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| PEAK OIL AND ENERGY CRISIS NEWS ARCHIVES 2009 | ||
| To Go Direct To Current Energy News Reports - Click Here To Go Direct To 2009 News Reports Archive - Click Here | ||
| Peak Oil and Energy Crisis News Current Earlier Peak Oil And Energy Crisis News |
Selected News Extracts 2009 "The most important
contributors to the world’s total oil production are the giant oil fields....The
evolution of decline rates over past decades includes the impact of new technologies and
production techniques and clearly shows that the average decline rate for individual giant
fields is increasing with time. These factors have significant implications for the
future, since the most important world oil production base – giantfields –will
decline more rapidly in the future, according to our findings.... By 2030 the production
from fields currently on stream could have decreased by over 50% in agreement with IEA
(2008) . The struggle to maintain production and
compensate for the decline in existing production will become harder and harder. Our
conclusion is that the world will face an increasing oil supply challenge, as the decline
in existing production is not only high but also increasing." "(Steven Chu, Obama Secretary
of Energy) was my boss. He knows all about peak oil, but he can't talk about it. If the
government announced that peak oil was threatening our economy, Wall Street would crash.
He just can't say anything about it." Cheer Up, It's Going to Get Worse Bohemian.com, 17 June 2009 "The
world will never be able to
produce more than 89m barrels a day of oil, the head of Europe’s third largest energy group has warned ....Christophe de Margerie, chief executive of Total, the French oil and
gas company, said he had revised his forecast for
2015 oil production downward by at least 4m barrels a day because of the current economic
crisis and the collapse in oil prices....Delays and
cancellations in projects to extract oil from Alberta’s tar sands and
Venezuela’s Orinoco belt – both expensive and environmentally difficult
operations in which Total is active – will cut 1.5m b/d of supply that would have
come on stream had oil prices remained strong. ...Meanwhile, Mr de Margerie now expects a faster decline in production at older fields, such as those in the North Sea. At lower price levels, companies will
find it harder to justify the greater cost of keeping such fields pumping." |
|
| Contact | 'We need a new way of thinking' - Consciousness Based Education |
| 2009 |
| "Gas drilling is often portrayed as the ultimate win-win in an era of
hard choices: a new, 100-year supply of cleaner-burning fuel, a risk-free solution to the
nation’s dependence on foreign energy. In the next 10 years, the United States will
use the fracturing technology to drill hundreds of thousands of new wells astride cities,
rivers and watersheds. Cash-strapped state governments are pining for the revenue and the
much-needed jobs that drilling is expected to bring to poor, rural areas. Drilling
companies assert that the destructive forces unleashed by the fracturing process,
including the sometimes toxic chemicals that keep the liquid flowing, remain safely sealed
as much as a mile or more beneath the earth, far below drinking water sources and the rest
of the natural environment. More than a year of investigation by ProPublica, however, shows that the issues are far
less settled than the industry contends, and that hidden environmental costs could cut
deeply into the anticipated benefits. The technique used to extract the gas, known as hydraulic
fracturing, has not received the same scientific scrutiny as the processes used for
many other energy sources. For example, it remains
unclear how far the tiny fissures that radiate through the bedrock from hydraulic
fracturing might reach, or whether they can connect underground passageways or open cracks
into groundwater aquifers that could allow the chemical solution to escape into drinking
water. It is not certain that the chemicals – some, such as benzene, that are known
to cause cancer – are adequately contained by either the well structure beneath the
earth or by the people, pipelines and trucks that handle it on the surface. And it is unclear how the voluminous waste the process creates can be
disposed of safely. 'This is a field where there is almost no research,' said Geoffrey
Thyne, a former professor at the Colorado School of Mines and an environmental engineering
consultant for local government officials in Colorado. 'It is very much an emerging
problem.' The lack of scientific certainty about hydraulic fracturing can be traced in
part to the drilling industry’s success in persuading Congress to leave regulation of
the process to the states, which often lack manpower and funding to do complex studies of
underground geology. As a consequence, regulations vary wildly across the country and many
basic questions remain unanswered. ProPublica has uncovered more than a thousand reports of water contamination from drilling
across the country, some from surface spills and some from seepage underground. In many
instances the water is contaminated with compounds found in the fluids used in hydraulic
fracturing. ProPublica also found dozens of homes in Ohio, Pennsylvania and Colorado in which gas
from drilling had migrated through underground cracks into basements or wells. But most of
these problems have been blamed on peripheral problems that could be associated with
hydraulic fracturing – like well failures or leaks – without a rigorous
investigation of the entire process. ProPublica has also found that drilling procedures that can prevent water pollution and sharply
reduce toxic air emissions – another frequent side effect -- are seldom required by
state regulators and are mostly practiced when and where the industry wishes. Another
uncertainty arises from the enormous amounts of water needed for 'fracking.' The
government estimates that companies will drill at least 32,000 new gas wells annually by 2012. That could mean more than 100
billion gallons of hazardous fluids will be used and disposed of each year if existing
techniques, which often involve 4 million gallons of water per well, are used." Natural Gas Drilling: What We Don’t Know ProPublica, 31 December 2009 |
"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." |
"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." |
"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." |
“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.” |
"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." |
"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 has arrived in Central
Asia. That is the unmistakeable lesson of the opening of the Turkmenistan-China gas
pipeline on December 12 (BBC, December 14). The 1,833 kilometre pipeline, which will carry
up to 40 billion cubic metres (bcm) of gas, also traversing Kazakhstan and Uzbekistan
before linking into China’s network in Xinjiang, was formally agreed only in April
2006. The construction of such an ambitious project
in a relatively limited time-frame is a concrete demonstration of Beijing’s push to
secure the region’s natural resources. 'The
strategic significance of the Turkmenistan-China pipeline cannot be underestimated', said analyst Borut Grgic (Atlantic Council, December 18). It is hard to
argue with his assessment. This pipeline could be yet
another blow to the EU’s Nabucco pipeline, from the Caspian to Europe: but Nabucco is
already so frail that the possibility of losing Turkmen gas as well seems inevitable. Far more significant is the implications for Russian and Iranian Caspian
policies, as well as China’s rising influence in Central Asia. For Ashgabat, the
pipeline will be a vital economic lifeline when operating at full capacity in 2012: the
lack of supply to Russia is currently costing around $1 billion per month. It also opens
the way for greater Chinese investment in the country’s huge but largely untapped gas
fields. In the long-term, we could even see Chinese-built pipelines stretching across the
deserts of Turkmenistan to Chinese-operated gas fields in the Caspian Sea. We are also
likely to see a ripple effect from this project, as Kazakhstan and Uzbekistan begin
plugging their own gas supplies into the Turkmenistan-China pipeline....China’s
increasing domination of Russia’s former dominions in Central Asia – which has
also included recent plans to buy up Kazakh farmland (RFE/RL, December 17) – will
have long-term implications for Russia’s political, energy and economic strategies.
How it handles the rise of China in the region will be one of the most unpredictable trends of the next decade. In order
to keep the three Central Asian transit states cooperating with each other (not guaranteed
given their history of disputes), China will have to make a firmer political commitment to
the region. Just as Georgia, Azerbaijan and Turkey
have become close allies as a result of the Baku-Tbilisi-Ceyhan project, so China,
Kazakhstan, Uzbekistan and Turkmenistan will be bound together through this new pipeline.
The implications - for Russia, Iran, and the West – will be serious." Turkmenistan-China pipeline changes energy balance Azeri-Press Agency, 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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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.'" |
"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." |
"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." |
"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." |
"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." |
"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." |
"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.'" |
"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." |
"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." |
"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." |
"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.'" |
"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." |
"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." |
"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." |
"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." |
"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.'" |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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.'" |
"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." |
"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." |
"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.” |
"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." |
"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.'” |
"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." |
"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." |
"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." |
"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.'" |
"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." |
"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." |
"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." |
"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." |
"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.” |
"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." |
"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.'" |
"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.'” |
"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. |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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.'" |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"... 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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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.” |
"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." |
"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." |
"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." |
"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." |
"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'." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
| "Current giant and super-giant fields are soon destined to be so
depleted that no leap in technology or increase in price will prolong their life. Oil is a
finite resource. Because the amount of oil has been underestimated in the past doesn't
mean it is today or will continue to be. The estimates of the commercially recoverable oil
found in fields discovered decades ago have been, in many cases, adjusted upward over
time. This upward assessment is primarily attributed, in addition to increased field
knowledge and production histories, to giant leaps in technology used to access and
extract the oil. Those who cite this trend as proof that oil shortages are not a near-term
threat are only correct in assuming that for much of their history, the giant and
super-giant fields were under-utilized. However, they fail to acknowledge the trend's
limitations. Regardless of the claims of the U.S. Geological Survey and others of a
trillion barrels of undiscovered oil, let's look at the recent history of finding giant
and super-giant fields. The consistency of their contribution is largely the result of
increased rates of extraction, not to new discoveries. As time passes, new discoveries are
increasingly smaller, of lower quality and located in ever-more difficult operating
environments. In the 1960s, 26 giant and super-giant
fields were discovered. That number has consistently declined to only two so far in the
first decade of the new millennium. The conditions
necessary to create giants and super-giants occur infrequently, and where they do occur
the real estate has, with few exceptions, been well explored. Trying as hard as they can
to discover giant or super-giant fields, the oil companies' results have been
disappointing. Because many countries (such as Russia and in the Middle East) keep
information regarding their oil fields a state secret, many giant and super-giant fields
may deplete much sooner than generally anticipated. The public does not know the forecast
of production from these fields because there is no single repository of such information.
It is shameful that we know so little about their state of depletion. To say that we
need not concern ourselves because we still have plenty of oil to exploit is simply
irresponsible. There is insufficient information about the state of the giant and
super-giant fields to make such a judgment. However, the statistics, depletion rate and
rate of replacing giant and super-giant fields clearly indicate reduced future production
capacity and increased price and cost. The most pressing, but largely ignored question is
when and at what cost?" Global oil supply: Separating fact from fiction Houston Chronicle, 24 October 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." |
| "Oil tycoon T. Boone Pickens told Congress on Wednesday that U.S.
energy companies are 'entitled' to some of Iraq's crude because of the large number of
American troops that lost their lives fighting in the country and the U.S. taxpayer money
spent in Iraq. Boone, speaking to the newly formed Congressional Natural Gas Caucus,
complained that the Iraqi government has awarded
contracts to foreign companies, particularly Chinese firms, to develop Iraq's vast reserves while American companies have mostly
been shut out. 'They're opening them (oil fields) up to other companies all over the world
... We're entitled to it,' Pickens said of Iraq's oil. 'Heck, we even lost 5,000 of our
people, 65,000 injured and a trillion, five hundred billion dollars.' President Barack
Obama has pledged to withdraw U.S. troops in Iraq. 'We
leave there with the Chinese getting the oil,'
Pickens said. Iraq's Oil Minister Hussain al-Shahristani told a Washington conference on
Wednesday that his government was happy with the energy auction it held earlier this year.
The auction was the first chance for foreign oil firms to compete for Iraqi oil since the
U.S.-led invasion in 2003. 'We're pleased with scale and participation of the IOC
(International Oil Companies) and the transparent and public competition,' Shahristani
said at a U.S.-Iraq business and investment conference. BP
and the Chinese oil company CNPC were the only firms to win a contract in Iraq's bid round
this summer, the first chance for foreign oil firms
to compete for Iraqi oil since the U.S.-led invasion in 2003. Seven other oil and gas
fields failed to attract bidders on the terms Iraq offered." Pickens says U.S. firms 'entitled' to Iraqi oil Reuters, 22 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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
| "The gas price has collapsed
worldwide. It has been beaten down by recession and at the same time undermined by new
discoveries in America and new supplies of sea-borne liquefied natural gas from the Gulf. Households don’t see this in their bills but industrial buyers of
gas have watched the spot or 'day ahead' price fall from 70p per therm to about 20p over
the past 12 months. One of the reasons your bill
isn’t falling is that most of your gas was bought by a utility, not on the spot
market but under a long-term contract with a big energy group. It is these contracts, some
as long as 30 years, that are now the subject of a tug-of-war between the world’s
biggest companies. Europe’s gas buyers are not just demanding lower prices, they are
looking to rewrite deals. They want to link
long-term prices more closely to spot markets and they want the big gas suppliers in
Siberia, the North Sea and North Africa to take more price risk. The conflict erupted last
week at the World Gas Conference when Alexey Miller, the chairman of Gazprom, flatly
denied that his company would renegotiate prices or volumes. At the same time Wulf
Bernotat, chief executive of E.ON, Gazprom’s biggest customer, said he was in talks
over the deferral of unwanted volumes of gas. In one corner, stubbornly, sit the suppliers
— troubled giants such as Gazprom of Russia,
Sonatrach of Algeria and StatoilHydro of Norway. These mainly sell gas through
long-distance pipelines under 'take-or-pay contracts'. These deals, sometimes linked to the
entire output of a big gasfield, require purchasers to take specified annual volumes of
gas. If they don’t take all the gas, they must pay for it anyway and the volume
declined can be supplied later when demand for the fuel increases. The take-or-pay price
is almost always linked to an index, made up typically of a basket of alternative fuels
related to crude oil. Take-or-pay was invented to
provide stability in a simple world made up of single buyers and monopoly sellers —
Russia selling gas to Germany or the old British Gas buying from Shell. Gas trading did
not exist because there was no organised market. Shell needed the certainty of a
guaranteed customer to justify the cost of drilling wells and building pipelines. British
Gas wanted a reliable supplier and both sides wanted a certain price. In the other corner,
fuming, sit today’s buyers — companies such as Britain’s Centrica, E.ON of
Germany, Italy’s ENI and GDF-Suez of France. They see the price of spot gas
plummeting in liquid markets such as the NBP in Britain, at Zeebrugge in Belgium and
America’s Henry Hub, but they have already bought gas from Russia at a gas price
linked to oil, which remains stubbornly high. Put in
simple terms, today’s UK spot gas price of 26p per therm translates into an oil price
of about $24 per barrel, compared with today’s crude price of about $75 per barrel.
The problem will continue, says Simon Blakey, a gas expert at IHS-Cera, the energy
consultants. He reckons demand will remain below minimum contracted volumes into 2011.
That means Europe could be working through its gas glut well into 2014-15. Italy is squabbling with Russia over some $2 billion worth of contracted
gas for which it has no customer, and if the glut, as expected, lasts three years, the
whole of Europe is arguing about liability for a gas bubble worth $25-$35 billion at
current prices. For Gazprom, it is a growing nightmare, compounded by the group’s
enormous financial commitments to build pipelines in the Baltic and giant gasfields in the
Yamal Peninsula and in the Barents Sea. Money talks
and Gazprom cannot ignore the convoys of ships from the Gulf, Egypt and Nigeria, dumping
liquefied gas into tanks at Zeebrugge, the Isle of Grain and Milford Haven at prices that
are half the cost of Russian take-or-pay gas. For
the Kremlin, it will be hard to accept that its biggest export earner, the nation’s
No 1 taxpayer, should be subject to the daily whims of traders watching screens in London.
Gazprom will put up a huge fight to prevent any linkage to spot markets and many outside
Russia will wonder whether gas, the fuel that underpins Europe’s energy future,
should become a trader’s plaything." Sellers on the spot ahead of gas war London Times, 15 October 2009 |
| "Prime Minister Vladimir Putin used a trip to China to
clinch oil, natural-gas and nuclear agreements, helping turn Russia into a global energy
supplier with pipelines stretching from Berlin to Beijing. Russian companies signed deals
on starting gas deliveries, jointly refining Siberian crude and building Chinese nuclear
reactors on a two-day visit to Beijing that started yesterday. 'China is Russia’s
economic future,' said Roland Nash, chief strategist at
Renaissance Capital in Moscow. 'If this relationship
works out, it will be a major contributor to the stability and speed of global economic
growth.' Asia’s largest energy consumer is
crucial for diversifying Russian energy exports away from traditional markets in Europe. Enemies for most of the Cold War, the two countries are now building
relations across their 4,000-kilometer (2,500-mile) border based on China’s appetite
for resources and Russia’s ability to deliver them as the world’s biggest energy
producer. OAO Gazprom, the Russian state-run gas
exporter, signed a framework agreement with China National Petroleum Corp. that could turn
China into Russia’s biggest single gas customer. The country currently imports no gas
from Gazprom, whose web of pipelines still reaches out to Europe. Igor Sechin, Putin’s deputy for
energy, signed an additional accord setting deadlines on future gas supplies. A contract
may be ready in June 2010 with deliveries in 2014 or 2015, Sechin told reporters. Shipments could reach China by new pipelines or as liquefied natural gas
aboard tankers, he said. 'This potential deal could be a game changer in the Russian gas
sector, moving it towards Asia,' said Cliff Kupchan of New York-based Eurasia
Group. 'Price is the key. No agreement, no deal.' Gazprom Chief Executive Officer Alexei Miller told reporters the
company is seeking a pricing formula similar to the one it uses in Europe, where the cost
of gas is pegged to the price of crude. China, the world’s largest user of coal,
relies on the comparatively cheap, dirty fuel to power its factories and generate
electricity. Gas is not the only energy source Russia can offer its neighbor, Sechin said.
China yesterday agreed to use Russian expertise to construct two additional reactors at
its Tianwan nuclear plant. Russia has also started
selling electricity to China from its Far East region. Coal exports to the country will
total at least $1 billion by the end of the year, Sechin added. Russia agreed in February
to supply China with oil for 20 years in return for a $25 billion credit to state oil
company OAO Rosneft and the government’s oil pipeline monopoly OAO
Transneft. The total value of oil deals signed with
Chinese companies this year is about $100 billion, according to the Russian government.
The first segment of an oil pipeline reaching the Chinese border is planned to be finished
this year. Sechin, also chairman of Rosneft, said the company reached an agreement with
CNPC yesterday on building a refinery in Tianjin, 100 kilometers southeast of the Chinese
capital. The joint project may also involve as many as 500 filling stations, he said.
Chinese money has helped transform Rosneft from a second- tier oil company into
Russia’s largest crude producer. ” Putin’s China Visit Helps Russia Become Global Energy Supplier Bloomberg, 14 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." |
| "The Potential Gas Committee at the Colorado School of Mines made
national news this summer when it announced that, largely because of shale gas, the United States
has a 100-year supply of domestic natural gas. Shale-gas deposits lie under parts of
Southwest Colorado that have never been drilled, including Montezuma, Dolores and western
La Plata counties. Gas executives have seized on the study to push for a much greater role
for their product in electricity generation, especially as the Senate prepares to debate a
climate-change bill. 'I truly believe that natural gas is the common thread of the
economy, the environment and energy security,' said Peter Dea, former president of the
Colorado Oil and Gas Association. Art Berman of
Labyrinth Consulting Services struck out at Dea and other natural-gas optimists. His study
of the Barnett shale field in Texas – the only mature shale play in the country
– showed that the wells decline much faster than companies like to admit, and less
than a third of the wells drilled will produce enough gas to break even. 'There are lots
of opinions about shale gas. What we’ve done is not an opinion. It’s an
observation,' Berman said. But companies continue to
tout shale gas as a 'game changer' because of pressure from Wall Street, Berman said. 'In
the midst of a boom, it’s hard to sit on the sidelines. Because a CEO is responsible
for his company’s stock price, and if you’re not in one of these plays, Wall
Street says, ‘Come on, guys,’ Berman said. That is too pessimistic a view for
Edward Warner, who played a role in two previous game-changers in the gas industry. He was
an Amoco geologist who helped unlock coal-bed methane in Southwest Colorado, and later he
was one of the first people to recognize the potential of Wyoming’s Jonah field, the
most concentrated deposit of natural gas in the United States. To Warner, the American gas
supply is limited only by technology and innovation." Assembly of peak oil experts look at shale gas The Durango Herald, 13 October 2009 |
| "While the rest of the world recoiled in horror at recent events in
Guinea, where at least 150 pro-democracy supporters were killed and dozens of women
publicly raped by government soldiers, China has
sensed an opportunity to steal another march on Western competitors in Africa. China is
preparing to throw the junta in Guinea a lifeline in the form of a multibillion-pound oil
and mineral deal, financed largely by soft loans. Such policies have already served China
well with rogue and discredited regimes from Angola to Sudan. The move comes as the European Union, spurred on by France, the former
colonial power, and the African Union are considering sanctions against Guinea if its
young military leader, Captain Moussa Dadis Camara, continues to renege on a deal to stand
down in favour of free elections....There is now barely a country on the continent that
does not have a sizeable Chinese presence. Copper-rich Zambia and the Congolese province
of Katanga now boast the fastest-growing Chinatowns in the world. Sudan, for years out of
bounds to Western companies because of its links to terrorism, now pumps 600,000 barrels
of oil a day from its Red Sea port into Chinese ships. In return it received weapons that
it used against rebellious black Africans in Darfur....Annual trade between China and
Africa is now put at £62 billion, more than four times the £15 billion that it reached
in 2004. China has also written off billions of dollars of bad African debt and used its
'war chest' of foreign currency reserves to cement new alliances and finance cut-rate
loans and commercial lines of credit. There is only one condition: any money provided must
be used to pay Chinese companies and buy Chinese goods that flood the continent’s
bustling street markets. Stalls now overflow with cheap plastic sandals, underwear,
artificial flowers and cut-price motorbikes and tools." China tightens grip on Africa with $4.4bn lifeline for Guinea junta London Times, 13 October 2009 |
| "The central challenge for energy policy is to deliver on climate
change and energy security at the least cost. Last Friday the energy regulator Ofgem
warned of the dangers if we don’t deliver on Britain’s commitment to renew our
energy infrastructure. The Ofgem report contradicted the traditional view that you can
deliver on climate change or energy security, but not both. It is the low-carbon,
home-grown energy scenario that would give the best guarantee of energy security and the
lowest price increases. The reason is that our North
Sea reserves are declining. A high-carbon future would mean we rely more and more on
imported gas. Two thirds of the world’s reserves are in Russia and the Middle East
and with rising demand from emerging economies, we could face significantly higher prices.
And yet in the short term, gas-fired power stations are easiest and cheapest to build so
without action from government, that’s what companies will do. Our low-carbon
transition plan published in the summer laid out how we can limit our dependence on gas
imports over the next decade. But it requires us to do some difficult things. In
particular, we need to deliver on the three alternatives to gas: renewables, clean coal
and nuclear. In each case, we need significant government intervention. All three require
reform of the planning system so energy projects don’t get tied in knots. In the face
of opposition from the other parties, we are establishing an Infrastructure Planning
Commission to speed decision making. We should
respect local concerns but just saying no will fail the country. And that’s what many
local authorities do. Sixty per cent of wind turbine applications to Conservative councils
are rejected.... This week Britain will be hosting governments from 20 countries in London
to discuss how government can support carbon capture and storage (CCS). This technology
has the potential to cut emissions from coal by more than 90 per cent. When some countries
rely on coal for 95 per cent of their electricity, this is a technology we cannot do
without. But CCS has been around for a long time without the investment to reach
industrial scale. Business alone will not make that investment and while it doesn’t,
it’s the environment that pays the price. Steven Chu, the US Secretary for Energy,
understands the need for government to play an active role. His colleagues in China,
Australia, Canada, the UK and many other countries also get it. That is why we are
planning a levy to provide financial support for CCS. The Conservatives’ only
response is to spend money on CCS that the Treasury has already allocated to pay off the
deficit. On nuclear power, government needs to break down the barriers to delivering new
stations. Again the Conservatives have opposed us, with Mr Cameron calling it a 'last
resort'. With gas power stations and renewable sources being built, nuclear coming on
stream and incentives for clean coal, we can be confident about our security of supply. It is true that in the next few years power plants generating 18
gigwatts will close. But we already have plants that can generate more than that under
construction or with planning permission.
E.On’s decision to delay its plans for a new coal-fired plant at Kingsnorth was made
because it doesn’t think Britain will need the energy it would have supplied in the
short term. But to deal with climate change, Britain needs to be on a path to zero-carbon
power. That could require even greater action. That is why my department is looking at
what will be needed between 2020 and 2050, with our report due to be published in the
spring. It is the kind of long-term planning that only governments can do." Ed Milliband, Secretary of State for Energy and Climate Change - We must work together to keep the lights on London Times, 12 October 2009 |
| "Motorists should pay higher taxes in the form of a national
road-pricing system to cut carbon dioxide emissions, according to the Government’s
climate change advisory body. The speed limit on all motorways should be strictly enforced
and may have to be reduced to 60mph to help to meet the Government’s legally binding
carbon reduction targets. The Committee on Climate Change, which devised the targets and advises the
Government on how to meet them, says that a “step change” is needed in emissions
reduction. In its first annual report to Parliament , the committee says that emissions
cuts since 2003 have been 'far slower than now required to meet (carbon) budget
commitments'. Emissions fell by an average of 0.5 per
cent in each of the five years to 2008. The committee says that emissions cuts of 2-3 per
cent a year are needed every year from now until 2050 to meet the targets...It also says the Government may have to double the grants planned for
electric cars from 2011 to £10,000 for at least the first 25,000 buyers. It says
otherwise the extra cost of battery-powered cars would be prohibitive. The committee
concludes that the total subsidy needed to achieve widespread use of electric cars is
likely to be £800 million, rather than the £250 million pledged by ministers.
Britain’s free-market approach to electricity generation is failing to deliver the
carbon savings required, the committee reports. It proposes government intervention to
raise the price of carbon emissions permits, currently about £12 a tonne. The committee
considers this too low to give power companies sufficient incentive to invest in renewable
energy. It also says the Government should consider a tax on carbon if the European
emissions trading scheme continues to have little impact on total emissions. The committee
calls for 8,000 more wind turbines by 2020, three new nuclear power stations and four coal
plants with carbon capture and storage systems. It also suggests a national programme to
insulate homes and install efficient condensing boilers." Tax motorists more to help save the planet, Government is urged London Times, 12 October 2009 |
| "It falls to the Committee on
Climate Change to tell a truth that politicians dare not mention. Unencumbered by the need
to win elections, the committee can say what we must do to meet our legally binding
targets to cut greenhouse gas emissions. Ministers are fond of saying how Britain is
leading the world by promising to cut emissions by 34 per cent on 1990 levels by 2020 and
80 per cent by 2050. They are less fond of outlining
the sacrifices required. The committee makes clear
that the apparent good progress to date is a 'false impression' created by the recession
and, before that, the closure of much of manufacturing industry. 'Where CO2 emissions have
fallen, the extent to which this has been through implementation of measures to improve
energy or carbon efficiency is very limited.'
Emissions will continue to fall this year but once the economy starts to recover, they
will rise unless the Government uses 'stronger levers'. The committee takes vague
government aspirations and explains exactly what will have to be achieved. For example,
while ministers have waffled about an electric car revolution, it sets tough targets:
240,000 electric cars by 2015, 1.7 million by 2020... Climate change committee tells a truth that politicians avoid London Times, 12 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." |
"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." |
| "America is not going to bleed its wealth importing fuel. Russia's
grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by
mid-decade after all. The World Gas Conference in Buenos Aires last week was one of those
events that shatter assumptions. Advances in
technology for extracting gas from shale and methane beds have quickened dramatically,
altering the global balance of energy faster than almost anybody expected. Tony
Hayward, BP's chief executive, said proven natural gas reserves around the world have
risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and
rising fast. 'There has been a revolution in the gas
fields of North America. Reserve estimates are rising sharply as technology unlocks
unconventional resources,' he said. This is almost unknown to the public, despite the
efforts of Nick Grealy at 'No Hot Air' who has been arguing for some time that Britain's
shale reserves could replace declining North Sea output. Rune Bjornson from Norway's
StatoilHydro said exploitable reserves are much greater than supposed just three years ago
and may meet global gas needs for generations. 'The common wisdom was that unconventional
gas was too difficult, too expensive and too demanding,' he said, according to Petroleum
Economist. 'This has changed. If we ever doubted that gas was the fuel of the future
– in many ways there's the answer.' The breakthrough has been to combine 3-D seismic
imaging with new technologies to free "tight gas" by smashing rocks, known as
hydro-fracturing or 'fracking' in the trade. The US is leading the charge. Operations in
Pennsylvania and Texas have already been sufficient to cut US imports of liquefied natural
gas (LGN) from Trinidad and Qatar to almost nil, with knock-on effects for the global gas
market – and crude oil. It is one reason why spot prices for some LNG deliveries have
dropped to 50pc of pipeline contracts.... The US
Energy Department expects shale to meet half of US gas demand within 20 years, if not
earlier. Projects are cranking up in eastern France
and Poland. Exploration is under way in Australia, India and China. Texas A&M
University said US methods could increase global gas reserves by nine times to 16,000 TCF
(trillion cubic feet). Almost a quarter is in China
but it may lack the water resources to harness the technology given the depletion of the
North China water basin..... As for the US,
we may soon be looking at an era when gas, wind and
solar power, combined with a smarter grid and a switch to electric cars returns the
country to near energy self-sufficiency. This has
currency implications. If you strip out the energy deficit, America's vaulting savings
rate may soon bring the current account back into surplus – and that is going to come
at somebody else's expense, chiefly Japan, Germany and, up to a point, China. Shale gas is
undoubtedly messy. Millions of gallons of water mixed with sand, hydrochloric acid and
toxic chemicals are blasted at rocks. This is supposed to happen below the water basins
but accidents have been common. Pennsylvania's eco-police have shut down a Cabot Oil &
Gas operation after 8,000 gallons of chemicals spilled into a stream. Nor is it exactly
green. Natural gas has much lower CO2 emissions than coal, even from shale – which is
why the Sierra Club is backing it as the lesser of evils against "clean coal"
(not yet a reality). The US Federal Energy Regulatory Commission said America may not need
any new coal or nuclear plants 'ever' again. I am not
qualified to judge where gas excitement crosses into hyperbole. I pass on the story
because the claims of BP and Statoil are so extraordinary that we may need to rewrite the
geo-strategy textbooks for the next half century." Ambrose Evans-Pritchard - Energy crisis is postponed as new gas rescues the world Daily Telegraph, 11 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." |
"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." |
| "One quarter of China's booming emissions of climate warming gases
are from its export trade to Europe and the United States, a report said on Friday,
calling for a new way of calculating national carbon emissions. The report for the
widely-respected government-funded Tyndall Centre for Climate Change Research by Tao Wang
and Jim Watson said the current method of assessing national emissions was unfair to
rapidly developing countries....The findings echo those of the New
Economics Foundation which earlier this month in its ‘Chinadependence’ report
accused the developed nations of ‘carbon laundering’ their economies. It said Britain among others was understating its carbon emissions
because it in effect exported its smokestack industries to China in the 1990s and was now
importing products it would have been making itself. ‘Because
of the way that data on carbon emissions gets collected at the international level, this
has the effect of 'carbon laundering' economies like those of Britain and the U.S.,’
said NEF director Andrew Simms." Quarter of China's carbon emissions due to exports Reuters, 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.'" |
| "The exact date of 'peak oil' - when the amount of oil being pumped
out of the ground every day reaches its highest point before beginning an inexorable
decline - has been hotly debated for decades. Environmentalists have tended to warn oil
could run out at any moment, while oil companies insist there are plently more oil fields
yet to be discovered. The most recent estimation from the International Energy Agency,
that advises Governments around the world, said conventional oil would not peak until
after 2030. However an authoriative new study
from the Government-funded UK Energy Research Council called this prediction 'at best
optimistic and at worst implausible'. The peer-reviewed research looked at 500 studies
from around the world and took into account the difficulty of accessing new oil fields as
well as growing demand. It predicted oil will begin running out before 2030 and there is a
'significant risk' peak oil will be reached before 2020. 'In our view, forecasts which
delay a peak in conventional oil production until after 2030 are at best optimistic and at
worst implausible. And given the world's overwhelming dependence on oil and the time
required to develop alternatives, 2030 isn't far away,' said the report's lead author
Steve Sorrell. 'The concern is that rising oil prices will encourage the rapid development
of carbon-intensive alternatives which will make it difficult or impossible to prevent
dangerous climate change.' Robert Gross, Head of
Technology and Policy Assessment at UKERC, said as soon as oil begins to run out it will
make energy more expensive, sparking a knock on effect on industry and economies around
the world. Petrol prices would rise and long distance travel become more expensive. 'The
age of easy and cheap oil is coming to an end,' he said. 'It doesn't suddenly come to an
end, obviously it's a gradual change, but we're moving away from easy and cheap oil to
increasingly difficult and expensive oil. At the moment oil is around £44 ($70) per
barrel after peaking at around £92 ($147) per barrel earlier in the year during the
height of the economic crisis. Dr Gross said the spectre of peak oil should encourage
Governments to invest in more energy-efficient vehicles such as electric cars, renewable
energy like wind or solar and improving energy efficiency in industry and homes. But he
said there was a risk that instead the world will start to look at even more intensive
forms of fossil fuels, therefore producing more carbon emisions and causing 'catastrophic
climate change'. Alternatives include heating tar sands to produce oil at huge cost both
environmentally and financially. 'The danger is high oil prices push us into high carbon
resources just as much as they might help push us towards renewables,' he said. 'The
challenge for policy makers is to make sure, on a global scale, that that isn't the
response to more difficult and expensive oil.' The world produces around 85 million
barrels of oil every day. It is estimated this could rise to more than 100 million barrels
per day before declining. Oil companies like BP claim billions more barrels are availabe
in new oil fields discovered in the Gulf of Mexico. However
Mr Sorrell said these new supplies are extremely difficult to access and will only delay
peak oil by a few weeks or even days. Even if the
new fields are exploited, he said the world needs to move away from oil in order to stop
global warming. But Mr Sorrell said the UK Government had no contingency plans for oil
peaking before 2020. 'If these problems are ignored and we do not make these changes ahead
of time, we are heading for trouble,' he warned....The Department for Energy and Climate
Change is currently considering the UKERC report. 'We are already well aware of the
significant challenges for investment in future oil production and that there is a role
for Governments to play in reducing demand for fossil fuels,' a spokesman said. 'Our
climate change, energy efficiency and energy security policies outlined in the UK low
carbon transition plan are not only reducing the UK’s carbon emissions, but are
consistent with the need to reduce our use of fossil fuels.'" Era of cheap, easy oil is over, warns study Daily Telegraph, 8 October 2009 |
| "Environmental activists claimed a major victory last night when
plans for Britain’s first new coal-fired power station for 30 years were shelved
after a sustained campaign. The announcement by E.ON that it would delay a decision on
Kingsnorth for three years is a serious setback for the Government’s principal
environmental policy of supporting the capture and storage of carbon emissions from coal
plants. The delay also heightens the risk of power
cuts after 2015, when EU rules will force Britain to close nine of its largest and most
polluting power stations." Green activists claim victory over coal power London Times, 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." |
"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." |
"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." |
"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." |
"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. " |
| "The dollar has fallen following
a report that Gulf states are in secret talks to replace the greenback as the main
currency for the trading of oil. Nations including
Saudi Arabia and the United Arab Emirates were speaking to Russia, China, Japan and
France, said the UK's Independent newspaper. However, Saudi Arabia subsequently said the
report was 'absolutely inaccurate'....The Independent's report said the Gulf states wished
to replace the dollar over a nine-year period with a basket of currencies including the
yen, China's yuan, the euro, and the new unified currency planned for nations in the Gulf
Co-operation Council, which include Saudi Arabia, Kuwait, the United Arab Emirates and
Qatar. Kuwait also denied the article's claim. 'We have never discussed or proposed this,'
said Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah. China's central bank suggested
in March that the dollar should be replaced by a new global reserve currency run by the
International Monetary Fund." Dollar falls on oil plan report BBC Online, 6 October 2009 |
| "In the most profound financial
change in recent Middle East history, Gulf Arabs are planning – along with China,
Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket
of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new,
unified currency planned for nations in the Gulf Co-operation Council, including Saudi
Arabia, Abu Dhabi, Kuwait and Qatar. Secret meetings have already been held by finance
ministers and central bank governors in Russia, China, Japan and Brazil to work on the
scheme, which will mean that oil will no longer be priced in dollars. The plans, confirmed to The Independent by both Gulf Arab and Chinese
banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it
also augurs an extraordinary transition from dollar markets within nine years....The
Americans, who are aware the meetings have taken place – although they have not
discovered the details – are sure to fight this international cabal which will
include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these
currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned
there is a risk of deepening divisions between China and the US over influence and oil in
the Middle East. 'Bilateral quarrels and clashes are unavoidable,' he told the Asia and
Africa Review. 'We cannot lower vigilance against hostility in the Middle East over energy
interests and security.'....This sounds like a dangerous prediction of a future economic
war between the US and China over Middle East oil – yet again turning the region's
conflicts into a battle for great power supremacy. China uses more oil incrementally than
the US because its growth is less energy efficient. The transitional currency in the move
away from dollars, according to Chinese banking sources, may well be gold. An indication
of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia,
Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves. The
decline of American economic power linked to the current global recession was implicitly
acknowledged by the World Bank president Robert Zoellick. 'One of the legacies of this
crisis may be a recognition of changed economic power relations,' he said in Istanbul
ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new
financial power – along with past anger among oil-producing and oil-consuming nations
at America's power to interfere in the international financial system – which has
prompted the latest discussions involving the Gulf states. Brazil has shown interest in
collaborating in non-dollar oil payments, along with India. Indeed, China appears to be
the most enthusiastic of all the financial powers involved, not least because of its
enormous trade with the Middle East. China imports 60 per cent of its oil, much of it from
the Middle East and Russia. The Chinese have oil production concessions in Iraq –
blocked by the US until this year – and since 2008 have held an $8bn agreement with
Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where
it has substituted for US interests) and has been negotiating for oil concessions with
Libya, where all such contracts are joint ventures. Furthermore, Chinese exports to the
region now account for no fewer than 10 per cent of the imports of every country in the
Middle East, including a huge range of products from cars to weapon systems, food,
clothes, even dolls. In a clear sign of China's growing financial muscle, the president of
the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the
yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US
monetary policy, to help rebalance the world economy and ease upward pressure on the
euro." The demise of the dollar The Independent, 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." |
| "Global oil supplies are indeed
set to peak within a few years, and no, that is not bullish for oil. Quite the
contrary—it will spell the end of the 'oil age.' That’s the take from Deutsche
Bank’s new report, 'The Peak Oil Market.' In
a nutshell: The oil industry chronically under invests in finding new supplies,
exemplified both by Big Oil’s recent love of share buybacks and under-investment by
big oil-producing nations. That spells a looming supply crunch. That will send oil to $175
a barrel by 2016—and will simultaneously put the final nail in oil’s coffin and
send prices plummeting back to $70 by 2030. That’s because there’s an even more
important 'peak' moment on the horizon: A global peak in oil demand. That has already
begun in the world’s biggest oil-consuming nation, Deutsche Bank notes.... The big
driver? The coming-of-age of electric and hybrid vehicles, which promise massive
fuel-economy gains for short-hop commuting but which so far have not been economic.
