looks cold — and sceptical. 'Are you sure we are making any money out of this?' the chief executive of E.ON, the world’s largest utility company, asks one of his employees. “This is a business, you know... Mr Bernotat seems genuinely exasperated by what he regards as fanciful policymaking that bears little relation to the realities of running a business. Above all, he believes that Britain’s target of generating one third of its electricity from renewable sources, such as wind and wave energy, by 2020 is naive and he says that politicians need to do far more to 'adjust expectations . . . There is a big mismatch with what is achievable. I think it is even bigger in the UK than in Germany. Politicians need to be more realistic.' His argument is that without bigger state subsidies or a higher price for carbon emissions, E.ON cannot afford to make the investment necessary to meet such ambitious targets. 'The carbon price is too low to support any accelerated investment in carbon abatement. Every investment must deliver an acceptable return.' The same focus on pure economics over ideology is behind E.ON’s decision to put the Kingsnorth development on hold. The announcement exposed divisions within Britain’s environmental movement. While many hailed it as a victory, others saw it as a disaster, warning that it would delay E.ON’s plans to invest in new carbon capture and storage (CCS) equipment — key technology in the battle against climate change, a battle in which the Government wants Britain to be a world leader. Mr Bernotat quickly brushes aside any suggestion that E.ON yielded to outside pressure from green groups. 'It was simply a reaction to market developments,' he says, adding that the recession has pushed back the need for new plants in the UK to about 2016 because of plummeting electricity demand. 'Demand is not developing at the same speed and we just felt we had to adjust our investment programme.' Kingsnorth, he says, is only one of a string of investments that E.ON is deferring because of the recession, which he says will leave depressed demand for electricity across Europe for another two years."
Monday manifesto: UK renewable energy target 'naive' says Wulf Bernotat
London Times, 19 October 2009

"Russian President Dmitry Medvedev sought to expand Moscow's political and economic influence in the Balkans on Tuesday by bringing a euro1 billion ($1.5 billion) loan to recession-hit Serbia and offering Belgrade a 'strategic partnership' in the distribution of Russian gas to Europe. The loan deal — approved during the first-ever visit to Serbia by a Russian president — adds to Russia's growing clout in Serbia, which relies on Moscow's diplomatic support in the U.N. Security Council to oppose the secession of Kosovo, Serbia's former province. About 60 countries have recognized Kosovo's independence, including the U.S. and most of the European Union.... Medvedev praised 'strategic' cooperation between the two countries, especially the planned construction of the South Stream natural gas pipeline that would bring Russian gas to Europe via the Balkans. 'Our goal is to make Serbia a big energy player which will distribute the Russian gas' in Europe, Medvedev told Serbia's Parliament. 'We are seeking to turn the cooperation between our two states into a strategic partnership.' Russian President Dmitry Medvedev sought to expand Moscow's political and economic influence in the Balkans on Tuesday by bringing a euro1 billion ($1.5 billion) loan to recession-hit Serbia and offering Belgrade a 'strategic partnership' in the distribution of Russian gas to Europe..... In the Balkans, most of the former communist states are weary of Moscow's clout and are courting the West. But Moscow has taken a special interest in Belgrade's fortunes. Russia not only shares cultural, ethnic and religious roots with Slavic, Orthodox Christian Serbia. Serbia's conflict with the U.S. and Europe over Kosovo became a symbol of the evaporation of Russian influence in eastern and central Europe in the decade after the breakup of the Soviet Union."
Medvedev Visits Serbia Bearing $1.5 Billion Loan
Associated Press, 20 October 2009

"World oil prices hit their highest point for a year yesterday, as a major new report urged governments around the world to take drastic action to head off an approaching oil supply crunch. US light crude futures pushed above $79 a barrel, supported by the view that a recovering world economy would raise demand for crude. Oil prices have more than doubled from the low point they hit in the spring, but are still around half the all-time high of nearly $150 a barrel they reached in early summer last year. Analysts have been surprised at the recent resilience of oil prices given the impact on energy demand of the global recession. In spite of this year's volatility in the oil price, the underlying trend for a decade has been for it to rise steadily. A report from the non-governmental organisation Global Witness – famous for its exposé of so-called 'blood diamonds' – pointed to an impending supply shock that could be so severe that many of the world's poor countries would simply be shut off from the world of energy by sky-high prices. Two years in the preparation, Global Witness's report, Heads in the Sand, accused governments of ignoring the fact that the world could soon start to run short of oil. This would lead to huge consequences in terms of price shocks and much higher levels of violence around the world than last year's food riots. 'There is a train crash about to happen from an energy point of view. But politicians everywhere seem to have entirely missed the scale of the problem,' said the report's author, Simon Taylor. 'We are all addicted to oil but if you look at the mathematics of the problem, they simply don't add up in terms of future supply and demand.' The report went through the latest figures from the oil industry and the Paris-based International Energy Agency, which last year drastically reduced its estimate of the available oil. The IEA figures showed there could be a gap of 7m barrels a day between supply and demand by 2015. That represents about 8% of the expected world demand by then of 91m barrels a day. The IEA expects production from existing oilfields to fall by 50% between now and 2020 and warned the world needs to find an additional 64m barrels a day of capacity by 2030 – equivalent to six times current Saudi Arabian production. But Global Witness took issue with the IEA's recommendation that the oil industry spend $450bn a year chasing these supplies, many of which may well not be there. Because of the demands of climate change, the report argued, the money would be better invested in moving rapidly to a post-oil world of renewable energy and conservation....The report said that between 2005 and 2008, global oil production ceased to grow in spite of widespread investment and rising prices, which should normally have brought forth a big rise in supply. It notes that the biggest year for new discoveries was 1965, since when they have been falling. Global oil production overtook new discoveries in 1984 and has outpaced them ever since. It also dismissed as myth a widely held expectation that tar sands in Canada could fill the supply gap. Tar sands are unlikely ever to yield more than 3-4m barrels a day, equivalent to the pace at which existing fields are declining every year. Taylor said the four key issues about oil – declining output, declining discoveries, increasing demand and insufficient projects in the pipeline – have been apparent for many years. 'But governments and multilateral agencies have failed to recognise the imminence and scale of the global oil supply crunch, and most of them remain completely unprepared for its consequences,' he said."
Oil prices hit high but report warns of supply crunch
London Times, 19 October 2009

"The golden age of oil refiners has ended. Will they see another? Such doom-laden questions crop up with any cyclical business -- as do proclamations of golden ages. But after the stellar profits of recent years, a sense of despair is gathering over refiners. Margins have collapsed amid recession. The likes of Valero Energy and Sunoco have switched off plants to cope. Rex Tillerson, head of Exxon Mobil, reckons U.S. gasoline demand peaked in 2007. It is this concept of 'peak demand' that haunts the refining sector just as 'peak oil' supply besets the upstream production side. Mr. Tillerson figures U.S. demand will fall to around 17 million barrels a day by 2020, from about 19 million a day today."
Refining Business Enters the Twilight Zone
Wall St Journal, 18 October 2009

"British homes could soon be heated by gas produced from cow manure and sewage slurry, under plans being considered by Centrica, the owner of British Gas. The company, which has 16 million UK customers, is drawing up plans to build a plant that would use organic waste to produce biomethane that could be injected directly into the national gas network. National Grid has estimated that such biogas could supply 18 per cent of total UK demand for gas — or 18 billion cubic meters of the approximately 100 billion total consumed in Britain every year. A spokesman for Centrica said that biogas was an 'interesting technology' and that it was studying the option of constructing a plant in Britain that would process an array of materials, from abattoir and farm waste to municipal food waste. John Baldwin, a biomethane consultant with CNG Services, which is advising Centrica, said that the industry remained “embryonic” in the UK but was well advanced in continental countries. However, he said that the economics of British biomethane production would be transformed in April 2011, when the Government begins a subsidy scheme called the Renewable Heat Incentive. By the end of this year, the Government is poised to set a premium that will be paid to biomethane producers from 2011, potentially unleashing a flood of investment into the industry. About 15,000 cars in Sweden use the fuel, which is available in filling stations."
British Gas owner could use cow manure to heat homes
London Times, 16 October 2009

"Demand for oil in developed nations peaked in 2005, and changing demographics and improved motor-vehicle efficiency guarantee that it won't hit those heights again, IHS Cambridge Energy Research Associates says in a new report. Reduced petroleum demand in developed nations could make their economic growth less vulnerable to oil price shocks, the report states. Nonetheless, global oil demand is still expected to grow, overall, driven by China and other developing nations as the world economy recovers. But demand for oil that has fallen in recent years in Organisation for Economic Co-operation and Development, or OECD, nations won't be made up, the analysts say. 'The economic downturn has been masking a larger trend in the oil demand of developed countries,' said Daniel Yergin, the company's chairman. 'The fact is that OECD oil demand has been falling since late 2005, well before the Great Recession began.' The biggest reason, the group says, is that oil demand in the transportation sector -- which is the United States' dominant use of oil and accounts for 60 percent of OECD petroleum demand -- is flattening. The trend has been noticed elsewhere, as well. Exxon Mobil Corp. CEO Rex Tillerson said this month that U.S. gasoline demand peaked in 2007. The Cambridge Energy Research Associates, or CERA, analysis cites several reasons why demand in developed nations -- which accounts for slightly more than half the world's total -- won't recover. Among them: Car ownership rates have reached 'saturation,' while populations are aging and population growth ranges from low to negative. Also, OECD governments, driven by global warming and energy security worries, have tightened fuel efficiency standards, while high prices in recent years have also pushed consumers away from gas guzzlers. In the United States, the Obama administration plans to implement rules that push corporate average fuel economy, or CAFE, standards to a fleetwide average of 35.5 miles per gallon by 2016, four years ahead of the schedule Congress laid out in a 2007 energy law. Global demand will nonetheless grow, fueled mostly by developing nations, CERA finds. The company forecasts world demand to increase from 83.8 million barrels per day this year to 89.1 mbd in 2014. 'Just 900,000 bpd [barrels per day] of growth is expected to come from OECD countries, just a fraction of the 3.7 million bpd of demand lost over the course of 2005 to 2009,' the report states. But CERA cautions that developed nations will hardly be through with oil anytime soon. The demand reduction in OECD countries between the 2005 peak and 2030 is expected to be 'fairly modest,' it states."
Oil Demand Has Peaked in Developed Nations, Never to Return -- Report
New York Times, 13 October 2009