Deutsche Bank expects the electric car to become a truly 'disruptive technology' which
takes off around the world, sending demand for gasoline into an 'inexorable and
accelerating decline.' In 2020, the bank expects electric and hybrid vehicles to account
for 25% of new car sales—in both the U.S. and China. “We expect [electric
propulsion] will reverse the dynamics of world oil demand, and spell the end of the oil
age,' the bank writes. But won’t cheaper oil in the future just lead to a revival in
oil demand? That’s what’s happened in every other cycle. Au contraire, says the
bank: Just as the explosion of digital cameras made the cost of film irrelevant, the
growth of electric cars will make the price of oil (and gasoline) all but irrelevant for
transportation. In a report filled with interesting tidbits, one in particular stands out:
The cost of the Iraq war at the pump. Deutsche Bank figures the cost of the war at $1.5
trillion. Amortized over 20 years, that works out to $75 billion a year. 'If the US
government taxed US gasoline consumers purely to reflect the financial cost of the war in
Iraq, gasoline prices should be some 54 cents per gallon higher,' the report notes." Peak Oil: The End Of the Oil Age is Near, Deutsche Bank Says Wall St Journal (Blog), 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." |
| "Competition for resources in
the Arctic Circle could provoke conflict between Russia and Nato, a newly appointed commander at the alliance warned yesterday. Russia has
recently been aggressive in its pursuit of claims to parts of the region and in February
sent a submarine to the floor of the sea symbolically to plant a Russian flag. Admiral
James Stavridis said that military activity and trade routes would also be potential
sources of competition around the polar cap. Speaking at the Royal United Services
Institute in London on Nato’s future direction, Admiral Stavridis, Supreme Allied
Commander for Europe, predicted that relations with Russia will dominate thinking at the
alliance....His assessment comes after warnings from Anders Fogh Rasmussen, the Nato
Secretary-General, who said this week that climate change had “potentially huge
security implications” for Nato. The thinning ice cap is opening up a new Northwest
Passage trade route, while it is estimatedthat
previously inaccessible oil worth $90 billion (£56 billion) lies beneath ice in the
Arctic Circle." Nato commander warns of conflict with Russia in Arctic Circle London Times, 3 October 2009 |
| "Living standards in Britain and other rich countries must fall
sharply over the next decade if the world is to avoid catastrophic global warming,
according to a leading climate research centre. Consumption of energy-intensive goods and
services should be cut and remain capped until low-carbon alternatives are available, said
the Tyndall Centre for Climate Change Research. The study says that Britain’s carbon
dioxide emissions need to fall twice as fast as planned by the Government. It concludes
that global greenhouse gas emissions are rising much faster than previously thought. It
says that Britain should commit to making all energy, including for electricity, heating
and cars, zero-carbon by 2025, at least 25 years earlier than planned. The centre, a
partnership of seven universities including Oxford, Cambridge and Manchester, says that
the economies of developed nations will have to shrink and consumption of almost all types
of goods will have to fall ‘in the short to medium term’. Speaking to The Times,
Professor Kevin Anderson, the centre’s director, said: ‘The wealthier parts of
the world, including Britain, will have to seriously consider reducing their levels of
consumption over the next 10-15 years while we put in place low-carbon technologies.
‘That may mean having only one car per household, a smaller fridge, buying fewer
clothes and electronic goods and curtailing the number of weekend breaks that we have.
‘It’s a very uncomfortable message but we need a planned economic recession.
Economic growth is currently incompatible with reductions in absolute
emissions.’…. Professor David MacKay, the
newly appointed chief scientist for the Department of Energy and Climate Change, said that
government figures claiming Britain had cut emissions by 21 per cent since 1990 were an
‘illusion’. He said that the cut had been
achieved largely because Britain had exported much of its manufacturing overseas. The
figures did not include emissions from goods Britain imported from China and other
countries. " Rich countries 'must slash living standards' to fight climate change London Times, 2 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.)." |
| "Scientists in the North-East
have developed groundbreaking diamond-driven technology, capable of making renewable
energy affordable on a mass scale for the first time.
Evince Technology Ltd, based in the Printable Electronics Technology Centre, NetPark, Sedgefield, has
developed a diode capable of converting electricity, including that from wind turbines and
photovoltaics more simply and cheaply than existing devices. At present, electricity has
to be converted using numerous silicon devices, each able to take only 3,300volts, and
transformers. But the five pence-sized diode developed by Evince only needs a single
diamond strip, grown in the lab, to control 15,000volts, the level of voltage coming from
the National Grid. Renewable energy sources, such as photovoltaics – power from the
sun, wind power and tidal power – are more difficult and expensive than traditional
power sources to put into the national grid because the amount of power they create
fluctuates. Dr Gareth Taylor, Evince Technology’s chief executive , said: 'What you
find with renewables is that they don’t generate power in a way that is designed to
go straight into the grid, the power fluctuates. 'Presently you need a box of electronics
with these big silicon transistors and you need lots of them to control the power. 'Our
technology replaces a lot of those devices with one device and that drives the cost
down.'” Affordable energy is driven by diamond technology Northern Echo, 1 October 2009 |
| "Chinese sovereign wealth fund China Investment Corp (CIC), fresh
from a series of investments in the global commodities sector, said on Wednesday it had purchased a stake in a Kazakhstan oil and gas company. CIC said it paid $939 million for about 11 percent of the Global Depositary Receipts (GDRs) of JSC KazMunaiGas Exploration and Production RDGZ.KZ (KMGq.L) through its wholly owned subsidiary, Fullbloom Investment Corporation. China's top oil and gas firm CNPC had 16 projects in central Asia and Russia and top refiner Sinopec Group had 8, as of the end of 2007, according to a report by CNPC.The following are some of the investments or proposed dealsmade by China firms in central Asia in recent years...." FACTBOX-China's energy ties with central Asia Reuters, 30 September 2009 |
| "At the moment the UK is
committed to cutting greenhouse gases by a third by 2020. However a new report from the
Tyndall Centre for Climate Change Research said these targets are inadequate to keep
global warming below two degrees C above pre-industrial levels. The report says the only
way to avoid going beyond the dangerous tipping point is to double the target to 70 per
cent by 2020. This would mean reducing the size of
the economy through a 'planned recession'. Kevin Anderson, director of the research body,
said the building of new airports, petrol cars and dirty coal-fired power stations will
have to be halted in the UK until new technology provides an alternative to burning fossil
fuels. 'To meet [Government] targets of not exceeding two degrees C, there would have to
be a moratorium on airport expansion, stringent measures on the type of vehicle being used
and a rapid transition to low carbon technology,' he said." 'Planned recession' could avoid catastrophic climate change Daily Telegraph, 30 September 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." |
"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." |
"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." |
"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." |
| "China’s one-child rule had resulted
in a sharp decline in population growth but its CO2 emissions had risen very rapidly
— 44.5 per cent of the growth in global emissions — largely because of the
increasing number of Chinese enjoying Western levels of consumption… The difference in emissions levels between a rich Westerner and a
poor African was illustrated in a study this month by the New Economics Foundation. It
found that by 7pm on January 4, a typical person in Britain would have generated the same
amount of carbon emissions that someone in Tanzania would be responsible for in the whole
year. A US citizen would reach the same point by 4am on January 2." Third World population controls won't save climate, study claims London Times, 29 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." |
"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." |
"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." |
"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." |
"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." |
| "A new study by research firm
IHS Herold illustrates why there are fears of a supply crunch: oil is getting much more
expensive to find, but investment in finding new oil is falling
this year. Exploration spending by listed oil companies rose 21 per cent and development
spending 23 per cent in 2008 - but total reserves fell 3 per cent, according to the study. Much of this was due to some existing reserves becoming uneconomic: there
was a a 5.2 billion barrel decline in revisions 'due to the steep drop in commodity
prices'. It’s not the first time total reserves have fallen, but it makes us wonder
what this year, when capital investment is set to fall further, will bring. Meanwhile the
average cost of replacing a barrel of oil equivalent rose 70 per cent to $23.44 in
2008....[The report says] 'Over the last three years, investment of more than $750 billion
in development capital has resulted in no change in crude oil reserves and production.
Recent deepwater discoveries provide hope that future results may be better, but
meaningful output from those new projects will be more than five years into the future.
Aside from OPEC curtailments, the world has virtually no excess capacity to meet demand
growth that could result from synchronous economic expansions. Crude markets could tighten
appreciably in a few years time, but current prices seem to be prematurely high.'" Finding new oil gets ever more expensive Financial Times (Blog), 23 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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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. " |
"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.'” |
"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
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." |
"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." |
"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.” |
"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." |
"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." |
| "When it comes to the future of automotive technology, electric cars
get the lion's share of the attention. But hydrogen-powered vehicles are slowly gaining
traction, first with an announcement
last week that auto companies are spending billions on fuel cell vehicles, and now with news that Germany is planning to launch a countrywide hydrogen fueling
network by 2015. A total of eight companies
(Daimler, EnBW, Linde, OMV, Shell, Total, Vattenfall and the NOW GmbH National
Organisation Hydrogen and Fuel Cell Technology) are working to bring the fueling network
to fruition. In its first phase, scheduled for 2009-2011, the companies involved will
lobby for public support and begin fuel station installations. The second phase will see
the mass rollout of hydrogen-powered cars along with an accompanying fuel network. Germany
isn't the only country trying to speed up the adoption of hydrogen fuel cell technology.
Canada is working on a hydrogen highway to link Vancouver and Whistler in time for the
2010 Winter Olympics, while Denmark is planning a hydrogen network to connect Denmark,
Sweden, Norway and Germany." Germany to create national hydrogen fuel network by 2015 Guardian, 15 September 2009 |
| "Russia's stranglehold over dwindling
global energy resources was dramatically confirmed yesterday when new figures showed that
the country has become the world's biggest exporter of oil. With production in August hitting
record levels, Russia toppled Saudi Arabia from the number one spot. It is already the
world's largest exporter of gas, and supplies around a third of the European Union's consumption. The news is
likely to heighten unease in EU capitals over the Kremlin's tightening grip on energy
reserves. There are fears of a repeat of January's debilitating gas war between Russia and
Ukraine – which saw winter
supplies to EU consumers cut off for weeks. Members of Opec agreed to cut oil production
last year in response to the economic crisis. Moscow indicated last December that it would
follow suit but instead ramped up production in the second quarter of 2009, as new fields
in Siberia came on stream. Russia produced almost 10
million barrels of oil a day in August, according to International Energy Agency figures
– a post-Soviet record. Relations with other
oil producing countries are likely to come under increasing strain, since Russia is now
profiting from Opec production cuts. 'The fear is that Russia will get a big head,' Andrew
Neff, an oil analyst with Global Insight in Washington, told the Observer. 'Not only is it
the world's largest gas exporter but now the world's biggest oil exporter as well. The
question is will Russia want to exploit its feeling of superiority and demand a seat not
just at the table, but at the head of the table.'" Europe fears winter energy crisis as Russia tightens grip on oil supplies Observer, 13 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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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." |
"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 field could be as high as $40 (Dh146.92) a barrel, which given that we have
seen oil as low as $33 this year may not be very attractive to shareholders. Also, while
there may be five billion barrels of oil in the field the chances of BP getting anywhere
near that amount out of the ground is zero. Indeed, the company might be lucky to get five
per cent to 15 per cent of the total, which would turn Tiber into a pretty mediocre find
rather than an exceptional one. It is also worth remembering that while the recent
discoveries sound spectacular, they only partially sate the massive demand that exists for
oil. Evolution Securities in London said last week that BP would need to find three Tibers
a year just to maintain its existing reserves, which demonstrates just how big the
challenge is facing the oil industry." |
"The
Norwegian Petroleum Directorate has cut by 20 percent its best estimate of how much oil
and gas lies in the budding near-arctic oil province of the southern Barents Sea, it was revealed Tuesday. In its Resource Report 2009, the NPD also
trimmed by 12 percent the reserves it expects oil companies to find in future, admitting
in its Barents-focused reporting that the numbers could yet vary wildly. 'Unfortunately, many of the new finds (in the Western Barents) are
small and signficantly less than that which was assumed before drilling started,' the
report’s authors wrote. They said the NPD had 'reduced expecations of large, future
finds' in the southern part of the Eastern Barents. The
good news was that more prospects than expected have been uncovered by state-sponsored
surveys and increased oil-company exploration since 2006. But uncertainty reined for the
Barents, once-touted as a major oil province in waiting, a conviction given strength by
the latest U.S. Geological Survey appraisals of the Arctic that had lifted the reserve
count by nearly 10 percent in recent years. 'After 43 years of exploration and 40 years
with production, how much of the proven reserves can be produced profitably and how large
the undiscovered resources are is still uncertain,' the NPD report said. Producible
reserves offshore Norway, including in the Norwegian Sea and North Sea are said to be
between 10 billion cubic metres and 17 Bcm of oil equivalents. The lower Barents reserve
count comes despite the confirmation of new exploration models by discoveries among the 18
wildcat wells drilled. The news will come as a blow to an oil industry keen to grow large
developments such as Snøhvit and Goliat. Both StatoilHydro at the former and Eni at the
latter have expressed hopes that satellite discoveries would further bolster their
developments in remote, sparsely populated northern Norway." |
| "Given how bleak the world looked as this year began, it feels
remarkable to be seeing growth again so soon. But it is even more remarkable that the
world is emerging from such a severe financial shock and slump with its most basic fuel,
crude oil, priced at close to $70 a barrel, seven times its price of a little over a
decade ago and double the level it was as recently as March. So this must mean the rebound
is even stronger than we think, with demand for oil soaring again? Not at all. Admittedly,
this is a pretty opaque market, with many countries treating oil stocks as an official
secret. Still, analysts at Banc of America
Securities-Merrill Lynch reckon that global oil demand has been three million barrels a
day lower in the second quarter of this year than in early 2008. They don’t expect it
to get back above that until 2011 at the earliest....
The oil producers’ cartel has deliberately cut production by nearly five million
barrels a day, which is more than the drop in global demand, to keep prices high. Opec members account for only about 35 per cent of world supply,
but Russia, a non-member, accounts for a further 11.5 per cent and is co-operating with their efforts. Moreover, the Gulf states
that dominate Opec have the largest oil reserves and lowest production costs, so can most
easily and painlessly turn their taps on and off. In the early years of this decade the
kingpins of Opec, Saudi Arabia, used to say that their ideal price range for crude oil was
$20-25 a barrel. Now, they say that it is $70-75. Crucially, the nationalists in Opec and
the extortionists in Russia have blocked the big Western oil companies from investing as
much in developing their oil reserves as they would have liked, driving them into
higher-cost fields elsewhere. Investment there, even before the financial crisis, has been
slow as the sudden rush to explore and expand drove up the costs of engineers and
equipment. Since the financial crisis, it has slumped.... In the 1970s, the rather
quotable Saudi Oil Minister, Sheikh Zaki Yamani, had a nice saying: 'The Stone Age did not
end because the world ran out of stones. Nor will the oil age end because we have run out
of oil.' It will end when oil consumers run out of patience with greedy oil producers, and
develop substitutes instead. The Arabs should surely see a warning sign in the fact that
the first new product of which Fritz Henderson, boss of the fresh-out-of- bankruptcy (and
quasi-nationalised) General Motors, emerged to boast was the Chevrolet Volt, a petrol-
electric hybrid, which is claimed to do 230 miles per gallon.... The usual forecasts,
based on extrapolation of past trends, do not see electric cars or non-fossil fuel power
plants having a really big impact for another 20-30 years. Imagine, though, the effect on
innovation of oil at $100-200 a barrel, of hundreds of thousands of Chinese (and Japanese,
European and America) engineers trying to do for solar power and for car batteries what
has been done in the past decade for mobile phones and computers. Then, the usual
forecasts will turn out to be wrong — as usual. The oil age, which began in earnest a
century ago in America, will be at an end." Opec’s greed will herald the end of the oil age London Times, 20 August 2009 |
| "It is true that in the long run economic development in China, India
and elsewhere will drive up the price of oil, but if the price rises too high, then the
world economy will go into recession, oil demand will drop and the price will fall again.
Last year proved that the US economy cannot live with $4 petrol..." The brighter side of expensive oil Financial Times, 16 August 2009 |
| "Britain could be in line for a new North Sea bonanza following
research which reveals its suitability to store billions of tons of waste carbon dioxide. Scientists have found the rock formations beneath the sea bed have
enough room to store up to 300 years’ worth of emissions from northern Europe’s
power stations. It means Britain could potentially
earn up to £4 billion a year by allowing countries such as Germany, France and Denmark
captured from their power stations into rocksto pump CO2 beneath UK waters....Two new
studies have shown that Britain is better placed to exploit the technology than any other
European country. One of the studies, by geologists at Edinburgh University, has shown
that the parts of the North Sea controlled by Britain overlie vast tracts of sandstone
rock strata that are ideal for holding CO2 These rocks are porous, allowing them to absorb
large amounts of gas, but are capped by mudstone, a thick, impermeable rock, that stops
the carbon dioxide escaping. Professor Stuart Haszeldine, who oversaw the Edinburgh
survey, said: 'Our research suggests we could store up to 200m tons of CO2 in those rocks
each year for 200-300 years. 'This is far more than Britain needs so we could take all the
CO2 generated by power stations in north European countries. The British government needs
to realise it has a huge asset here.' The second study was carried out by
Stephenson’s colleagues at the BGS who have been probing the fate of 10m tons of CO2
pumped under the sea bed by Statoil, the Norwegian energy company, since 1996. It showed
the CO2 is stable and so unlikely to bubble back out as some had feared." North Sea’s new bonanza London Times, 16 August 2009 |
| "The Government's long-term plan for decarbonising the UK economy has
been hailed as a world leader because it is the first to include national carbon budgets.
It has gained credit too from its adoption of an ambitious 80% target for greenhouse gas
emission cuts by 2050. What is not not so clear from the Government's glossy 220-page
booklet spelling out the strategy is that the manner in which it is proposed to achieve
its goals casts it in a very different light. UK greenhouse gas emissions (of which carbon
is by far the most significant, accounting for about 70%) have declined by only about 1% a
year since the 1990 baseline. That means that cuts of 3.2% per year are needed from now to
meet the 80% reduction target by 2050. That's a tall order, both in enormously improved
technology and hugely changed behaviour, but it's made all the more difficult by the
Government (rightly) accepting under pressure that emissions from international aviation
and shipping, which are very substantial, should be included. But the Government has a
trick up its sleeve. Its primary policy instrument for delivering the plan targets is the
EU Emissions Trading Scheme (ETS) which requires energy-intensive industries to obtain
permits for their emissions in a market. Crucially however the ETS allows these big
polluters to buy emission credits as a substitute for cutting their own emissions. When
they are bought from abroad, they count towards the UK targets. What the Government is proposing is that 70% of UK emissions come
from industrial sectors that are within the EU ETS, and that there should be no limit on
the number of emission credits that are used to meet this target. Thus the only part of
the UK target which will be achieved entirely by in-country reductions is the 30% that
derives from non-ETS sectors. Even if some of the 70% ETS cuts are generated at home, it
is likely that at least half of the UK target will be purchased from abroad, not earned at
home. This puts an entirely different complexion on
the Government's Low Carbon Transition plan. It explains why the Government is so relaxed
about giving the go-ahead to the third runway at Heathrow and the tripling of airport
capacity as well as to a series of new coal-fired power stations beginning at Kingsnorth
in Kent without requiring prior installation of carbon capture and storage. Both of these
developments will hugely increase UK greenhouse gas emissions, but respectively the
airline industry and the big coal-burning generators like E.ON will simply buy whatever
emission credits are necessary from abroad." The Government's low carbon transition scam Michael Meacher (blog), 15 August 2009 |
| "All around the world, economies seem to be turning a corner, moving
out of a period of this global recession in which the good news was just that things were
getting bad more slowly into one in which things are actually getting better. Exports are
picking up, order books are getting fatter, production is starting to rise in America,
China, Germany, Japan and even Britain. No one can know whether just around that corner a
mugger might be lurking, ready to give economies a new thump in the solar plexus. Such
things could happen because of politics — remember the 1979 Iranian revolution, which
delivered a second oil shock — or because some new financial horror is exposed. But
let us, in a positive summer spirit, assume that recovery really is beginning.....remarkably, we will be leaving a supposedly historic slump with
the price of oil at $70 a barrel, more than double its level of six years ago. In part,
that is in anticipation of renewed growth in demand from Asia. But, to have resisted the
slump, it must also imply that supply is highly constrained, both by under-investment in
new oilfields in the past quarter of a century and by Opec’s renewed grip on
production and the markets. As recovery gathers pace, the oil price will surely go higher,
unless Opec loses its nerve or Saudi Arabia, newly in possession of surplus capacity,
starts to feel charitable. This is bad news for the strength of the Western (and Chinese
and Indian) recoveries, as dearer oil is like a tax on growth. But it will be terrific for
environmentalists and producers of electric cars, doing more to cut greenhouse gases than
a hundred earnest ministerial gatherings." The recovery will prove Thatcherism right London Times, 13 August 2009 |
| "World oil demand will rise less than previously thought next year
and evidence of a 'bottoming out' of the recession is patchy at best, the International
Energy Agency said on Wednesday. The outlook from the IEA, which advises 28 consumer
countries, follows two other cautious forecasts on oil demand this week. Oil prices eased
following its release and were trading below $70 a barrel. 'Evidence of a bottoming out of
the recession is still a bit patchy. The latest data on industrial production for some of
the larger countries remains negative,' David Martin, analyst at the IEA, told Reuters.
'There is not clear evidence yet we have seen the worst.' World
oil demand will rise by 1.3 million barrels per day (bpd) in 2010 to average 85.3 million
bpd, the Paris-based IEA said in its latest monthly report. The increase is 100,000 bpd less than previously forecast. The agency also revised upwards global outright demand in 2010 by
70,000 bpd on the basis of higher fuel use in Asia and made a larger upward adjustment for
2009 demand, which is now assessed at 83.9 million bpd. That barely changes the sharp
contraction in world oil demand expected in 2009 because of the recession, the IEA said,
forecasting fuel use this year would be 2.35 million bpd lower than in 2008." IEA trims 2010 oil demand growth, recovery patchy Reuters, 12 August 2009 |
| "Turkey has agreed to grant access to Russia's South Stream gas pipeline
through its part of the Black Sea, in a move which could hurt the prospects of an
EU-backed project to reduce Russian energy dependency. The Turkish deal is a major
breakthrough for the Russian pipeline, which has to cross the maritime economic areas of
either Turkey or Ukraine, but with Ukraine very unlikely to give consent. At a signing
ceremony in Ankara on Thursday (6 August), Russian prime minister Vladimir Putin and his
Turkish counterpart, Recep Tayyip Erdogan, insisted that South
Stream is not a rival to the EU-backed Nabucco pipeline project.
'Even with the construction of South Stream, Nabucco will not be closed,' Mr Putin said at
a news conference. 'The more infrastructure projects, the better, because that will create
reliability and stability of energy supply to Europe.' The European Commission also
officially rejects the idea the two projects are in competition. 'We consider [South
Stream] a complementary initiative to our ongoing Nabucco efforts,' commission spokesman
Martin Selmayr said at a press briefing in Brussels. South
Stream is designed to bring more Russian gas under the Black Sea to Bulgaria and Italy.
Nabucco is to bring gas from Caspian Sea area countries to Europe via Turkey, bypassing
Russia. Experts warn that if South Stream is built
the EU will be forced to buy Caspian gas at a much higher price, however. 'I argue that if
South Stream is built, Nabucco will not be, at least not for Caspian gas,' Zeyno Baran, a
Turkish-American energy expert with the Washington-based Hudson Institute, told
Euobserver. Turkey just last month signed a legal framework agreement for Nabucco, raising
hopes of the country's strategic backing of EU energy security interests. 'Europeans need
to really understand what's going on in Turkey, how close it has gotten to Russia as
opposed to Europe and the US,' Ms Baran said. In terms of geopolitical impact, South
Stream would reduce the importance of Ukraine's transit pipeline network, which currently
ships 80 percent of Russian gas to the EU. The new situation would make it easier for
Moscow to exert political pressure on Kiev by raising the price of its gas exports to
Ukraine without the fear of a potential knock-on effect on its EU customers. If South Stream is built before Nabucco, it could also see
Azerbaijan sell its extra gas into the Russian pipeline, damaging prospects for Georgia's
independence. Georgia currently buys all its gas from Azerbaijan, with the country being
forced to go back to Russian suppliers if its Azeri channels were blocked. 'If South Stream is built, all that Caspian gas is going to pour into it.