"The issues of constrained supplies for oil really started back in the late 1970s. In the 1979-1980 time frame, there was a very rapidly rising demand for oil and an inability to supply it. And Saudi Arabia was being called upon back then to jump capacity from 8-9 million [barrels a day] to 10 million to 15 million. And frankly it was very difficult to do that. So that was when I first came face to face with the issue of oil supplies. This went away in the mid-1980s when there was low demand and alternatives came along. However, it resurfaced as a problem in the mid-1990s, particularly during the late 1990s when oil prices collapsed. There was no investment or very minimal investment globally in oil capacity. At the same time there was a very rapid rise in demand. The OPEC countries were considered as a solution; somehow they would increase capacity from 20 to 30 to 40 million barrels/day, and I didn’t think it was sustainable. So I really got involved with this problem in the late 1990s..... It’s very important to adhere to proper reserve definitions when we’re talking about oil. Oil is money in the bank. If you are very loose in terms of how you define it, you can go off and make assumptions that are unsustainable. The current numbers published—I call them 'declared reserves'—are something like 1,200 billion barrels. On top of that there are another 150 billion of extra-heavy crudes and 150 billion Canadian type of bitumens. So that would lead you to believe that we have roughly 1,500 billion barrels of proven oil reserves. In fact, those are hardly proven. There is a lot of speculation. If we go back to the SEC type of definitions, that number drops way back, maybe down to 900 billion. I think it’s important to be precise about the definitions if not the actual estimates, because that’s the only way we can decide how much can be delivered on a timely basis. So yes, I think I would say 900 billion proven, perhaps 1,200 billion probable and potential. But that’s about the limit....At the same time, when we look at the technical side, yes there are many resources that have not been tapped. You could go to coal-to-liquids, you could go to gas-to-liquids, you could go to the ultra-deep ocean and Arctic regions, but these are all far more expensive and there is a ceiling to what the global economy can afford for energy. Roughly speaking, once you get to five to six percent of the global GDP being spent on oil, that’s about the ceiling. You cannot just assume that people will pay the price at higher and higher costs. For that reason, I do think we do have a boundary, we do have a limit to what is available with current technologies, in terms of supplementing supplies....The nature of the oil industry is such that it takes a long time to deliver additional capacity. And at the same time it’s becoming evident that the resources to deliver additional capacity…the resources are not there. To give you an analogy, yes we can put a man on the moon, we can put 10 men on the moon…can we put 10,000? There aren’t the resources. The oil industry is being pressed to deliver a huge amount of oil—we’re producing 85 million barrels a day, with forecasts going to 100-plus million barrels a day. So, overcome declines, add new capacity, and do this on a sustained basis at affordable prices, and that’s where the economics are breaking down. You don’t have the logistics, you don’t have the industry infrastructure, and the costs are climbing. We just witnessed that when you have semi-submersibles that are running you $500,000 to $600,000 a day to operate, you can’t afford cheap oil any more. That’s the reality. So the economics have broken down. It’s not a matter of you throw a little money and you get a lot of oil; it’s now you throw a lot of money and you get a little oil.....There is no national plan for Iraq to develop its resources. The postage stamp approach of every company takes a field and decides what to do with it doesn’t give you a national program, doesn’t give you an integrated process. If you add up all the capacities that are being talked about—7 to 8 million barrels a day—where is the natural gas going to come from to maintain pressure and deplete the reservoirs? These are fields that have been mature for a long time. So I think Iraq is doing a fantastic job at trying to sustain its current production. There are a lot of very skilled people there, very good engineers and professionals. I think they are very challenged; they have to rebuild a country, not just an industry. They need power, they need transportation, they need communication, and—more important than anything, probably—they need an organization. Iraq will probably come back up to 2.5 to 3 million barrels a day, perhaps 4 million; I think that would probably be the ceiling. That’s about as much as Iran produces....Iran is running into this predicament of needing to improve its recovery through gas injection to sustain capacity but not having access to its own domestic gas for lack of technology. And also they have a strong requirement for domestic gas in general. So ironically, while Iran has the world’s second-highest gas reserves—over 1,000 trillion cubic feet—they are not an exporter of gas; they are a net importer of gas, in fact they import a little from Turkmenistan. So this is the paradox of Iran: they claim 130 billion barrels of oil reserves, they claim over 1,000 trillion cubic feet of gas reserves but they are not able to produce more than 4 million barrels a day and they can’t even export gas. It’s a real tragedy in a sense."
Interview with Sadad al Husseini - Former exploration and production engineer at Saudi Aramco, Saudi Arabia's national oil company
Part 2—'A lot of Money = a Little Oil'
ASPO-USA, 12 October 2009

"Britain's ambitious policies to cut carbon dioxide in the fight against global warming are still not enough, the official climate change watchdog warns today in its first annual report. Even though the Government has created a detailed plan for transition to a low-carbon economy, a 'step change' is still needed in the pace of reducing carbon emissions, and in fact the rate should be more than doubled, says the Climate Change Committee. This will have to involve everything from a comprehensive national home insulation strategy to creating a fleet of 1.7 million electric cars with the infrastructure to support them – otherwise, says the committee, on current rates of progress, the "carbon budgets" to which the Government has committed itself are unlikely to be met....By most measures, Britain is doing well – it is the only country in the world to have a binding framework for getting its CO2 emissions down, established with considerable fanfare under last year's Climate Change Act. Yet this is far from enough, the committee says. Ministers are now legally committed to bringing down UK carbon emissions to 34 per cent below their 1990 level by 2020, by using three five-year-long budget periods where the reductions can be monitored. The Climate Change Committee – chaired by Lord Turner of Ecchinswell, who as Adair Turner was director general of the Confederation of British Industry – is the progress-chasing part of the process, and each year it will report publicly on how the Government is doing – and if necessary, deal out criticism which could be politically embarrassing. Its first annual report, placed before Parliament today, cannot yet assess progress, as precise CO2 emissions figures for 2008, the first year of the first budget period, are not yet available. However, the committee warns starkly that the current rate of reduction is inadequate to meet the Government's own targets – and says that it will have to be more than doubled."
Cars must be electric, says climate tsar
Independent, 12 October 2009

"Britain faces a return to 1970s-style power blackouts and disruption to its electricity supplies within four years, the energy regulator warned yesterday. Ofgem raised the spectre of a return to the three-day week for British industry as the country scrambles to renovate its crumbling power infrastructure ahead of new EU pollution rules that will force the closure of a quarter of UK power stations by 2015. Alistair Buchanan, Ofgem’s chief executive, said: 'There could be a potential shortfall in the period 2013-18 ... Life might be pretty cold.' In extreme scenarios such as during periods of unusually harsh winter weather, Mr Buchanan said that Britain could be forced to switch off power supplies to large factories to conserve dwindling electricity supplies for households.... Speaking at the publication of Project Discovery, a report from Ofgem on the security of energy supplies, Mr Buchanan said that a failure to tackle the issue had left Britain more vulnerable to energy supply shocks than any other major country in Europe. Germany and France, he said, were 'way ahead of us' in terms of investing in new, lower-carbon power supplies, adding that only 'massive reductions' in demand achieved through energy savings could rescue consumers from swingeing increases in their energy bills of up to 60 per cent. Ofgem said that by 2020 Britain needed to spend between £95 billion and £200 billion on new wind farms, gas, nuclear and biomass power stations, as well as high-voltage transmission networks to ensure reliable supplies and meet tough targets to cut carbon emissions. But Jeremy Nicholson, of the Energy Intensive Users Group, which represents some of Britain’s biggest manufacturers, including Corus, the steelmaker, said Britain was entering 'very dangerous territory'. He warned that such major disruption presented a 'material threat to heavy industry' and added that manufacturers could be facing even bigger rises in their energy bills than consumers — as much as 120 per cent. Ed Miliband, Secretary of State for Energy and Climate Change, acknowledged the need for greater action."
Power cuts forecast to hit UK in four years
London Times, 10 October 2009

"Uranium, the key to nuclear power generation, is in short supply in India. The country’s reserves stand at 75,000 tons of low-grade ore, which requires processing before it becomes fuel for nuclear reactors. This ore contains between 0.03 to 0.2 percent of triuranium octoxide, or U3O8 – an impure mixture of uranium oxides obtained in the processing of uranium ore – as U-238, which is the non-fissionable isotope found in natural uranium. International mines have anywhere from 2 to 14 percent. Four mines in the Singhbhum district of Bihar state produce only 220 tons of uranium concentrate. In addition, 120 tons come from byproducts like tailings from phosphate, zinc and copper mines. India’s 17 operating reactors require 500 to 600 tons of uranium concentrate annually. Additional amounts are needed for its weapons program. Two more mines in Meghalaya and Karnataka state may begin operations in the next four years, boosting output to about 600 tons. This might be enough to feed the existing nuclear reactors, but not enough for the ambitious nuclear power program the government wants to implement. Generating 470,000 megawatts of nuclear energy by 2050, as envisaged by Prime Minister Manmohan Singh, will require huge amounts of uranium. This was a key reason for India to negotiate the Indo-U.S. nuclear deal and seek a waiver from the Nuclear Suppliers Group on the ban it faces on nuclear trade. Although the deal is settled, India still has to go through the international minefield of uranium-producing countries, which have a few hang-ups before they part with the ore. A major initiative by India’s Department of Atomic Energy is also in progress to locate new ore bodies in India. Miners will go as deep as 1,000 meters to mine the ore. If successful, this may save India valuable time in negotiating agreements and deals with foreign suppliers. As much as 100,000 tons of new ore is needed by India, but the chances of finding it in the country are slim. Therefore, it has to look at suppliers elsewhere. Australia has 24 percent of the world’s known uranium reserves of 5.5 million tons. It is followed by Kazakhstan with 17 percent, Russia and Canada with 10 percent each, South Africa and the United States with 7 percent each, Namibia, Brazil and Niger with 5 percent each, and 1 percent each for India, China, Mongolia and Tajikistan. The NSG tightly controls these supplies, to restrict unauthorized trade of this vital and dangerous commodity."
India’s quest for uranium
United Press International, 9 October 2009

"The debate over exactly when we will reach 'peak oil' is irrelevant. No matter what new oil fields we discover, global oil production will start declining in 2030 at the very latest. That's the conclusion of the most comprehensive report to date on global oil production, published on 7 October by the UK Energy Research Centre. The report, which reviewed over 500 research studies, suggests that global oil production could peak any time from right now to as late as 2030. 'Either way, our research shows that the difference between even the most pessimistic and optimistic claims is just 15 to 20 years,' says Steve Sorrell, the report's lead author, who is based at Sussex University in the UK. This is a problem, says Sorrell, because 20 years isn't long enough for governments to prepare well-thought-out policies that would tackle the economic chaos likely to occur when oil production begins to decline. Research in 2005 by the US Department of Energy suggests that policies to reduce the demand for oil while developing large-scale alternatives will take at least two decades to bear fruit, he says. Global production of oil is declining at a rate of 4 per cent per year in existing oil fields and we have very little to replace it with, says Sorrell: 'If we want to maintain global oil production at today's level we would need to discover the equivalent of a new Saudi Arabia every 3 years.' Yet discoveries of new oil fields are in decline. Even the 'giant' Tiber field recently found by BP in the Gulf of Mexico 'will only serve to delay peak oil by a matter of days', he says. '"Of the 70,000 oil fields on Earth, just 100 giant fields account for 50 per cent of the oil we use,' says Sorrell. 'Most of these giant fields are quite old and past their peak of production, and we're not going to find many new ones.'"
Why the 'peak oil' debate is irrelevant
New Scientist, 8 October 2009