Nabucco is important not only for diversifying
Europe's needs, but it's also freeing the Central Asian countries and the Caucasian
countries from the hold of Russia. Now with this, Turkey sent a signal, whether it to
wanted or not, that it doesn't really care about those countries, it just cares about
becoming a gas hub.'" Turkey Plays Both Sides on Gas Pipelines BusinessWeek, 11 August 2009 |
| "Mexico’s oil production may fall 4.9 percent next year as the
nation faces the greatest 'fiscal shock' in 30 years, Finance Minister Agustin
Carstens told a Senate committee today....State-owned
oil company Petroleos Mexicanos on July 30 cut its production forecast to 2.65 million
barrels a day for this year, from an earlier estimate of as much as 2.8 million. Carstens
said Pemex may pump 2.5 million barrels a day next year and output would keep falling
through 2012. Output is slumping as production at Cantarell, the company’s largest
field, drops at a rate twice as fast as forecast by Pemex. Last year, production slumped
at the fastest rate since 1942." Mexico Oil Production to Fall 4.9%, Drop Through 2012 Bloomberg, 11 August 2009 |
| "From his 44th floor office
overlooking La Défense, surrounded by fat art books and bonsai trees, Christophe de
Margerie is drawing a typically eccentric analogy. The oil business, he says, peering over
his moustache at the sweltering streets below, is a bit like hairdressing, especially
during a recession. 'I was talking with a hairdresser the other day. He told me they were
having no problems at all. People still need to get their hair cut. Business is good.' In
the same way, he argues, while industrial demand for oil and gas has suffered in the
downturn, Total’s business is holding up better than many because levels of private
car use have fallen only modestly...Few in his position, presiding over a colossus with
revenues of €180 billion last year, would speak their mind so comfortably, nor would they openly utter what many in the industry still
consider heresies: that global oil production is close to a peak because of a lack of
resources and investment; and that consumption in Europe and the United States may already
be in terminal decline because of a growing focus on energy efficiency and on the
environment.... 'If we are talking about Old
Europe,' he said, pondering oil’s future, 'then definitely [demand] has peaked and it
will decline, especially if based on consumption per person per year ... In the US,
consumption has probably peaked.' Only Asia, he believes, especially India and China,
offers big opportunities for oil companies such as Total to earn profits by meeting
steadily growing demand. This, in turn, means that the industry urgently needs to find new
products beyond fossil fuels in order to continue to prosper. 'We all know there will be a shortage of energy, so, in my view, not to look at other options would be strange,' he says,
adding that Total, one of the world’s six oil 'supermajors', along with BP, Shell,
ExxonMobil, ConocoPhilips and Chevron, needs to diversify into renewable energy and
nuclear power. The commercial imperative is merely amplified by the threat of climate
change. Mr de Margerie believes that the North Sea, an important part of Total’s
empire where the company remains the fourth-biggest producer, offers a good example of the
challenges facing the industry. Production in the UK sector peaked in 1999, but Total has
managed to sustain higher levels than expected by what he describes as skilful 'gardening'
of resources, ekeing out remaining supplies of oil and gas from smaller, still untapped
fields." Monday Manifesto: Christophe de Margerie asks if oil is offering a Total solution London Times, 10 August 2009 |
| "Last week, the government published a review of the UK’s energy
security situation. In a report commissioned by the prime minister, Malcolm Wicks, the former energy minister, pronounced that 'there is
no crisis'. His findings were in marked contrast to those of the UK Industry Taskforce on
Peak Oil and Energy Security, which concluded last year that the economy faces a clear and
present energy-security threat. The taskforce, a group that includes Virgin, Scottish and Southern
Energy, Arup, Stagecoach
and Solarcentury, was set up in 2007 on the basis of our shared opinion that peak oil
merited serious study as a business risk. Some began with the assumption that the issue
was low-risk but high-consequence. Sadly, we are now of the collective view that peak oil
is a high-risk, high-consequence issue....The
taskforce will produce a second report this November, studying among other topics the
impact of the recession on oil production, which we
concluded (www.peakoiltaskforce.net) last
November was most likely to peak in 2013. Early indications are that the recession has
moved the peak a little further into the next decade, but steepened the descent in
production thereafter. Most leaders in the oil industry put the peak well beyond the next
decade, a view that we know senior civil servants share. The Wicks review mentions peak
oil only once. The relevant passage concludes: 'Few authors advocating an imminent peak
take account of factors such as the role of prices in stimulating exploration, investment,
technological development and changes in consumer behaviour.' The UK industry taskforce
report ignored none of these things. Prices do stimulate exploration but – we argue
– not enough. We discuss the intervals between oil discoveries and bringing capacity
to the market. We discuss investment, and conclude that there have been dangerous
shortfalls even when prices have been high. We discuss technological developments such as
enhanced oil recovery and conclude that they tend only to slow depletion rates. We discuss
changes in consumer behaviour and worry that they will not be sufficient, especially in
India and China, to shrink global demand in parallel with supply. If we imagine a review
of financial security in 2006, the equivalent of the cursory dismissal of peak oil in the
Wicks review might have read as follows: 'Few authors advocating the toxicity of
derivatives take into account factors such as the investment banking industry’s
sophisticated treatment of risk, and the extent of the due diligence involved in awarding
triple-A investment grading.' We believe there are profound cultural problems in this
debate. The FT’s Gillian Tett
has argued that the banking elite cocooned itself in a 'social silence' over the true
worth of its assets in the run-up to the financial crunch. We
worry that the oil industry is wrapped in a social silence on the depletion of its own
assets. If we are right, a dire energy crunch awaits
us and we need to act now. The most perplexing thing about this fundamental difference of
opinion is this. The UK taskforce held two meetings with Department of Energy and Climate
Change officials, one of which Mr Wicks attended himself. Yet his review ignores not just
our conclusions, but our very existence." Do not discount the threat of peak oil Financial Times, 9 August 2009 |
| "Georgia’s pro-Western President said yesterday that Vladimir
Putin remained determined to kill him as part of ambitions to restore Russia’s former
Soviet empire. In an interview with The Times, a year after the war between the two
countries, Mikhail Saakashvili said that Georgia’s survival as an independent state
threatened Mr Putin’s reputation as a strong ruler. Only continued support from the
United States and Europe prevented a Russian invasion to install a puppet regime, he
warned. With tensions rising along the front line between Georgia and Russian troops in
the breakaway territories of South Ossetia and Abkhazia, Mr Saakashvili said that the
Kremlin was testing the resolve of the West... Mr
Saakashvili said that Mr Putin wanted to destroy Georgia to reassert control over the
Caucasus region, the critical conduit for pipelines that bypass Russia and carry oil and
gas from Central Asia and the Caspian Sea to Europe." Vladimir Putin determined to kill me, says Georgian President London Times, 8 August 2009 |
| "Many [British] power
stations are due to close over the coming decade (see chart 1), and supplies are getting
tight. The government reckons that, of a total of
around 75GW in generating capacity, 20GW will disappear by 2015. The private sector is
less optimistic. EDF (a state-owned French firm that wants to build nuclear plants in
Britain) puts the size of the hole at 32GW, and E.ON, a German competitor, reckons it will
be 26GW. One survey of experts before the recession (conducted by Mitsui-Babcock, another
power-station builder) found that three-quarters expected blackouts by the time of the
London Olympics in 2012. When the BBC did a similar poll in 2008, the downturn had pushed
the date back to 2015. 'There’s a risk of blackouts somewhere between 2013 and 2016,
depending on how fast the economy recovers,' says Mr Helm. 'It may not happen,' says an
engineer, 'but we’d be lucky'....Britain’s
coal and nuclear plants together account for just under 45% of all power generation (see
chart 2). But most of the nuclear plants, and around half of the coal plants, are due to
close in the near future. The nuclear stations are simply too ancient to carry on: most
are over a quarter of a century old. Around half have already shut down and are being
decommissioned. Those that remain are increasingly doddery. British Energy, which runs
most of the remaining reactors, had to shut two of its eight power stations last year
after engineers discovered cracks in components. By
2023 only one nuclear plant will be left, a modern
reactor at Sizewell in Suffolk. Some of the power plants may be patched up a bit and
granted life extensions (one on Anglesey was recently given a nine-month reprieve), but
not for long. New nuclear plants are on the way, but there are worries about how much they
cost and how uncertain returns on them are for investors. Even
the most optimistic atom-splitters think that 2017 is the earliest date by which the first
one can be built. They will come too late to help with the supply crunch....Britain has committed itself to meeting punishing climate-change
targets. Its carbon emissions in 2020 must be 34%
lower than their level in 1990, and that is only a stepping stone en route to an eventual
cut of 80% by 2050. These targets would seem to rule
out rebuilding coal-fired power stations, because coal is the most planet-warming of the
fossil fuels. Instead, ministers want to see a big expansion in the amount of energy
Britain gets from the waves, the sun and the wind—especially offshore wind. They are
hoping to see 33GW-worth of maritime windmills (somewhere around 5,000 turbines in all)
built over the next 11 years. That is quite an ambition, and many doubt whether it can be
realised. Britain’s entire offshore capacity in 2008 was only 0.6GW, although
admittedly this was the biggest in the world. History is not reassuring: a combination of
nimbyism and poorly-designed state subsidies means that Britain’s previous,
less-ambitious renewable targets have all been missed. Even if the windmills are built,
they will not in themselves plug the generation gap because they do not generate power on
a calm day. National Grid reckons that compensating
for that uncertainty of supply will require a huge amount of over-engineering. 25GW of
wind power, it reckons, would be worth only around 5GW of fossil-fired generation. Since
coal is too dirty, nuclear plants are too slow to build and renewables are of only limited
use, investors are turning towards more gas plants, encouraged by rollercoaster power
prices that make planning long-term and expensive projects difficult. Gas plants are cheap to build (though expensive to run), so they seem
ideal for a market with a murky future, like Britain’s. The first sizeable new power
station in Britain for half a decade—built in 2008 at Langage, near Plymouth, by
Centrica, a big energy firm—is gas-fired, and there are plenty of others on the
drawing board. The Department of Energy and Climate
Change reckons that three-quarters of the fossil-fired power stations already planned are
to run on gas. The
trouble is that Britain already gets 46% of its electricity from gas; over half of its
houses use it for heating and cooking. That is a legacy of Britain’s North Sea
wealth, which for three decades provided all the energy the country could possibly
consume. But the golden goose is showing its age: North Sea production peaked in 1999 and
has since been falling faster than all but the gloomiest foresaw. That leads to worries about security of supply. 'The best way to have a
secure energy system is to have lots of different fuels,' says Mr Constable. 'It’s
hard to see how a system that’s two-thirds gas-fired fits that definition.' In a
gas-dominated system, power providers would be unable to hedge easily against changes in
the gas price, which tends to shadow the notoriously volatile oil price. Firms can simply
pass on price increases to their customers, but voters are unlikely to appreciate
unpredictably gyrating bills. Other worries are
political. Britain currently imports around a quarter of its natural gas, much of it from
Norway; by 2015, according to one estimate from Centrica, that could rise to
three-quarters.... Other sources are becoming
available, particularly liquefied gas shipped from the Middle East, but the worldwide
market is—for now at least—immature and thinly traded, and Britain’s
storage capacity is limited. The more gas plants
Britain builds, the likelier it becomes that, like much of the rest of Europe, it will be
reliant on Russia for a lot of its gas, either directly or indirectly through agreements
with continental energy firms. That is a worry:
under Vladimir Putin Russia has proved itself an unreliable supplier, cutting gas to
countries such as Ukraine and Belarus that have incurred the ire of the Kremlin. All this leaves Britain in a hole. The lights are dimming, but green targets are an argument against new
coal plants, security-of-supply concerns make gas dicey, lack of time rules out nuclear,
and worries about practicality dog renewables." Dark Days Ahead Economist, 6 August 2009 |
| “In a report on
energy security by Malcolm Wicks, a former energy minister, said the UK needs to nurture
better relationships with gas exporters, Norway, Qatar and Saudi Arabia, while tripling
nuclear capacity and pushing for renewable energy. The Labour MP said that the UK must
avoid a costly ‘dash for gas’ and minimise its exposure to political spats like
the Russia-Ukraine row that push up spot prices. The Department of Climate Change last
month said energy efficiency means that declining North Sea gas will not result in extra
imports beyond next year. But Mr Wicks' report said that ‘such projections are
inevitably uncertain and others have estimated higher import dependence’. The MP also advised that state intervention in the energy market would be
increasingly necessary. He urged the Government to consider legislation to reserve storage
space in offshore gas facilities owned by energy companies for UK needs. This would stop
companies diverting gas supplies to other countries in the event of a shortage.” UK should lock in gas contracts as supply wanes, says PM's aide Malcolm Wicks Daily Telegraph, 5 August 2009 |
“Coal has become the ugly sister of power sources, condemned as
old-fashioned, ultra-polluting and excessively costly to mine, given that we have
exhausted the most easily accessible supplies. Yet
beneath the Firth of Forth, in a coalfield of more than 200 square miles, a project is
taking shape that, if successful, would offer an affordable means of reaching billions of
tons of deep-lying coal deposits without causing irreparable harm to the environment. The
Firth of Forth field is so deep – 500 metres or more beneath the surface – that
it has not been cost-effective to mine. The attraction of exploiting it has further
diminished because of the link between global warming and fossil fuels. The new scheme,
however, would couple two recently improved technologies – underground coal
gasification and fuel cells. Rather than having the coal dug out, oxygen and water would
be pumped down the mine to create a white-hot chemical reaction that turned the coal into
gas. This process would not only generate electricity more efficiently than wind, nuclear
or conventional gas and coal power plants, but would enable the capture and storage of
more than 99 per cent of the CO2 contained in the fuel before it escaped into the
atmosphere. The construction of such a carbon capture and storage (CCS) facility
means that environmental objections to using coal as a fuel would be dramatically diluted.
Equally, it would enable much more of the world's remaining coal deposits to be mined
– in Britain alone there are an estimated 17 billion tons suitable for the CCS
process. Coal has been a driving force of the world economy since the Industrial
Revolution, and with China, India and the United States sitting on huge reserves, it is
expected to remain so for decades, or even centuries, to come. China and the US, the
world's two biggest greenhouse gas producers, both rely heavily on coal – China,
which burnt 2.74 billion tons in 2008, obtains 80 per cent of its electricity from coal,
while the US derives 65 per cent. Annual world consumption of coal is more than 6.5
billion tons, which by 2030 is forecast to rise to 10 billion tons. Scientists have
repeatedly given warning that if emissions from fossil fuels continue to rise, there will
be little hope of avoiding catastrophic levels of climate change – unless the carbon
dioxide can be captured and stored. At the
Firth of Forth field, this could be done quite simply. First, the gas produced from the
so-called ‘flash-frying’ of the coal would be piped to the surface and cleaned
of contaminants. Then it could be run through a traditional generator. But there is a more
effective alternative, which involves the gas being separated into two streams. One would
consist of hydrogen, which could be fed into high-efficiency fuel cells to be turned into
electricity; the other would be the carbon dioxide, for storage. The key to the process is
low-cost, alkaline fuel cells, developed by AFC Energy Ltd, which turn hydrogen into
electricity, with water as a by-product. Such is the potential of the scheme that despite
its use of coal, usually a guarantee of the environmentalists' ire, it has won the
approval of Friends of the Earth. Neil Crumpton, the FoE's energy specialist, describes it
as an opportunity to ‘demonstrate carbon capture technologies without the excuse of
claiming to need to build a massive, new coal power station’.” |
| “An ‘interventionist’
approach by the government will be needed if security of energy supply is to be
guaranteed, a report commissioned by the prime minister will conclude on Wednesday. Malcolm Wicks, the former
energy minister appointed by Gordon Brown as his special representative for international
energy issues, will say that ‘the time for market innocence is over’ and that
the government needs to do more to safeguard electricity and gas supplies. His report,
published by the Department of Energy and Climate Change, raises concerns about a new
'dash for gas' that could make Britain more dependent on imports from countries such as
Russia, Algeria and Nigeria. The warning comes as
figures compiled by New Power, an industry journal, show that gas-fired power stations
account for the majority of planned generation capacity, far exceeding any other fuel. Mr
Wicks’s report emerged out of concerns that, while energy policy was addressing the
threat of climate change – as seen in the white paper
launched by Ed Miliband, the energy secretary, last month – security of supply
was being relatively neglected. The recession, which
has cut oil prices to less than half their peak of $147 a barrel a year ago and has sent
wholesale gas and electricity prices tumbling, has eased immediate fears about energy
shortages.Dorothy Thompson, the chief executive of Drax, the operator of
Europe’s biggest coal-fired power station, said there had been an 'unprecedented'
drop in demand for electricity. National Grid, which
owns the electricity and gas transmission networks, published forecasts in May suggesting
that power demand by 2016 would still be well below its 2008 level. But as the world
economy recovers, energy
demand is expected to pick up again, led by emerging economies such as China and India,
and that is expected to push oil and gas prices higher. Meanwhile, Britain’s oil and
gas production from the North Sea is in decline as its mature fields are sucked dry. As a
result, the country, which was self-sufficient in gas as recently as 2004, is expected to
have to rely on imports for between 45 per cent and 70 per cent of its needs by 2020. Mr
Wicks argues that this shift to import dependency means the prevailing model of energy
policy since the 1980s – that the market should be allowed to work freely as far as
possible – is no longer workable. ‘The era
of heavy reliance on companies, competition and liberalisation must be re-assessed,’
he said. ‘We must still rely on companies for exploration, delivery and supply but
the state must become more active: interventionist, where necessary.’ Mr Miliband and
his Labour predecessors had already begun to shift policy in that direction, but Mr
Wicks’ recommendations, if implemented, would push the government further than it has
so far been prepared to go. Among his proposals, he
suggests that the government should look at setting objectives for the fuel mix for the
country’s electricity generation, specifying a set proportion, perhaps within bands,
to come from energy sources such as gas, nuclear, coal and wind. The government has
signed up to that approach for renewables, which are supposed to provide about 30 per cent
of Britain’s electricity by 2020, but not for other technologies. Other ideas put forward by Mr Wicks include the possibility of
government-backed strategic gas storage, to run alongside commercial storage sites, which
could release gas to cope with supply disruptions such as the problems caused by Russia’s
dispute with Ukraine in January. “ Call for more intervention on energy Financial Times, 4 August 2009 |
"The world is in danger of a uranium supply
shortfall as the global nuclear industry speeds up, chief executive of Energy Resources
Australia (ERA) Rob Atkinson told MINING DAILY. 'While there are an awful lot of nuclear
reactors being built around the world, uranium mines
are not keeping pace,' he said. 'With 30 countries
in the world operating nuclear reactors, as well as another 14 countries planning
reactors, that leaves open quite a significant supply opportunity.'” |
| "The world is heading for a catastrophic energy crunch that could
cripple a global economic recovery because most of the major oil fields in the world have
passed their peak production, a leading energy economist has warned. Higher oil prices
brought on by a rapid increase in demand and a stagnation, or even decline, in supply
could blow any recovery off course, said Dr Fatih
Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by
OECD countries. In an interview with The Independent, Dr Birol said that the public and
many governments appeared to be oblivious to the fact that the oil on which modern
civilisation depends is running out far faster than previously predicted and that global
production is likely to peak in about 10 years – at
least a decade earlier than most governments had estimated. But the first detailed assessment
of more than 800 oil fields in the world, covering three quarters of global reserves, has
found that most of the biggest fields have already peaked and that the rate of decline in
oil production is now running at nearly twice the pace as calculated just two years ago. On top of this, there is a problem of chronic under-investment by
oil-producing countries, a feature that is set to
result in an 'oil crunch' within the next five years
which will jeopardise any hope of a recovery from the present global economic recession,
he said. In a stark warning to Britain and the other Western powers, Dr Birol said that
the market power of the very few oil-producing countries that hold substantial reserves of
oil – mostly in the Middle East – would increase rapidly as the oil crisis
begins to grip after 2010. 'One day we will run out of oil, it is not today or
tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves
us, and we have to prepare ourselves for that day,' Dr Birol said. 'The earlier we start,
the better, because all of our economic and social system is based on oil, so to change
from that will take a lot of time and a lot of money and we should take this issue very
seriously,' he said. 'The market power of the very few oil-producing countries, mainly in
the Middle East, will increase very quickly. They already have about 40 per cent share of
the oil market and this will increase much more strongly in the future,' he said. There is
now a real risk of a crunch in the oil supply after next year when demand picks up because
not enough is being done to build up new supplies of oil to compensate for the rapid
decline in existing fields. The IEA estimates that
the decline in oil production in existing fields is now running at 6.7 per cent a year
compared to the 3.7 per cent decline it had estimated in 2007, which it now acknowledges
to be wrong. 'If we see a tightness of the markets,
people in the street will see it in terms of higher prices, much higher than we see now.
It will have an impact on the economy, definitely, especially if we see this tightness in
the markets in the next few years,' Dr Birol said. 'It will be especially important
because the global economy will still be very fragile, very vulnerable. Many people think
there will be a recovery in a few years' time but it will be a slow recovery and a fragile
recovery and we will have the risk that the recovery will be strangled with higher oil
prices,' he told The Independent. In its first-ever
assessment of the world's major oil fields, the IEA concluded that the global energy
system was at a crossroads and that consumption of oil was 'patently unsustainable', with
expected demand far outstripping supply. Oil production has already peaked in non-Opec
countries and the era of cheap oil has come to an end, it warned. In most fields, oil
production has now peaked, which means that other sources of supply have to be found to
meet existing demand. Even if demand remained steady, the world would have to find the
equivalent of four Saudi Arabias to maintain production, and six Saudi Arabias if it is to
keep up with the expected increase in demand between now and 2030, Dr Birol said. 'It's a big challenge in terms of the geology, in terms of the investment
and in terms of the geopolitics. So this is a big risk and it's mainly because of the
rates of the declining oil fields,' he said. 'Many governments now are more and more aware
that at least the day of cheap and easy oil is over... [however] I'm not very optimistic
about governments being aware of the difficulties we may face in the oil supply,' he said.
Environmentalists fear that as supplies of conventional oil run out, governments will be
forced to exploit even dirtier alternatives, such as the massive reserves of tar sands in
Alberta, Canada, which would be immensely damaging to the environment because of the
amount of energy needed to recover a barrel of tar-sand oil compared to the energy needed
to collect the same amount of crude oil." Warning: Oil supplies are running out fast Independent, 3 August 2009 |
| "Although Russia and the United States are most often mentioned as
the contestants of the 'new Great Game' that began after the fall of the Soviet Union,
other players have also entered the arena. Central
Asia, possessing billions of barrels of recoverable oil and trillions of cubic meters of
natural gas, is located fortuitously between Europe and China -- two massive consumers of
energy resources. The region also sits on the
frontier of the Islamic world, and Beijing and Brussels are among those who see Central
Asia as a potential bulwark against potential security threats emanating from Iran,
Afghanistan, and Pakistan. China has multiple motives
in Central Asia, and has adopted an ingenious policy
for dealing with the region, according to James Nixey, manager and research fellow for the
Russia and Eurasia program at Chatham House. 'I would assess it as being a considerable
degree of genius,' Nixey said. 'Chinese foreign policy is very long-term and they're much
happier as they were -- just to give an example of Hong Kong -- to sit back and wait for
things to come their way, as they know it will.' As for security concerns, Beijing has
found success in exerting its influence through a regional alliance. China, Russia, and
four of the Central Asian states -- Uzbekistan, Tajikistan, Kyrgyzstan, and Kazakhstan --
compose the Shanghai Cooperation Organization (SCO), formed in 2001 after Uzbekistan
joined a grouping known as the Shanghai Five....Although
security issues often make the headlines, China's main interest is gaining access to its
neighbors' energy resources, and there too it enjoys
a number of advantages over regional player Russia, and outsiders such as the United
States and the European Union. Central Asian states see neighboring China as a potential
consumer of their own exports, and Beijing never seems to be short of money. China also
refrains from criticizing the internal politics of Central Asian governments, something
that can't be said of the West. Chinese companies have been active in building the
pipelines, roads, and railways needed to carry the resources back to China. Chinese
companies, which enjoy a reputation for completing projects on time, train and employ
local workers as well as bringing in their own labor. The approach is bearing fruit,
Clements explains. China is 'starting to receive oil
and gas and also uranium and other minerals, so natural resources are coming from the
region,' he said. Russian companies had a near monopoly over the export of Central Asia's
energy resources in the 1990s, but much has been done to even the playing field. China has
helped build an oil pipeline from western Kazakhstan that is already in operation, and a
gas pipeline from Turkmenistan that is expected to go online at the end of this year.... The European Union, too, is looking to break Russia's monopoly over
Central Asian energy resources. Europe receives Central Asian oil and gas via Russia, and
some in the EU have raised concerns about a heavy reliance on Russia for energy supplies.
Incidents such as the suspension of Russian gas supplies at the start of this year, owing
to a dispute between Ukraine and Russia, reinforce the view that the EU needs urgently to
diversify its energy import sources. To help offset
such fears, the EU is supporting the 3,300-kilometer Nabucco pipeline project to bring gas
from Azerbaijan and some Central Asian nations to the heart of Europe. This year, the EU
unveiled its 'Southern Corridor-New Silk Route' strategy that aims to greatly develop and
enhance road and rail links and pipelines between the Caspian area and Europe. The EU strategy is having some success, Clements said, but 'they're still
limited in the progress they've made in terms of trying to engage Turkmenistan into a
trans-Caspian pipeline deal. We have seen some progress there. We've seen states that
previously turned away from the West, especially Uzbekistan, again maybe altering its
course into a sort of middle path between the West and Russia.' The recent signing of an
agreement between Nabucco transit countries brings the project closer to realization. The
EU will pay the cost of construction so that the Central Asians have a new export route to
one of the most valued energy customers in the world -- the EU. The EU's strategy also
serves to strengthen Central Asia's hand in dealing with Russia. A pipeline explosion that
cut off Turkmenistan's gas exports to Russia in April is one example. Turkmen officials
blamed Russia, and Moscow rejected the blame. But the events may have helped lead
Turkmenistan to pursue other energy partners. Turkmenistan has since signed a deal with
Germany's RWE for rights to explore a bloc on the Turkmen Caspian shelf. In July, Turkmenistan's foreign minister went to Brussels and
Washington for energy talks. The same month,
Turkmenistan said it would sell gas to Nabucco. 'If you look at the trends I tend to think
there's a bit of ebb and flow,' says Nixey of Chatham House. 'At the moment [the EU is] on
a bit of a high so they may be feeling quite pleased with themselves.' 'The fact that the
Kyrgyz have reversed their decision on Manas air base or that the Uzbeks are making more
overtures toward the EU right now is a good thing in so many ways,' he said. 'But the fact of the matter is what is given can just as easily be
taken away.'" China, EU Wait In The Wings For Access To Central Asia Radio Free Europe, 2 August 2009 |
| "Eighteen
years after the five former Soviet republics of Central Asia became independent, outsiders
continue to jockey for position in the traditional contest for influence in the region.
The great powers -- Russia, the United States, China, and Europe -- follow two main
strategies to gain or hold sway in the region: the provision of mutual security, and the
use of financial measures and trade incentives in exchange for access to enormous energy reserves. The five states of
Central Asia -- Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan -- are
majority Muslim states that mark the northern limits of the Islamic world. To the south
are Afghanistan and Iran, countries that outside actors and the Central Asian countries
themselves view as potential sources of security problems. Neighboring Russia and China,
meanwhile, see Central Asia as a hotbed of movements linked with opposition elements
within their own borders. Central Asia's vast
deposits of oil, natural gas, and uranium are the modern-day lures of a region that has an
ancient history as a crossroads for trade between the East and the West. And the five nations are showing an increased readiness to play that role
again, but are finding they can now demand security and trade partnerships in
exchange....A relative newcomer on the scene, the United States was among the first
countries to open embassies in all five Central Asian states after the collapse of the
Soviet Union, and U.S. companies quickly descended on the region. Chevron, for example,
signed a joint partnership in 1993 with Kazakhstan to develop the enormous Tengiz oil
field, among the top 10 producing fields in the world. With a wary eye on fighting in
Afghanistan and Pakistan, the Central Asian states have also established new security
partnerships, primarily involving the Russia-dominated Collective Treaty Security
Organization (CSTO), as well as the United States. Since the September 2001 terrorist
attacks, Washington's primary interest in Central Asia has been cooperation in ridding
Afghanistan of the Taliban and extremist groups such as Al-Qaeda. The Central Asians
were eager allies, remembering that Afghanistan's problems spilled into Central Asia
several times in the 1990s. The U.S-led coalition was allowed to use bases in Kyrgyzstan
(Manas), Tajikistan (Dushanbe), and Uzbekistan (Khanabad). A weakened Moscow grudgingly
accepted the U.S. military presence in what it considered its backyard. But as Russia
gained strength, it worked to remove, or at least curtail, U.S. influence in the
region." Shifting Tides Of Influence In Central Asia Radio Free Europe, 1 August 2009 |
| "As the global economy recovers from the current downturn, there is a
significant risk that resurgent energy demand will coincide with tight supply, vaulting
oil prices higher again. Indeed, prices are already on the rise. Research by the McKinsey Global Institute (MGI), combining
macroeconomic modeling with an understanding of industry dynamics, finds that unless
business leaders and policymakers act decisively on both oil supply and demand, there is a
risk that a second oil shock could follow economic recovery—indeed, one that could be
lengthier than the second price spike that hit the world economy in the 1970s. In the 1970s there was a silver lining to the twin shocks. For a long
time after, energy demand remained subdued and the world saw a revolution in energy
efficiency and substitution. Never again, policymakers vowed, would they allow soaring
energy prices to take their economies hostage. As it did in the 1970s, energy demand
likely will surge once the world economy expands again. MGI expects demand to grow more
than 2% annually between 2010 and 2015, nearly a full point faster than in the period from
2006 to 2010. At the same time, we face a supply picture that is less promising than it
was in the 1970s....Today, tight credit as well as uncertainty about oil price levels is
compromising investment in new supply. Even after the credit crunch eases, producers could
remain cautious in the face of strenuous efforts by markets such as the U.S. to lessen
their dependence on imported oil, adding uncertainty to the demand outlook. In any case,
even in a more benign investment environment, producers will find adding supply capacity
more difficult than they did in the 1970s because of the challenge of producing oil from
rapidly maturing oil fields and the difficulty of finding new low-cost oil fields. One way
to avoid imbalance in the oil market in the face of constrained supply is higher prices
that dampen demand—but the transmission mechanism is much weaker today than it was in
the 1970s due to energy subsidies and the lower energy intensity of many economies. In
this context, fuel substitution and higher energy efficiency become vital checks on
demand. Here, too, the prospects appear less promising than they did in the 1970s. Back
then, the twin oil shocks triggered improvements in energy efficiency and a substitution
to different types of fuel, spearheaded by developed countries. These moves reined back
demand for a long time. Such efforts continue today and are paying dividends—in the
U.S., for example, both demand for fossil fuels and per capita energy consumption will
fall between 2006 and 2020. Overall OECD fossil fuel demand will be almost flat. But decisive action by developing regions is vital this time
because they will account for 90% of energy demand growth between now and 2020. Even if
the current recession proves to be deeper than the downturn in the 1970s, rapid growth in
developing economies would boost global energy consumption significantly. There are many
actions that policymakers can take, even in the short term, to abate energy demand in
parallel with measures to ensure supply, and these need not come at a high cost. We
calculate that investments to increase energy productivity that offer investors a return
of 10% or more could reduce global oil demand by as much as 10% by 2020, or between 6
million and 11 million barrels per day—the amount required to keep demand and supply
in balance. But although some developing countries have taken action on energy
efficiency—China's fuel-efficiency standards, for instance—these efforts are not
yet sufficiently broad-based or robust. Moreover, it is unlikely that developing countries
will substitute fuels at the rate witnessed in the 1970s when developed economies were
able to make 'easy' switches. Today, for example, residual fuel oil comprises only 12% of
total petroleum-products demand, and nearly half of the total is used for marine bunkers
where no real substitute is available. Finally, one potential quick win—the removal
of fuel subsidies, largely in the Middle East—could cut 2 million to 3 million
barrels per day of demand in 2020 but is unlikely to materialize for political reasons. It
may already be too late to avert a second oil shock that could develop as early as 2010,
depending on how quickly the global economy recovers." Scott S. Nyquist, director in McKinsey & Co.'s Houston office Are We Headed for Another Oil Shock? Business Week, 29 July 2009 |
| "U.K. utilities may need to mothball power plants and cut investment
plans as the country faces the biggest electricity
glut in almost 20 years.