"There is a 'significant risk' that global production of conventional oil could 'peak' and decline by 2020, a report has warned. The UK Energy Research Centre study says there is a consensus that the era of cheap oil is at an end. But it warns that most governments, including the UK's, exhibit little concern about oil depletion. The report's authors also state that the 10 largest oil producing fields in the world are all in decline.... Countries and companies are notoriously reticent about their oil reserves. But the report suggests the easy oil has already been found, and new reserves will become increasingly difficult and expensive to extract, and will not make up for the current major oil fields as they decline. It says: 'More than two-thirds of current crude oil production capacity may need to be replaced by 2030, simply to keep production constant. 'At best, this is likely to prove extremely challenging. This report does not contain new research, but is a review of data already available. But the authors say the risk presented by global oil depletion deserves much more serious attention by the research and policy communities. 'Much existing research focuses upon the economic and political threats to oil supply security and fails to either assess or to effectively integrate the risks presented by physical depletion,' they argue. 'This has meant that the probability and consequences of different outcomes has not been adequately assessed.' Despite the evidence, the report notes with some surprise that the UK government rarely mentions the issue in official publications."
Warning over global oil 'decline'
BBC Online, 8 October 2009

"Suncor Energy Inc. Chief Executive Officer Rick George said Alberta’s oil sands are increasingly important as a supplier of energy. 'As conventional oil worldwide becomes increasingly difficult to find, develop and more costly, the oil sands, the second-largest oil base in the world, will play a bigger and bigger role,' he said in a speech to the Economic Club of Canada in Toronto today. Oil prices, currently above $69 a barrel, will probably not rise as high as $100 before the end of the year, he told reporters after his speech. They may range from $60 to $75 until the global economy recovers, he added. He said demand for energy from India and China in particular 'remains relatively strong.' Led by George, Calgary-based Suncor completed its C$19.2 billion ($18.1 billion) acquisition of Petro-Canada in August, the biggest takeover for a Canadian oil company ever. Suncor has said it may shed natural-gas assets to focus on oil projects such as crude production from the tar sands and will save C$1 billion in capital spending and C$300 million in operational expenditures a year. Those savings may be even higher, George said today. The company is cutting 1,000 jobs as part of the reorganization. Suncor has announced the planned divestiture of 104 gas stations in Ontario."
Suncor Says Oil Sands Becoming Increasingly Important
Bloomberg, 7 October 2009

"The plan to de-dollarise the oil market, discussed both in public and in secret for at least two years and widely denied yesterday by the usual suspects – Saudi Arabia being, as expected, the first among them – reflects a growing resentment in the Middle East, Europe and in China at America's decades-long political as well as economic world dominance. Nowhere has this more symbolic importance than in the Middle East, where the United Arab Emirates alone holds $900bn (£566bn) of dollar reserves and where Saudi Arabia has been quietly co-ordinating its defence, armaments and oil policies with the Russians since 2007. This does not indicate a trade war with America – not yet – but Arab Gulf regimes have been growing increasingly restive at their economic as well as political dependence on Washington for many years. Of the $7.2 trillion in international reserves, $2.1trn is held by Arab countries – China holds about $2.3trn – and the nations interested in moving away from dollar-trading in oil are believed to hold over 80 per cent of international dollar reserves. Saudi Arabia's denials of any such ambitions were regarded by Arab bankers as a normal part of Gulf politics. The Saudis, of course, managed to deny that Iraq had invaded Kuwait in 1990 – even when Saddam Hussein's legions stood along the Saudi frontier, until the US broadcast the news of Iraq's aggression to the world. Saudi bankers are well aware that in nine years' time – the current timeframe for a transition away from the dollar in oil trading to Japanese and Chinese currencies, the euro, gold and a possible new Gulf currency – China will have doubled its national income to $10trn (assuming a growth rate of 7 per cent), at which point the US might hold no more than 20 per cent of the world's gross income. Such massive financial movements, encouraged by the de-dollarisation of oil, will have enormous political effects in the Middle East, especially if economic superpower rivalry between America and China comes to dominate the Arab world."
A financial revolution with profound political implications
Independent, 7 October 2009

"OPEC member Kuwait's plan to raise its oil output capacity to four million barrels per day by 2020 has been delayed by 10 years on manpower shortage, the emirate's oil minister said on Tuesday. 'We have decided to move the target date for raising output capacity to four million bpd to 2030 instead of 2020,' Sheikh Ahmad Abdullah al-Sabah told reporters. The minister cited lack of sufficient manpower as the main reason, adding that 'to achieve that capacity we need foreign oil majors.' Opposition MPs have for years blocked a government project to seek the assistance of international oil companies to raise production at its northern oil fields. The minister declined to answer questions on the fate of the project and if the government still wants to go ahead with it. Kuwait, OPEC's fourth-largest producer, announced in March it had raised its output capacity to three million bpd. The minister said on Tuesday the emirate still has the same capacity and its current production is 2.2 million bpd according to OPEC quota. In December, former oil minister Mohammad al-Olaim said Kuwait may delay some planned investments in the sector due to plunging crude prices but will keep its main projects. The original plan had also stipulated to raise output capacity to 3.5 million bpd in 2010 but it now looks that this target will not be met."
Kuwait delays oil output capacity boost to 2030
Agence France Presse, 6 October 2010

"The U.S. Energy Information Administration on Tuesday raised its outlook for world oil demand at the end of 2009, as the economies of China and other Asian countries begin to improve. In its new monthly energy forecast, the agency said it now expects an increase of 410,000 barrels per day in the fourth quarter of 2009 from the same period a year ago. Its previous forecast estimated just a 240,000 bpd rise in fourth-quarter demand. World petroleum demand is still expected to drop overall in 2009 to 83.67 million bpd, well below the 2008 level of 85.46 million bpd. The EIA estimates world oil consumption will rebound in 2010, climbing by 1.1 million bpd compared with 2009. Last month the agency had projected a smaller increase of 910,000 bpd. 'Sustained economic growth in China and signs of a turnaround in other Asian countries continue to fuel expectations of a global recovery in world oil consumption,' the EIA said....In the United States, the world's largest petroleum consumer, oil demand is expected to fall 330,000 bpd in the fourth quarter from a year earlier. U.S. oil consumption in 2010 was revised upward, with the EIA now expecting a 320,000 bpd increase in demand compared with 2009. On the supply side, the EIA raised its forecast for OPEC crude oil production next year to 29.19 million bpd from its prior estimate of 28.89 million bpd. 'Oil inventories remain high and EIA expects oil production by the Organization of Petroleum Exporting Countries to increase as well,' the agency said. The EIA also raised its projection for oil output from non-OPEC countries in 2010 to 50.26 million bpd from its previous estimate of 50.19 million bpd. 'Over the forecast period, higher output from Brazil, the United States, Azerbaijan, Kazakhstan and Canada should offset falling production in Mexico and the North Sea,' the agency said. "
U.S. EIA raises 2010 world oil demand forecast
Reuters, 6 October 2009

"Gold prices will hit $1,500 an ounce in 2011 when oil prices move back above $100 a barrel as emerging market growth creates shortages, Bank of America Merrill Lynch said on Monday. 'For the world economy to resume growth of 5 percent, commodity supplies must expand by a similar rate,' said Francisco Blanch, head of global commodity research at the U.S. bank. 'With emerging markets likely to lead the global recovery, too much money chasing too few barrels could bring another spike in oil prices.' Investors use gold as a hedge against inflation, which erodes wealth and is often triggered by rising oil prices."
Gold to track oil, hit $1,500/oz in 2011
Reuters, 5 October 2009

"Just five hours' worth of gas storage capacity will be built in the UK over the next two years, even though gas imports this winter are forecast to reach record levels. The energy minister Lord Hunt admitted in a parliamentary answer last week that only a tiny fraction of capacity will be added to the 16 days' worth of average supply now available. The new storage, which will come into operation by the end of the year at the Aldburgh site in Yorkshire, amounts to just 0.06bn cubic metres, or just over five hours' worth, compared to the 4.34bn cubic metres already in existence. No additional capacity beyond this is forecast to come on stream until April 2011 at the earliest."
Gas storage capacity will only grow by tiny fraction, minister admits
Reuters, 4 October 2009

"China's Communist regime is celebrating its 60th birthday this week with a massive parade in Beijing, and another big play for a greater share of the global resource pie. Sovereign wealth fund China Investment Corp. sealed a deal yesterday to acquire an 11-per-cent stake in KazMunaiGas Exploration and Production, Kazakhstan's second-largest oil producer. Also this week, the Nigerian government confirmed that government-controlled China National Offshore Oil Corp. has made a pitch to buy up to six billion barrels of Nigeria's crude oil reserves in a deal that could be worth as much as $30-billion (U.S.)."
China's birthday present: More resources
Globe & Mail, 1 October 2009

"India announced the world’s boldest nuclear power development plan yesterday, saying that it could boost its atomic capacity by 12,000 per cent by 2050 to end crippling power shortages while limiting carbon emissions. Manmohan Singh, the Prime Minister, predicted that India could produce 470 gigawatts of nuclear power by 2050, compared with the 3.8GW currently produced by its 17 reactors. India’s target is almost five times the current nuclear power capacity of the United States — the world’s biggest producer with 100GW, according to the International Atomic Energy Agency (IAEA). It far outstrips predicted US nuclear capacity in 2050 as well as China’s plans — previously the world’s most ambitious — to increase the power generated by its reactors from the current 9GW to about 300GW by that year."
India promises 12,000% boost in nuclear capacity by 2050
London Times, 30 September 2009

"Russia's Gazprom (GAZP.MM) will cut gas output in 2009 by 13.8 percent to the lowest in history on low demand at home and in Europe and much lower demand in the former Soviet Union, a newspaper reported on Wednesday. The world's largest gas producer, which supplies a quarter of Europe's gas needs, will produce 474 billion cubic metres (bcm) in 2009 with exports to Europe expected to fall by 10 percent to 142.5 bcm, Vedomosti business daily said, citing Gazprom documents. The company has previously only given a range of expected production falls in 2009 -- saying it could fall as much as 18 percent....Gazprom has previously said its investment programme for 2009 will fall by a quarter from the initial plan to around 760 billion roubles and Vedomosti said every major project will undergo a cut in investment this year. It will affect gas projects on the Yamal peninsula, which will see investment slashed by a third to 147 billion roubles. The Prirazlomnoye field on the Kara Sea and Shtokman on the Barents Sea will have investment halved to 10.8 billion and 13 billion respectively."
Gazprom to cut 2009 gas output to all-time low
Reuters, 30 September 2009

"Don't look for Iran to throw up the white flag anytime soon. The Obama administration is scrambling to tighten trade sanctions against Iran after the disclosure last week that Tehran was hiding a heavily fortified facility that many believe is designed to make material for nuclear weapons. But the kind of sanctions that would really hit Iran's economy - sanctions against its energy industry - are thought to be off the table because China and other nations are too reliant on Iran's oil. 'They look to Iran as a major source of future oil supplies,' said James Placke, a senior associate at Cambridge Energy Research Associates who specializes in the Middle East. 'They'd have to go through a substantial policy reversal, and I'd be surprised if they did that.' The United States and its allies can tighten sanctions all they want - The United States already has extensive sanctions against Tehran. But without the Chinese on board sanctions don't have the official weight of the United Nations Security Council, and are thus taken less seriously by the world community."
Chinese oil demand fueling Iranian defiance
CNN, 30 September 2009

"Greenhouse gas emissions created by Britons are probably twice as bad as figures suggest, says the government's new chief energy scientist.   Professor David MacKay told the BBC that reductions in carbon dioxide emissions since 1990 are 'an illusion'. 'Our energy footprint has decreased over the last few decades and that's largely because we've exported our industry,' he said. Developing countries now made the goods that Britain buys, he added. He was speaking unofficially in a previously recorded interview, but his comments will increase pressure on the UK to improve its offer of emissions cuts at the upcoming climate change talks. 'Other countries make stuff for us so we have naughty, naughty China and India out of control with rising emissions but it's because they are making our stuff for us now,' he said. 'It's been estimated by Dieter Helm from the University of Oxford that roughly half of our energy footprint actually lives overseas so our true footprint is twice as big as it looks on paper.' Prof Helm's paper suggests if the UK counted 'embedded' emissions, its total pollution would have gone up not down..... Setting a baseline of 1990 for emissions cuts allowed the UK to cut emissions without trying because 1990 was a peak of coal burning in Britain....Prof Helm's paper says: 'If carbon outsourcing is factored back in, the UK's impressive emissions cuts over the past two decades don't look so impressive anymore. 'Rather than falling by over 15% since 1990, they actually rose by around 19%. And even this is flattering, since the UK closed most of its coal industry in the 1990s for reasons unrelated to climate change. 'No doubt, recalculating the figures for other European countries and the US would reveal a similar pattern.' It is consumption and not production that matters, according to Prof Helm."
Britons creating 'more emissions'
BBC Online, 30 September 2009

"Offshore capital expenditure is forecast to increase from last year's $260 billion to $360 billion by 2013 with the long-term outlook for the industry remaining bullish, market consultants Douglas Westwood said today. 'Leading indicators have been improving since the beginning of the year; our view is that offshore expenditure will grow,' Steve Robertson, the director of Douglas Westwood, told the Trends in the Offshore Drilling Industry conference in London. 'From 2011 onwards, delayed projects will come back into the market.' Robertson said deep-water drilling will see particularly strong demand growth. 'There will be increasing reliance on deep-water drilling for supply,' he said, adding that the company forecast around 12% of total global demand will be supplied by deep-water drilling by 2015. Robertson said demand from China being a key driver for oil demand fundamentals remaining strong. 'If China follows Korea’s path - as it has largely to date - oil demand will more than double in the next decade,' he added. Robertson questioned whether supply could meet this demand, with 66 out of 99 producing countries having reached their peak production by 2008. 'Peak oil is not a myth or a scare tactic, in our view it is very much a reality,' he said."
'Brighter days ahead offshore'
Upstreamonline, 29 September 2009

"The U.S. government on Tuesday revised down U.S. oil demand in July to 4 percent below year-ago levels as the struggling economy sent petroleum consumption to the lowest level for the month in 13 years. Oil demand in July was 133,000 barrels per day (bpd) less than the Energy Information Administration previously estimated at a revised 18.771 million bpd, the lowest since 1996. That's down 786,000 bpd from a year earlier when demand was 19.557 million bpd. The EIA report appears to contradict other recent government data that suggest the U.S. economy is on the road to recovery."
U.S. July oil demand lowest in 13 years: Govt
London, 29 September 2009

"At a time of such great challenge for America, no single issue is as fundamental to our future as energy. America’s dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism. It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete. These urgent dangers to our national and economic security are compounded by the long-term threat of climate change, which, if left unchecked, could result in violent conflict, terrible storms, shrinking coastlines, and irreversible catastrophe. These are the facts, and they are well-known to the American people. After all, there is nothing new about these warnings. Presidents have been sounding the alarm about energy dependence for decades....Today I'm announcing the first steps on our journey toward energy independence, as we develop new energy, set new fuel efficiency standards and address greenhouse gas emissions."
President Barack Obama, Speech At The Whitehouse
Washington Post, 26 January 2009

"I’ve been tracking the number of projects, globally, for a long time both in the Middle East and elsewhere—Russia, Brazil, west coast of Africa, and others. A lot of this information is in the public domain, so there is no mystery there. The International Energy Agency recently reported on the same numbers. The bottom line is that there are not enough projects. There is not enough new capacity coming on line, within say the next five to six years, to make up for global declines. And that’s assuming a very moderate level of declines—6% to 6.5% for non-OPEC, perhaps a 3.5% to 4% decline rate for OPEC. Even at these modest decline rates, we are basically going to see a shortage of capacity within two to three years. We’re being lulled by this current excess capacity, which has more to do with lower demand than anything to do with supply. So we do have a problem in the near term. In the longer term it’s even worse because in the longer term the lead time to discover, develop and put on line production runs into 10 years. And there isn’t enough being done in the long term as well. So it’s both a short and a long-term problem....Saudi Arabia has a very credible and professional record in terms of declaring capacity and meeting its production targets. When the Kingdom announced a target of 12.5 million barrels of capacity, they actually committed funds to develop that capacity and we’ve seen them now commissioning those: 250,000 additional barrels in Shaybah; 1.2 million barrels in Khurais; 500,000 in Khursaniyah; 900,000 coming on stream in a couple of years in Manifa. So these are real projects and real capacities. I don’t think there is an issue that Saudi Arabia can deliver the oil it says it can deliver. The question is, what about the rest of the world? Is the rest of the world able to make up the difference? If we’re looking at 85 to 90 million barrels a day, and Saudi Arabia delivers 12.5 million, who’s going to deliver the rest and how much effort is going into that? And with decline rates of 7% to 8%, that’s four or five million barrels a year of net new capacity that has to come from new projects. So that’s where the challenge is. I don’t think the problem is Saudi Arabia. I think the problem is the rest of the world....if you look at published information—for example, British Petroleum’s annual statistical report—it very clearly shows that from 2003 forward, oil production has hardly increased. So the information is there. If you look at some of the advertising that Chevron has been putting out for years now, they clearly say we’re half-way through the world’s reserves. The information is there. The facts are there. Oil prices did not jump four-fold over a three- or four-year period for any reason other than a shortage of supply. Yes, there may have been some recent volatility in 2008, but the price trend started climbing way back in 2002-2003....This is not going to get any better. This is going to get worse because you have population growth all over the world, you have a standard of living that is improving all over the world, you have aspirations across the globe for a better quality of life, and people want energy, so it’s actually important to talk about the facts and come up with solutions rather than act as if these issues don’t exist and then wait for some solution to materialize out of nowhere....I think it’s very important to understand the difference between conventional oil projects and unconventional oil projects—let’s say, the extra-heavy crudes. The IEA put out their report in 2008 on the long term. They listed a whole lot of projects. If you look at the conventional oil projects, which I have, and plot the cumulative capacity against cumulative cost, what you come up with is $30,000 to $32,000 per barrel of capacity for conventional oil. That’s for projects coming on-stream between 2008 and 2015. If you look at the unconventional—that’s the Canadian extra-heavy, and I included two Qatari gas-to-liquids projects—the cost per barrel of capacity is $92,000 per barrel. It’s three times the cost of conventional oil. That means that if you want 100,000 barrels of unconventional oil (syncrude), you’ve got to invest $9 billion. And those are just at current costs. For the conventional oil, when you can find it, it’s $3 billion per 100,000 barrels/day. But even the conventional has gotten very expensive. If you look at the Tengiz and the Kashagans, they’re running $40 billion to $50 billion to get 500,000 to 600,000 barrels of oil/day. So everything is getting far more expensive and slower to develop. I think, yes, we will have synthetic crude oil. The Germans ran their World War II machine on coal-to-liquids, but that was a very expensive solution; we can’t replace 80 million barrels a day with coal-to-liquids. So they will be important supplements but not replacements....There no doubt that the energy that goes into extracting extra-heavy crudes—be it in the form of fuels such as natural gas to heat the bitumens to get them to flow, be it in terms of the surface process of mining two tons of sand for one barrel of oil, then the cracking and refining to convert them to synthetic crudes—these are very high penalties. The same thing goes with gas-to-liquids; basically it takes one-third of the gas to deliver the other two-thirds as a liquid. So these have diminishing returns. Yes, you will be able to deliver, I think everybody forecasts 4 or 5 million a day from unconventional crudes, maybe going to 8 or even 10 million barrels by 2030. But that 8 million a day is only 10 percent of total consumption. It’s not a solution....we have had discoveries, they are important, they are slow to evolve. If the Tupi discovery, which happened a couple of years ago, is going to take until 2017 or 2018 to be online, that’s a long time to wait. What’s the target? A million barrels a day. Declines will have overcome that rate a long time earlier, certainly in Brazil itself."
Interview with Sadad al Husseini, former production engineer with Saudi state oil company
'The Facts Are There'
ASPO-USA, 28 September 2009

"Mexican oil production fell again in August but state oil company Pemex said it had some early indications the rapid fall in output at its giant Cantarell field may be slowing. Mexico pumped 2.542 million bpd in August, a decline of 7.9 percent on a year ago but production at Cantarell edged higher for the first time in more than two years. A slowdown in the decline at Cantarell would be welcome news for Mexico, which faces a possible downgrade of its credit rating amid concerns the government is overly dependent on revenues from the declining oil industry. However, a Pemex spokesman urged caution, saying the company needed more time before it could be sure that the field had stabilized...The Cantarell unit, which includes the giant field along with several nearby satellite reservoirs, produced 650,154 bpd in August, up from 646,557 bpd in July, according to the energy ministry. Output at Cantarell was 34 percent below what it yielded in August 2008. Mexican President Felipe Calderon fired Pemex's chief executive earlier this month in part due to frustration over the company's repeated failure to meet production goals. The government abandoned its forecast that oil production would rise to 3 million bpd by 2012 earlier this month, projecting in its budget proposal that output would fall to 2.5 million bpd in 2010 and remain at that level for several years. A legacy of years of underinvestment in exploration means Pemex has few options to quickly replace the production capacity lost at Cantarell.... In the medium term Pemex is focusing on developing the unconventional Chicontepec reserve, a huge onshore area where billions of barrels of crude are locked in complex rock formations that do not allow oil to flow easily. However output at Chicontepec remains stagnant despite Pemex executives projections earlier this year that August would be the beginning of an upward trend in production from the area.... Chincontepec produced 30,706 bpd in August, down from 32,405 bpd in July. The area produced around 29,000 bpd at the end of 2008 and Pemex has forecast that Chicontepec production will reach nearly 80,000 bpd by the end of this year. Analysts are skeptical that Pemex has the technical capacity to develop Chicontepec, which requires hundreds of wells to be drilled every year."
Mexico's Cantarell oil field may be stablizing
Reuters, 25 September 2009