National Grid Plc, the manager of Britain’s power network, predicts this year’s
6 percent drop in consumption may leave some plants unneeded to meet demand. The
oversupply will increase because the country’s six biggest energy suppliers, led by
Centrica Plc and Scottish & Southern Energy Plc, are developing more natural
gas-fueled stations. From Didcot in Oxfordshire to
Longannet in Scotland, power generators are shuttered. Profits from gas-fed plants may
fall by 30 percent in the winter heating season that starts in October 2010, compared with
the same period this year, futures markets show. The result will be cheaper energy for
U.K. consumers and an earnings squeeze for utilities including E.ON AG and RWE AG....There’s a 'danger' the utilities and government will treat
slowing demand as a reason to delay plans to increase energy efficiency and build
renewable energy plants, said Tony Ward, a partner in Ernst & Young LLP’s power
and utilities team. He predicts utilities will need to ax 35 billion pounds of investment
plans because of the slowdown in energy demand. That will reduce expenditure to 199
billion pounds through 2025, the accountant said in a report published July 21. The
oversupply may linger for six years because the slump in energy use is prolonging the
lives of 12,000 megawatts of capacity that is allowed to run for a maximum 20,000 hours,
or about 29 percent of the time, between 2008 and 2015. By spacing out their operations rather than using up the hours
immediately, producers are leaving the market saturated for longer....Use of coal-fed
generators with a cap on their remaining operations dropped 30 percent in the five months
through May compared with the year-earlier period, according to the England and Wales
Environment Agency. The U.K. Nuclear Decommissioning
Authority is also extending the operating life of its oldest atomic reactors, and
EDF’s British Energy division got approval on July 1 to extend the use of its
Hartlepool and Heysham-1 plants for another 10 years." Power Glut Forces U.K. Utilities to Idle Plants Bloomberg, 29 July 2009 |
| "Europe's largest onshore
windfarm project has been thrown in severe doubt after the RSPB and official government
agencies lodged formal objections to the 150-turbine plan, it emerged today. The setback
adds to the problems facing the government's ambition to install 10,000 new turbines
across the UK by 2020 as part of its plan to cut the carbon emissions causing climate
change. The proposed 550MW windfarm, sprawling
across the centre of Shetland's main island, would add almost 20% to existing onshore wind
capacity. But the objectors say the plans could seriously damage breeding sites for
endangered birds, including a rare wader, the whimbrel, which was unexpectedly discovered
by the windfarm developer's own environmental survey teams. Other species at risk include
the red throated diver, golden plover and merlin." Latest protest leaves climate strategy twisting in the wind Guardian, 29 July 2009 |
| "It was meant to be the world's first demonstration of a technology
that could help save the planet from global warming – a project intended to capture
emissions from a coal-fired power station and bury them safely underground. But the German
carbon capture plan has ended with CO2 being pumped directly into the atmosphere,
following local opposition at it being stored underground. The scheme appears a victim of
'numbyism' – not under my backyard. Opposition to the carbon capture plan has
contributed to a growing public backlash against renewable energy projects, raising fears
that Europe will struggle to meet its low-carbon commitments. Last week, the Danish firm
Vestas blamed British 'nimbies' opposing wind farms for its decision to close its turbine
factory on the Isle of Wight. Many countries continue to use coal for generating power as
it is the cheapest and most readily available fuel in the world. It will probably power
the development of China and India. But coal is also seen as the dirtiest fuel. So, Vattenfall's Schwarze Pumpe project in Spremberg, northern
Germany, launched in a blaze of publicity last September, was a beacon of hope, the first
scheme to link the three key stages of trapping, transporting and burying the greenhouse
gases. The Swedish company, however, surprised a recent conference when it admitted that
the €70m (£60.3m) project was venting the CO2 straight into the atmosphere. 'It was supposed to begin injecting by March or April of this year but we
don't have a permit. This is a result of the local public having questions about the
safety of the project,' said Staffan Gortz, head of carbon capture and storage
communication at Vattenfall. He said he did not expect to get a permit before next spring:
'People are very, very sceptical.' The spread of localised resistance is a force that some
fear could sink Europe's attempts to build 10 to 12 demonstration projects for carbon
capture and storage (CCS) by 2015. The plan had been
to transport up to 100,000 tonnes of carbon dioxide from the power plant each year and
inject it into depleted gas reservoirs at a giant gasfield near the Polish border. Scientists maintain that public safety fears are groundless: the
consequences of escaping CO2 would be to the climate, not to public health. Many big
environmental groups support CCS, both off and onshore, as a necessary evil in the battle
against climate change. But Jim Footner, a Greenpeace climate campaigner, said the German
protests were 'a stark warning to those that think CCS is an easy solution to the huge
climate problems of coal-fired power stations'. The first wake-up call came in March, when
a Dutch council objected to Shell's plans to store CO2 in depleted gas fields under the
town of Barendrecht, near Rotterdam. This was despite a successful environmental impact
assessment and the enthusiastic backing of the Dutch government, which, in September, must
decide whether to give Shell the green light, despite the council's opposition." Not under our backyard, say Germans, in blow to CO2 plans Guardian, 29 July 2009 |
| "The Iraqi cabinet Tuesday approved a law providing for the
establishment of a national oil company for the first time in decades, a government
spokesman said. Ali al-Dabbagh said that the cabinet submitted the new draft law to the
country's parliament for final approval. He didn't provide any details about the content
of the new law. The Iraqi National Oil Co., or INOC,
was set up in 1964 but ousted leader Saddam Hussein scrapped the company in late 1987. The
reinstated national oil company would act as the parent of the existing three major Iraqi
oil operators - the South Oil Co., Iraq's largest petroleum company in Basra; North Oil
Co. in Kirkuk; and Missan Oil Co. in Ammarh in
southern Iraq. Thamir al-Ghadhban, an energy adviser to Prime Minister Nouri al-Maliki,
confirmed that the law was passed by the cabinet Tuesday and would be sent to the
parliament for approval.... The previous law stated that the INOC would have authority to
conclude service and management contracts with international oil companies to improve oil
recovery from producing fields. It isn't known if that provision was retained in the new
law. Iraq sits atop the world's third-largest proven crude reserves after Saudi Arabia and
Iran, but is desperate for oil revenue to rebuild its war-shattered economy, especially
with global prices down. Iraq's pre-U.S.-led-invasion
production ceiling was about 3 million barrels a day, but it now produces only 2.4 million
barrels a day, of which 1.8 million is for export, according to Oil Ministry figures. Crucial to improving Iraq's broken infrastructure and returning
production to pre-2003 levels are security guarantees that major international oil
companies' operations won't be disrupted by sectarian power struggles. Last month Iraq
held its first licensing auction, offering six oil and two gas fields to international
companies. Only one, the giant Rumaila field in southern Iraq, was awarded to an alliance
of BP PLC (BP) and China National Petroleum Corp. The country is planning to hold a second
licensing auction by the end of this year, covering 10 groups of oil and gas fields." Iraq's Cabinet Approves Law Establishing National Oil Co Dow Jones Wires, 29 July 2009 |
| "Saudi Aramco’s oil
production capacity has reached 12 million barrels per day (bpd), which could allow it to set records for crude output once global energy
demand recovers. The national oil company accounts for nearly all crude production in
Saudi Arabia, the world’s biggest oil exporter. 'Production capacity of the company
was 12 million bpd in June, when output started from three fields,' said Khalid al Falih,
the chief executive of Aramco, according to the Saudi newspaper Al Hayat. Those deposits
included Khurais, at which production capacity was raised by 1.2 million bpd, or roughly
seven-fold, in the biggest completed oilfield expansion project in the world. The field is
located in the most prolific Saudi onshore oil-producing region, east of Riyadh, near the
giant Ghawar field, which has the world’s biggest deposit of conventional crude
oil.The output capacity at Khurais was less than 200,000 bpd before the expansion,
according to US government data. The other Saudi oil projects completed last month
included a 250,000 bpd capacity expansion at the Shaybah oilfield, in the kingdom’s
remote Empty Quarter near its border with the UAE, which previously could produce up to
550,000 bpd. Aramco also developed an initial 100,000 bpd of output capacity at the
Nuayyim field, south-east of Riyadh. In total, the
three projects have raised Saudi oil production capacity by 1.55 million bpd or about 15
per cent. That has boosted the kingdom’s spare
capacity to a record 4 million bpd, as Saudi Arabia has led the way in delivering the
record 4.2 million bpd of output cuts that OPEC pledged last year in an attempt to stem a
steep slide in the price of oil...In 2007, amid predictions by 'peak oil' theorists that
Saudi output was about to decline, Aramco announced a bold plan to add more than 2 million
bpd of new oil production capacity to bring the
kingdom’s total capacity to 12.5 million bpd this year. The company said a further 2.5 million bpd of additions were possible
next year and in 2011, potentially bringing output
capacity to 15 million bpd. Aramco has now delivered
most of the increases promised for this year, even as global oil demand has fallen because
of the economic crisis. Mr al Falih said the drop in
oil demand was temporary and he predicted consumption growth would eventually resume. If
the world failed to invest in new oil production during the downturn, global capacity
would fall, causing another sharp rise in crude prices that could again destabilise the
economy, Mr al Falih said. In the long term, Saudi
Arabia planned to maintain spare production capacity of 1.5 million to 2 million bpd, he
said." Saudi Aramco gears up for record oil production The National (UAE), 28 July 2009 |
| "Prince Andrew, who is the UK's special representative for trade and
investment, told politicians from the Central Asian nation this week that Britain would be
willing to provide 'substantial support' to help the country pipe its gas to Europe. The
country used to pipe its Caspian gas to Russia, but recently stopped following a row over
contracts. It is now hoping to send gas to Europe through a pipeline funded by the
European Union. 'The prospect of sending Turkmen natural gas to European markets,
including Britain, is fully in line with Turkmenistan's plans to diversify its exports to
world markets,' Gurbanguli Berdymukhamedov, the country's president, said. Britain will
become increasingly dependent on expensive imports over the coming years. However, utility
companies are anxious to source gas from more politically friendly regimes than Russia,
which has the one of the world's most plentiful supplies. Other European countries were
hit by gas price rises during the row between Ukraine and Russia over a pipeline last
winter. The UK gets the majority of its gas from the
North Sea and Norway, plus cargos of liquefied natural gas from countries such as Qatar.
Domestic gas production is dropping by 5pc per year. Turkmenistan, which sold 70bn cubic
meters of gas last year, already supplies Iran and is currently working on a pipeline to
China expected to come online soon. However, there
remain question marks over the reliability of the Turkmen supplies, with some experts
casting doubt on whether it has the resources to supply the European market." Britain targets Turkmenistan gas as North Sea resources deplete Daily Telegraph, 28 July 2009 |
"The cost of pumping a barrel of oil out of the ground depends on a
variety of factors, including the size and accesibility of the field. Oil companies are
often reluctant to give precise cost information. The
following provides estimates of the cost of running a field for OPEC members and other
individual countries, obtained from traders and industry analysts. It also gives the International Energy Agency's more general assessment of
costs for the oil-producing regions of the world. Saudi Arabian crude is the cheapest in
the world to extract because of its location near the surface of the desert and the size
of the fields, which allow economies of scale. The
operating cost (stripping out capital expenditure) of extracting a barrel in Saudi Arabia
has been estimated to be around $1-$2, and the total cost (including capital expenditure)
$4-$6 a barrel. Extraction of Iraqi oil is in theory
also very cheap, although there are political and security challenges. Industry analysts
estimated total costs at between $4-6, although they said some fields could be more
expensive. In the United Arab Emirates, operating and capital costs combined were
estimated to be around $7 a barrel. Oil extraction from mature and deep water offshore
fields is much more expensive than from the accessible hydrocarbon territory of the Gulf.
In Nigeria, production in ultra-deep water fields can reach $30 a barrel compared with
onshore costs of around $15, according to analysts. In offshore Angola, it costs around
$40 to produce one barrel of oil (operating and capital costs), traders told Reuters.
Operating and capital costs in Algeria, Iran, Libya, Oman and Qatar were all estimated to
be around $10-15 a barrel. In Kazakhstan, where reserves are big and largely unexploited,
the cost to produce a barrel for medium-sized producers, such as Kazakh state oil company
KazMunaiGas is around $15-18, and for Kazakhstan's largest operator Tengizchevroil, it is
about $10-12, the Kazakh-British Chamber of Commerce said. Analysts said these were
operating costs, probably including transport, as it is expensive to move the oil to
distant ports. In Venezuela, where fields tend to be mature and small and it is difficult
to make new discoveries, production costs were generally estimated at $20 a barrel
(operating and capital costs). Those figures do not include the more expensive Orinoco oil
from the country's sand deposits. One analyst said the extraction of one barrel of Orinoco
was around $30 (operating and capital costs). Ecuador, where fields are also small and the
distance to ports add to costs, analysts pegged extraction costs at $20 a barrel. In
the mature British North Sea, where the remaining oil is difficult to access, the industry
body Oil & Gas UK said the break-even cost was around $50 a barrel. One analyst said
operating and capital costs were $30-40 a barrel. The International Energy Agency
(IEA) -- in its latest November 2008 world energy outlook -- gave the following estimates
for the all-in costs of producing oil from various types of hydrocarbons in different
parts of the world:  Source: International Energy Agency World Energy Outlook 2008 Compiled by Martina Fuchs, Christopher Johnson, Karen Norton, Joe Brock and Barbara Lewis, Editing by James Jukwey" FACTBOX-Oil production cost estimates by country Reuters, 28 July 2009 |
| "The demand for oil has hit a short-term peak in the west and
industry predictions of how long it will take to recover are getting longer, research from
Greenpeace shows. The Shifting Sands report pulls together oil demand forecasts from Opec
and the International Energy Agency (IEA). The report found both have cut their medium and
long-term forecasts - partly due to the impact of the current recession, but also down to
new government policies. 'In the longer term, the impact of two key policy instruments
adopted in the US and EU are cited as gaining in influence. These are the US Energy
Independence and Security Act and the EU Climate and Energy package. These policies, and
the fact that there has been a degree of saturation in these markets, have led to the
unanimous conclusion among these agencies that oil
demand in the OECD has peaked.' The report adds
that, although demand in countries such as China and India will continue to grow, 'a
global peak in oil demand may be within sight'. Greenpeace says this could put at risk the
tens of billions of dollars major oil companies have invested in carbon-intensive tar
sands projects. The report also contains data showing how the oil majors have become
increasingly reliant on tar sands, with Shell emerging as the most heavily involved." Oil demand: Is a global peak in sight? The Guardian, 28 July 2009 •
DATA: Revisions to oil demand forecasts |
| “Much has been written
about how the UK needs to become a low- carbon economy, but less about how that will be
achieved. On 15 July the Government provided some answers. The UK Low Carbon Transition
Plan sets out how the UK will meet the cuts in greenhouse gas emissions set down in the
new carbon budgets, and is supported by three sector-specific strategy documents: the Low
Carbon Industrial Strategy, the Renewable Energy Strategy and 'Low Carbon Transport: A
Greener Future'. The policy announcements amount to some 750 pages, so it is impossible to
do them justice in anything less than a lengthy article, but they are ambitious to say the
least. If the Government's ambitions are realised, we
will get 40 per cent of our electricity from low-carbon energy by 2020….the Government has pledged to provide financial support for up to
four commercial-scale carbon capture and storage (CCS) demonstration projects and will be
requiring that all new coal-fired power stations have CCS capabilities. Capturing and compressing CO2 uses a large amount of energy,
estimated at between 10 and 40 per cent of the energy produced by a power station. On
average this will require the construction of a fifth power station for every four new
ones that use CCS…. Another argument used by
the Government to support CCS is security of supply and to reduce dependence on imported
gas (principally from Russia), but this argument carries little weight when one considers
that the UK imports approximately 35 per cent of its
coal from Russia. This may lead to a resurgence of
the UK's coal industry, but even if CCS does not succeed in the UK, the UK will have the
project management, financial and legal expertise to develop CCS projects globally, so
there will still be opportunities for business.” Carbon Capture: a Waste of Time and Energy PennEnergy, 28 July 2009 |
| "Fuel oil, the waste left after making gasoline and diesel, is
becoming as valuable as crude for the first time in six years. Prices have doubled this
year to the equivalent of $66.47 a barrel in Singapore, approaching the $70.30 of Arab
Light crude, which has been more expensive since July 2003. Fuel oil output at refineries
in the developed world fell 18 percent in April from a year earlier, the International
Energy Agency estimates. China’s imports climbed 46 percent in June from a year
earlier, Barclays Capital said in a July 22 report. The increase is squeezing Hamilton,
Bermuda-based Frontline Ltd. and A.P. Moeller-Maersk A/S, the world’s biggest
shipping companies, while rewarding Exxon Mobil Corp. and Reliance Industries Ltd., owners
of the largest refineries in the U.S. and Asia. The
shortage is growing as the oil industry builds new plants that obtain more gasoline and
diesel from each barrel....Frontline, the world’s biggest operator of oil
tankers, has ordered captains to slow their ships to conserve fuel, said Chief Executive
Officer Jens Martin Jensen. The average vessel consumes about $40,000 of the fuel, known
as bunker, a day. 'With bunker prices going up, it has a strain on the bottom line,'
Jensen said in a telephone interview. 'We are slow steaming, it makes sense to slow down.'
Fuel oil is what remains after propane, jet fuel, gasoline and diesel are distilled from
crude. Refiners can build plants that take that residue and process it again to strip out
more fuels for cars, trucks, trains and airplanes. Every 42-gallon barrel of Arab Light
crude yields 19 gallons of fuel oil when run through a typical refinery, according to New
York-based Energy Intelligence Group. Plants equipped with so-called cokers and
hydrocracking units produce almost no fuel oil. Fuel oil cost $10.15 a barrel less on
average than crude during the past five years. The
discount to Persian Gulf benchmark Dubai oil narrowed to $1.56 a barrel July 24 from
$30.46 in June 2008, according to data compiled by Bloomberg. Refineries are limiting
production as the first global recession since World War II curbs oil consumption by 2.8
percent this year, the fastest decline since the early 1980s, according to the IEA. Crude
oil dropped 78 percent to a low of $32.40 a barrel on Dec. 19 in New York from a record
$147.27 on July 11, 2008. The Organization for
Petroleum Exporting Countries agreed since October to reduce output by 4.2 million barrels
a day, or 14 percent, to support prices. Members cut
sales of the lowest- quality crudes, which cost the least and yield the most fuel oil,
Asian refinery officials said. Saudi Arabian Oil Co., OPEC’s biggest producer, will
supply 20 percent less than contracted volumes to Asian refiners in August, with the
deepest cuts in heavy and medium crudes, according to a survey of refinery officials on
July 9..... Exxon and Reliance can increase
production of gasoline and diesel by putting fuel oil through hydrocrackers, catalytic
crackers and cokers. A refinery with these units can make $1.38 from each barrel of Dubai
crude, compared with the 91 cent-a- barrel profit from a plant without them, data compiled
by Bloomberg show. BNP Paribas estimates that refinery units capable of breaking down an
extra 1.4 million barrels of fuel oil are being built in Asia that will come on line by
the end of 2011. Refiners 'think fuel oil is low so
they are cracking more,' said Simon Neo, a deputy managing director at Singapore- based
Equatorial Marine Fuels. 'This means higher costs for the marine industry.' The fuel
expense of running the biggest oil tankers is $40,280 a day, based on the $424 a metric
ton costs in Singapore. That’s more than three times the $12,270 that London-based
Drewry Shipping Consultants Ltd. estimates for paying crew, insurance, repairs and related
operating expenses.....Fuel oil production is also
falling as Saudi Arabia and the rest of OPEC cut output of the lowest-quality crudes.
Saudi Arabia’s Arab Heavy yields 22 gallons of fuel oil per barrel, three more than
what comes from Arab Light. Saudi Arabia has reduced production this year by about 400,000
barrels a day, or 4.5 percent, to about 8 million barrels a day, according to data
compiled by Bloomberg.” Maersk Hit With Frontline as Fuel Oil Beats Crude Bloomberg, 27 July 2009 |
“A long-term
decline in the demand for oil could
undermine the huge investments in Canadian tar sands, which have been heavily opposed by
environmentalists, according to a report published today. The report, by Greenpeace, will make
uncomfortable reading for the companies that are investing tens of billions of pounds to
exploit the hard-to-extract oil in the belief that demand and the price would climb
inexorably as countries such as China and India industrialise. Citing projections from the oil producers' cartel Opec and the
International Energy Agency, as well as various oil experts, the report casts doubt on the
conventional assumption that consumption and prices will begin gathering pace once the
world pulls itself out of recession. It argues that alongside the cyclical fall in the oil
price there are more fundamental structural changes taking place. These are driven by
advances in energy
efficiency and alternative energy, cleaner vehicles, government policies on climate
change and concerns over energy security. Greenpeace has posted the report to 200
shareholders in Shell and BP, including pension funds, in an effort to put pressure on the
companies to think again. BP reports quarterly results tomorrow and Shell on Thursday.
Lorne Stockman, the author of the report, said: ‘A peak in oil demand was barely
discussed even a year ago, but now it is a viable idea. When it happens, I wouldn't want
to guess, but it will happen sooner than we thought. There has been lots of talk about a
supply peak, but it is good to start talking about a demand peak, and that has huge
implications for these companies. ‘All of the international oil companies as you look
beyond 2020 need a high oil price to be profitable, because they are increasingly being
pushed to develop expensive resources in not just the tar sands, but in deep water and
offshore Arctic sites. ‘But there is something
more structural going on,’ he added. ‘Governments are beginning to act, and not
just the Obama administration. In the EU, the policy driver is climate change, and in
China and the US, it is about energy security and the vulnerability of the economy to
volatility in the oil price.’…. The report notes that Opec and the IEA have been
revising projections for oil demand downwards since 2006, with by far the sharpest
revision this year. Opec has revised its 2025 oil forecast down by 12% within the past
four years. Peter Hughes, who spent much of his career at BP and BG, and is now director
for global energy at consultancy firm Arthur D Little, recently wrote a report titled 'The
Beginning of the End for Oil?' He supports the Greenpeace view and said the correlation
between oil demand and GDP growth has been weakened. ‘It is widely accepted that
demand in OECD countries has plateaued and is going into decline but it has also been
thought that would be massively outweighed by growth in China. But the Chinese think
long-term and identified some time ago that the biggest threat to their economic growth
was an increasing dependency on imported energy, which is anathema to them. The conclusion
is clear – to reduce the reliance on hydrocarbons through energy efficiency and
fundamental technology change. I think we will reach peak oil demand in the middle of the
next decade.’ About 50% of oil demand in the US fuels cars and the report takes hope
from the Obama administration having tied recent bailouts for the industry to the
development of cleaner vehicles. But it notes the US is far behind China, where government
mandates mean new Chinese cars are 56% more fuel-efficient than those built in Detroit.
Fuel-efficient cars in China attract 1% sales tax and sports utility vehicles, 40%.
Greenpeace also contends that a high oil price is simply unsustainable. It cites research from Cambridge Energy Research Associates, which suggests
that economies become constrained when the price moves into a band between $100 and $120 a
barrel, causing the price to fall back. Another report from energy business analysts
Douglas Westwood puts the ‘recession threshold’ even lower, at $80 a barrel…..There are contrary views. The Saudi oil minister warned in May
that the world could be facing another oil shock, with prices above $150 within two to
three years through a lack of investment in new capacity. The International Monetary Fund
has expressed similar concerns. Even Greenpeace does not suggest that there will not be
temporary squeezes on demand and price spikes. But it believes that the world might fast
be approaching a tipping point that could have profound implications.” |
“China consumed 33.35 million metric
tons of crude oil in June, which was up nearly 2.6% from the corresponding month of 2008,
and the third month in a row to register a year-on-year increase in demand, a Platts
analysis of official data showed July 22. Collective crude oil throughput at Chinese
refineries rose to a new high of 31.92 million metric tons in June, or an average of 7.8
million barrels per day, dwarfing the previous record of 31.19 million metric tons
processed in May. The government raised domestic fuel prices twice in June, providing
refiners an incentive to step up production. The price hikes on June 1 and June 30 lifted
gasoline prices by a total of Yuan 1,000 per metric ton ($17 per barrel) and gasoil also
by Yuan 1,000 per metric ton ($19.65 per barrel). Domestic crude production in June,
however, failed to keep pace with the rise in refinery runs, inching up 1.8% from a year
ago to 15.71 million metric tons (3.83 million barrels per day). Meanwhile, China's
year-to-date oil demand is slightly below 2008 levels, as the strength in the second
quarter 2009 (Q2) could not fully offset the slump in the first quarter (Q1). Chinese oil demand in the first half of 2009, at 186.32 million
metric tons, was 0.23% below the same period of 2008, Platts estimates.” |
“BP
Plc, Europe’s second-largest oil and gas company, said its North Sea output will drop
about 9 percent this year, almost double the U.K.’s estimated overall decline. Production from BP’s fields in Norway and the U.K. will be the
equivalent of about 320,000 barrels of oil a day in 2009, compared with 350,000 barrels a
day last year, the London-based company said on its Web site. BP said it plans to maintain
output at 300,000 barrels a day for the next decade. ‘For the majors like BP, Shell
and Exxon, the North Sea is becoming less important,’ said Alex Kemp, professor of
petroleum economics at Aberdeen University. ‘The fields are relatively small. They
are not terribly exciting for a mega- major.’….Once
the world’s fourth-largest oil and gas producer, the U.K. has been in decline since
1999, with energy output shrinking 5 percent last year as oil prices fell and the credit-
market crisis hurt investment in energy exploration. The U.K. government is counting on
North Sea oil and gas for tax revenue as the financial industry suffers in the worst
recession since World War II. Industry lobby group Oil & Gas UK forecasts that oil and
gas production will average about 2.5 million barrels a day in 2009, down 5 percent from
2008. Norway, the world’s fifth-largest oil
exporter and third- biggest natural-gas supplier, is seeking to boost output of natural
gas and is opening more of its unexplored northern waters to drilling to counter a decline
in oil output at maturing fields. Norwegian crude
output will fall to about 1.9 million barrels a day in 2009 from about 2.11 million
barrels a day last year, according to Bloomberg calculations based on data from the
country’s Petroleum Directorate. Natural gas output is forecast to rise to 102.9
billion cubic meters this year, the directorate said in January.” |
| "Britain — and Europe — measure carbon emissions on the
basis of the production of carbon in their geographical areas. And, on paper, the
performance in cutting emissions seems impressive. By 2005 Britain had reduced emissions
by 15 per cent compared with 1990 — and the recession has cut them further still. But
this tells a very distorted story: while we have been producing less carbon, we have been
consuming a lot more. If we add in emissions caused by producing goods imported from
overseas (many of which used to be produced here) and take account of aviation and
shipping, Britain’s record is awful: carbon
consumption since 1990 had gone up 19 per cent by 2005." Don’t blow our £100 billion on wind power London Times, 17 July 2009 |
“Thousands more wind turbines,
millions of ‘smart’ electricity meters for homes and new cars emitting 40 per
cent less pollution than they do now all are on the way in the next decade under ambitious
plans to slash CO2 emissions from every sector of the economy. They form part of the UK Low Carbon Transition Plan,
a national government strategy for cutting greenhouse gas emissions in the fight against
climate change, which was launched by the Energy and Climate Change Secretary, Ed
Miliband, yesterday. Although the detail may sound familiar – many of these projects
are already on the drawing board – it is the bringing them together into an
all-inclusive society-wide plan which is new, as the
Government faces up to its legally-binding target of cutting UK carbon emissions to 34 per
cent below 1990 levels by 2020. Under last year's Climate Change Act, ministers have bound
themselves to hit the target with a system of rolling five-year ‘carbon
budgets’, and the strategy shows in detail for the first time how they intend to do
this. Its central component is a seven-fold increase – in just a decade – in the
amount of Britain's energy for power generation, transport and home heating supplied from
renewable sources such as wind, wave and solar power (from just over 2 per cent to 15 per
cent). This leap will mean that by 2020 about 30 per cent of electricity alone will come
from renewables (up from 5.5 per cent today) and this huge expansion will derive
principally from much more wind power. Although no
precise figure was given yesterday, this will involve, Mr Miliband said,
‘thousands’ of new wind turbines, both onshore and offshore (one current
estimate is about 7,000). By the 2020 date another 10
per cent of electricity will come from non-renewable low-carbon energy sources,
principally the new nuclear power stations whose construction the Government is backing,
and the infant technology of carbon capture and storage (CCS), which takes the CO2
emissions from power stations and buries them underground. Demonstration power plants
fitted with CCS should be coming onstream by 2020. The Government accepts that low-carbon
energy will be more expensive for consumers and yesterday gave two sets of estimated
increases on power bills. Just paying for the new system might add £77 to electricity and
£172 to gas bills each year but when all climate change measures are taken into account
– such as home insulation which will save consumers money – the total addition
is likely to be between £75 and £92 by 2020, the Government said. On the other hand, the White Paper foresees a substantial increase in
employment from the changes, with as many as 400,000 new green jobs being created.“ |
“Homeowners
who install solar panels and wind turbines will be paid for any electricity that they feed
back into the National Grid, the Government confirmed yesterday. The payments will be based on a fixed price per unit of electricity and
will be set high enough to encourage hundreds of thousands of homes to invest in renewable
sources of power. Local energy suppliers will adjust the bills that they issue according
to the number of units fed back into the grid. Homeowners with low energy consumption and
a solar panel could receive net payments from their energy company. Ed Miliband, the
Energy and Climate Change Secretary, said that the ‘feed-in tariffs’ would be
available from next April.” |
“…a very interesting document
produced by Ofgem, the regulator, which describes the UK's energy needs and our position
in the national and international energy markets that might satisfy them. Its evidence is
shaping Ofgem's Project Discovery, a major piece of work looking ahead at the challenges
to our energy supplies on behalf of consumers. In the
document it refers to the ‘2016 cliff face’ – the point when 35pc of our
traditional oil and coal-fired power stations will be closed under the EU's Large
Combustion Plant Directive. So, seven years to go….Sounds
impressive. But here's a bit of context. At the moment we generate 75GW of power in the
UK, of which wind accounts for about 2.2GW. The
Government wants us to generate 33GW from wind by 2020. The 630MW to be generated by the London Array first comes on stream only
in 2012. You can see the enormous investment still needed, and needed very soon, if wind
power is going to hit its target. New nuclear
stations, which the Government is right to back, won't appear until 2017 at the earliest.
And as for clean coal technology, we'll only have demonstration sites by 2014. So we'd better get spending or we risk closing the old power stations
without the new, clean ones being up and running. Except we are in the mother of all
credit crunches. The Government hasn't got the money
to pay for the capital expenditure itself, so needs the markets to deliver the cash…..The economics of the wind power business, for instance, is fragile
to say the least. The UK's only large-scale manufacturer of wind turbines, Vestas, is
closing its Isle of Wight factory. One large energy company after another has announced a
scaling back in wind investment over the past 12 months including British Gas-owner
Centrica. So hitting environmental targets and ensuring a secure supply of energy isn't
merely a challenge but a crisis in the making. You heard of the credit crunch, and its
devastating effects, after the event. We can't afford to wait that long to discover the
energy crunch. The disruption to society of even brown-outs, never mind black-outs, could
be far worse than rising unemployment. ” |
“The UK has today announced its
strategy for meeting carbon emissions targets and to a massive increase in renewable
energy. Plans announced this morning by UK
Energy and Climate Change Secretary, Ed Miliband have been met with cautious praise by
industry and environment groups. The plan has three components: The UK Low Carbon Transition Plan sets out how the UK will meet the cut in
missions set out in the budget of 34% on 1990 levels by 2020. (According to figures from the government,
emissions have already fallen by 22% from 1990.) Also published today is the Renewable
Energy Strategy which maps out the UK Government's strategy for reaching the EU target of
15% of the UK's total energy consumption from renewables by 2020, from around 2% today.
And finally, the Government's Low Carbon Transport Plan which sets out how to reduce
carbon emissions from domestic transport by up to 14% over the next decade. The strategy
identifies a range of low carbon sectors with potential for job creation and growth. These
include: wave and tidal power; civil nuclear power; offshore wind; and ultra-low carbon
vehicles. It also sets out the Government's strategy
for removing barriers that are blocking the development of Britain's full potential in
these areas. Publication today of the Renewable Energy Strategy follows a year-long
consultation process. It recommits the Government to
a massive increase in renewable electric power generation going up from 5% today to 30% by 2020. Among key points of the Low Carbon Transition Plan are a huge increase in
employment in the low-carbon sector, energy efficiency measures in buildings and
transport, and for an increase in low-carbon power: *More than 1.2 million people will be
in green jobs *7 million homes will enjoy pay-as-you-save home energy makeovers, and more
than 1.5 million households will be supported to produce their own clean energy *40% of electricity will be from low carbon
sources, from renewables, nuclear and clean coal . The Government announcements said that
around 50% of the annual emissions cuts between now and 2020 will be achieved by further
greening of the electricity mix. ‘We expect 40%
of the electricity we use in
2020 to come from low carbon
sources - 30% from renewables, the rest from nuclear (including new build) and clean coal. We need to
all-but eliminate carbon from electricity by 2050. The UK Renewable Energy Association
said that ‘While delivery will be the crucial test, and concerns remain, the
announcements made today undoubtedly demonstrate a step-change in political leadership
that is desperately needed to ensure renewables can tackle the serious threats of UK
energy security and climate change.’ The
strategy also sets out the first investments from the £405 million for low carbon
industries and advanced green manufacturing announced at Budget 2009. Key investments
related to renewables include: Up to £60 million to capitalise on Britain's wave and
tidal sector strengths, including investment in Wave Hub ? the development of a
significant demonstration and testing facility off the Cornish coast ? and other funding
to make the South West Britain's first Low Carbon Economic Area.
Up to £120 million to support the development of a British based offshore wind
industry. Up to £10 million for the accelerated deployment of electric vehicle charging
infrastructure. £11.2m to help regions and local authorities prepare for and speed up
planning decisions on renewable and low carbon energy whilst protecting legitimate
environmental and local concerns. Up to £6m to start development of a 'smart grid',
including a policy road map next spring. Other related actions include: DECC (Department
for Energy and Climate Change) to take direct responsibility from Ofgem for establishing a
new grid access regime within 12 months. Launch of the new Office for Renewable Energy
Deployment in DECC to speed up the growth of renewables in the UK. … While the focus is on electric power generation on transport,
heat is also an important issue. The Renewable Energy Association said that the
announcement that renewable heat projects being built today will be eligible for the
forthcoming Renewable Heat Incentive (RHI) should help ease the paralysis in the renewable
heat industry. A similar announcement has been made for Renewable Electricity Tariffs.
However REA is still pressing for the RHI to be expedited as heat is the biggest single
use of energy in the UK and renewable heat still has no dedicated support.” |
“The
Organization of Petroleum Exporting Countries expects world oil consumption will grow a
modest 500,000 barrels a day in 2010 after two years of shrinkage, fueled by a stronger
economy and demand in China, India, the Middle East and Latin America. In its monthly oil
market report, issued Tuesday, OPEC reaffirmed its view that world demand will fall about
1.6 million barrels a day this year to 83.8 million barrels a day, compounding a small
decline in 2008 as the world economy stagnates. OPEC
revised demand projections for the second half of the year, however, and now anticipates
declines less severe than projected last month. ‘World oil demand is settling down in
line with the current world economic situation,’ the report said. Energy forecasters
have regularly revisited assumptions in the past year as the fast-changing economic
landscape altered consumption patterns and toppled crude prices from highs above $145 a
barrel. OPEC has struggled to cope with rapidly
declining demand, cutting official production among its 11 quota-bound members by 4.2
million barrels a day. The cartel's report follows similar forecasts issued last week by
the U.S. Energy Information Administration and the International Energy Agency, a watchdog
group for most heavily industrialized countries. The EIA also expects oil demand will
spring back by 940,000 barrels a day in 2010, while the Paris-based IEA forecasts a 1.4
million barrel-a-day demand rebound. In its June
report, OPEC said the worst appeared to be over in the oil markets. Tuesday's update
estimated world oil demand declined a ‘steep’ 2.5 million barrels a day in the
second quarter. OPEC still sees declines for the rest of the year, but now predicts
declines of 980,000 barrels a day in the third quarter and 140,000 barrels a day in the
fourth quarter. That's smaller than earlier forecast declines of 1.22 million barrels a
day and 370,000 barrels a day in the third and fourth quarters, respectively. According to
the report, emerging economies will make up the bulk of the demand increase next year,
adding 800,000 barrels a day. China's demand is
projected to increase by 300,000 barrels a day, up from minimal growth this year. U.S.
consumption is expected to rebound somewhat, rising by a daily 200,000 barrels after a
sharp decline of 700,000 barrels a day this year, though OPEC warned it will be a
‘wild card in 2010 given the uncertainty about the pace of the economic
recovery.’ Overall, demand among the developed economies of the Organization for
Economic Cooperation and Development, or OECD, is forecast to contract by 300,000 barrels
a day in 2010 after an anticipated decline of 1.8 million barrels a day this year. ‘The pace of the global economic recovery continues to be the main
risk for the outlook for next year,’ OPEC said. Non-OPEC
supply is forecast to increase by 300,000 barrels a day in 2010 to 50.9 million barrels a
day, driven by Brazil, the U.S., Azerbaijan, Kazakhstan, Canada, China and India. Mexico,
the U.K., Norway and Russia are expected to experience the largest declines, according to
the report. OPEC said it expects demand for its crude in 2009 to fall at a daily rate of
2.3 million barrels a day to 28.5 million barrels a day versus last year's levels. OPEC members' crude demand is seen dropping by 400,000 barrels a day to
28.1 million in 2010 from this year. OPEC's reference basket fell to $59.66 per barrel on
July 13 after surging by almost 20% to average $68.36 a barrel in June. Also in June,
OPEC's crude production averaged 28.4 million barrels a day, up 39,000 barrels a day from
the previous month, 1.18 million barrels a day above the group's output quota of 24.845
million barrels a day.” |
“With memories of freezing houses,
schools and offices still looming large, five countries will sign up to an ambitious
pipeline project intended to break Russia’s grip on European gas supplies. The Nabucco project, a 2,000-mile (3,300km) pipeline to pump gas
from Azerbaijan to Europe via Turkey, has been given extra urgency by the ongoing payment
dispute between Russia and Ukraine, which saw supplies to a dozen EU countries suspended
in the depths of last winter. Turkey, Bulgaria, Romania, Hungary and Austria will sign a
transit agreement today to give Nabucco — which has hit investment problems during
the recession — fresh impetus and increase credibility with suppliers. The project
has been dogged by fears that it could turn out an €8 billion (£6.8 billion) white
elephant. Delays in securing start-up funding and political agreement mean that Nabucco
will not be ready until 2015. Even then Russian efforts to buy up Azerbaijan’s
reserves and the unpredictability of potential suppliers, including Iran and Turkmenistan,
mean that there may not be enough gas to make the pipeline viable. Furthermore, Russia is
planning its own €10 billion Caucasus pipeline, called South Stream, to bypass
Ukraine and deliver gas to southeastern Europe under the Black Sea, although it is still
struggling to forge agreements with transit countries over the route and ownership rights.
Gazprom, the state-owned Russian company, has done a deal for 50 billion cubic metres of
Azerbaijan’s gas but the EU believes that once Nabucco is built it will draw in
supplies from Egypt, Iran, Iraq and Turkmenistan if there is not enough from Azerbaijan. ‘Major obstacles to Nabucco still stand, and supply is number
one,’ said Ana Jelenkovic, an analyst at Eurasia Group. ‘Without securing the
supplies you cannot have the pipeline — but without the pipeline you cannot secure
the supplies.’ Nabucco was conceived to diversify Europe’s gas supply after
Russia turned off the taps during the winter of 2006 in a dispute with Ukraine, through
which the gas flows. With a capacity of 31 billion
cubic metres a year it would supply only 5 to 10 per cent of EU demand, but it would break Russia’s monopoly over countries that have
suffered the worst during the winter cut-offs, such as Bulgaria, Slovakia and Romania. In
some cases schools and factories were closed as heating was severely rationed to conserve
fuel; several countries, mostly in eastern Europe, reported a halt in Russian gas
shipments while others — including Austria, France, Germany, Hungary and Poland
— reported substantial drops in supplies. The project is rich in geopolitical
significance, not least because Russia is quick to use its huge energy reserves as a
political tool. In May, Turkmenistan, Kazakhstan and
Uzbekistan — all in Russia’s ‘backyard’ — held off their support
for Nabucco at a meeting in Prague Azerbaijan signed an agreement in June to export gas to
Russia from its Shakh Deniz reserve. However, after a dispute with Russia which has seen
Moscow halt gas imports, Turkmenistan said last week that it was now ready to provide gas
for Nabucco. ‘Currently Turkmenistan has excess
gas for trade. We are ready to send it abroad to any customer. This includes
Nabucco,’ President Berdymukhamedov said. EU officials insist that there is enough
gas from the Caucasus region to supply both Nabucco and South Stream, which they see as
Russia’s attempt to escape reliance on the Ukrainian transit routes. ‘A lot of
fanfare was made about the deal for 500 million cubic meters of gas between Azerbaijan and
Russia, but that is one sixtieth of the size of Nabucco. It is a very small deal,’
said a European Commission gas expert. ‘Our strategic aim is to reach new sources of
gas, and for every deal in gas and oil you get agreement on the pipeline first. Even
Russia does it that way around.’ José Manuel Barroso, the European Commission
President, said: ‘The Nabucco project is of crucial importance for Europe’s
energy security and its policy of diversification of gas supplies and transport
routes.’” |
| "The number of wind turbines is set to quadruple over the next decade
under government plans to force through wind farm planning applications. Ministers have
put wind power at the heart of a Renewable Energy Strategy, which is due to be released on
Wednesday. It will outline how Britain is to meet its
target of a 34 per cent cut in CO2 emissions by 2020. The Government’s plans are
likely to include more than 4,000 additional onshore turbines by 2020, many built at beauty spots and on high ground which would make them
visible across miles of open countryside. Another 3,000 turbines would be installed at sea
— some of them visible from the coast, though others could be up to 100 miles
offshore. Ministers are considering several measures to push wind farm planning
applications through more quickly. Of the 93 applications submitted for onshore wind farms
in the past three years, only 35 were approved by local authorities. Another 14 were
eventually passed after an appeal but almost half of the original applications failed. In
England, the South East, South West, East Midlands, London and the North West regions have
all set targets for installing a combined total 1,310 megawatts of wind turbine capacity
by 2010. So far they have installed only 340 megawatts (MW) and have another 66MW under
construction. The worst performing area is the South West, which has so far achieved only
15 per cent of its 2010 target of 355MW and has no wind farms under construction. There are 2,327 onshore wind turbines in Britain, each with an
average capacity of 1.5MW — enough to power 840 homes. Offshore there are 210 larger
turbines, the latest of which have a capacity of 5MW....
The CBI has also thrown its weight behind the anti-turbine lobby by calling on the
Government to focus less on wind power and more on building new nuclear power stations and
coal plants with carbon emission-capturing technology. It said Britain was sleepwalking
towards an unhealthy reliance on gas for electricity generation if the wind targets could
not be met." Number of wind turbines to quadruple under Renewable Energy Strategy London Times, 13 July 2009 |
“The
US is increasingly reliant on oil from West Africa for its daily energy needs and
forecasts that up to 25 per cent of imports will hail from the Gulf of Guinea by
2015.Ghana, which discovered oil offshore only recently, is set to become a producer next
year. Some Ghanaians say Barack Obama’s choice
of the country for his first presidential visit to sub-Saharan Africa was partly related
to ambitions to ensure an interest in the country’s estimated 3-4bn barrel reserves.
The US is still Africa’s foremost trading partner ahead of the European Union and
China. But the vast majority of US investment in
Africa is in oil and gas, and to a lesser extent
mining. Given its growing strategic importance to the US economy, African security has
become a growing priority for Washington too, with spending on training and operations
rising to nearly $1bn in recent years. In 2008,
George W.Bush launched the first separate command structure for Africa, but neither he nor
Mr Obama have persuaded any African country to host the base. Only Liberia has offered and for now Africom is in Germany. There has been widespread opposition on the continent to the
militarisation of relations and suspicion that the US wants to pursue the war on terror
and fend off rivalry for resources from China.” |
| "Household energy bills will rise by more than £200 a year under
the Government’s low-carbon strategy being announced next week. Meeting Britain’s targets for cutting emissions could push another
1.7 million households into fuel poverty, meaning that seven million homes would be
spending more than 10 per cent of their income on fuel.The Renewable Energy Strategy, to
be published on Wednesday, will state that more than £100 billion will have to be
invested in renewable energy infrastructure, including 7,000 wind turbines, by 2020. The Government has bound itself legally to cutting CO2 emissions
by 34 per cent by 2020 and 80 per cent by 2050. To achieve this, it must increase the
amount of energy generated from renewable sources from 2 per cent at present to 15 per
cent by 2020. The strategy estimates that energy bills will have to rise by about 20 per
cent to pay for the investment. The average
household currently pays about £1,150 a year for electricity and gas, a small decline on
last year but still double the amount paid in 2003. The cost of converting to renewable
energy and modernising Britain’s power supply would add about £230 to annual bills.
Costs are likely to ratchet up quickly as the investment is made, with the increase
reaching 20 per cent within three years." Low-carbon strategy will raise household energy bills by £200 a year London Times, 11 July 2009 |
“The developed world's demand for oil
will not recover from the effects of global recession for another four years, the cartel
of producing nations predicted yesterday. Consumption will rise slower than expected over
the short- and medium-term, the 13-strong Organisation of Petroleum Exporting Countries
(Opec) says in a report. Global demand will drop to
84.2 million barrels per day (bpd) this year – compared with 85.6 million bpd in 2008
– only recovering to last year's levels by 2011. By 2013 it will still be at 87.9
million bpd, 5.7 million bpd less than previously thought. But for OECD countries, the
outlook is more depressed. Demand will drop from last year's 47.5 million bpd to just 45.5
million bpd in 2010, and remain stagnant until 2013, Opec says. … Mr Al-Badri described the current $60-plus oil price as
'comfortable', but still below the $75-plus Opec says it needs to secure investment.
London Brent Crude slipped below $63 yesterday but the price has more than doubled this
year, peaking at nearly $72 last week and rising faster in May than at any time for a
decade. Against a background of dismal fundamentals, the rises have prompted renewed
claims that speculators are skewing the market.” |
“The
most comprehensive report of its kind has identified the UK's best locations for
households to install micro-wind turbines, say its authors. The Energy Saving Trust (EST)
said some households could generate in excess of £2,800 worth of electricity a year.
However, it also concluded that other locations would actually lose money if a small-scale
turbine was installed. The EST is advising homeowners to visit its website, which will
show whether a turbine will help them cut their bills. The performance of domestic turbines have come under the spotlight in
recent years, with critics saying the devices failed to generate the amount of electricity
outlined by manufacturers. ‘Because the turbines are seen as a new, emerging
technology, there has been very little proper monitoring and performance assessment,’
explained author Simon Green, the EST's head of business development. ‘Our study was
not tested in the lab, or based on computer modelling, but on real homes in order to
independently assess their performance.’ The two-year study involved 57 locations,
ranging from south-west England to the Orkney Islands, and tested a range of turbines that
fell within two categories: building-mounted and free standing pole-mounted.
‘Building-mounted turbines were generally smaller ones with a 50cm diameter, which
were fitted to roofs on a bracket similar to TV aerials,’ Mr Green told BBC News.
‘The others - pole-mounted turbines - were generally larger, with bigger power
outputs, and were remotely mounted in a field or at the end of a garden.’ At the
sites, the researchers recorded wind speed and measured the net generation of electricity
every five minutes. The team could then work out, over the course of a whole year, exactly
how much electricity was produced and the overall performance of the wind turbine. Mr
Green said the study's findings revealed that there were a complex range of factors that
influenced the effectiveness of a wind turbine's performance. ‘The
fundamental conclusion is location, location, location,’ he said.‘It is critically important that wind turbines are located
in an area with sufficient wind resources. ‘We
believe that a minimum average wind speed needs to be at least five metres per second
(18km/h; 11mph).’" |
| “For two years the price
of oil has been dangerously volatile, seemingly defying the accepted rules of economics.
First it rose by more than $80 a barrel, then fell rapidly by more than $100, before
doubling to its current level of around $70. In that time, however, there has been no
serious interruption of supply. Despite ongoing conflict in the Middle East, oil has
continued to flow. And although the recession and price rises have had some effect on
consumption, medium-term forecasts for demand are robust. The oil market is complex, but
such erratic price movement in one of the world's most crucial commodities is a growing
cause for alarm. The surge in prices last year
gravely damaged the global economy and contributed to the downturn. The risk now is that a
new period of instability could undermine confidence just as we are pushing for recovery. Governments can no longer stand idle. Volatility damages both consumers
and producers. Those who rely on oil and have no substitutes readily available have been
the victims of extreme price fluctuations beyond their control -- and apparently beyond
reason. Importing countries, especially in the developing world, find themselves committed
to big subsidies to shield domestic consumers from potentially devastating price shifts.
In Britain and France we also know how the price of crude dictates the price of petrol at
filling stations and the effect on families and businesses. For countries heavily reliant
on income from oil exports, the windfalls from brief price surges are offset by the
consequent difficulties of planning national budgets and investment strategies. Extreme fluctuations in price are encouraging energy users to
reconsider their reliance on oil. The International Energy Agency, for instance, has cut
its long-term forecast of oil consumption by almost a quarter. Producers are in danger of finding that their key national resource loses
both its market and its long-term value. More
immediately, we as consumers must recognize that abnormally low oil prices, while giving
short-term benefits, do long-term damage. They diminish incentives to invest, not only in
oil production but also, in our own countries, in energy savings and carbon-free
alternatives. As such, future problems are stored up in the form of shortages, greater
dependence and an acceleration of global warming. Upstream investment worldwide is already
down by 20% over the past year. And with some sources of supply in decline, such as Alaska
and the North Sea, the resource we will all need as the economy recovers is being
developed in neither an adequate nor a timely way. … The world's economy is still
reliant on secure supplies at prices that are not so high as to destroy the prospects of
economic growth but not so low as to lead to a slump in investment, as happened in the
1990s.” Gordon Brown and Nicolas Sarkozy We Must Address Oil-Market Volatility Wall Street Journal, 8 July 2009 |
“The
UK is heading for an ‘energy crunch’ after new oil and gas exploration in the
North Sea dropped 57pc in the first half of this year. A report by Oil & Gas UK, the
industry group, showed that companies are cutting back on new projects as costs rise and
funding is scarce during the recession. Investment in the industry fell to £4.8bn last
year, down £1.2bn over the last two years, and it could drop below £3bn next year. The
report estimates that £5bn a year is needed to maintain exploration. Malcolm Webb, chief
executive of UK Oil & Gas, said billions of barrels may never be extracted if the lack
of investment causes oil and gas fields to shut prematurely. ‘Last year, we had the
credit crunch, next year we are looking at an energy crunch,’ said Mr Webb, whose organisation represents 85 oil and gas companies. ‘I'm still
very concerned about the lack of investment.’ Domestic reserves still account for
about two-thirds of all the UK's primary energy needs, but reliance on foreign imports is
increasing as domestic production is currently dropping by 5pc a year. Mike Tholen, economic adviser for Oil & Gas UK, said the fall
was likely to accelerate to 7.5pc over the next few years. In the worst case, the North
Sea could provide just 500,000 barrels of oil equivalent per day by 2012 – or just
12pc of the UK's energy demand. If investment is
maintained, domestic production could still meet 40pc of Britain's needs. Oil producers
believe it is still possible to extract 37bn barrels from the North Sea. However,
declining investment means as little as 11bn barrels may be recovered before fields are
decommissioned. ‘Ministers say it would be regrettable if production is at the lower
end of estimates. We think this is an understatement,’ Mr Webb said.” |
“The U.S. Energy Information
Administration on Tuesday once again raised its world oil demand forecast for this year as
the global economy gradually improves. In its monthly energy outlook, the EIA increased
its 2009 global oil demand projection to 83.85 million barrel per day (bpd), up 170,000
bpd from its June estimate of 83.68 million bpd. World oil demand this year is still well
below 2008 levels of 85.41 million bpd. The agency said consumption will rebound to 84.79
million bpd in 2010, up 380,000 bpd from the previous estimate of 84.41 million. The slumping economy had prompted months of major downward revisions
before the agency increased its oil demand projection for 2009 by 10,000 bpd last month.
The change reflects some positive economic news from the world's largest petroleum
consuming countries, including the United States and China. ‘In particular, there has
been stronger economic activity in Asia than was previously anticipated, and the current
forecast reflects higher expected oil consumption in that region,’ the EIA said.
Optimism that a potential economic recovery could lift flagging fuel demand has helped
lift crude prices from below $33 a barrel in December to more than $70 a barrel last
month. While the price gains have fueled concerns that higher energy costs could dampen
any economic recovery, oil has fallen back to around $63 a barrel due to weaker economic
data, including last week's grim jobless data. The agency actually lowered its 2009 U.S.
demand forecast by 10,000 bpd to 18.85 million bpd, down from 18.86 million bpd in a
previous forecast." |
“Russian oil production is
likely to fall 0.9 percent this year from last year’s average of 9.78 million barrels
a day amid declining drilling, Sanford C. Bernstein
analyst Oswald Clint said in a research note. While second-quarter production showed
unexpected strength, the performance of individual companies, fields and assets ‘does
not provide enough evidence to suggest that this strength is permanent,’ the report
said. New Russian projects such as OAO Lukoil and ConocoPhillips’ Arctic
Yuzhno-Khylchuyu field, which began production last year, and OAO Gazprom and Royal Dutch
Shell Plc’s Sakhalin Energy venture have helped offset declines in West Siberia. OAO
Rosneft expects to begin output from the Vankor field later this year. ‘Expectations for new and longer term growth will be met with
disappointment,’ Clint wrote. ‘Across the larger oil producers, production is
actually down 0.9 percent, or around 80,000 barrels per day, despite six new fields on
stream.’ Russia’s average first-half rig
count was about 3 percent below last year’s levels, after rising between 2004 and
2008, the report said. Cost pressures remain an issue in the oil sector with increases in
pipeline tariffs across Russia, a higher crude export duty and climbing electricity
charges, according to the report.” |
| "There is still a looming shortage of uranium. The 400 or so reactors
in the world now in operation get about 40% of their fuel from Soviet-era nuclear warheads
being converted to fuel grade. The agreement under which Russia is converting uranium and
supplying material to the West runs out in 2013. Russia does not intend to extend that
agreement, as they will need more material internally. Another hundred reactors are
planned over the next decade or so. Uranium mines can't be developed fast enough to bridge
that gap. Nuclear energy will continue to increase,
but it is unlikely to increase as a percentage of energy output. It will do little more
than keep pace with the overall increase in energy output." Lawrence Roulston: Challenges and Enormous Opportunities in Alternative Energy The Energy Report, 2 July 2009 |
| "Canada is doing the least of any of the world's wealthiest countries
to fight climate change, says a damning report card released Wednesday by the World
Wildlife Foundation. Of the G8 countries -- Canada,
France, Germany, Italy, Japan, Russia, the United Kingdom and the United States -- Canada
is one of the few whose emissions are still increasing, the 2009 Climate Scorecard said,
blaming an 'expanding exploitation of the tarsands' in Alberta. 'Nowhere else on Earth do fewer people steward more resources, yet Canada
now stands dead last among the G8 Nations in protecting our shared home from the threat of
dangerous climate change,' said foundation spokesman Keith Stewart. The report found the
country's emission rates per capita were very high compared to the other industrialized
countries' averages. The report measures countries' performance and trends in areas such
as development of greenhouse gas emissions since 1990, the distance to their Kyoto
targets, their share of renewable energies and the efficiency of their climate policies.
The evaluation is based on their progress and improvement made since 1990, the current
status of emissions, and the intended policies for the future. According to the report,
Germany, the United Kingdom and France have already achieved their Kyoto targets. But the
report says the efforts of those countries won't be enough to keep the global temperatures
below the so-called danger threshold -- which has been defined by scientists as a
two-degree rise of average temperatures around the planet when compared to pre-industrial
times. To prevent climate change to these danger levels, the WWF estimates global
emissions must peak and decline well before 2020 and be reduced by 80% by 2050." Canada fails climate change report Calgary Herald, 1 July 2009 |
| "Having forecast late last year that OPEC capacity would grow
by 3.2 million b/d by 2014, the International Energy Agency now sees OPEC capacity growth
at just 1.7 million b/d between 2008 and 2014. Indeed, the IEA sees capacity in two key
producers, Iran and Venezuela, actually shrinking over the period. 'Weaker demand,
contract renegotiation, reduced cash flow, geopolitical turmoil and increased resource
nationalism underpin this year's more modest outlook,' the IEA said in its Medium-Term Oil
Market Report released June 29. 'Saudi Arabia, the UAE, Algeria, Libya, Iraq and Angola
all see capacity expansion, but these are largely offset by decline elsewhere.' Oil production capacity in Iran, Venezuela and Ecuador is expected to drop
by a collective 1 million b/d by 2014 as a consequence of growing resource nationalism,
the IEA said. 'The increasing trend towards resource nationalism among some OPEC countries
over the past few years is having a marked impact on crude capacity expansion plans for
the outlook period,' it said. 'The upward oil price trend from 2004 to mid-2008, and
expectations that capacity constraints would make oil ever more costly, empowered several
OPEC members such as Algeria, Ecuador, Iran and Libya to alter production sharing
contracts in an effort to capture more of the revenue stream,' it said. 'In the case of
Venezuela oil assets have been nationalized. As a result, sharply lower production
profiles emerged for some countries in the medium term, with Ecuador, Iran and Venezuela
now collectively envisaged posting a 1 million b/d drop in production capacity by 2014,'
it said. Iranian capacity, seen at 3.97 million b/d in 2008, is forecast to drop by
490,0000 b/d to 3.48 million b/d by 2014. Venezuelan capacity is seen dropping from 2.62
million b/d in 2008 to 2.2 million b/d in 2014. Ecuador's capacity is forecast to drop
from 500,000 b/d in 2008 to 390,000 b/d by 2014. Nigerian capacity is also forecast to
drift downward from 2.48 million b/d in 2008 to 2.46 million b/d by 2014. 'Iran's
challenging political and commercial operating environment, coupled with sharply lower oil
revenues, continues to undermine the country's ambitious production expansion plans,' the
IEA said. 'Already plagued by persistent delays and cancellations of planned projects, IOC
interest in developing projects in the country has cooled along with the downturn in the
outlook for oil demand,' it said, adding that for cost capacity was now around 100,000 b/d
below that of a year ago, largely because of stalled plans for Darkhovin lll and Azadegan
ll. 'New capacity additions over the 2008-2014 period are a net 470,000 b/d but the
escalating decline rates at older onshore fields more than offset the gains,' the IEA
said. The IEA said it had been 'extremely difficult to develop a robust production
capacity forecast for Venezuela given the acute lack of available data and increasingly
cloudy investment outlook due to the ongoing nationalization of oil industry assets.'
'Because of these issues we have previously retained a 'current capacity extended
forward'approach until a clearer picture emerged,' it said. 'Venezuela has recently
released some unaudited data on the country's oil exports, aiming to augment third-party
estimates of production levels. Not only does considerable uncertainty over baseline
production persist, but so too for future developments in the oil sector and investment
plans.' The agency said it was increasingly apparent that the global downturn was likely
to have a detrimental impact on Venezuela's oil sector. It noted that, in response to
lower oil revenues and the continued need to fund the government's social welfare
programs, Caracas had slashed the budget for Petroleos de Venezuela by 65% this year to
$6.1 billion. 'As a result, we have amended our outlook to reflect the acute shortage of
investment capital for PDVSA, with capacity expected to decline by 420,000 b/d, from 2.6 2
million b/d in 2008 to 2.2 million b/d in 2014. The IEA said the outlook for Ecuador had
been clouded by the government's severe shortage of investment capital and, given stricter
operating terms, it's inability to attract foreign partners. OPEC
kingpin Saudi Arabia's capacity is forecast to rise to 11.22 million b/d this year from
10.74 million b/d in 2008, but the agency said it believed the Kingdom could 'surge' to
12.5 million b/d by the end of this year 'if the need arose.' The IEA sees Saudi capacity
rising to 12.16 million b/d in 2010 before falling back to 12.04 million b/d in 2011 and
to 11.83 million b/d in 2012. It rises again to 11.86 million b/d in 2013 and to 11.97
million b/d in 2014. 'Saudi Aramco will register the largest single incremental capacity
increase in history this year with the startup of the massive 1.2 million b/d Khurais
development in June 2009,' the IEA said, noting that the 250,000 b/d Shaybah expansion and
the 100,000 b/d Nuayyim project were also brought on stream in June. '...combined, the
three projects are designed to raise the kingdom's total installed capacity to 12.5
million b/d,' it said. 'However, given weak near-term demand, it is unlikely that Saudi
Aramco will maintain immediately operable capacity at such elevated levels, and we have
assumed operations at some fields could be shut in for rehabilitation or extensive
maintenance work during this weaker demand period,' it said. 'As a result, a net 1.23
million b/d increase in capacity, to 12 million b/d by 2014, is projected,' it added.
'That said, we assume that Saudi Arabia could surge to 12.5 million b/d by end-2009 if the
need arose.'UAE capacity is forecast to climb by
330,000 b/d to 3.1 million b/d in 2014, but the IEA said reaching the targeted 3.5 million
b/d 'will require considerable investment and technological expertise given the Emirates'
mature fields and challenging geological basins.' In Kuwait, where capacity is seen rising
by just 60,000 b/d to 2.69 million b/d by 2014, 'longstanding internal political
disagreements between ... parliament and the ruling family over the future role of
[international oil company] involvement in the country's oil industry are having a serious
impact on the medium-term oil production outlook,' the IEA said. Iraq, it said, 'remains
the OPEC wild card given constitutional and security issues, and we maintain a cautious
view on its supply capacity growth.' The IEA's base case or 'higher GDP' scenario sees
demand for OPEC crude increasing by around 3.8 million b/d between 2009 and 2014, from
27.68 million b/d this year to 31.45 million b/d in 2014. Under the alternative, 'lower
GDP' outlook, however, demand for OPEC crude is forecast to average 27.82 million b/d this
year--140,000 b/d more than the base case projection for 2009--and to rise by just 60,000
b/d over the period to 2014." IEA sees OPEC capacity growth at just 1.7 million b/d between 2008-2014 Platts, 30 June 2009 |
| "The worst recession in decades will curtail oil demand for years to
come, the International Energy Agency predicted on Monday as it cut sharply its forecasts
for world consumption and declared that the threat of a supply crunch had receded. The
consuming countries’ oil watchdog said it expected global demand to grow at an
average annual rate of just 0.6 per cent or 540,000 barrels a day from 2008-14, raising
consumption from 85.8m b/d to 89m b/d. This latest forecast is 3.3m b/d lower than the
previous forecast for 2013 volumes. If the agency’s most pessimistic economic
scenario proves correct, oil demand could contract, with consumption falling to 84.9m b/d
by 2014, it said in a report. The slowdown in demand growth means the crucial cushion of
spare supply the Opec oil producers’ cartel holds is now expected to reach 7.78m b/d
next year, or 8 per cent of global demand. Last year, the IEA expected surging energy
usage to reduce that supply cushion to 1.67m b/d. The size of the Opec cushion has been an
important driver of international crude prices. The cushion’s diminishing size has
stoked fears that Opec has too little spare supply to bring on to the market to plug
shortfalls and contributed to last year’s surge in benchmark Nymex West Texas
Intermediate to a record $147 a barrel. On Monday, WTI futures for August delivery rose 49
cents to $69.65, after an attack on a Royal Dutch Shell oil platform by a Nigerian
militant group. The IEA cautioned against putting too
much faith in hopes of a swift economic recovery, which have pushed the oil price back up
towards $70 a barrel from half that level in February. It said that economic 'green shoots' could be accounted for by stock
rebuilding across industries after a steep drawdown of inventories. Nobuo Tanaka, the group’s managing director, said it had
become difficult to make predictions and that the watchdog’s assumptions, based on
April data, were getting old. 'If the economy grows much faster, the market could be much
tighter, and we could see much smaller spare capacity in 2014.'" Oil watchdog cuts demand forecasts Financial Times, 30 June 2009 |
| "Only one of the bidders for the
eight contracts to run oil and gas fields in Iraq has accepted oil ministry terms. Six oil fields and two gas fields were available in a televised auction
that was the first big oil tender in Iraq since the invasion of 2003. BP and China's CNPC
agreed to run the 17 billion barrel Rumaila field after Exxon Mobil turned it down. Iraq
has asked the rest of the companies to consider resubmitting bids for the other seven
contracts. The oil ministry is offering 20-year service contracts. Other fields have
failed to find buyers, either because there were no bidders or because terms were
declined. Thirty-two oil companies had been approved as potential bidders. For each field,
the ministry specified a minimum production level, which was close to the amount that is
currently being produced. The bidders will not be paid for anything up to the minimum
production level - but they say how much they want to be paid for each barrel produced
above the minimum, and also predict how much oil they will be able to produce. From that,
the auctioneers pick a winning bidder. However, there is another twist. In a red envelope,
the auctioneers have the maximum amount that the oil ministry is prepared to pay. Those
amounts were significantly less than the oil companies were asking for, so the winning
bidders were asked to cut their prices. In the case
of the Rumaila field, Exxon Mobil declined to accept the ministry's maximum payment, but
BP and CNPC, which had originally asked for $4 a barrel, agreed to do the work for $2 a
barrel. They will also be able to charge the ministry for the costs of the work they have
to do on the production facilities. The contracts are subject to approval by the cabinet. Other winning bidders declined to accept the ministry's maximum
payments.Before the auction, Iraqi officials said companies from nations involved in the
2003 invasion would be neither favoured nor disadvantaged. The auction was originally
planned for Monday, but had to be delayed because of sandstorms in Baghdad. 'Our principal objective is to increase our oil production from
2.4 million barrels per day to more than four million in the next five years,' Oil Minister Hussein al-Shahristani told Iraqi public television." Oil companies reject Iraq's terms BBC Online, 30 June 2009 |
| "Wind has the power to
revolutionise the UK's electricity industry, according to a study published on Wednesday.
Research from analysts Poyry says that the UK can massively expand wind power by 2030
without suffering power cuts or a melt-down of the National Grid. The cost of electricity would then be determined not by consumer demand,
but by how hard the wind is blowing. When it is windy power will be so cheap that other
forms of generation will be unable to compete, the report says. If accepted by government, these key findings could strongly
influence the UK's future energy supplies. The study was done for National Grid, Centrica
and others. The researchers reviewed 2.5 million hourly weather reports on wind speeds all
around the UK. If the wind were to drop everywhere round the UK (as happened during the
January high pressure cold snap), other generators would make their money by switching on
back-up fossil fuel power stations for a very short time, charging extremely high prices,
it predicts. Dr Phil Hare from Poyry said these back-up generators might stand idle for
years without making a profit - so the government might need to find a new way of ensuring
they were funded. The study bases its assumptions on current levels of subsidy. It
concludes that, thanks to the wind subsidy through the 'Renewable Obligations
Certificates' issued by regulator Ofgem, electricity prices would be negative if the wind
were blowing hard. 'The market will have to evolve
to accommodate the wind. The average output of a wind turbine is only about a third of its
full capacity. So when the wind is blowing strongly you'll have to turn some of the wind
power off; otherwise it will swamp the system,' Dr Hare said. 'Nuclear power
stations will have to be built with variable output so they - like gas and coal plants -
can occasionally cut their power when the wind is blowing most strongly. It does look as
though nuclear, coal and gas are competing for the same share of the market.' Dr Hare said the study answered another key question: whether we
could move to widespread intermittent power from the wind, waves and tides together. 'Some
people were worried that the complexity stemming from intermittent wind with an overlay of
tidal power peaking twice a day might simply have been too much change for the grid to
bear. But our research shows the grid can cope.' The study investigated a scenario for
2030, in which electricity is more than 40% renewable - mostly from wind. But some experts urge caution. Dr John Constable, from the Renewable
Energy Foundation, said: 'The study confirms that while very high levels of uncontrollable
renewable generation are theoretically manageable, the practical difficulties are
significant, and the cost will be high. 'Less ambitious levels of wind would almost
certainly result in a system which is not only just as clean but is also more robust and
affordable.' The study amplifies a recent paper from National Grid itself stating that a
move towards wind power would not necessitate widespread investment in expensive back-up
power plants fuelled by gas or coal. This is a key finding which helps remove one of the
main barriers to the advance of wind, although some will remain sceptical. But it comes
with a warning. Dr Hare said: 'It will cost more. There is no such thing as cheap green
power - that is a myth.' The authors of a report from the Royal Society this week made the
same point. But politicians are still reluctant to pass on this message to the
public." Wind 'can revolutionise UK power' BBC Online, 30 June 2009 |
| "The International Energy Agency, an adviser to
oil-consuming nations, cut five-year forecasts for global crude demand because of the
economic slump, predicting consumption won’t regain last year’s levels until
2012. The IEA cut its oil demand estimates for every
year through 2013 by about 3 million barrels a day, it said in its Medium- Term Oil Market
Report today. Consumption will average 86.76 million barrels a day in 2012, the first year
it will rise above 2008’s level of 85.76 million barrels a day, according to the
Paris-based agency. The worst global economic crisis since World War II has crimped oil
demand in developed economies and slowed growth in China and India. While the drop in consumption has postponed the threat of a potential oil
supply shortfall, risks remain as the recession forces companies to cut spending on new
production, according to the IEA’s executive director Nobuo Tanaka. 'There is so much
uncertainty about the economic recovery and how fast it may happen,' Tanaka said in an
interview after the report’s release in Paris today. 'We
may have a supply crunch again, just like last year, in 2014 to 2015. If the economic
recovery is slower, we could have ample supply capacity.' Crude oil has climbed 59 percent this year to more than $71 a barrel in
New York on increasing optimism the global economic slump may be ending. Still, the World Bank said June 22 the recession will be deeper
than it expected three months ago. Analyst estimates compiled by Bloomberg show the rally
may reverse over the next three months as supply outstrips demand and speculators sell.