"Vladimir Putin played host to a dozen energy giants in a remote Siberian oil town yesterday, hoping to secure their help with developing the colossal gas reserves of the Yamal Peninsula. Promising friendship and tax breaks, the Russian Prime Minister and former President told chief executives of some of the world’s biggest energy companies, including Royal Dutch Shell, Total, of France, and E.ON, of Germany, that he was inviting them to be long-term partners in developing Yamal. The remote Yamalo-Nenets region contains one of the world’s biggest gas reserves, estimated by Gazprom at 16 trillion cubic metres — ten times the size of the UK’s remaining gas reserves. Mr Putin’s warm welcome to the foreign oil companies was in marked contrast to the Kremlin’s concern only a year ago about conserving Russia’s strategic resources for Russians. Last year, in his final act as President, Mr Putin signed a law restricting foreign investment in 42 sectors, including energy. However, the recession is believed to have focused attention in the Kremlin on the huge cost of keeping the gas flowing. Hosting yesterday’s meeting with the foreign energy companies in Salekhard, the capital of Yamal, Mr Putin said: 'We would like you to consider yourselves participants in our undertaking. The main condition from our side is that partnerships should be stable and long-term.' Also attending the Arctic meeting were ExxonMobil and ConocoPhillips, Mitsui and Mitsubishi, of Japan, Statoil, of Norway, ENI, of Italy, GDF-Suez, of France, Petronas, of Malaysia, and KOGAS, of Korea. Mr Putin indicated that favourable fiscal treatment might be on offer. Russia’s attitude towards foreign oil and gas investors has in the past been less welcoming. In 2006 Shell was forced to give up control of Sakhalin, a big liquefied natural gas project in Eastern Siberia, ceding half of its interest to Gazprom after a dispute over costs and alleged environmental violations. TNK-BP, the joint venture that holds BP’s Russian interests, was also forced to hand over Kovykta, another giant gasfield, to Gazprom. However, in June, Shell appeared to have found its way back into the Kremlin’s favour. The Dutch oil company was invited by Mr Putin to take part in a further development of Sakhalin while in the same month Total was given the chance to join Novatek, a Russian gas company, to develop a gas prospect in Yamal costing $1 billion. Christopher Granville, a Russia analyst at Trusted Sources, the consultancy, said that project management as well as cash was behind the Kremlin’s change of heart. 'There is a growing understanding that the ability to carry out major projects is something that these [foreign] companies can provide,' he said. Gazprom is already investing huge resources developing Bovanenkovskoye, a huge gasfield in Yamal, and an 1,100-kilometre pipeline linking it to Gazprom’s network of pipelines bringing gas into Europe. Gazprom is stretched financially with heavy borrowings and diminished cash flow because of the fall in gas prices in Europe. Last week Yuri Trutnev, the Russian Natural Resources Minister, complained that foreign investment rules were impeding Russia’s resource development. He accused Gazprom and Rosneft, the only two Russian companies engaged in offshore exploration, of underinvestment. Meanwhile, foreign investors have complained that the resource threshold above which foreigners must relinquish control is a meagre 70 million tonnes of oil and 50 billion cubic metres of gas. Too low, they say, to be worth the effort."
Putin thaws on foreign firms as gasfield proves too big too handle
London Times, 25 September 2009

"The government has today formally launched its Marine Renewables Proving Fund, inviting wave and tidal energy developers to bid for £22 million in new grants designed to accelerate the commercial development of marine energy technologies. The fund, which was announced in July as part of the government's renewable energy strategy and will be managed by the Carbon Trust, aims to help marine energy developers get their technologies to a stage where they can be installed, at which point they can apply for further financial assistance from the Marine Renewables Deployment Fund. The government faced criticism last month from Conservative shadow energy and climate change secretary Greg Clark, after it emerged that none of the £50 million Deployment Fund had yet been distributed. Clark said that the government was guilty of providing over 20 times more subsidies to the coal industry than it has delivered to the marine energy sector."
UK launches £22m wave energy fund
Guardian, 23 September 2009

"British alternative energy company Ceres Power moved a step closer to bringing its 'green' fuel-cell boiler to the mass market on Wednesday by signing an outsourcing deal with a Dutch company. Heating appliances maker Daalderop will make the boiler assembly, the white box that houses Ceres's fuel cells parts, in volume, thus saving Ceres having to set up its own facility to do so. Ceres's combined heat and power product, which it is developing in conjunction with British Gas, enables people to use the gas and fuel already coming in to their homes to generate their own electricity, rather than buying it from the grid. The company plans to bring the wall-mounted product to the mass market in the second half of 2011, Chief Executive Peter Bance told Reuters. 'We're giving ourselves a couple of years of getting it right,' Bance said via telephone....He expects the UK's planned feed-in tariff to boost interest in the product further, as it means customers would receive incentives for electricity they generate within their homes."
Ceres Power closer to mass production
Reuters, 23 September 2009

"The oil industry has been on a hot streak this year, thanks to a series of major discoveries that have rekindled a sense of excitement across the petroleum sector, despite falling prices and a tough economy. These discoveries, spanning five continents, are the result of hefty investments that began earlier in the decade when oil prices rose, and of new technologies that allow explorers to drill at greater depths and break tougher rocks....It is normal for companies to discover billions of barrels of new oil every year, but this year’s pace is unusually brisk. New oil discoveries have totaled about 10 billion barrels in the first half of the year, according to IHS Cambridge Energy Research Associates. If discoveries continue at that pace through year-end, they are likely to reach the highest level since 2000....It is not just oil that is benefiting from the exploration boom. Repsol, Spain’s biggest oil company, said this month that it had discovered what could turn out to be Venezuela’s biggest natural gas field. In recent years, companies have found substantial natural gas reserves in the United States, from shale rocks once believed to be impossible to drill.....Exploration remains a risky, and costly, business, where some deepwater wells can cost up to $100 million. From 30 to 50 percent of exploration wells find oil. Some executives are also worried the world might face a shortfall in supplies in coming years if another decline in oil prices causes exploration to falter. The chief executive of the French oil giant Total, Christophe de Margerie, has warned that such a supply crunch is possible by the middle of the next decade. 'There could be a shortage of capacity,' he said. His concerns echoed those of Abdullah al-Badri, the secretary general of the Organization of the Petroleum Exporting Countries, who said that lower oil prices also threatened investments by OPEC nations. Saudi Arabia is also unlikely to expand its production in coming years because of the uncertainty clouding future oil demand, Ali al-Naimi, the kingdom’s oil minister, signaled earlier this month. Saudi Arabia is just completing a $100 billion program to increase its capacity to 12.5 million barrels a day, from around 9 million barrels a day just a few years ago. Although they are substantial, the new finds do not match the giant fields discovered in the 1970s, like Alaska’s Prudhoe Bay, Ekofisk in the North Sea, or Cantarell in Mexico. They are also dwarfed by the last enormous discovery, the Kashagan field in the Caspian Sea, discovered in 2000 and estimated to hold over 20 billion barrels of oil. 'We have not seen another Kashagan, but still these finds are very material,' said Alan Murray, the exploration service manager at Wood Mackenzie, a consulting firm in Edinburgh. Since the early 1980s, discoveries have failed to keep up with the global rate of oil consumption, which last year reached 31 billion barrels of oil. Instead, companies have managed to expand production by finding new ways of getting more oil out of existing fields, or producing oil through unconventional sources, like Canada’s tar sands or heavy oil in Venezuela. Reserve estimates typically rise over the life of a field, which can often be productive for decades, as companies find new ways of getting more oil out of the ground. The industry’s record has improved in recent years, thanks to high prices. According to Cambridge Energy Research Associates, oil companies have found more oil than they produced for the last two years through a combination of exploration and field expansions. 'The appetite for opening new frontiers when prices were low in the 1990s was very small,' said Paolo Scaroni, the chief executive of Italy’s oil giant Eni. 'Today, the biggest discovery of all is technology.' One of the largest finds this year was made by a small producer, Heritage Oil, at the Miran West One field in the Kurdistan region of northern Iraq. It found nearly two billion barrels of oil and plans to drill a second well before the end of the year. While the central government of Iraq has had a hard time attracting investors to develop its huge fields, local authorities in Kurdistan have been successfully wooing foreign producers."
Oil Industry Sets a Brisk Pace of New Discoveries
New York Times, 23 September 2009

"The united front that China and India claim to present on climate change puts the United States in a tough position — but could give President Obama the leverage that he needs to persuade Americans to save energy. In a calculated move, China, which has just overtaken the US as the world’s largest emitter of greenhouse gases, stole the show at yesterday’s special United Nations summit on climate change with plans to pour billions of dollars into energy-saving technology and nuclear power. China, which like the US produces about a fifth of global warming gases, made a strong bid to grab the moral high ground and the claim to world leadership — as well as much of the lucrative new market in green technology. Indian ministers had already jumped the gun with talk of new curbs, although the gesture may be worth more in politics than in science, as analysts are sceptical of their commitment to force through mandatory efficiency standards on vehicles and buildings, renewable energy and stopping deforestation. The pincer movement by the twin giants of the developing world puts pressure on the US to reverse years of political resistance and set targets for cutting its own emissions. The move by China and India 'has a huge political benefit for Obama', said Paul Bledsoe, of the National Commission on Energy Policy in Washington."
Beijing steals the show, but gives Obama an opportunity to act
London Times, 23 September 2009

"Uranium demand will rise and exceed supply in 2014 as China and Russia add nuclear power stations, benefiting producers Paladin Energy Ltd. and Energy Resources of Australia Ltd., the Royal Bank of Scotland said. The price of uranium will double to a peak of $95 a pound in late 2011, from an average of about $47 a pound this year, RBS analysts Warren Edney, Sam Berridge and Lyndon Fagan said in a research report published today. Paladin has surged 84 percent in Sydney trading this year and Energy Resources 36 percent as investors bet uranium will rise along with use of nuclear power. Some 48 reactors are being built, compared with 34 in 2008 and 32 in 2007, RBS said. Supplies are 'inconsistent' with 'logistical, statutory and operating bottlenecks' in Canada, Namibia and Australia. Demand will climb steadily, leading to 'a deficit market from 2014 on,' Fagan said by telephone from Sydney today. Perth-based Paladin and Darwin-based Energy Resources 'are well placed' to gain and 'should see their margins grow,' he said."
Uranium Shortage Looms in 2014, Benefiting Paladin, RBS Says
Bloomberg, 22 September 2009

"The head of oil giant Total has told the BBC the world could face a shortage of oil because of underinvestment. Chief executive Christophe de Margerie warned that too little has been spent trying to tap into new oil reserves because of the economic crisis. 'If we don't move [now] there will be a problem,' Mr de Margerie said. 'In two or three years it will be too late.' He also said he thought oil prices would rise to more than $100 a barrel, from their current level of around $70. "
Total issues oil shortage warning
BBC Online, 21 September 2009

"Recovery is underway in Britain but the economy is vulnerable to future shocks such as rising energy prices, Andrew Sentance, a senior Bank of England policymaker, declared on Monday....He advised caution against expecting a return to the stability experienced between the mid 1990s and mid 2000s, adding the energy market was a prime candidate for providing the 'next big global shock', with energy price hikes and increased emissions likely to follow as global demand picks up. Energy consumption outside the OECD rose by almost 50pc from 2000 to 2008, so that energy consumption among emerging markets now exceeds that in advanced OECD economies - a sign of the shifting balance of global economic power. Global price developments have sent consumer price inflation in the UK on a 'giant rollercoaster', from over 5pc a year ago to 1.6pc now he said.  'Without the impact of food and energy prices, which are heavily influenced by global price developments, UK CPI inflation would have stayed very close to the 2pc in the last few years...Therefore the task of managing inflation has become more challenging for national monetary authorities in the new global economy of the 21st century.'”
BoE's Andrew Sentance warns Britain's recovery at risk from rising energy prices
London Times, 21 September 2009