Oil demand in 2014 will rise to 88.99 million barrels a day, according to the IEA. From
2009, when oil demand will fall the fastest since the early 1980s, that represents an
average annual increase of about 1.4 percent, or 1.2 million barrels a day. From 2008
levels it represents an average increase of 0.6 percent, or 540,000 barrels a day. The
IEA’s oil demand estimates reflect a 'higher GDP scenario' based on the International
Monetary Fund’s forecasts for global economic growth made in April. The IMF expects
world economic expansion to reach nearly 5 percent a year between 2012 and 2014, the IEA
said. In its 'lower GDP scenario,' which assumes that a rebound in the global economy will
be 3 percent a year, the IEA said global oil demand could fail to reach last year’s
levels by 2014, standing at 84.92 million barrels a day, 6.34 million barrels less than
predicted in December. 'Many see the lower variant,
or something close to it, as a more likely outcome, so profound could be the fallout from
the recent financial and economic market turmoil,' the IEA said in the report. Consumption in developed economies will shrink 1.1 percent a year
to 44.4 million barrels a day in 2014, even under the higher GDP scenario, according to
the IEA estimates. According to the lower economic growth estimate, OECD demand may shrink
as much as 1.5 percent. Demand in developing economies outside the Organization for
Economic Cooperation and Development will rise through 2014. Oil use in those countries
will increase an average 2.6 percent a year to 44.6 million barrels a day, according to
the IEA. While the economic slump tempers global demand growth, it may also cause supply
to shrink as lower exploration and production spending delays projects and reduces spare
capacity, according to the IEA. Supplies from outside OPEC are forecast to decline by 0.4
million barrels a day between 2008 and 2014, compared with six- year growth of 1.5 million
barrels a day forecast in the last report, the IEA said. The biggest revisions are in the former Soviet
Union and North America, where projects to develop Canada’s oil sands are being
delayed, the IEA said. The group predicts that non-OPEC supply will peak at 51.12 million barrels
a day in 2011 and start declining thereafter, reaching 50.22 million barrels a day by
2014. As new oil projects are delayed, the IEA estimates global oil capacity to increase 4
million barrels a day by 2014, compared with its previous estimate of 5.5 million barrels
a day. Spare production capacity in OPEC countries will drop 'substantially' below 5% of
global demand in the following two years, it said. 'Supply capacity growth
is going to be constrained over the next five years,' David Fyfe, head of the IEA’s oil
industry and markets division, said in an interview in Paris today. 'With lower prices and
lower spending in 2009, we think supply-capacity growth is going to be very sticky.'" IEA Cuts 5-Year World Oil Demand Outlook on Economy Bloomberg, 29 June 2009 |
| "Global demand for gas is
expected to fall in 2009 marking the first annual decline since the Fifties, a new report
warns. The International Energy Agency's (IEA) annual Natural Gas Market Review said:
'[We] project that for the first time in 50 years, the world will witness a drop in global
gas demand.' It says that after a 1% increase in gas consumption in 2008, gas demand among
OECD countries fell by 4% during the first quarter of 2009 - January to March - and is
expected to decline further this year. 'The global
financial crisis has turned the economic landscape upside down, with huge implications for
the oil and gas sector,' said Nobuo Tanaka, IEA executive director. 'In the natural gas
sector, we have moved from a tight supply and demand balance with extremely high gas
prices to an easing one with plummeting prices. Both markets [oil and gas] face enormous
uncertainty surrounding the timing, pace and extent of any economic rebound, which affects
all prognoses for oil and gas market fundamentals over the next five years.' The report
serves as a fresh reminder of the severity of the current world recession despite coming
amid some early signs of recovery. The IEA said said prices soared in the first half of
2008 but that was followed by demand weakening and spot prices plummeting. The report added that the combination of weak demand and lower
prices could undermine future investment with exploration companies, which already face
financing problems from the credit crunch, reluctant to push ahead with projects until
they can foresee rising demand. That could create a price squeeze in the medium-term when
demand recovers, the IEA said. It also said climate
change awareness 'puts a question mark on the future role of gas' and that Russia, the
world's largest producer, faces 'considerable' technical and financial 'challenges'." Gas demand set for first fall in 50 years This is Money, 29 June 2009 |
“The first half of 2008 saw strong gas
demand growth in most IEA regions of up to 10% in some countries. This began to slow in
mid year, then to reverse dramatically late in 2008, and continue to fall into 2009… Of particular note is the continuing growth in unconventional gas
production in the United States. Gas production in 2008 showed a near 8% increase over a
year earlier, despite destructive hurricanes in the late summer, and has continued to show
around 4% increases in the early months of 2009. Growth at these levels represents a major
turnaround from the production declines of about 2% per year observed earlier in the
decade, challenging the wisdom that United States production would inevitably decline,
increasing the need for large-scale LNG and pipeline imports. Indeed LNG imports in 2008,
at less than 10 bcm, were less than half the level of 2007. LNG was thus freed up for
other markets, and over the course of 2008, some 20 bcm of ‘Atlantic’ LNG was
shipped to Pacific markets, double the levels of 2007, in response to the strong demand in
those regions in the first half of 2008. Hence United States unconventional gas production
is of global significance. However, low gas prices
have reduced the gas rig count by nearly half in April 2009 compared to the year before,
and it seems inevitable that growth in output will slow. The future of United States gas
output remains one of the major uncertainties in global gas markets. Globally, LNG
capacity continued to grow, although various problems restricted output, so actual
production grew only modestly to 240 bcm in 2008. However, a massive increase in new LNG
capacity is already underway in 2009, and the next three years will see capacity grow to
at least 370 bcm, an astonishing increase, without precedent in the LNG world. Thus, 2009
and 2010 will test the flexibility and resilience of the global LNG market. Norway also
continued its export led expansion, with gas output in 2008 growing by 10% to almost 100
bcm…Falling gas prices and volumes have taken a heavy toll on all producers’
cash flows, adding to the already serious problems in gas investment throughout the value
chain identified in earlier Natural Gas Market Reviews. Large investments continue to be
needed to meet growing demand in the medium to longer term, and to offset falling output
in many consumer countries. For example, UK gas
output in 2008 was two thirds of 2003 levels, and declines at the end of 2008 and early
2009 were around 10%.....financing problems are
likely to bedevil all new construction projects in 2009 and even into 2010, especially for
the long lead time, high capital intensity projects found in many parts of the gas sector.
as the global recession hit gas hard….. In the
LNG sector, notwithstanding the massive increases in capacity that will be seen in the
next few years from projects under construction, very few new projects have been
sanctioned in recent years. Unless 2009 and 2010 see a number of new project approvals,
there will be a dearth of new capacity in the period after 2012. Financing problems, plus uncertain demand growth will impact such
approvals adversely, although these projects are to meet medium to longterm demand. Globally there is nearly twice as much regasification capacity
operating or well under construction, compared to liquefaction capacity. This imbalance is
likely to remain an ongoing feature of the LNG trade well into the medium term….. gas demand from the powersector through 2009 is likely to be
weak, although the outlook in the medium term remains strong. Most
power plants under construction and planned in OECD countries are gas-fired. Gas power has
shorter lead times, lower capital cost, a smaller footprint and the lowest carbon
emissions of any fossil fuel. New gas-fired capacity is also being developed in many
non-OECD countries, although generally coal remains the dominant fuel in the power sector
there. Current investment and financing uncertainty may actually favour gas further, with
its smaller unit size and shorter lead times responding to an uncertain demand recovery
path. Greater deployment of renewables over the medium term may also enhance the role of
gas to balance intermittent sources such as wind…..
In the medium to longer term, Europe also needs greater investment in more varied sources
and routes for gas supply, enhanced gas storage, and much more diversity in its
electricity sector, embracing renewables, nuclear and coal, with improved environmental
performance….. Many gas producers are consuming
more gas in their own domestic markets, notably Iran and other Middle Eastern countries.
Iran, as the second biggest gas reserve holder, seems unlikely to be a significant
exporter before 2015, at the earliest. Other gas suppliers such as Qatar are imposing
moratoria on further gas development. Both China and India are emerging as major gas
users, although their energy mixes seem certain to be dominated by coal for the
foreseeable future. Both countries will be able to
import around 30 bcm of LNG within the next few years on the basis of regasifi cation
terminals being built and contracts concluded, and both could exceed 100 bcm of annual gas
consumption in the near to medium term, bigger than any OECD European or Pacific gas
user.” |
| "Russian gas giant Gazprom has
signed a deal to import natural gas from Azerbaijan and then pipe it to Europe. Gazprom
will import 500 million cubic metres of Azeri gas from 2010, and it expects import levels
to rise. The move is being seen by observers as an attempt by Moscow to extend its grip on
potential European energy supplies. Europe gets
about 20% of its gas from Russia via pipelines in the Ukraine - though last winter rows
between Kiev and Moscow saw supplies being cut. Gazprom chief executive Alexei Miller said
that his firm had also been promised priority in buying gas from the second phase of the
Shakh Deniz Caspian Sea field. This is seen as a potential key source of gas for the
EU-backed Nabucco pipeline, which circumvents Russia." Gazprom in Azerbaijan gas deal BBC Online, 29 June 2009 |
| "Consumers will need to pay more for energy if the UK is to have any chance
of developing the technologies needed to tackle climate change, according
to a group of leading scientists and engineers. In a Royal Society study to be published
today, the experts said that the government must put research into alternatives to fossil
fuel much higher among its priorities, and argued that current policy in the area was
'half-hearted'. 'We have adapted to an energy price which is unrealistically low if we're
going to try and preserve the environment,' John Shepherd, a climate scientist at
Southampton University and co-author of the report said. 'We have to allow the economy to
adapt to higher energy prices through carbon prices and that will then make things like
renewables and nuclear more economic, as carbon-based alternatives become more expensive.'
Shepherd admitted higher energy costs would be a hard sell to the public, but said it was
not unthinkable. Part of the revenue could be generated by a carbon tax that took the
place of VAT, so that the cost of an item took into account the energy and carbon
footprint of a product. This would allow people to make appropriate decisions on their
spending, and also raise cash for research into alternatives. 'Our research expenditure on non-fossil energy sources is 0.2% of
what we spend on energy itself,' said Shepherd.
'Multiplying that by 10 would be a very sensible thing to do. We're spending less than 1%
on probably the biggest problem we've faced in many decades.'" Energy bills 'too low' to combat climate change Guardian, 29 June 2009 |
| "Russia has been forced into an embarrassing climbdown on resource
nationalism, as the credit crunch has left it unable to invest in the development of its
assets. In a surprise move, Russian prime minister
Vladimir Putin invited Royal Dutch Shell to help develop two new oil and gas fields on
Sakhalin Island, just three years after the government forced the company to cede majority
control in the Sakhalin 2 project to state-controlled group Gazprom." Russia invites Shell back to Sakhalin as finances plummet Daily Telegraph, 28 June 2009 |
| "...the growth of global
carbon dioxide emissions fell by half in 2008 as a result of the recession, high oil
prices and an increase in renewable energy. In addition, the figures show that, for the
first time, carbon dioxide emissions from the developing world account for more than half
of the global total. The analysis, by
the Netherlands Environmental Assessment Agency, shows that the rise in the world's
emissions from fossil fuel burning and cement production in 2008 was just 1.7%, compared
with 3.3% in 2007. The slowdown in emissions growth was caused primarily by a 0.6% fall in
the consumption of oil – the first decline in global oil use since 1992. This trend
was uneven around the world. In China, oil use continued to rise, but at only 3%, down
from an average of 8% since 2001. In the US, oil consumption fell by a massive 7%. By
contrast, global coal use continued to creep up and the rise in the consumption of natural
gas remained unchanged. Increasing renewable energy capacity and improving energy
efficiency in many countries also contributed to the reduced rise in carbon dioxide
emissions. NEAA's Jos Olivier said: 'The impact of energy and climate policy is hard to
distinguish from those of fuel prices and the recession, but policies encouraging
renewable electricity generation will have helped avoid around 500m tonnes of carbon
dioxide from fossil fuel power stations.' It remains to be seen how the rate of emissions
will change in 2009. If the recession continues to bite through the year, global emissions
could flatten off entirely. Meanwhile, policymakers are likely to be particularly struck
by the revelation that, in 2008, the developing world accounted for 50.3% of carbon
dioxide emissions, exceeding developed nations and international travel combined for the
first time. This fact will provide ammunition for those arguing in favour of binding
emissions targets for all nations, not just industrialised ones. Furthermore, the data
does not take into account the carbon dioxide released by deforestation, which accounts
for almost 20% of all greenhouse gas emissions and takes place overwhelmingly in the
developing world." Gordon Brown and Ed Miliband's blueprint for global warming deal Guardian, 26 June 2009 |
| "Technology to capture carbon
emissions from coal-fired power plants and store them underground will be ready by 2015
and could be in wide use in the United States by 2020,
according to the top executive at American Electric Power Co Inc. Mike Morris, CEO of
Columbus, Ohio-based AEP, one of the largest U.S. utilities, said his company's work in
West Virginia on carbon capture and sequestration (CCS) gives him more insight than
skeptics who doubt the technology." AEP sees carbon capture from coal ready by 2015 Reuters, 25 June 2009 |
| "A year ago prices rose to the previously unimaginable high of almost
$150 a barrel. Oil producers made one last effort to keep up with demand and in doing so
may have pushed world oil production to an all time high - the 'peak' in peak oil. While
it took six years for oil prices to climb, it only took six months for them to plunge into
the $30's causing panic amongst the exporters of OPEC. This
led to a series of OPEC production cutbacks which were supposed to reach 4.2 million
barrels a day (b/d) but petered out around 3 million due to quota-cheating by several of
the more desperate and less honorable OPEC members.
In the world outside of OPEC oil production has been steady in the last year with some
notable drops in production. In Mexico, output from its largest oil field has been
dropping much faster than expected due to depletion. In Nigeria insurgent attacks on oil
facilities have brought production down to about 1 million b/d when the country should be
producing closer to 3 million. In Venezuela, President Chavez has been busy expropriating
the remaining pieces of the oil industry still owned by foreigners. Drops in production
can be expected soon. The net result of all these voluntary and involuntary cuts is that
world oil production has dropped significantly since reaching an all-time high last year.
This drop in production when coupled with the normal declines in output from aging oil
fields and the prospects that less oil will be coming into production from new fields than
expected, has led many to declare that the all time peak in world oil production took
place last year. While it will take several years to verify that this was indeed the case,
inability of the world's oil industries to ever again increase production has unfathomable
implications which are not as yet widely recognized. A corollary of the low oil prices and
the lack of easy credit have led to a slowdown in the investment going into new oil
production projects. While this has little immediate impact on the availability of oil,
some years down the line it means that all of the new oil needed to offset depletion will
simply not be there and that world production will decline faster than expected....The latest estimates from the International Monetary Fund say that
world-wide GDP will be down about 2.7 percent this year. The world's spare oil production
capacity currently is around six million b/d. This, however, is not a static number as the
world's capacity to produce oil from existing sources is withering away at 3 or 4 million
b/d each year and unless this much new supply is opened, then total world supply must
inevitably shrink. Now there is no question that
very high oil prices would quickly choke off economic growth. Every dollar per gallon
increase in the price of oil products drains about $800 million each day from the pockets
of consumers in America. Worldwide it drains about $3.5 billion each day. Most observers
believe that as soon as worldwide demand for oil gets ahead of supply there will be
multi-dollar per gallon increases in the prices of oil products. There seems to be little
doubt that over the next few years, the world's oil supply will be forced into
irretrievable decline from a combination of geologic and geopolitical reasons coupled with
a lack of adequate investment. Should the demand for oil increase in the next year or so,
there will still be some room for increased production without unacceptable prices
increases for a while. The longer a recovery is delayed, however, the better the chances
that oil prices will quickly surge to recovery-choking levels. While there are long-term
solutions to this problem they will take decades to implement." The Peak Oil Crisis: Stifling a Rebound Falls Church News-Press, 24 June 2009 |
| "Britain needs to pump up
investment in gas storage facilities because increased dependence on imports poses a
serious threat to the nation's security, a think tank said on Tuesday. Higher dependence
on gas supplies from mainland Europe will also leave Britain vulnerable to the
manipulation of energy for political purposes, the Institute for Public Policy Research
said it will warn in a final report to be issued next week. The think tank -- whose findings cited tensions between gas producer
Russia and transit state Ukraine as a major risk -- will publish the two-year review next
week to coincide with an expected government report on a national security strategy. 'Our
national circumstances have changed radically in supply terms in recent years, bringing
new risks,' said Paddy Ashdown, former head of Britain's Liberal Democratic Party, who co-chaired the
panel that compiled the report. 'We need to build strategic gas storage capacity as a
matter of urgency, while bringing on stream new technologies that are both climate
friendly and can make us more energy independent and resilient,' Ashdown said in a
statement." UK must expand gas storage for security -think tank Reuters, 23 June 2009 |
| "Oil markets may face a supply
crunch by 2014 if global GDP growth hits 5% in the coming years, the head of the
International Energy Agency said Tuesday. 'If
economic GDP growth gradually rises through 2011 and 2012 ... then oil demand will come
back and by 2014 you will maybe have a supply crunch,' Nobuo Tanaka said at the Renewable
Energy Finance Forum in New York, noting economic growth would have be around 5%. The
global economic crisis has battered fuel demand, knocking crude off record peaks near
US$150 a barrel hit last July and causing inventories to swell. Prices have rebounded from
below US$33 in December - trading around US$67 on Tuesday - on signs of an economic
recovery that could lift oil consumption. Mr. Tanaka said that if the global economy grows
at a slower rate, any oil supply crunch could be delayed. 'If
GDP only grows 3% we will probably see a postponing of the supply crunch until after
2014,' he said." IEA says potential for oil supply crunch by 2014 Reuters, 23 June 2009 |
| "Recession will cut investments in the energy supply sector in 2009
by more than the $100-billion (U.S.) quoted in the International Energy Agency's report
released in May, its chief economist said on Tuesday. The
agency, adviser to 28 industrialized countries, said in a report presented to the G8
energy ministers in May that oil and gas upstream investment would fall 21 per cent, or
about $100-billion in 2009 from 2008 due to the global recession. 'The information that we are getting... may well mean that we are going
to revise the numbers downwards,' Fatih Birol told Reuters in an interview. Mr. Birol said
the IEA had not made a comprehensive update of the G8 report but that the agency was
getting signals the drop in investment would be worse than initially feared. A more
detailed update will be released for the IEA world energy outlook in November, he added.
Mr. Birol cited three reasons for the worse-than-feared decline in investments. 'The first
thing is that the oil price prospect is still uncertain with most companies not having yet
increased their price assumption to base their projects from $40-45 [a barrel],' he said.
He cited as other reasons the fact firms did not foresee demand picking up, and that key
producing countries still had some spare capacity to be used. 'For those reasons I think
it would be wrong to say that the investment appetite of the oil companies has returned,'
he said. Asked whether $75 a barrel, a price branded by Saudi Arabia as a target, would be
fair for consumers and producers, Mr. Birol said: 'In a normal world, when the global
economy is running in order,..., to bring new
investments in the offshore and oil sands to the market, you need a price level of $75 a
barrel.' But in the current economic context, any
strong price rise from the current oil price of $68 a barrel would hurt the economic
recovery, he said." Energy investment to lag further: IEA Reuters, 23 June 2009 |
| "Oil markets risk another speculative bubble unless the financial
sector is reformed and transparency increased, but prices are not yet a threat to economic
recovery, the EU and OPEC said after joint talks on Tuesday. U.S. oil was trading at
around $68 a barrel on Tuesday, far below a record of nearly $150 hit last year and also
below the $75-$80 OPEC officials have said they seek.... OPEC's leading producer Saudi
Arabia said at the group's last conference in May oil prices of $75 a barrel could be
achieved this year and the economy was ready to cope. Members of the group have since
nudged their price aspirations even higher and Angolan Oil Minister Jose Botelho de
Vasconcelo, who is also OPEC president, said on Tuesday he 'would love to reach $80 per
barrel.' For the fragile world economy, $80 could be
alarming, but representing the European Union, Energy Commissioner Andris Piebalgs said a
price approaching $70 was not damaging. 'What we also discussed in our meeting is that $70
per barrel, the current price, definitely does not impede the recovery of the economy,' he
said. 'We really believe the current situation has some good stability. If it continues it
will be a chance for (economic) recovery and also guarantee that upstream investments will
continue' OPEC has often argued too low an oil price
chokes off investment in new supplies and Tuesday's joint statement said any inability to
invest in new production capacity 'could lead to a perpetuation of damaging boom/bust
cycles.' At its last two meetings, OPEC has kept existing output curbs in place, saying it
wanted to prevent overly high prices that could jeopardise economic recovery, even though
the amount of excess oil supply meant there was a case to cut production." OPEC, EU say regulation needed to stop oil bubble Reuters, 23 June 2009 |
| “Continued reliance on oil is unsustainable and this has resulted in
interest in alternative fuels. Coal-to-Liquids (CTL) can supply liquid fuels and have been
successfully used in several cases, particularly in South Africa. This article reviews CTL
theory and technology behind CTL. Understanding the fundamental aspects of coal
liquefaction technologies are vital for planning and policy-making, as future CTL systems
will be integrated in a much larger global energy and fuel utilization system. Conversion ratios for CTL are generally estimated to be between
1-2 barrels/ton coal. This puts a strict limitation on future CTL capacity imposed by
future coal production volumes, regardless of other factors such as economics, emissions
or environmental concern. Assuming that 10% of world coal production can be diverted to
CTL, the contribution to liquid fuel supply will be limited to only a few Mb/d. This
prevents CTL from becoming a viable mitigation plan for liquid fuel shortage on a global
scale. However, it is still possible for individual
nations to derive significant shares of their fuel supply from CTL, but those nations must
also have access to equally significant coal production capacities. It is unrealistic to
claim that CTL provides a feasible solution to liquid fuels shortages created by peak oil.
For the most part, it can only be a minor contributor and must be combined with other
strategies.” A review on coal to liquid fuels and its coal consumption International Journal of Energy Research, 23 June 2006 |
| "Fortunately, Iraq no longer depends on its own agriculture to feed
itself. Instead it has become one of the world's largest food importers. The rationing
system, at a cost of $6bn a year, gives Iraqis just enough cheap food to fend off
starvation. But this food is paid for by oil revenues and these have been going down at
frightening speed. A reason for this is the decline in the price of crude from $140 last
year to less than half that today. But more
devastating to Iraq is that production from their great oilfields is falling. These are
the so-called super giants, nine oilfields with reserves over five billion barrels, which
hitherto have been some of the most productive in the world. Oilfields like Kirkuk and Bai
Hassan in the north and North and South Rumaila, West Qurna and Zubair in the south,
appeared an endless resource which, in the long term, would bail Iraq out of whatever
trouble it was in. But now even they are beginning to fail because of neglect,
under-investment and mismanagement. Last year this
did not seem to matter so much because the price of oil was high and the government
supposed it was going to stay that way. It happily raised salaries and wages and increased
the number of state employees to about two million, twice the number under Saddam Hussein.
The Oil Minister Hussein Shahristani said in an interview with the oil expert Ruba Husari
last July: 'Iraq is in desperate need of modern technologies, not of capital investment,
to arrest the decline in those fields [the super giants] and introduce enhanced recovery.'
Note that at this time Shahristani, a former nuclear scientist who was imprisoned and
tortured under Saddam Hussein, thought that Iraq did not need capital investment. A year
later the country is broke, has frozen government hiring, including extra police, and is
negotiating a $5.5bn standby loan from the IMF. Oil
production at the end of May was 2.41 million barrels, which is still less than the 2.58
million produced immediately before the 2003 war or the 3.5 million produced in 1979. This is the background to an immensely important change in Iraq. On 29 and
30 June Mr Shahristani will award 20-year-long contracts to international oil companies to
work in already developed oilfields, first to restore production to what it once was, and
then to increase it. The companies will be paid in crude oil at a fixed price as a fee for
extra output and will put up all the investment. Critics within the Iraqi oil industry say
that the government is selling the farm, and that it should have confined the
international oil companies to oilfields which had been discovered but not developed. The
big producing fields it should have kept for itself, using the services of foreign
engineering companies, consultants and contractors to raise output. At this stage, the
government does not believe it has much choice but to go ahead with the contracts being
awarded at the end of June, and even then it will be three years before any new oil is
produced. Surprisingly, these epoch-making developments in the way Iraq's oil wealth is
controlled and exploited are hardly noticed abroad outside the oil industry and the
specialist business press. Yet their outcome will do much to determine how people live in
Iraq over the next century and will have an impact on the energy supply of the whole
world. Iraq is currently estimated to have the
third-largest oil reserves in the world, but the western and southern deserts are largely
unexplored and may contain another 45 to 100 billion barrels of recoverable crude.
'According to independent consultants,' says the US Department of Energy, 'the cluster of
super-giant fields of south eastern Iraq forms the largest known concentration of such
fields in the world and accounts for 70 to 80 per cent of the country's proven oil
reserves.' No wonder the determination of the
international oil companies to get a stake in Iraqi oil development, even if the precise
terms of the present contracts are not to their liking. Just how much oil the world
possesses will be determined as they explore what deposits lie beneath the dreary deserts
and salt marsh around Basra." Iraq: The final countdown Independent, 23 June 2009 |
| "Oil prices have remained in the vicinity of $68 to $70 a barrel for
nearly three weeks as the markets weigh conflicting signals. In the short term there is
clearly adequate production and all indications are that the OECD economies are still
contracting. Optimists continue to interpret indications of slower contraction as signals
that economic growth will resume soon....Among the many interesting aspects of last
week’s Iranian elections is that five days of nearly continuous demonstrations have
had no discernable impact on world oil markets. Only a few years ago, this situation would
have resulted in an instant price spike of several dollars a barrel. Tehran has issued
reassuring statements that the demonstrations pose no threat to oil production. More important is the surplus production capacity of a reported 6
million b/d that currently exists within OPEC. There
appears to be more than enough productive capacity available to replace all of Iran’s
4 million b/d should the situation ever deteriorate to the point where Iranian oil
production is threatened." Peak oil notes ASPO USA, 18 June 2009 |
"The
U.S. oil and gas industry’s costs of finding resources rose 35 percent last year amid
the wild rise and fall in commodity prices, an Ernst & Young study released Thursday
showed. The three-year average cost per barrel of oil
equivalent, excluding acquisitions of proved reserves, was $27.22. But in 2008 that spiked
to $51.96. 'This validates that finding oil and gas
reserves is very, very expensive,' said Marcela Donadio, oil and gas sector leader for the
Americas. She noted that cost also demonstrates why some companies have delayed final
investment decisions on costly expansions or new projects, such as those in Canada’s
oil sands or deep-water exploration." |
| "A global shift toward nuclear power is prompting countries to rush
to lock in long-term access to tight supplies of uranium, and China and India look to be
the next players to get in on the action. A tie-up between Rosatom, the Russian
state-owned producer, and Canada-based miner Uranium One announced this week is just the
latest in a series of moves on the part of Asian and European countries to lock in uranium
supply to fuel construction of dozens of new reactors over the next decade. 'I think
increasingly the supply of reactors is being tied to security of supply of nuclear fuel,'
said Divya Reddy, an energy analyst with the Eurasia Group in Washington. Rosatom secured
a 17 percent stake in Uranium One and a long-term supply deal in exchange for a half stake
in the Karatau mine in Kazakhstan....the most likely sources of demand in the longer run
will come from Asia, including India, which last year signed a deal ending a three-decade
ban on nuclear trade with the United States....China, with the most ambitious nuclear
power expansion plans, has been in talks with top uranium miner Cameco about a potential
supply deal, a company spokesman confirmed. Australia is also mulling selling uranium from
BHP Billiton's Olympic Dam mine to China, provided it is not used in Beijing's weapons
program. Led by China, India and Russia, more than 100 new reactors will be built over
over the next decade, Cameco estimates, all part of a global push to reduce dependence on
greenhouse gas-producing power sources such as coal. With new reactors expected to be
larger on average than the 426 currently in operation, generating capacity would grow by
28 percent, the company says....Kazakhstan has leveraged its massive reserves into a
rapidly expanding industry, while Australia is also ramping up production with several
mines in the planning stage. Uranium One CEO Jean Nortier said last week that Africa could
emerge as the next hot spot for the mineral, where uranium is often found in copper and
gold deposits. Equinox Minerals , for instance, plans to build a uranium mill to process
ore from its Lumwana copper mine in Zambia. Increases
in production will be necessary to keep afloat an industry that is already sharply in
deficit. Mined production last year fell short of consumption by about 60 million pounds,
with the shortfall made up largely by recycled material and diluted enriched uranium from
decommissioned nuclear weapons, sold by Russia under an agreement with Western producers
that will end in 2013." Nuclear nations rush to lock in uranium deals Guardian, 18 June 2009 |
| "Russian Ambassador to Namibia, Nikolai Gribkov, said the forthcoming
visit of Russian President, Dmitry Medvedev, to Namibia provides an ideal opportunity for
the two countries to transform their political cooperation into strong economic and trade
ties.Medvedev’s visit could re-ignite the two governments’ intentions to set up
a nuclear power plant in Namibia, as proposed by Russian Prime Minister Mikhail Fradkov
during his visit to Namibia in 2007. With Namibia
having just leapfrogged Russia as the fourth largest uranium producer in the world, the Kremlin may take full advantage of Medvedev’s visit to exploit
the African country’s uranium reserves. In 2007, three Russian mining giants
Techsnabexport, Renova and Vneshtorgbank established a joint venture to mine uranium in
Namibia, after acquiring prospecting licences." Medvedev visit watershed for Namibia’s energy and trade Informante (Namibia), 18 June 2009 |
| "Furious protests threaten to undermine the Iraqi government's
controversial plan to give international oil companies a stake in its giant oilfields in a
desperate effort to raise declining oil production and revenues. In less than two weeks,
on 29 and 30 June, the Iraqi Oil Minister, Hussain Shahristani, will award service
contracts to the world's largest oil companies to develop six of Iraq's largest
oil-producing fields over 20 to 25 years. Senior figures within the Iraqi oil industry
have denounced the deal. Fayad al-Nema, the director of the South Oil Company, which comes
under the Oil Ministry and produces most of Iraq's crude, said on the weekend: 'The
service contracts will put the Iraqi economy in chains and shackle its independence for
the next 20 years. They squander Iraq's revenues.' Mr Nema is reported to have since been
fired because of his opposition to the contracts, which he says is shared by many other
officials in Iraq's state-owned oil industry....The development of Iraq's oil reserves is
of great importance to the world's energy supply in the 21st century. They may be even
larger than Saudi Arabia's, as there was little exploration while Iraq was ruled by Saddam
Hussein. International oil companies are desperate to get their foot in the door.