"Barely a week goes by without a major oil discovery being announced. Recent hot spots include the Gulf of Mexico, Brazil and West Africa. But beware jumping to conclusions about how much this changes the dynamics of energy supply, for oil bears or peak-oil pundits.....impressive as the application of new technologies is, consultancy Wood Mackenzie said the latest discoveries are in line with the underlying exploration trend of the past decade. Given the recent multiyear rally in oil prices, it is surprising oil output from nations not in the Organization of Petroleum Exporting Countries hasn't increased. With the global economy seemingly recovering and energy consumption sure to rise as the industrialization of China and India continues, it is tempting to conclude prices must be squeezed higher. But it is worth remembering some immediate issues. OPEC's production cuts and new Saudi Arabian fields leave the cartel with spare capacity of roughly 6.5 million barrels a day. It might take years of robust global growth to absorb that. Factor in new fuel-efficiency standards and biofuel development, and it could be 2020 before U.S. gasoline consumption, roughly a 10th of global oil demand, returns to 2008 levels, said Edward Morse at Louis Capital Markets. Even China is catching the fuel-efficiency bug, as it realizes energy subsidies stymie competitiveness."
Oil Investors Embark on Voyage of Discovery
Wall St Journal, 18 September 2009

"Oil prices will rebound to $105 per barrel by 2012 due to the upcoming tightening of supply, a new study has found. According to a Morgan Stanley report, most of the scheduled incremental oil capacity from 2009 to 2015 is highly ambitious and unlikely to be achieved due to technical, financial and political setbacks. This will result in tight spare capacity, one of the major reasons for price increases in 2005 until oil prices peaked last year. Energy economists believe price rises in the past years revealed an oil market that has lost a great deal of its flexibility and capacity to deal with supply disruptions or large unexpected increases in global demand. Spare capacity – or extra crude oil stored for emergency cases – is said to have helped offset large demand and supply shocks in the 1980s and 1990s. But this has dipped to record lows in recent years. Current spare capacity is estimated at 6.7 million barrels per day (mbpd). Due to the slump in demand, this is enough to keep the market calm for the time being. However, Morgan Stanley estimates that by 2012, demand will increase by 2.7 mbpd during which time global production capacity will have fallen by 700,000 bpd. This will take the spare capacity down to 3.3 mbpd or less than four per cent of global oil demand. 'We see global spare production capacity staying ample through end-2010, before declining in 2011 and reaching 2007-2008 tightness by 2012,' it said. 'While the high prices of 2004-2008 prompted a flurry of exploration and production activity, the payback for this activity is mostly lagged to 2012 and beyond.' The report, 'Crude Oil: Balances to tighten again by 2012', said oil demand has dropped by two million barrels per day (bpd) this year but it will rebound by one million bpd next year and then grow by one per cent. Even at this marginal demand growth level, it will still create a tight market due to a string of delays in oil producing states incremental output plans. The bulk of the expansion projects are either expensive such as the Canadian oil sands; or technically extraordinarily challenging such as the Tupi in Brazil; or face geopolitical challenges, as in the case of Iraq, Venezuela, Nigeria and Kuwait. If a significant portion of these supplies fails to materialise, global spare production capacity would be drastically reduced, it said. 'As inventories cannot be drawn on indefinitely, this scenario would entail prices moving markedly higher to ration demand,' it added. Much of the incremental capacity and existing spare capacity comes from Saudi Arabia. Its spare capacity stands at 4.5 mbpd or nearly 70 per cent of the 6.7 mbpd of estimated global spare capacity. Saudi, Opec's largest oil producer is the world's largest net oil exporter and second largest producer behind Russia. The kingdom, whose current Opec quota is 8.05 mbpd, is the only country in the Middle East that is poised to increase its capacity to 12.2 mbpd by end of next year, as per its target. This relates largely to the ramp-up of new production at the massive Khurais (1.2 mbpd) and Shaybah (250,000 bpd) fields. Morgan Stanley said a third of the new Saudi capacity in 2009 is likely to remain idled initially, although the Saudis have noted that production from these facilities could reach capacity within as little as 30 days if needed. It has now started commissioning its new fields with priority given to the small Arabian super-light field of Nuayyim. Although the field will only produce 100,000 bpd, it has a high gas-to-oil ratio of 800 cubic feet per barrel of crude – a welcome stream during peak gas demand in summer....Abu Dhabi National Oil Company (Adnoc) had originally announced plans to phase the increase of capacity from 2.85 mbpd to 3.5 mbpd by 2010, with follow-up expansions to raise production to 4 mbpd by 2015. The 3.5 mbpd deadline was later pushed back to 2012 and has now been delayed to an unspecified date, said Morgan Stanley. Major incremental developments such as the Thamama G and Habshan 2 reservoirs in the Bab field and the Huwaila Field development totalling together approximately 390,000 barrels per day have now slipped beyond 2012. A detailed Exxon study of the complexity of the Zakum reservoirs also calls into question whether production can be lifted by 200,000 bpd, while maintaining high levels of oil recovery and overcoming declines from the lower reservoir zones. Adco, the UAE's offshore joint venture company with Shell, BP, ExxonMobil, Total and Portugal's Partex, had plans to increase the output of the Upper Zakum reservoirs in the Zakum field. This development project had aimed to increase Zakum's output from 550,000 to 750,000 bpd. The Zakum Field reservoirs are carbonate rocks with shale separations and reefal developments. The complexity of the project and increases in cost estimates since its approval in early-2006 have now delayed completion from 2010 to beyond 2013....Other delayed projects include the offshore Hail and Bui Tini field developments, which were scheduled to deliver 50,000 bpd, the Quarriers Field (40,000 bpd) and the Bina Al Qumran Field (20,000 bpd)....Kuwait's original plans to invest up to $40 billion (Dh146.8bn) over the next 15 years to rehabilitate its oil sector and boost upstream capacity from 2.65 mbpd to four mbpd over the next 15 years also appear 'unlikely'.....the Kuwait State Audit reported in July 2009 that the government-owned KOC would not be able to achieve its strategic production increase owing to numerous delays in the implementation of specific projects in the northern oil fields and the construction of supporting infrastructure. KOC now plans to increase its rig activity from 25 drilling rigs to 60 before 2011 but the concurrent increase in production remains undefined. This, according to Morgan Stanley, is largely the result of the closure in early-2009 of technical service agreements with all major international oil companies. 'KOC on its own will be hard-pressed to establish technical and organisational resources required to manage the major expansion programme,' it said. In recent months, KOC has focused on its large Burgan oilfield, where production challenges include severe water requirement, reservoir pressure declines, infill drilling requirements and remedial work-overs for older oil wells. 'In order to sustain Burgan's capacity of nearly 1.43 mbpd and due to manpower limitations, KOC has had to defer other expansion in both the north and west of Kuwait,' it said....Iraq's plan to increase production capacity by two mbpd to almost 4.5 mbpd within six years likewise appears 'unachievable', says the report. The combined impact of the disappointing round one bidding process and the lack of centralised plans and supporting infrastructure for round two fields does not portend to a rapid increase in Iraq's production capabilities, it said. Given ongoing declines within its mature reservoirs, the absence of investments over the past three decades, and continued domestic turmoil and tensions, any significant change in Iraq's production capacity is unlikely to materialise until 2014 and beyond....The report dubs Iran's expansion plans are 'ambitious' too. Its target to achieve production capacity of 4.5 mbpd within the next four years and 5.3 mbpd by 2013-2014 has run into a variety of technical, financial and political problems. The National Iranian Oil Company (NIOC) has, in the past, been confident it could achieve its objectives through in-fill drilling and work-overs of existing wells as well as the development of new fields such as Azadegan and Yadavaran. Smaller fields such as Paranj, Jufeir, Khesht, Mansourabad and West Paydar were also scheduled to supplement such capacity expansions. Azadegan has more than five billion barrels of mostly heavy oil reserves across four reservoirs. Its expansion from 20,000 bpd to 260,000 languished for years owing to a reluctance of Japanese partner Inpex to violate US sanctions. NIOC and CNPC have now signed a deal to increase Azadegan's capacity in two phases by 2013. These plans are slow to evolve owing to the extreme reservoir complexity and low commerciality of the heavy crude, which was originally to be shipped to a super heavy crude refinery in Khuzestan. CNPC signed an agreement with NIOC in 2007 to develop the extensive Yadavaran field reported to have more than 17 billion barrels of heavy oil. This field also has technology issues and the targeted production capacity of 300,000 bpd may slip beyond 2012."
Supply constraints to push oil up to $105 a barrel by 2012
Emirates Business 24/7, 18 September 2009

"A flurry of big oil discoveries from Brazil to Sierra Leone undermines those who believe that there are no new oil frontiers to explore but the finds may not be enough to ward off a supply crunch as the world economy recovers. Anadarko, the US company, announced this week that it had found a whole new oil basin stretching 1,100km from the coast of Ghana to Sierra Leone. That came on the heels of a big find in Brazil, one of the world’s most important future oil exporters. The Brazilian find, which was made by Petrobras and BG, came shortly after BP announced that it had discovered oil in a layer of very deep rock in the Gulf of Mexico, establishing a new geological oil zone. In the new west African basin, Tullow, Anadarko’s UK-listed partner, believes it could find several new oil fields to match the size of its Jubilee field in Ghana, believed to hold 1.8bn barrels of oil, the continent’s largest offshore field. BP says it believes the deep waters of the Gulf of Mexico could hold 50bn, rather than 30bn, barrels. Edison Lobão, Brazilian energy minister, told Brazil’s Congress this week that the country’s oil reserves beneath large offshore salt formations could hold 50bn-80bn barrels of oil and natural gas, allowing Brazil to double its output to 3.8m barrels a day within a decade...Are these new discoveries big enough to delay or even avoid the supply crunch that oil executives, leaders of the Group of Eight rich countries and Opec, the oil cartel, all warn could befall the world as it attempts to recover from its worst recession in decades? In the near-term, the answer is probably not. This is because fields take a long time to develop and some forecasters see a crunch happening before 2014. David Fyfe, who heads mid-term supply forecasting at the International Energy Agency, the rich countries’ watchdog, said the speed of the economic recovery would be a major factor. If the economy returns to 4.5-5 per cent growth rates, the world will need about 4m barrels of oil a day more output to meet demand if it does not want to risk a price spike, such as the one that happened in the summer of 2008. That July, spare capacity, which today lies at a comfortable 6m b/d, was reduced so dramatically by demand from China and elsewhere that oil prices rose to a record of $147 a barrel. Oil producers were just not able to keep up, analysts say. In respect of the effect of the recent discoveries on long-term supplies, analysts are split on whether the finds over the past few weeks will make a discernible difference. Bob MacKnight, analyst at PFC Energy, a Washington-based consultancy, says much more oil would need to be found to delay the plateau that global oil production will eventually hit as the world’s biggest fields decline and large oil-rich areas remain untapped because of political hurdles. 'We are really approaching a peak production in deep water. It looks as though with these discoveries we will be able to hold on for longer. We need them,' he says. In terms of overall production, he says the discoveries will shallow the decline rather than move the peak. Ann-Louise Hittle, analyst at Wood Mackenzie, an Edinburgh-based consultancy, warns that supply forecasters already factor into their projections 'yet to be discovered fields' because of the incremental technology advances the industry makes, allowing companies to drill deeper and more challenging wells. But she suggests that the basin on the coast between Sierra Leone and Ghana might not be part of such forecasts and thus could move the goalposts. 'If you do really open up several new Jubilee fields, then you could start having an impact,' she said, referring to the African field. But one thing all the analysts stress is that delaying an oil supply crunch will need more than just a slew of discoveries. 'If action is not taken on the demand side, you will not shift it,' says Ms Hittle. It will be up to governments whether the demand-side effect comes from policies promoting efficiency and oil alternatives or the more painful demand erosion that comes from economies screeching to a halt because oil supply again fails to keep up with demand."
Oil strikes not enough to quench demand
Financial Times, 17 September 2009