'Everyone wants to be in Iraq,' says Ruba Husari, an expert on Iraqi oil. 'Together with
Iran, this is the only oil province in the world that has great potential. It is a great
opportunity for oil companies because nobody knows the size of Iraq's reserves. Iraq
itself needs to know what is under its soil.' But Iraqis are wary of the involvement of
foreign oil companies in raising production in super
giant fields like Kirkuk and Bai Hassan in the north and Rumaila, Zubair and West Qurna in
the south. They suspect the 2003 US invasion was
ultimately aimed at securing Western control of their oil wealth. The nationalisation of
the Iraqi oil industry by Saddam Hussein in 1972 remains popular and the rebellion against
the service contracts has been gathering pace all this week. Parliament is demanding that
bidding be delayed.... Critics of the deal in parliament say that Iraq has already
invested $8bn (£4.9bn) in developing its super giant fields. But Mr Shahristani needs
$50bn over the next five or six years to raise current production
levels from 2.5 million barrels a day of crude and
knows the money and expertise can only come from outside Iraq." Iraqi Oil Minister Accused of Mother of All Sell-Outs Independent, 18 June 2009 |
"(Steven Chu, Obama Secretary of
Energy) was my boss. He knows all about peak oil, but he can't talk about it. If the government announced that peak oil
was threatening our economy, Wall Street would crash. He just can't say anything about
it." Cheer Up, It's Going to Get Worse Bohemian.com, 17 June 2009 |
| "The US Department of Energy
estimates that Opec’s production spare capacity has surged to a seven-year high of
4.7m barrels a day – up from 1.5m b/d last year
– as demand for oil has dropped because the impact of the economic recession. The
cushion is enough to cover twice the level of Iran’s oil exports, analysts said.
'There is a lot of spare capacity out there,' said Michael Wittner, global head of oil
research at Société Générale in London. Opec’s production spare capacity hit a
record low of 1m b/d in 2005 but, as the economic crisis has reduced oil demand worldwide
over the last year, the cartel’s idle pumping capacity has surged. In the past, the
oil market has reacted with panic to geopolitical events in Iran as spare capacity was not
enough to cover even a relatively small disruption in supplies. This time, however, the
largest demonstrations in Iran since 1979 have not hit prices because of the production
cushion and record high inventories. West Texas Intermediate, the US oil benchmark, was
hovering at the $70 a barrel mark on Wednesday, down from last week’s 8-month peak of
$73.23 a barrel. The coolness of the oil market in the current Iran turmoil signals that
the increase in spare capacity will allow Opec, the oil cartel, to manage oil prices more
effectively during a geopolitical crisis. From 2005 until early- 2008, the cartel almost
lost control of the market as razor-thin spare capacity meant the threat of a supply
disruption in countries such as Nigeria, Iraq or Venezuela pushed prices higher.
Commercial stocks of crude oil are also extremely high as result of low demand. Oil
traders in the physical market said Iran’s oil exports were running at normal levels
in spite of the turmoil, noting that the country’s oil fields and export terminals
were far away from the capital, Tehran, the centre of the demonstrations. Iran last month
produced about 3.65m b/d, according to the International Energy Agency, the western
countries’ oil watchdog. As Iran’s domestic demand absorbs about 1.4m b/d, the
country’s oil exports are running just above 2.2m b/d. Mr Wittner, a former
intelligence official at the CIA, said Saudi Arabia, Opec’s most reliable member, has
alone almost 3m barrels a day of spare production capacity of a 'crude oil of similar
quality to the one pumped by Iran'. Riyadh spare
capacity is set to increase further as the country is bringing into stream this month a
new oil field, the massive 1.2m b/d Khurais development." Crude ignores Iran effect Financial Times, 17 June 2009 |
| "An international plan to build a nuclear fusion reactor is being
threatened by rising costs, delays and technical challenges. Emails leaked to the BBC
indicate that construction costs for the experimental fusion project called Iter have more
than doubled. Some scientists also believe that the
technical hurdles to fusion have become more difficult to overcome and that the
development of fusion as a commercial power source is still at least 100 years away. At a meeting in Japan on Wednesday, members of the governing Iter council
reviewed the plans and may agree to scale back the project....Iter was formally launched
in 2006 as collaboration between the European Union, the United States, Russia, Japan,
China, India and South Korea. The plan was to build the world's most advanced fusion
experiment within 10 years for a budget of $6bn (£3.6bn). But the grand scheme has been
dogged by soaring costs caused by more expensive raw materials and increases in staff
numbers. Emails seen by the BBC indicate that the total price of constructing the
experiment is now expected to be in excess of $16bn (£10bn).... Costs are not the only
problem; Iter is also beset by huge technical challenges. Fusion takes place when a
superheated gas called a plasma reaches a stage called ignition, where hydrogen atoms
start to fuse with each other and release large amounts of energy. Iter aims to achieve
this but only for a few minutes at a time. MIT professor Bruno Coppi has been working on
fusion research in Italy and the United States for many decades. He believes that Iter is
the wrong experiment; it is too costly, will take too long and may not deliver fusion. He
says we should be looking at other options....Another huge hurdle is how to contain gases
that are 10 times hotter than the Sun. The materials required simply haven't been invented
yet. Professor Balibar explained: 'The most difficult problem is the problem of materials.
Some time ago I declared that fusion is like trying to put the Sun in a box - but we don't
know how to make the box....Dr Norbert Holtkamp is the man tasked with building the
machine....Dr Holtkamp says the view that the project is to be scaled down is wrong. 'Fusion is not going to be the alternative in the next 20, 30 or
40 years, that is correct. But there needs to a long
term plan; 40 years is little more than a generation. We need to think about the next
generation and the many after that.'...Ultimately fusion may be a technological dream that
is just too hard to turn into reality. And Iter, in a beautiful setting in the south of
France, may become the graveyard of a good but impossible idea." Fusion falters under soaring costs BBC Online, 17 June 2009 |
| "Crude oil will rise to an average $80 to $85 a barrel in the coming
year as inventories decline, billionaire investor T. Boone Pickens said in Calgary today....
The hedge-fund manager is promoting an energy plan that relies on U.S.-produced natural
gas to cut the country’s dependence on foreign oil. 'In this market you’re going
to see oil inventories work off,' Pickens said. 'There’s
no question what the Saudis want; they want a balanced market and they want $75 minimum
for their oil.'... Plans to build a pipeline to
bring natural gas from Alaska to the lower 48 states don’t make sense, Pickens said.
Gas found in shale deposits in Texas is more accessible, he said. Shale gas is locked in
non-porous rock that made the reserves inaccessible until producers perfected new drilling
technologies in the 1990s. 'I don’t think the pipeline from Alaska, through Canada
and down to the lower 48 makes sense,' Pickens said. 'You’ve got 50 trillion cubic
feet in the Barnett and then another twice that, maybe, over in Haynesville in north
Louisiana. I don’t see quite how that pipeline gets built right now.' Other U.S.
shale fields, including the Marcellus in Pennsylvania, West Virginia, New York and Ohio
and the Woodford in Oklahoma will provide ample supplies in the coming years, he
said.” Pickens Says Oil Will Average $80 to $85 a Barrel Bloomberg, 17 June 2009 |
| "Alexei Miller, Gazprom's chief
executive, warned in a speech in Italy last week of a looming 'supply crunch' in the oil
market after 2012, caused by under-investment today, which could send oil and gas prices
soaring. A few days later, he drove that warning
home in the most vivid way possible, with Gazprom's investment cuts and production delays
raising the spectre of a gas supply crunch in Europe. The
decision to defer the flow of gas from Gazprom's first development of the huge reserves in
the Yamal peninsula, in northern Russia, makes perfect sense in the short term. All the
talk in the industry is of a global 'gas glut', fostered by a surge in supplies of
liquefied natural gas, particularly from the mega-projects in Qatar now coming on stream. 'Barely a year ago everyone was saying Gazprom would not be able to keep
up with demand,' says Jonathan Stern of the Oxford Institute for Energy Studies. 'The
speed of the turnround has been extraordinary.' The
global recession has hammered Europe's gas consumption, particularly for industrial users.
The car industry, for example, uses gas-fired heaters to dry paint, and many assembly
lines have fallen silent. Cedigaz, the gas industry association, has estimated that
industrial demand in developed economies, including the European Union, the US and Japan,
will be 17 per cent lower this year than last year. Residential consumption is more
stable, but the EU's overall demand could fall 5 per cent this year, even after an
unusually cold January. Gazprom, which is the
biggest gas importer into the EU, has been forced to cope with that downturn at the same
time as Russian demand has been plunging. Prof Stern estimates that EU demand will be 20bn
cubic metres lower than last year, Russian demand 40bn cu m lower and demand from Ukraine
and other former Soviet states also 20bn cu m lower. Gazprom has responded by cutting its
own production and forcing independent Russian gas producers to cut theirs. It has also
told Turkmenistan, one of its main central Asian suppliers, to cut its export price. An
explosion in April cut the gas pipeline from Turkmenistan to Russia, and it has not yet
reopened. The causes are disputed. The rate at which gas demand picks up will depend on
the pace of economic recovery. Tony Hayward, chief executive of BP, said last week that
although demand had steadied after dramatic falls earlier in the year, there were as yet
no signs that it was rising again. So Gazprom's forecast that even in 2012 its production
is likely to remain lower than last year is a plausible assumption. The alarming prospect for Russia is that western European demand
will never recover. If the EU could meet its objective of raising energy efficiency by 20
per cent by 2020, then its gas consumption could fall through the decade. Cambridge Energy Research Associates, a consultancy, argued recently that
even going halfway to the EU target could cut gas demand back to early 1990s levels by
2030. However, other experts are sceptical those savings can be achieved, or that other
fuels can substitute for gas in the next decade. Colette Lewiner of Capgemini, the
consultancy, argues that European gas demand is set to rise until at least 2020. 'I don't
think renewables will be able to do enough,' she says. 'If you take all the other energy
sources, you are still left with a rising need for gas.' European production, meanwhile,
is in decline. The International Energy Agency
estimates western Europe's gas production will fall by 30 per cent over the next two
decades. The search is on for new sources of gas to bring to Europe. The EU has high hopes
for Azerbaijan and Turkmenistan, and recently there has been growing optimism about gas
from northern Iraq. But the reality is that the EU cannot do without Russia, and sooner or
later that gas from Yamal will be needed." Russian move raises supply crunch fears Financial Times, 17 June 2009 |
| "For decades, crude oil prices have gone to extremes, for instance,
the $147-per-barrel peak last summer, followed by an overcorrection. But 2009 is puzzling. Prices are going in the opposite direction
of demand. In the midst of a global meltdown, anyone
who bought crude oil futures at the beginning of the year, in the low $30 range, has more
than doubled their money. Meanwhile, natural gas continues to wallow in the trench. On
Tuesday, oil nearly reached $73, as it reportedly continues to climb on news of a
weakening dollar, despite ample oil supply and weak demand." Oil's Paper Bubble Forbes, 16 June 2009 |
| "The UK is third from bottom in
a league table of renewable energy across Europe, with only
Luxembourg and Malta sourcing less of its energy from clean sources such as wind or sun.
The table, showing the percentage of renewables in EU countries, was published by the
government in response to a parliamentary question by the former environment minister
Michael Meacher. It showed that the UK received 1% of
its energy from renewables in 1995 and just 1.3% a decade later. Only Luxembourg, at 0.8% and 0.9%, and Malta, which has no renewable energy, came
lower on the list. The numbers show the scale of the
challenge facing the UK as it attempts to meet a commitment to source 15% of its energy
from renewable sources by 2020, part of binding European climate targets. Top of the EU list was Sweden, with 35.7% of its final consumption of
energy coming from renewables in 1995 and 40.8% in 2005. Romania jumped from 9.3% to 19.2%
over the same period, while Denmark went from 8.3% to 17%. Portugal dropped from 22.8% to
17% and France from 11.4% to 9.5%, though both are still comfortably ahead of the UK. A
spokesperson for the Department of Energy and Climate Change said
several wind farms had become operational in the UK since 2005 and that the proportion of
renewable energy in the country had risen from 1.3% in 2005 to about 1.8% now. 'Our [2020]
target is ambitious but achievable. It's good for the climate to have more low-carbon
energy, and good for our energy security to have more home-grown energy. 'We've started
from a low base, but we have made big progress. There was an increase of 26% in onshore wind power generation from 2006
to 2007 and a 20% increase in offshore wind. The UK is now the world's leader on offshore
wind, underlined by the green light given to the world biggest offshore wind farm, the
London Array, thanks to the extra support in the budget." UK trails EU league for renewables Guardian 15 June 2009 |
| "The price of oil has been extraordinarily volatile. At the beginning
of the recession it fell by about 80 per cent as world expectations were lowered. In the
past six months, the price has recovered by about 100 per cent, taking oil back to $70 a
barrel. These price gyrations need to be explained, particularly the strength of the price
recovery in 2009; the recession may have reached bottom but it has certainly not reached
this level of recovery. Part of the explanation is the shift of the global economy from
mature to emerging countries, particularly to the four biggest emerging markets of Brazil,
Russia, India and China, the so-called Bric countries, which are holding their own
economic summit in Yekaterinburg this week. In coming
years Bric is expected to soar above the US and Europe; China alone will catch up with the
US in five to ten years' time. The big emerging countries have continued to increase their
demand for oil, even during the recession. The swing
of effective demand to the emerging countries is not in dispute, but there are different
views about an even greater shift in the oil market, so-called 'peak oil'. That is the
point in time when flows of new production are fully cancelled out by declines in existing
production. That does not mean that oil is running out; but it does mean that demand will outstrip new supply, as has happened in the North Sea and North America. This time it will be
a universal shortfall. Many experts believe that the recession has indeed passed its low
point; in that case demand for oil will recover in the countries worst hit, but will also
continue to increase in the emerging countries, particularly the Bric countries. Much of the discussion in Yekaterinburg will centre on the future
of oil supplies and particularly on the possible diversion of Russian oil from Europe to
China. If the peak
oil theory does prove correct, the present recovery
in prices will only be the beginning. Those oil economists who accept the peak oil
argument tend to expect the price to reach $150 a barrel, probably in 2010. This might be
accompanied by a rise in the gold price above $1,000 an ounce. Oil and gold prices tend to
move together, and the emerging countries have larger dollar reserves than they would
altogether like. Gold is the one real alternative to paper currencies as a reserve asset.
The old assumptions are being undermined. It is only too clear that most politicians are
still living in the 20th-century world, the world in which they grew up. The peak oil market may already have been reached, but in any case it will be reached eventually. The only question is
when. Power is passing from the North West to the SouthEast, from the US to China." Lord Rees-Mogg - Rising oil prices will buy off democracy London Times, 15 June 2009 |
| "The UK is third from bottom in a league table of renewable energy across Europe, with only
Luxembourg and Malta sourcing less of its energy from clean sources such as wind or sun. The table, showing the percentage of renewables in EU countries,
was published by the government in response to a parliamentary question by the former
environment minister Michael Meacher. It showed that the UK received 1% of its energy from
renewables in 1995 and just 1.3% a decade later.
Only Luxembourg, at 0.8% and 0.9%, and Malta, which has no renewable energy, came
lower on the list. The numbers show the scale of the
challenge facing the UK as it attempts to meet a commitment to source 15% of its energy
from renewable sources by 2020, part of binding
European climate targets....Top of the EU list was Sweden, with 35.7% of its final
consumption of energy coming from renewables in 1995 and 40.8% in 2005. Romania jumped
from 9.3% to 19.2% over the same period, while Denmark went from 8.3% to 17%. Portugal
dropped from 22.8% to 17% and France from 11.4% to 9.5%, though both are still comfortably
ahead of the UK...A spokesperson for the Department of Energy and Climate Change said
several wind farms had become operational in the UK since 2005 and that the proportion of
renewable energy in the country had risen from 1.3% in 2005 to about 1.8% now." UK trails EU league for renewables Guardian, 15 June 2009 |
| "Russian state-owned nuclear giant Rosatom has secured a 17 percent
stake in Canadian rival Uranium One (UUU.TO),
acquiring another toehold in North America in exchange for a 50 percent stake in the
Karatau uranium mine in Kazakhstan....The deal comes
as several countries have sought to lock in supply of nuclear fuel to feed growing power
industry demand...'You're not going to spend
billions of dollars in building nuclear power stations and not have uranium to feed them,
or more importantly be held at ransom,' said David Davidson, an analyst at Paradigm
Capital in Toronto. Russia swaps mine stake for 17 pct of Uranium One Reuters, 15 June 2009 |
| "The latest edition of the
excellent BP Statistical Review of World Energy, published last week, shows that, for the
first time, total oil demand in the emerging markets now outstrips the West. That's an
important milestone. From now on, the Western world
can slump but global oil prices can stay 'fundamentally' strong...These economies are home
to no less than two-thirds of the world's population. They're in the midst of the fastest,
most widespread industrial revolution the world has ever seen." Oil prices will be driven upwards by the needs of developing nations Daily Telegraph, 14 June 2009 |
| "This month an Iraqi politician will appear on television to open
envelopes and reveal the winners of a long and hard-fought contest. In the balance hangs
the wellbeing of 28m people, tens of billions of dollars of contracts and how much you and
I pay for everything from yoghurt pots to petrol. It should make good viewing. For the
hopeful contestants, it has been a long wait — since 1972 to be exact. That was when
the Iraqi oil industry was nationalised and foreign operators were booted out. Now the oil
giants have been invited back. At the ceremony on June 29 and 30, Hussain al-Shahristani,
the oil minister, will reveal which of them will be the first to be let back into the
south of the country, where most of its oil and gas resources are found. ...At a time when explorers are going to great lengths to get at new
sources, Iraq’s is the 'easiest' oil in the world. It costs between $2 and $4 a
barrel to extract, compared with $50 or more for tar sands or deep-sea drilling. In its annual review of world energy, BP announced last week that global
reserves fell for the first time in more than a decade. Lambert Energy, a consultancy,
predicts that at present rates of decline the world will need 40m barrels a day of new
production capacity within a decade just to keep up with current demand. Philip Lambert,
its founder, said: 'The world needs Iraq, both the north and the south, to work. There is
nothing else that can fill the gap.'... The deals offered to the oil giants in the south
won’t be nearly as attractive as those in Kurdistan. They are technical contracts,
under which companies are paid a fee to increase production. Oil groups have found such
deals in other countries such as Iran unappealing. However, the contracts do provide for
additional payments if production targets are passed. ” Rush for ‘easiest oil in the world’ LondonTimes, 14 June 2009 |
| "Over the past six years of violence in Iraq, oil has been the
flashpoint in Kirkuk, a city forever home to a combustible mixture of races. Kurds have
always claimed Kirkuk as a homeland; Turkomans, Assyrians and Arabs have at various times
based empires here. The resulting melting pot of races and clans has never mixed
comfortably. Since the US declared its invasion a success in mid-2003, Kirkuk has seen its
biggest population shift in centuries, with Kurds capitalising on a power vacuum in
Baghdad and Arabs rushing to reinforce their foothold. Kurds have been accused of
ethnically engineering Iraq's most divided city to lay the foundations for a nascent
Kurdistan. Arabs have been accused of doing anything - including bombings - to stop the
city from escaping their grasp. All along, Kirkuk has had the feel of a
boom-town-in-waiting, sitting on a subterranean lake of fabulous wealth that would one day
create fortunes. 'That day is closer than ever,' said Sharlet Yohana, 50, an Assyrian
woman who works in the Iraqi government-owned oil extractor, the North Oil company. 'The real conflict here is about oil,' she said from the sitting room of her middle-class home in an Assyrian
Christian neighbourhood. 'Oil may well provide our future wealth and comforts, but it will
also be our damnation. 'We will never have peace
until the political problems surrounding the oil are solved. Everyone will suffer, far
more than we are now: Kurds, Arabs, Turkmen, Christians. Already we have a curfew from
midnight to 5am, and many Christians are blown up or assassinated. They are bringing this
to a head now, before the foreign contractors come in.'....Advocates of the Arab claim to Kirkuk, among them an outspoken Sunni
MP, Osama al-Najafi, insist the programme, which is authorised by article 140 of Iraq's
constitution, is no longer relevant, because it has expired. 'The UN in its final report
said article 140 was not suitable to solve this problem in its present form,' al-Najafi
said. The UN report was released in April after two years of searching for a solution for
Kirkuk. The UN recommended a jointly administered region and a referendum to decide the
city's future racial complexion. But with the population and mix having changed so
markedly and with Baghdad fearing it is now on the wrong side of the ledger, it is highly
unlikely to endorse such a ballot. 'The report was unjust and one-sided,' al-Najafi
complained. 'They dealt with the Kurdistan province and Iraq as distinct areas, not one
country. And they compared the situation to Northern Ireland and the UK. And when they
dealt with the Arab perspective, they put inside quotes and added question marks. 'The Kirkuk problem comes down to oil,' he said. 'The Kurds want the funds
to finance the proposed state of Kurdistan. It is
enshrined in the constitution that oil and gas is for all Iraqis. But they have signed a
range of contracts from those that are without agreement from the central government.
'This situation cannot continue for long. The tensions are growing and there is no
agreement about the shape of the future Iraqi state. There are deep divisions and they are
not drawing any closer' To many Kurds, the divisions are indeed becoming more entrenched.
'We don't see this so much as Northern Ireland as a new Jerusalem,' said one senior member
of the Kurdish parliament. 'This is a conflict with a history and we are prepared to play
a long game on it. The oil is bringing things to a head rapidly and Baghdad feels it is
starting to lose significant ground. 'The Turks remain uneasy in the north, but we will do
nothing to provoke them. Time is on our side." Kurds lay claim to oil riches in Iraq as old hatreds flare Observer, 14 June 2009 |
| "One way to know that the end of
the Age of Oil will soon be upon us is the current excitement and chatter about
going—literally—to the ends of the earth to find more oil. The Arctic Circle,
which circumscribes about 6% of the earth’s total surface, is one of the last regions
of any significant size to be explored for oil, and for good reason: It’s locked in
ice for much of the year, far from support and distribution lines, and is one of the most
extreme environments on earth. Whatever oil and gas
is extracted from the top cap of our planet will be the most expensive and difficult oil
ever produced. Yet the prospect of new oil production from the Arctic is attracting
renewed attention as the world becomes increasingly cognizant of the end of cheap, easy
oil, and the security and economic risks associated with the expensive, difficult oil that
remains.... The important question now is: How much remains to be
discovered up there? In an effort to answer this
question, the United States Geological Survey (USGS) in cooperation with an international
group of geological experts from Canada, Demark, Greenland, Norway, Russia, and other
governmental agencies has just completed an effort to round up the available data on the
Arctic region and assess its potential, known as the Circum-Arctic Resource Appraisal
(CARA). Their summary report, 'Assessment of Undiscovered Oil and Gas in the Arctic,' was
released last week. Much of the area is as yet
unexplored, so an innovative approach to assessing the area and extrapolating from the
limited data available was required. In order to have some way of evaluating the 'very
sparse geological data' on the area, the evaluators used 'analogs' from the real world as
comparison samples.... Maps of the resources reveal their uneven distributions: Sixty
percent of the oil is concentrated in just six AUs, predominately in Alaska, and
two-thirds of the undiscovered gas is in just four AUs, predominately in Russia.... A
range of probabilistic estimates were developed for the assessment units, which were then
aggregated into the summary report. Estimates of undiscovered resources are customarily
stated in terms of a range of probabilities. The median, P50 estimates (50% probability)
are usually reported in the press, but they’re often shown to be optimistic once a
given resource is produced....an analysis by
respected petroleum geologist Jean Laherrère in March 2008 on The Oil Drum estimated that the
Arctic would contain 50 billion barrels of oil and 1000 TCF of gas, putting his estimates
just above the P95 estimates offered by the USGS. Laherrère is one of the fathers of the
modern peak oil study, a man with deep experience in the global oil and gas exploration
and production industry, and his estimates are usually quite accurate. To give a sense of
scale to these numbers, world oil consumption is around 30 billion barrels per year, and
world gas consumption is about 110 TCF per year. So the Arctic may contain anywhere from a
1-3 year supply of oil and a 7-27 year supply of gas. However, these are merely estimates
of 'original oil and gas in place.' Typically, only 25-35% of that amount is
economically recoverable using current technology. So the Arctic may in fact have perhaps
a 4-month world supply of recoverable oil, and around a 2-year supply of gas. In reality of course, the resources wouldn’t be found or produced
all at once, but rather in chunks, over time, and would have far greater implications for
the nations that lay claim to it (for example, Greenland) than for the world as a whole.
'With respect to oil, there’s nothing that we see in the Arctic that suggests this
preeminence of oil within and around the Gulf states would be significantly shifted,' said
geologist Donald Gautier, lead author of the survey.... In terms of the all-important
production rate however, it seems safe to assume that although the Arctic’s resources
will be most welcome to the nations that possess them, they will amount to little more
than a trickle of very expensive hydrocarbons within the context of enormous world
demand.Exploration and development of oil and gas from the Arctic Circle is a foregone
conclusion. The world simply needs hydrocarbons too much, and the remaining prospects are
few. But to exploit it will require technologies that don’t yet exist, enormous
amounts of capital, and a high tolerance for risk. In other words, the price of oil will
have to be high, and stay high, to make the effort worthwhile." How Much Oil Is In The Arctic? Business Insider, 13 June 2009 |
| "The steady rise in the oil price has prompted a sharp increase in
predictions for the crude price. With oil now above $70 a barrel, Goldman Sachs has raised
its forecast for the end of the year from $65 to $85 and says prices could touch $100 by
the end of next year. The Chancellor this week singled out rising oil prices, along with
the failure of other European countries to clean up their banks, as serious threats to the
recovery. The oil price had 'the potential to be a huge problem,' he said. Economists
argue about how much impact a big rise in the oil price has on the British economy these
days, although they agree that it is much less than it used to be. It is also less
important than for the US. The doubling of the price
in the past four months has put paid to hopes that British households will see further
cuts in their utilities bills. If it increases much further, there will be fears that
those bills could start rising again, though it takes some time for a rise in the oil
price to feed through into long-term gas prices. The strengthening of sterling has also
taken some of the sting out of the rise in the oil price in dollar terms." Scrambling for green shoots London Times, 13 June 2009 |
| "For a tiny, teardrop-shaped fragment in the Indian Ocean, Sri Lanka
punches far above its weight. Its location off the southeastern coast of India may have
put it right in the line of the 2004 tsunami, but it also puts it in pole position to
exploit the growing geopolitical struggle unfolding
in the Indian Ocean. China’s role in the Sri
Lankan civil war is well known. Its deal to build a major port at Hambantota in southern
Sri Lanka is part of a regional strategy to create a 'string of pearls' of friendly
harbours in Pakistan, Bangladesh and Burma, along key
shipping routes through the Indian Ocean. ... Next
month, for the first time, Sri Lanka will attend the Shanghai Co-operation Council as a
dialogue partner, a blessing bestowed by Russia and China in recognition of its importance
in the new Indian Ocean great game. Russia, which continues to growl over Nato expansion
in Eastern Europe, is also observing keenly any activity in the Indian Ocean. Already Nato has encroached up to the Persian Gulf. In October
2007 it conducted its first ever naval exercises in the Indian Ocean, part of an American
strategy to establish Nato’s presence in this crucial region. Russia, Iran — and
even China — fear Nato’s expanding alliance with Pakistan will give it a
foothold in the region. Despite Delhi’s
friendly relations with the West, India is desperate not to allow Pakistan to gain any
more influence there. Sri Lanka’s prime location in prime maritime real estate has
elevated it to the jewel in the crown of the new Indian Ocean paradigm." Sri Lanka's crucial role in Indian Ocean power struggle London Times, 12 June 2009 |
"The uranium industry says Australia has
slipped down the rankings of the world's biggest producers and that is threatening its
position as an exporter. Industry leaders told a conference in Darwin they were determined
to pressure governments to remove more barriers to the expansion of mining. The Uranium
Association's executive director, Michael Angwin, said Australia had dropped from being
the world's second biggest producer of uranium to the third biggest, behind Canada and
Kazakhstan. He said Australia would be in a stronger competitive position if Queensland
followed Western Australia and allowed uranium mining. 'We can't just store that up and
think that on the strength of that uranium endowment we'll capture the world's uranium
market whenever we want to,' he said. The Uranium
Association says there is the potential for uranium exports to increase from 10,000 to
40,000 tonnes a year." |
| "As recently as 2007, the IEO
projected that the global production of conventional oil (the stuff that comes gushing out
of the ground in liquid form) would reach 107.2 million barrels per day in 2030, a
substantial increase from the 81.5 million barrels produced in 2006. Now, in 2009, the
latest edition of the report has grimly dropped that projected 2030 figure to just 93.1
million barrels per day - in future-output terms, an eye-popping decline of 14.1 million
expected barrels per day. Even when you add in the 2009 report's projection of a larger
increase than once expected in the output of unconventional fuels, you still end up with a
net projected decline of 11.1 million barrels per day in the global supply of liquid fuels
(when compared to the IEO's soaring 2007 projected figures). What does this decline signify - other than growing pessimism by energy
experts when it comes to the international supply of petroleum liquids? Very simply, it
indicates that the usually optimistic analysts at the Department of Energy now believe
global fuel supplies will simply not be able to keep pace with rising world energy
demands. For years now, assorted petroleum geologists and other energy types have been warning that world oil output is
approaching a maximum sustainable daily level - a peak - and will subsequently go into
decline, possibly producing global economic chaos. Whatever the timing of the arrival of
peak oil's actual peak, there is growing agreement that we have, at last, made it into
peak-oil territory, if not yet to the moment of irreversible decline. Until recently,
Energy Information Administration officials scoffed at the notion that a peak in global
oil output was imminent or that we should anticipate a contraction in the future
availability of petroleum any time soon. '[We] expect conventional oil to peak closer to
the middle than to the beginning of the 21st century,' the 2004 IEO report stated
emphatically. Consistent with this view, the EIA reported one year later that global
production would reach a staggering 122.2 million barrels per day in 2025, more than 50%
above the 2002 level of 80.0 million barrels per day....In 2025, according to this new
report, world liquids output, conventional and unconventional, will reach only a
relatively dismal 101.1 million barrels per day. Worse yet, conventional oil output will
be just 89.6 million barrels per day....[Unconventional] fuels include Canadian oil sands,
Venezuelan extra-heavy oil, deep-offshore oil, Arctic oil, shale oil, liquids derived from
coal (coal-to-liquids or CTL), and biofuels. At present, these cumulatively constitute
only about 4% of the world's liquid fuel supply but are expected to reach nearly 13% by
2030. All told, according to estimates in the new IEO report, unconventional liquid
production will reach an estimated 13.4 million barrels per day in 2030, up from a
projected 9.7 million barrels in the 2008 edition." It's Official - The Era of Cheap Oil Is Over: Energy Department Changes Tune on Peak Oil Tom Dispatch, 11 June 2009 |
| "British production in the North Sea is set to drop to levels not
seen since the late 1970s, BP statistics suggested. Chief executive Tony Hayward said
output will fall by at least 5 per cent a year in the coming years, and if investment is
not stepped up the declines could be even steeper. Just 1.54million barrels of oil were
produced in 2008, compared with a peak of 2.9million in 1999, and continued declines will
leave output at its weakest since 1978. Combined oil and gas production has fallen to
2.6million barrels a day. 'The North Sea is a mature and declining province,' said
Hayward. 'It will decline for sure at 5 per cent per year, and if the investment doesn't
go in - and this year it is not going in - it will probably decline at a faster rate.'...At the current rate of production, the UK has six years of oil
left and just under five years of gas, BP's annual Statistical Review of Energy showed. Making matters worse, the credit crunch is likely to lead to a halving of
North Sea investment in 2010 compared with last year, according to industry lobby group
Oil and Gas UK." BP's grim warning over growing cost of North Sea oil Daily Mail, 11 June 2009 |
| "Output from Alberta's oil sands
region, the largest crude reserves outside the Middle East, will rise to 3 million barrels
per day by 2018, the province's energy regulator
said on Wednesday, even as it slightly lowered its estimate of the region's reserves. In
its annual estimate of the province's oil and gas reserves, Alberta's Energy Resources
Conservation Board (ERCB) said it expects production of the tar-like bitumen contained in
the oil sands to more than double over the next nine years, from about 1.3 million barrels
per day last year. The forecast is more bullish than one released just days ago by the
Canadian Association of Petroleum Producers. Cutting its production estimate for the third
time in a year, CAPP estimated that by 2020, oil sands output would only be 2.9 million
barrels per day in its most optimistic case. Both the CAPP and ERCB estimates were based
on current and planned projects in the oil sands region of northern Alberta. The board
could not immediately account for the discrepancy between the two forecasts. The regulator
also lowered its estimate of the remaining recoverable oil sands reserves to 170.4 billion
barrels from its 2008 estimate of 172.7 billion barrels due to more detailed technical
data. Alberta's conventional oil reserves were pegged at 1.5 billion barrels, down 3
percent from last year and continuing a multi-year decline as new oil discoveries replaced
only 77 percent of production. However the ERCB estimates that 3.7 billion barrels of oil
will ultimately be found and recovered in Alberta through conventional methods. Total
output of conventional and oil sands crude in 2008 fell 1 percent to 1.85 million barrels
per day as planned and unplanned maintenance shutdowns at oil sands projects crimped
production." Alberta oil sands output pegged at 3 mln bpd by 2018 Reuters, 11 June 2009 |
| "The International Energy Agency
on Thursday forecast that the slump in global oil demand in 2009 would be slightly less
severe than previously expected, the organization's first upward revision to its estimates
in 10 months as economic indicators suggest the recession may be past its peak. The
Paris-based agency said in its closely watched monthly survey that global oil demand would
fall by 2.9 percent to 83.3 million barrels a day this year, or 2.5 million barrels a day
less than in 2008. In May, the IEA was expecting a 3
percent annual fall in demand, the sharpest rate of decline since 1981. 'These revisions
do not necessarily imply the beginnings of a global economic recovery and may only signal
the bottoming out of the recession,' the IEA said in its report....Since predicting in
August that 2009 global oil demand would reach 87.8 million barrels a day, the IEA has
steadily lowered its forecasts as the financial crisis plunged the world into the deepest
global recession since the Great Depression. Oil prices have been gaining quite steadily
over the past weeks, rising from near $35 a barrel in March to highs above $72 on
Thursday. Analysts say the rise can be attributed in part to hopes for a global economic
recovery but mainly to the U.S. dollar's fall against other major currencies, as investors
turn to commodities as a hedge against inflation and a safeguard from dollar weakness. The
IEA mentioned rising refinery activity and OPEC's decision in late May to stick to its
current production targets as contributing factors to higher crude futures." International Energy Agency makes first upward revision to 2009 global oil demand in 10 months Associated Press, 11 June 2009 |
| "Crude oil rose for a third day, climbing above $72 a barrel for the
first time in seven months, after China’s net
imports jumped to a 14-month high and U.S. crude and gasoline stockpiles unexpectedly
fell. China, the world’s second-biggest energy
user, increased its net crude purchases to 16.62 million metric tons in May, or 3.9
million barrels a day, according to data released by customs on its Web site today. Oil
was also supported by a 4.38 million barrel drop in U.S. stockpiles.... China’s
spending on factories, property and roads surged a more-than-estimated 32.9 percent from a
year earlier, the statistics bureau said today, helping to drive a recovery in the
world’s third-largest economy and drive up demand for fuel. The Organization of Petroleum Exporting Countries will only
consider increasing output when the price of crude rises to $100 a barrel, according to
Kuwaiti Oil Minister Sheikh Ahmed al- Abdullah al-Sabah. OPEC is scheduled to meet on Sept. 9. U.S. fuel demand in the past four
weeks averaged 18.3 million barrels a day, down 6.9 percent from a year earlier, the
Energy Department said. There was a 7.7 percent deficit in the week ended May 29. Gasoline
use averaged 9.2 million barrels a day during the period, up 0.4 percent from a year ago.