"Peak oil supply will be hit this year after the economic crisis and low prices in the first quarter of 2009 slashed much needed investment, a senior executive at Australian investment bank Macquarie said. 'This is our view – capacity has pretty much peaked in the sense that declines equal new resources,' Iain Reid, head of European oil and gas research at Macquarie, told Reuters....Mr. Reid's latest research report – The Big Oil Picture: We're not running out, but that doesn't mean we'll have enough – sees global oil production capacity topping out at 89.6 million barrels per day (bpd) this year, a far more pessimistic view than most other banks or traditional forecasters. Underinvestment in mature fields, rising resource nationalism, and the cost and difficulty of retrieving oil from discoveries in ultra-deep water could see global production capacity fall to 87.3 million bpd by 2015, according to Mr. Reid. Mr. Reid, who spent 16 years with oil firms Shell and Amerada Hess, saw the current spare capacity cushion of around 5.2 million barrels wiped out by 2012....Macquarie saw the potential for a huge supply deficit to emerge, with global oil demand predicted to rise to 90.9 million bpd by 2015 from 84.2 million bpd today because of rising consumption from China and other emerging markets. 'Adding sufficient productive capacity on time is nearly impossible,' Mr. Reid said in his report. Episodes of higher oil prices would be an obvious consequence, without either a greater political push for efficiency savings or new technological advances, he said. But his price forecasts were still relatively conservative. He expected the benchmark U.S. crude contract will average $84 a barrel in 2012, compared with around $71 now. The bank's 'long run' forecast is for an average price of $75. The level of nearly $150 hit last year was unlikely to be repeated, Mr. Reid said, because of its immediate damaging effect on the world economy and on fuel demand. 'One hundred dollars a barrel is perhaps liveable with in certain scenarios, but I would say gasoline will reach the $4 level again and that will naturally force more efficiency in the United States,' Mr. Reid said, adding it was difficult to forecast when such levels would be hit. Eventually, the trend could be towards peak demand, rather than peak supply as higher prices drive the quest for greater efficiency and alternative energy sources. '(Oil near $150) would very soon create another set of global economic drivers which would spell much lower demand in the future,' said Mr. Reid. 'In the very long term, we can see demand for oil falling quite substantially.”
Peak oil expected in 2009: Macquarie
Reuters, 16 September 2009

"Renault SA Chief Executive Officer Carlos Ghosn said the future of electric cars depends on a rebound in oil prices that may boost sales of the battery-powered vehicles he’s spending 4 billion euros ($5.9 billion) to develop.  'If it’s less than $70, we’re going to have a problem,' Ghosn said in an interview at the Frankfurt Motor Show. 'If oil’s at $200 the economic equation’s very easy, and if it’s more than $200, even easier.' Renault pledged yesterday to sell 100,000 electric cars by 2016 in Israel and Denmark, the first two countries to hire the Paris-based company’s U.S partner Better Place to roll out nationwide networks of battery-charging and swapping stations. Ghosn is pitting electric cars from Renault and Japanese affiliate Nissan Motor Co. against a new generation of smaller, cheaper gasoline-electric hybrids from rivals including Toyota Motor Corp. The French company’s Fluence sedan, on show for the first time in Frankfurt, will become the world’s first mass- market electric car if the agreement with Better Place pays off."
Renault’s Ghosn Says Future of Electric Autos Hinges on $70 Oil
Bloomberg, 16 September 2009

"The UK Government is piling on the pressure for a 'Southern Corridor' of energy supplies to avoid over-reliance on Russian gas. Lord Hunt of Kings Heath, the Energy minister, is in Turkey and Azerbaijan this week as part of a concerted British effort to push energy security up the European agenda following last winter's ruckus between Russia and Ukraine over gas supplied through the latter's pipelines. 'Last winter was a wake-up call to Europe because it showed we must develop diverse sources of supply,' Lord Hunt said. 'I am here to encourage progress, talk to government and industry and do everything we can to encourage the development of the Southern Corridor.' A central element of the development of alternative supply routes is the proposed Nabucco pipeline from Azerbaijan, through Turkey, in Europe. The British Government is trying to smooth political negotiations affecting the project, such as the rules governing transit of Azeri gas through Turkey and the price to be paid. Lord Hunt met the Turkish energy minister yesterday and is holding talks with his Azeri counterpart today to try to push discussions ahead. 'If that can be resolved then the way is open for commercial companies to come in with investment and develop the infrastructure,' he said. The Southern Corridor is also potentially big business for British companies. Lord Hunt's tour included meetings with both local energy groups and major British players in the region, including BP, Shell and International Power. 'It is about understanding what the issues are in the region and getting a feel about likely developments in the future,' he said."
Government pushes for non-Russian gas supplies
Independent, 16 September 2009

"Total SA Chief Executive Officer Christophe de Margerie said there could be a new oil crisis when demand for oil and natural gas outstrips supply around 2014 or 2015, Le Parisien reported, citing an interview. He said oil prices could rise above last year’s record as demand rises and that the company won’t pull out of Myanmar, the newspaper reported."
Total Says 2014/2015 Hydrocarbon Demand Could Outstrip Supply
Bloomberg, 11 September 2009

"Despite the spot price of uranium dropping yet another dollar to $45 per pound, recent reports from the World Nuclear Association (WNA), the International Atomic Energy Association (IAEA) and industry consultant UxC show that uranium demand is set to outpace uranium supply in the coming decade. China and India will be the main drivers behind rising demand levels as together they have 28 reactors currently operating, 22 under construction and 58 new reactors expected to come on line over the next eight years, according to the WNA. The WNA’s latest report, The Global Nuclear Fuel Market Supply and Demand 2009-2030, sees a best case scenario of a 558 GWe in world nuclear capacity by 2020 and 818 GWe by 2030. Uranium mine production has fallen below western demand since the mid-1980’s, says World Nuclear News, but so far, secondary supplies from inventories, stockpile drawdowns and recycled materials have made up the difference. But as demand increases in energy hungry nations like China and India, primary production from mines needs to pick up the pace dramatically. 'Uranium production needs to increase dramatically from its current level,' said Cameco’s Penny Buye, co-chair of the WNA report’s drafting group. The IAEA has also updated its annual projections for global nuclear power capacity. Both its low and high end forecasts for 2030 are much higher than last year’s projections. At the low end, the agency sees worldwide nuclear capacity at about 510 GWe and the high projection is at 810 GWe. Ux Consulting has also published a report forecasting worldwide nuclear growth through 2030. The Nuclear Power Outlook (NPO) report highlights “dramatic growth” in nuclear power usage in China, India, Russia and other regions over the next twenty years. According to the NPO, there are currently 435 reactors with a capacity of 370 GWe in 31 countries and 55 reactors are now under construction in 12 countries. By 2015, Ux forecasts a total of 492 reactors (428 GWe total capacity) in 31 countries, 568 reactors (517 GWe) in 42 countries by 2020 and 697 reactors (702 GWe) in 52 countries by 2030. The report also projects a 78 per cent growth in annual uranium demand over the two decades from today’s level of 183 million pounds to 325 million by 2030. When one considers that 2008 primary mine production only totaled 114 million pounds, says Ux, the 'critical need for increased global uranium production' becomes clear. While several miners are working to bring new mines into production, this is a process that takes many years from the exploration and development stages to acquiring licensing and commencing production. No doubt this disconnect between supply and demand will have an impact on future price trends, notes the report. Hence, demand is likely to outstrip supply making $40 per pound uranium a thing of the past."
Uranium Demand Set to Outpace Supply
Uranium Investing News, 10 September 2009

"Nuclear energy's fuel supply infrastructure should be able to meet world demand in the short term, but expansion will be needed across the entire fuel cycle beyond 2020, warns the latest WNA market report. The newly released report, The Global Nuclear Fuel Market Supply and Demand 2009-2030, is the fifteenth in a series which started in the mid-1970s. Produced by a drafting group drawn from member companies of the World Nuclear Association (WNA), the report is based on the knowledge and opinion of the whole industry. The report uses information gathered via questionnaires from WNA members representing all aspects of the fuel cycle across the globe. A computer model is then used to forecast nuclear fuel supply and demand to 2030.....Production of uranium from mines - primary production - has been far below the amount required to fuel the western world's power reactors since the mid-1908s, with so-called secondary supplies - inventories, stockpile drawdowns and use of recycled materials including uranium from decommissioned nuclear weapons - making up the shortfall. However, although secondary supplies will continue to play an important part, the report warns that the period of primary supply being so far below annual reactor requirements will have to come to an end with a substantial need for new primary production facilities in the longer term. 'Uranium production needs to increase dramatically from its current level,' Cameco's Penny Buye, co-chair of the drafting group, told the Symposium. The market must ensure that conditions be conducive for this to happen, she added."
More U mines needed as nuclear grows
World Nuclear Association, 10 September 2009

"Global oil demand will be almost 0.5 million barrels per day (bpd) higher than previously forecast this year and next on stronger-than-expected U.S. and Chinese fuel consumption, the International Energy Agency said. The IEA, adviser to 28 industrialised economies, said on Thursday world oil consumption would average 84.4 million bpd in 2009 -- down 2.2 percent from 2008 due to the economic downturn...But it said in its Oil Market Report that demand would rally next year, rising almost 1.3 million bpd, or 1.5 percent, as recovery takes hold. Its estimate of the year-on-year rise in demand was 40,000 bpd less than in its previous report. David Fyfe, head of the IEA's oil industry and market division, said oil consumption would pick up again towards the end of this year after a period of extreme weakness, especially in the large, developed economies. 'The year-on-year decline will diminish as we go through the end of 2009, and then from early 2010, we will begin to see year-on-year growth in global demand,' Fyfe said. The IEA report said the upward revisions in estimates of oil demand were largely due to the largest consumers -- the United States and China -- but said developing economies were likely to account for virtually all of next year's rise in global demand.... The Organization of the Petroleum Exporting Countries met in Vienna on Wednesday and agreed to keep its oil production unchanged, with the 11 OPEC members subject to curbs aiming to maintain output at 4.2 million bpd below their September 2008 production levels. OPEC oil output has increased this year, despite promises to restrain production, and the IEA said the group pumped 55,000 bpd more in August than in July, taking OPEC-11 compliance with promised cuts down to 66 percent from 68 percent in July."
IEA sees higher global oil use as economy recovers
Reuters, 10 September 2009

"Mexico's oil output is falling faster than expected, increasing the chance that the country will lose its status as a major oil exporter in coming years and face a worsening budget shortfall. Output at state-owned oil monopoly Petróleos Mexicanos's offshore field Cantarell, once the world's second-largest oil field, has plunged to 500,000 barrels a day from its peak of 2.1 million in 2005....Ratings agency Standard & Poor's revised its outlook for Mexico's sovereign-credit rating to negative in May, citing the decline in oil output as a factor.... Carlos Morales, head of Pemex's exploration and production division, says Cantarell is expected to stabilize at 400,000 barrels a day. The company has offset some of Cantarell's decline by raising output at other fields, notably offshore field Ku-Maloob-Zaap -- now Mexico's biggest field -- which produces roughly 800,000 barrels a day. In coming years, 'when Ku-Maloob-Zaap goes into decline, we have enough other projects to raise overall output slightly,' Mr. Morales says. David Shields, an independent oil consultant in Mexico City who warned about Cantarell's impending collapse years ago, says he is dismayed at the lack of accountability at Pemex. 'Production at Cantarell is almost being allowed to run out without any decent explanation' of the technical reasons, he said....One big bet is Chicontepec, a massive onshore field discovered in the 1920s. It has resisted exploitation because it is made up of small pockets of oil spread out over thousands of square miles. So far, though, output at the field has disappointed. A better long-term bet, say analysts, are oil deposits in the deep waters of the Gulf of Mexico. Pemex, however, lacks the technology to operate in deep water. Last year, Mexico passed a law giving the company greater flexibility to hire foreign oil companies as contractors. But expected legal challenges from nationalist lawmakers have kept Pemex from even publishing the proposed contracts -- a process that could take the rest of this year. Even then, many foreign companies may not bite. Oil from deep waters takes about seven years to develop, and many analysts say Mexico is doing too little, too late."
Mexico's Fading Oil Output Crimps Exports
Wall St Journal, 9 September 2009

"Taxpayers could be forced to provide commercial insurance cover to the nuclear industry to safeguard plans being considered by ministers to build a fleet of new reactors in Britain. Private insurers are refusing to offer energy companies full coverage against the risk of a Chernobyl-style nuclear accident, forcing the Government to consider stepping in itself to act as an 'insurer of last resort'. The Department of Energy and Climate Change confirmed that PricewaterhouseCoopers, the audit firm, had been appointed to draw up recommendations setting out how the Government could do this."
UK taxpayer may be forced to take on nuclear risk after insurers refuse to offer cover
London Times, 9 September 2009

"World oil demand is set to grow next year for the first time since 2007 and is expected to reach pre-recession levels by 2012, IHS Cambridge Energy Research Associates said in its quarterly World Oil Watch report. IHS CERA expects oil demand growth to rise by 900,000 b/d in 2010 and resume its 2007 high of 86.5 million b/d by 2012, which would mark a 5-year turnaround. Oil demand dropped by 2.8 million b/d to reach 83.8 million b/d in 2009. The last time that the world experienced such a severe decline in oil consumption was in the early 1980s, and it took 9 years for demand to return to the 1979 high. 'There are a lot of questions as to whether things will be different this time in terms of the recovery of oil demand,' said IHS CERA Chairman Daniel Yergin. 'While the answer is that it will be shorter, it is still going to take a substantial amount of time.' Jim Burkhard, IHS CERA global oil managing director, said key differences between the current recovery and that of the 1980s are accelerating oil demand growth from emerging markets and fewer options for substituting fuels on a global scale. 'In the 1980s, the largest area of the demand decline came from power generation, where oil was replaced by readily available substitutes like coal, gas, or nuclear,' Burkhard said. 'Today, global demand growth is coming from the transportation sector in emerging markets where there are fewer large-scale options for switching fuels.' Overall, emerging markets will drive the recovery of oil demand. IHS CERA expects oil demand to increase to 89.1 million b/d in 2014 from 83.8 million b/d in 2009. The report anticipates 83% of the oil demand growth will come from countries outside the Organization for Economic Cooperation and Development members. 'This near-stagnation of oil demand growth in the industrial countries of the OECD highlights several structural changes,' Burkhard said. 'Decreasing oil intensity associated with economic growth, higher fuel efficiency, the displacement of conventional oil with renewable energy sources, and a slower pace of growth in transportation fuel consumption—all these point to a leveling off of demand in the industrial world.' While the trajectory of oil demand seems certain, Burkhard said future events always can alter demand. 'While our base case suggests that 2012 will be the year that global oil demand recovers to 2007 levels, we continue to research the alternative scenarios that could alter the balance in the oil market,' Burkhard said."
IHS CERA: World oil demand set to rise next year
Oil & Gas Journal, 8 September 2009

"Russia is surpassing Saudi Arabia in oil exports for the first time since the Soviet Union’s collapse as Prime Minister Vladimir Putin exploits OPEC production cuts to gain market share. Exports of crude and refined products from Russia rose to about 7.4 million barrels a day in the second quarter, according to Energy Ministry data. Saudi shipments fell to about 7 million barrels a day, International Energy Agency estimates of output and domestic demand showed. Investors had expected Russian supplies to decline this year after Putin’s deputy, Igor Sechin, told the Organization of Petroleum Exporting Countries in December that his government was ready to limit production to support prices. Instead, the country is providing tax breaks for new fields in Siberia. OAO Rosneft, OAO Lukoil and BP Plc’s Russian venture TNK-BP pumped more as prices rose 60 percent to $71 a barrel. 'In no uncertain terms, Russia has been the biggest beneficiary of OPEC’s sacrifice,' said Chris Weafer, chief strategist at UralSib Financial Corp., in an interview in Moscow. 'Higher prices have equaled a $20 billion tax windfall.'...Saudi Arabia has about 2.75 million barrels of daily capacity idle. Russia doesn’t have the flexibility to switch wells off for months and turn them back on again, so has minimal spare capacity, said Oswald Clint, a London-based analyst at Sanford C. Bernstein. Russia’s crude oil production climbed 1.3 percent in August from the same month in 2008, to 9.97 million barrels a day, and exports expanded 5.9 percent, according to the Energy Ministry’s CDU-TEK unit. The increase came after the largest producer, Rosneft, began pumping from its new Vankor field in Siberia. In March, while Russian politicians hinted at possible supply cuts, Lukoil Chief Executive Officer Vagit Alekperov said his company aimed to raise output 1.5 percent this year. 'If Russian production had fallen as much as people had forecast, and it were 600,000 to 700,000 barrels a day lower than it is today, the market would be significantly tighter,' said Edward Morse, head of economic research at LCM Commodities LLC in New York. Russia already exports more energy than any other country, when shipments of natural gas from state-run OAO Gazprom, the world’s largest producer, are included. The Moscow-based company’s gas production alone last year was equivalent to 9.9 million barrels of oil a day, compared with Saudi Arabia’s 9.2 million barrels of crude, according to Gazprom and Bloomberg estimates....Saudi Arabia has remained the top oil supplier, until now. The nation exported 7.39 million barrels a day of crude and oil products in the first quarter, beating Russia’s 7.25 million, according to Bloomberg calculations based on IEA estimates of Saudi production and domestic use and Russian energy ministry data. Saudi Arabia was currently producing about 8 million barrels a day, Oil Minister Ali al-Naimi said today in Vienna when arriving for tomorrow’s OPEC meeting, adding the kingdom is complying with the group’s cuts 'as best we can.'.... Russia began selling oil long before explorers found the world’s largest deposits in Saudi Arabia. The region’s first well was drilled in 1847 in Baku, Azerbaijan, then part of Czarist Russia. The Nobel and Rothschild families began carrying oil out of the region, where production rose to more than 400,000 barrels a day by the onset of the Second World War, according to the State Oil Co. of Azerbaijan. Soviet central planners pushed Russian output to 11.48 million barrels a day in 1987. Following the collapse of the Soviet Union in 1991 and Russia’s 1998 financial crisis, production tumbled to about half that amount by 1999. As the economy accelerated in 2000 when Putin was president, London-based BP and ConocoPhillips of Houston formed ventures with Russian partners. Production rebounded by more than 60 percent in a decade as modern drilling technologies reduced costs. The biggest gains ended last year as crude output fell for the first time in a decade, declining by 0.6 percent to 9.78 million barrels a day, according to the Energy Ministry. Companies opening deposits in new regions asked for tax breaks. Russia began cutting taxes Jan. 1 and oil companies expect a group of 13 fields will receive an exemption from export duties this year. Russian Energy Minister Sergei Shmatko said in January that production could fall as much as 4 percent this year and warned in June that half of the nation’s untapped deposits would lose money at $60 a barrel. Whether Russia can sustain the gain 'is a question of considerable controversy,' LCM’s Morse said. 'I’m of the opinion that Russian production is going to grow.' Oil will be needed to fill a Far Eastern pipeline, currently under construction, that will supply China and the Pacific region, he said. The slump in Saudi crude output in the past year allowed Russia to gain share in the U.S. market, the world’s largest. Russian supplies of crude and products to the U.S. jumped 33 percent in the first six months of the year to a record 638,000 barrels a day, according to U.S. Energy Department data. Saudi Arabian shipments to the U.S. tumbled 29 percent during the same period to 1.08 million barrels a day, placing it fourth behind Canada, Venezuela and Mexico and ahead of Nigeria and Russia. The kingdom ranked as the second-biggest petroleum supplier to the U.S. early last year, when Russia was ninth."
Putin Blinking on Exports Signals Lower Oil for OPEC
Bloomberg, 8 September 2009

"Despite the rather pessimistic view generated by the concept of peak oil, new fields are being discovered all the time. One pops up and then another, and another. Each new discovery pushes peak oil just a bit further away and leaves us wondering whether the panic over declining oil reserves is just another bit of eco-hype. In the past couple of weeks alone we have had a 8.8 billion barrel discovery announced at the Soussangerd field in Iran and BP revealed a five billion- barrel find at the Tiber field in the Gulf of Mexico. There have also been some huge discoveries off the coast of Brazil and when modern geological processes are brought to Iraq, Iran, Libya and a host of other countries, we are likely to see a significant jump in known reserves. Improved technology may also mean that older fields nearing their retirement date can be given additional life through more efficient extraction methods. However, before we get complacent and rush out to swap the Toyota Prius for a thirsty Land Rover, none of this new development is going to be easy to exploit. The days of oil bubbling out of the ground, as it used to do in Saudi and Bahrain, are long gone and the new fields are often extremely hard to tap. Take the BP find in the Gulf of Mexico. Its drill hole is a staggering 10,685 metres deep – this is nearly two kilometres more than the height of Mount Everest. The well is also in deep water, which will make it much more expensive to construct a drilling platform and pipeline to shore. Analysts were estimating last week that BP's cost of production from the Tiber f