Fuel imports to the U.S. dropped 379,000 barrels a day to 2.55 million, the department
said. Crude-oil imports slipped 676,000 barrels to 8.97 million." Oil Climbs Above $72 as China Imports Rise, U.S. Supplies Drop Bloomberg, 11 June 2009 |
| "Global natural gas resources could be more than quadrupled, helping
tackle climate change, if the world adopted US technology and expertise to tap
unconventional sources, according to a report by PFC Energy, a consultancy. For Europe, which geological surveys show has vast unconventional
shale gas, coal bed methane and hard to access gas, this could ultimately lead to reduced
dependence on Russia. Globally, it could ease the
transition from high carbon coal to cleaner burning natural gas in electricity production.
'This is a game changer,' said Robin West, PFC chairman. PFC says that global
unconventional natural gas resources, based on 1997 geological estimates that could rise
with new technologies, total 3,250,000bn cubic feet. To contrast, the world's conventional
natural gas reserves are 620,000bn cubic feet. PFC
does not put a timetable on how quickly these resources could be developed - indeed, some may be left in the ground forever. There are political,
economic and bureaucratic obstacles to recovering this natural gas. But the technology is
available and for the first time companies are considering the potential. 'You're talking
about massive new resources,' said Nikos Tsafos, PFC's upstream and gas group senior
analyst. 'Even if you only got 10 per cent of that, given the need for economic viability
at each formation, you would increase the reserve base globally by 50 per cent.' The
growth in unconventional gas in the US underlines the potential. Richard Ranger, analyst
at the American Petroleum Institute trade association, said accessing US shale had
increased domestic natural gas supply estimates from 90 years' worth to 116 years. 'Unconventional gas has already transformed the supply picture in
the US,'' Mr West of PFC said. US unconventional gas supplies have doubled from 2000 to
2008, to 8,000bn cubic feet, PFC says, which is about two-thirds the gas volume that
Europe imports from Russia. Michael Steinhacker,
project manager for Unconventional Gas Service at Wood Mackenzie consulting, said Europe's
higher population density created problems in terms of the transportation of rigs and
other equipment. Supporting infrastructure, which is already in place in the US, would
also have to be built. The development of technologies to recover gas from shale - such as
fracturing it with high-pressure water - has been led by independent natural gas company
Devon Energy. Devon has formed a joint venture with Total, which is attempting to get a
concession in France for 1.4m acres to produce shale gas. While there is no active shale
development project outside the US, testing is continuing on the commercial viability of
some shales, said Bill Van Wie, Devon's senior vice-president of exploration." Unconventional sources promise rich natural gas harvest Financial Times, 10 June 2009 |
| "A game-changing moment could be upon us. In recent years, the world
has grown used to condemning China as a climate criminal. But over the next few weeks and
months, don't be surprised if you hear the same nation being hailed as the planet's first
green superpower. The State Council, China's cabinet,
will soon release the details of a staggeringly large 'new energy' programme that could
propel the world's biggest greenhouse gas emitter past Europe and the US into a global
leader in renewable energy and low-carbon technology. This is no short-term economic boost
or sop for climate change negotiations; it is a long-term investment aimed at making China
a dominant force in the global low-carbon economy for decades to come. Power plays do not
come much bigger. The size of the energy stimulus
has not yet been revealed, but reports in the domestic media and from foreign diplomats
suggest between 1.4 trillion (US$200 bn) and 4.5 trillion yuan (US$600bn) will be invested
over the next ten years in nuclear power plants, solar and wind farms, hydroelectric dams,
'green transport', 'clean coal' and super efficient electric grids. The consequences will
be staggering. If the bigger figure proves correct, China
will be spending the equivalent of its 2009 military budget on 'new energy' for each of
the next ten years. ....China already makes most of
the world's solar panels and wind turbines. Its carmakers, such as BYD, are pushing ahead
faster than established Japanese and American rivals to mass produce electric vehicles.
Its carbon capture technology and high-efficiency 'ultrasupercritical' coal plants are
close to the global cutting edge. With the new package, the government will commit itself
to developing domestic markets for these 'sunrise' industries....If a substantial amount
of the new package goes on renewables and efficiency, Julian Wong, an energy analyst at
the Center for American Progress in Washington DC, says the potential is enormous. He
says: 'If those expectations are fulfilled, China could emerge as the unquestioned global
leader in clean energy production, significantly increasing its chances to wean [itself]
off coal, and at the same time ushering in an era of sustainable economic growth by
exporting these clean-energy technologies to the world.' This
is not being done because of international obligations, but as an investment in national
security. Renewable energy eases China's dependence on foreign fuel supplies, which are a
growing concern. In an age of soft power, asymmetric
warfare and carbon anxiety, an investment in solar and wind energy will help the country
to stake a claim to the moral high ground. Todd Stern, the top climate change envoy for
President Barack Obama, recently warned that the US could fall behind. 'We need to
recognise that if we aren't careful, we may spend the next few years chasing China to do
more, but then spend all the years after that chasing them,' he said before heading to
Beijing for talks with his Chinese counterparts this week." China makes renewable power play to be world's first green superpower Guardian, 10 June 2009 |
| "The price of oil
burst through the $71 a barrel mark today amid
revelations that proven reserves had fallen for the first time in 10 years and predictions that the price could eventually hit $250....Kuwait's oil
minister, Sheikh Ahmad al-Abdullah al-Sabah, put some of the rise down to signs of
recovery in Asia but warned that overall demand was still weaker than last year. Opec
would not raise supply at current oil prices but did not rule it out 'if it reached $100',
he said...The latest surge has also raised fears that higher energy costs could snuff out
the nascent economic recovery....The febrile
atmosphere in oil markets was fed by the publication of BP's Statistical Review of World
Energy, which showed that the world's proven crude reserves had fallen by 3bn barrels to
1.258tn by 2008 from a revised 1.261tn in 2007.
Declines in important producers such as Russia and Norway offset rises in new areas such
as Vietnam, India and Egypt. The figures did not include Canada's tar sands, which are put
at 150bn barrels. The drop is partly attributed to a drop in exploration drilling due to
the precipitous fall in oil prices last year but also to the end of 'easy' oil....Global
oil consumption fell 0.6% to 81.8m barrels a day in 2008, the first decline since 1993 and
the largest drop for 27 years. North Sea output dropped 6.3% to its lowest level for three
decades." Oil price leaps to year's high Guardian, 10 June 2009 |
| "The giant Russian energy
company, Gazprom, which controls the world's largest reserves of natural gas, has issued a
stark warning to the European Union saying it must decide if it wants to continue
receiving supplies of Russian gas. Speaking in an interview for the BBC's Newsnight
programme, Gazprom deputy chairman Alexander Medvedev warned that Europe was now at a
crossroads. 'Only three countries can be suppliers of pipeline gas in the long-term -
Russia, Iran and Qatar. So there is no other choice than to deal with these suppliers,' he
said. 'Europe should decide how to handle this situation… and if Europe doesn't need
our gas, then we will find a way of selling it differently.' The threat comes as the EU scrambles to find alternative energy suppliers
following the crisis in January, when Russia shut down the main pipeline into Europe for
two weeks in a price dispute with the key transit country, Ukraine. The EU currently relies on Russia for a quarter of its total gas
supplies. Of the bloc's 27 member states, seven are almost totally dependent on Russian
gas....But is it already too late for Bulgaria and
Europe as a whole to escape the addiction to Russian gas? It is now a vital issue
for the EU and it is leading to increasing friction with Moscow in what being described as
a new 'Great Game' between Russia and the West over energy supplies. Gazprom is already
manoeuvring cleverly in this game, pushing ahead with highly ambitious plans which would
strengthen its hold over Europe. Despite the sharp fall in oil and gas prices which have
hit Gazprom hard, the company is determined to build two new pipelines to Europe at a
total cost of at least $20bn (£12.5bn)....The first
pipeline, called Nord Stream, would go from western Russia under the Baltic Sea to
Germany, while the second, called South Stream, would go from Russia's south coast under
the Black Sea to Bulgaria, eventually ending up in Italy. Gazprom wants to pump gas under
the sea directly to Europe so it can avoid transit countries such as Ukraine which lie
along the existing land routes. It argues this will
improve Europe's energy security. But it will also give Russia the ability to pump much
more gas to Europe. Mr Medvedev of Gazprom believes
that by 2020, Russia's share of the European gas market will increase from 26% to 33%
'because local production is going down and demand is increasing'...While the Commission seems unconcerned by the long-term implications of
Nord Stream, there is real worry about Gazprom's other big pipeline project, South Stream.
No construction work has begun on it yet, but Gazprom insists feasibility studies will be
completed this year and the pipeline will be built across the Black Sea to Bulgaria and
into the heart of Europe by 2015. For Europe this could spell disaster. It could kill off
one of its most important schemes for breaking away from its dependency on Russia. For five years, the EU has been pushing for a pipeline to be
built from the Caspian region to Austria which would carry gas from Central Asia, the
Caucasus and Middle East. Crucially, the pipeline called Nabucco would not go across any
Russian territory. But like South Stream it would
enter Europe via Bulgaria and possibly use several of the same European transit countries.
There are serious doubts that both Nabucco and South Stream are viable. One European
Commission official told the BBC that there was now a 'war of gas pipelines' going on with
Russia, with 'harsh competition as each side tries to gather support for its plans'....And Moscow itself is now openly saying that competition for energy
supplies in areas including Central Asia and the Caspian Sea could lead to military
conflicts along its borders over the next decade. A
security strategy document, published in May, was signed by the Russian President Dmitry
Medvedev." Energy fuels new 'Great Game' in Europe BBC Online, 9 June 2009 |
| "The U.S. will get more than half of its natural gas supplies from
so-called tight reservoirs by 2020, Royal Dutch Shell Plc estimates. New technology will allow tapping 500
trillion cubic feet of unconventional gas resources in North America, enough to supply the
U.S. for two decades, said Malcolm Brinded, executive director for
the upstream business at Europe’s biggest oil company. Shell expects
to more than triple tight gas output to more than 300,000 barrels of oil equivalent a day
in 2020. 'Having picked much of the low-hanging
fruit, our industry is now focused on more difficult resources, tight reservoirs,
fractured carbonates, oil shales, oil sands, and ultra-heavy oil,' Brinded said in a speech
posted on the Hague-based company’s Web site today. 'Tight gas in North America has
rapidly developed into a real game-changer.' The world holds 3,000 trillion to 10,000
trillion cubic feet of technically recoverable tight gas, according to Shell. It competes
with StatoilHydro ASA and BP Plc, which are also developing unconventional gas projects in
North America. Tight gas is methane locked in impermeable sandstone rock, which prevents
the gas from flowing to well." U.S. to Get Half of Gas From ‘Tight’ Fields by 2020, Shell Says Bloomberg, 9 June 2009 |
| "Last year, the U.S. Geological Survey completed an extensive
analysis of Wyoming's Gillette coal field, the nation's largest and most productive, and
determined that less than 6% of the coal in its biggest beds could be mined profitably,
even at prices higher than today's. 'We really can't
say we're the Saudi Arabia of coal anymore,' says
Brenda Pierce, head of the USGS team that conducted the study. No one says the U.S. is
facing a coal shortage. But the emerging ranks of 'peak coal' theorists argue that current
production levels may be unsustainable and, if anything, create a false sense of security.
David Rutledge, an electrical-engineering professor
at the California Institute of Technology who has studied global coal production, figures
the U.S. has about half as much recoverable reserves as the government says, which would
work out to about 120 years' worth. The Energy
Information Administration, part of the Department of Energy, says it is reassessing its
coal tally in light of the new Geological Survey data. It intends to create a new coal
baseline from which it will begin its annual subtraction 'as soon as we can,' says William
Watson, a member of the energy analysis team at EIA in Washington, D.C. In the field,
challenges are becoming more apparent. Mining companies report they have to dig deeper and
move more earth to extract coal from aging mines, driving up costs. Utilities have grown skittish about whether suppliers can ship
promised coal on time. American
Electric Power Co., the nation's biggest coal buyer, says it has stepped up its due
diligence to make sure its suppliers can make deliveries after some firms missed shipments
last fall. It even bought a mine to lock down
supplies. 'We are very much concerned, and it's getting worse,' said Tim Light, senior
vice president for AEP....The country's coal supplies have been seen as a bulwark of
energy security. In 1979, as the U.S. was reeling from an oil shock, President Jimmy
Carter pushed for projects to create liquefied gas from America's vast coal reserves.
Today the U.S. produces 1.1 billion tons of coal annually, more than any nation but China.
Concerns about supplies are out of the spotlight now, masked by what could be a short-term
lull in the appetite for coal. Recession has reduced demand from the two biggest users of
coal, electricity producers and steelmakers....Experts expect coal production to drop this
year by 5% to 10%, or as much as 100 million tons. Prices for coal from Wyoming's Powder
River Basin are down nearly 30% from a year ago, to about $8.50 a ton.... The U.S. isn't
the only nation employing improved drilling data and computer modeling to reassess its
supplies. Germany cut its proven hard-coal reserve
estimates by more than 99% in 2004 as it explored
reducing mining subsidies, which would make coal more expensive to extract. Overall, assessments of total world reserves dropped by half from
1980 to 2005, according to a study by Energy Watch Group, an independent group based in
Germany. The U.S. Geological Survey, the Department
of the Interior's science agency, attempted to get a clearer picture of the nation's coal
supplies beginning in 2004. Its full study of the Powder River Basin in Wyoming and
Montana will be completed next year. The agency began
with the Powder River's rich Gillette coal field, an 80-mile-long strip in northeastern
Wyoming that contains the nation's 10 top-producing mines. About one-third of all coal in
the country is produced there. Some 1.2 million short tons leave the field daily, a river
of coal filling more than 75 trains of 125 to 150 cars each. For the Gillette study, USGS
engineers, geologists and economists spent three years analyzing data from 10,200 drill
holes, the most comprehensive study ever attempted of the region. The team concluded there
are 201 billion short tons of coal in the Gillette field. Environmental rules and physical
challenges put much of that out of reach, leaving what they figured were 77 billion short
tons of recoverable coal. Little is presently worth mining. Analyzing coal beds that
contained 82% of the Gillette deposits, the team determined that with coal selling for
$10.50 a ton, the prevailing price two years ago, less than 6% of the coal could be
extracted profitably enough to leave mining companies an 8% rate of return. If Powder
River prices were to hit $60 a ton in current dollars, as much as 47% could be extracted.
But at that price, coal would have a tough time competing with other fuels and
technologies.... After many decades of mining, some
of the country's coal fields are showing their age. 'What's left to mine is not as easy as
what we mined even 10 or 20 years ago,' says Janine Orf, spokeswoman for Patriot Coal
Corp. in St. Louis. 'The seams are getting thinner and there are more limestone
intrusions.'" U.S. Foresees a Thinner Cushion of Coal Wall St Journal, 9 June 2009 |
| "Three British companies have been shortlisted to bid for contracts
to work on Iraq's oil and gas fields, pitting themselves against 32 other non-Iraqi
companies in a televised, two-day bidding procedure revealed at Baghdad's Oil Ministry.
BP, which provided technical assistance to the Iraqi state oil company in 2004-2006, BG
International and Premier Oil were among the 120 companies who put themselves forward in
June last year, and which now appear on the shortlist of 35 companies who are invited to
submit proposals for consideration by a panel of experts at the Ministry. Along with other
oil majors including Exxonmobil and Total, they are due to present proposals on June 29
and 30 to work on one of six oil fields and two gas fields. It will be the first major
foreign investment in Iraqi oil for 40 years, which has the world's third-largest oil
reserves but needs massive foreign investment to resurrect the country's energy
infrastructure....Oil Minister Hussein al-Shahristani
gave Iraq's current oil output as 2.4 million barrels per day, the highest since 2003, and
anticipated that after this round of contracts is awarded, production would increase to 4
million barrels per day. Three fields in this round
of bidding are in Basra, two in Kirkuk in the north, and one in Maysan, also in the south.
The two gas contracts are for sites in Anbar and Diyala provinces. There are none in Iraqi
Kurdistan, the northern region where revenue from resources is heavily disputed. However,
Mr al-Shahristani slammed the semi-autonomous Kurdish Regional Government (KRG), who began
exporting oil at the beginning of this month, calling the deals 'illegal' as they had not
been seen by the Iraq Oil Ministry. 'The KRG has signed some contracts and created a
backlash,' he said, adding that the revenue from the oil would go directly to central
government, who would not pay firms who signed independent deals with the KRG. The KRG
would continue to receive 17 per cent of oil revenue, he said, and no more. Companies,
including Norway's DNO International, Toronto-listed Addax Petroleum and Turkey's General
Enerji who signed independent deals with the KRG must be paid by the KRG, he said, adding
that, 'we will not discuss any compensation for these companies under any
circumstances.'" Iraq unveils foreign oil contract shortlist London Times, 10 June 2009 |
| "Oil and gas players are
slashing spending on new projects amid the current recession, but as energy demand climbs
over the long term, 'the next [oil] price spike may already be in the making,' the chief executive of Royal Dutch Shell, Jeroen van der Veer, warned
Monday. The steep slide in oil prices from their historic peak of July 2008 was 'only a
dent in a graph that goes up all the time,' van der Veer said in an address to the 14th
Asia Oil and Gas Conference in Kuala Lumpur. Citing the International Energy Agency's
estimate of a 20% drop in oil and gas project investment this year compared with 2008 and
a 40% slump in renewable energy sector investment, van der Veer said the current
overcapacity in the market would disappear as in the long term, energy demand was bound to
climb. As the world's population increases from 6 billion to 9 billion by 2050, 'energy
demand, even taking into account energy saving, will double,' he said. Oil and gas would
not be able to supply the incremental demand, 'in what I call more of the same,' van der
Veer said. 'You need renewables, unconventionals and conventionals.' The Shell executive,
who retires at the end of this month after 38 years with the oil and gas giant, reminded
delegates that construction of oil and gas projects, be they in the LNG sector, refining,
or the proposed development of oil reserves in the Arctic, takes 'at least four to five
years' after the final investment decision. 'The system is very slow to react,' he said.
While Shell itself plans to maintain investments 'at a relatively high level' in 2009, the
same might not be true for the whole sector, van der Veer said....Shell estimates renewables could meet around 30% of global energy
demand by 2050, but that means the remaining 70% would still come from fossil fuels and
nuclear energy, van der Veer said." Shell CEO warns next oil spike 'may already be in the making' Platts, 8 June 2009 |
| "Most believe our current economic problem was caused by the
extension of too much credit, too freely, and to the wrong people, over the last 30-40
years. Some, however, are suspicious that the
many-fold run-up in oil prices from their historic $10 or $20 a barrel that sopped up so
much consumer purchasing power may have had more than a little to do with our current
economic problems. While the consequences of the
economic downturn are well understood, we are just starting to appreciate that the massive
governmental effort to keep a recession from turning into a depression is threatening
unprecedented repercussions of its own. In the last 10 months, the U.S. government and its
central bank have spent or issued guarantees approaching $12 trillion in efforts to boost
the economy. During the current fiscal year, the US will sell $3.25 trillion in new
securities vs. $892 billion worth last fiscal year. Some are already calling this
phenomenon the 'bailout bubble' and are worried that deficit financing on this scale could
destroy the dollar and take much of the U.S. economy with it....Any increase in demand
from a revitalized economy is almost certain to drive oil prices higher. In the last eight
months, OPEC has reduced its oil production by about three million b/d which has kept
production closer to demand for the time being. Although a few members of OPEC currently
have surplus production capacity that could be turned into increased production, every
year we are extracting some 30 billion barrels of mostly easy and cheap-to-produce oil. The simple message is that in three to four years excess
production capacity is likely to be eaten up by depletion. After that increased oil production will become very expensive and take
considerable effort. Much higher prices and considerable economic damage are virtually
certain." The Peak Oil Crisis: Watching a Mega-Crisis Falls Church News-Press, 4 June 2009 |
| "Uranium prices are probably too
low to spur the development of new mines, leaving a potential shortfall in supply in the
years ahead, Rio Tinto Group and Cameco Corp. officials said. Uranium
prices peaked at $136 a pound in 2007 and have fallen as low as $40 this year, according
to Roswell, Georgia- based Ux Consulting Co. Demand for uranium is expected to outstrip
supply from next year through 2012, pushing prices up to $75 in 2011, Macquarie Group Ltd.
estimates. 'The market is relatively balanced and
utilities are well covered, but if you go out several years there has got to be some
concern about where supply is going to come from,' George Assie, Cameco’s senior
vice-president of marketing and business development, said in an interview in Edinburgh on
June 1. The Saskatoon, Saskatchewan-based company is
the world’s largest uranium producer. Uranium prices plunged partly on concern that
countries including China and India would delay nuclear-power projects because of the
global economic crisis. That spurred companies including Uranium One Inc., which operates
in Kazakhstan, to cut exploration and spending. Uranium supply will expand by 5.8 percent
this year and growth will slow to 1.2 percent in 2010 and 4.1 percent in 2011, Max Layton, an analyst at Macquarie,
said in an e-mail. Uranium for immediate delivery is trading at about $49.50 a pound,
according to Ux Consulting. 'It is possible
we’re not at a level yet that will support the necessary amount of incremental
production that we are going to need over the next five to 10 years,' Clark Beyer, managing director of Rio Tinto Uranium Ltd., said in an
interview in Edinburgh. London-based Rio mines the metal in Australia’s Northern
Territory and Namibia. Beyer and Assie declined to give specific forecasts for what prices
would be needed to encourage new supply, saying that it depended on the project. Since
2003, the price of uranium has risen fourfold while output of the radioactive metal has
advanced by about 24 percent, Kim Goheen, Cameco’s chief
financial officer, said today at an investor conference in New York. Forecasts of additional gains in output have been tempered by
lengthy regulatory processes and other challenges, including the October 2006 flooding of
Cameco’s Cigar Lake mine, the world’s largest undeveloped high-grade uranium
deposit. 'The current financial turmoil is likely to put additional pressure on the
development of new production capacity,' Goheen said. Supply gains will also be curbed
after 2013 when a program to convert Russian nuclear warheads into fuel ends. The 20-year plan to recycle bomb-grade metal into low enriched uranium
suitable for reactors converted the equivalent of 14,000 warheads into 10,200 metric tons
of fuel through the end of 2008, according
to USEC Inc. The end of the program will sap so-called secondary supplies of uranium, said
Gerard Pauluis of Synatom SA, the Brussels-based company that buys as much as 1,200 tons of
uranium a year for Belgium’s reactors." Uranium Price Slump May Hurt Supplies, Producers Say Bloomberg, 3 June 2009 |
| "Green energy overtook fossil
fuels in attracting investment for power generation for the first time last year,
according to figures released today by the United Nations. Wind, solar and other clean technologies attracted $140bn (£85bn)
compared with $110bn for gas and coal for electrical power generation, with more than a
third of the green cash destined for Britain and the rest of Europe. The biggest growth
for renewable investment came from China, India and other developing countries, which are
fast catching up on the West in switching out of fossil fuels to improve energy security
and tackle climate change. 'There have been many milestones reached in recent years, but
this report suggests renewable energy has now reached a tipping point where it is as
important – if not more important – in the global energy mix than fossil fuels,'
said Achim Steiner, executive director of the UN's Environment Programme. It was very
encouraging that a variety of new renewable sectors were attracting capital, while
different geographical areas such as Kenya and Angola were entering the field, he added.
The UN still believes $750bn needs to be spent worldwide between 2009 and 2011 and the
current year has started ominously with a 53% slump in first quarter renewables investment
to $13.3bn....Wind, where the US is now global leader, attracted the highest new worldwide
investment, $51.8bn, followed by solar at $33.5bn. The former represented annual growth of
only 1%, while the latter was up by nearly 50% year-on-year. Biofuels were the next most
popular investment, winning $16.9bn, but down 9% on 2007, as the sector was hit by
overcapacity issues in the US and political opposition, with ethanol being blamed for
rising food prices. Europe is still the main centre for investment in green power with
$50bn being pumped into projects across the continent, an increase of 2% on last year,
while the figure for America was $30bn, down 8%. But while overall spending in the West
dipped nearly 2%, there was a 27% rise to $36.6bn in developing countries led by China,
which pumped in $15.6bn, mostly in wind and biomass plants. China more than doubled its
installed wind turbine capacity to 11GW of capacity, while Indian wind investment was up
17% to $2.6bn, as its overall clean tech spending rose to $4.1bn in 2008, 12% up on 2007
levels." Green energy overtakes fossil fuel investment, says UN Guardian, 3 June 2009 |
| "Iraq’s self-governed
Kurdish region began exporting oil for the first time yesterday, pumping crude through a
pipeline to Turkey for sale to foreign markets.
Iraq’s Kurdish President, Jalal Talabani, and Massoud Barzani, the president of the
Kurdish regional government, opened a ceremonial valve in Arbil, the regional capital.
Pointedly, there were no non-Kurds from the federal Government at the ceremony. Kurds and Arabs in Iraq are in a dispute over the division of the
country’s mineral resources that could still spill into bloodshed. Mr Barzani said: 'This achievement will serve the interests of all
Iraqis, especially the Kurds.' Turkey has long feared
that the generation of Kurdish oil wealth from Iraq could spark secessionist violence
among its own Kurds. However, the Turkish Genel
Enerji is jointly developing the Taq Taq oilfield with Addax Petroleum, an oil and gas
company based in Calgary, Canada. Economic ties between Turkey and Iraq have strengthened
enormously in the past year, with Turkish exports to northern Iraq increasing by 76 per
cent. Yet discord over oil rights between Baghdad and
Arbil continues to delay the exploitation of much of Iraq’s massive proven oil and
gas reserves. Kurdish officials recently unveiled an $8 billion (£5 billion) plan that
could supply natural gas from northern Iraq to Europe via the Nabucco pipeline, a key
element in the endeavour by the European Union to cut its reliance on Russian gas. Hussein al-Shahristani, the Iraqi Oil Minister, rejected the deal as
illegal, saying that it was done without the participation of the Oil Ministry. Baghdad
opposes Arbil signing its own contracts, a position Kurdish officials have ignored.
Baghdad has said in response that it will award production rights to the Kirkuk oilfields
— disputed between Arabs and Kurds and reputed to be the location of bigger oil reserves than the whole of
Alaska — to the highest-bidding international oil company this month. Kirkuk’s
constitutional status remains contested. The UN has recommended a referendum to decide the
issue. 'Iraq has had a revenue shortfall of $10 billion due to the incompetence of
Iraq’s Oil Ministry,' said Ashti Hawrami, the Iraqi Kurds’ natural resources
minister, in a speech during which he vowed that the region would continue to seek
partners without the approval of the central Government. More American soldiers died in
Iraq in May than at any time in the past eight months, weeks before US forces are due to
withdraw from Iraqi cities. Twenty-four US soldiers lost their lives last month, the
highest number since September." First oil exports for Iraq’s Kurdish region despite resources clash London Times, 2 June 2009 |
| "Gazprom, Russia’s state-controlled energy group, has told
Turkmenistan to reduce its gas export price after saying it did not need central Asian
gas. The statement marks an escalation in a dispute that has prompted Turkmenistan to
intensify its efforts to find other export routes for its gas. Gazprom offered last year
to pay central Asian gas suppliers high prices to outbid rival buyers in China and Europe.
But Valery Golubev, deputy chairman of Gazprom, has now said it would be unprofitable to
sell highly priced Turkmen gas in Europe and Ukraine where energy demand has fallen as the
economic recession has taken hold....Gazprom has cut
gas production by more than 20 per cent this year as demand slumped in Europe and Ukraine. It is determined that central Asian producers should share the pain of
lost revenues." Gazprom escalates Turkmen gas price dispute Isabel Gorst in Moscow, Financial Times, 2 June 2009 |
| "A report from one of the
world’s top energy consultancies says oil production in Canada’s tar sands could
see a five-fold increase by 2035. 'The oil sands
have moved from the fringe to the center of energy supply,' notes the report 'Growth in
the Canadian Oil Sands: Finding a New Balance' released by IHS Cambridge Energy Research
Associates (CERA) on May 18. Environmentalists and some aboriginal groups want the
oil sands to stay on the fringes because extracting heavy oil produces more greenhouse gas
emissions than convention crude. Meanwhile, the Council on Foreign Relations (CFR) issued
a report titled 'The Canadian Oil Sands: Energy Security vs Climate Change' on May 22
arguing that both the negative environmental impacts and benefits to U.S. energy security
from Canada’s tar sands are overstated. 'Smart regulation can place a fair and
reasonable price on the oil sands’ greenhouse gas emissions, providing the right
incentive to reduce them,' said Michael Levi, an author of the CFR report. Levi told IPS
that lifecycle green house gas emmissions from the tar sands are 17 percent worse than
conventional U.S. oil imports. Environmentalists dispute this claim, stating oil
production from the tar sands is at least three times worse than conventional oil. 'The
development of Canadian oil sands encapsulates the complexities that the world faces on
energy, environment and security,' said IHS CERA chairman Daniel Yergin in a statement.
Yergin won a Pulitzer award for his book 'The Prize', a history of the oil industry. CERA
did not respond to interview requests from IPS. Oil today accounts for 35 percent of
global energy supply - the largest share of any form of energy. In 2008, world oil demand
was 85.2 million barrels per day. CERA estimates global oil demand in 2035 could range
from 97 million barrels per day (mbd) to 113 mbd. If
the global economy stays in recession or a slow growth scenario, production from
Canada’s tar sands will reach about 2.3 million barrels per day by 2035, an increase
of about 1 million barrels a day from present levels, according to CERA. In 2008, Canada supplied the U.S. with 19 percent of its oil
imports. That number could rise to 37 percent by 2035, according to CERA." Oil Economy Driving Growth of Controversial Tar Sands Inter Press Service, 1 June 2009 |
| "Oil is the world’s most important commodity, and the need to
understand the long-term supply is widely recognized. In some way, all energy
projects—whether they involve conventional or green alternatives—will be
measured against oil....Primary contributing factors to the present inadequacy of energy
investment are price volatility and uncertainty of future delivery capacities, which are
the byproducts of tightening supply. The authors
confirm the work of others that the energy future depends upon a handful of irreplaceable
and aging fields, many of which are in unknown states of depletion. It is time for the
world to better understand global oil productive capacity in order to take appropriate
measures.... The authors propose that the key to
this understanding is the modeling of the largest fields.... As
these largest fields diminish in productivity there is little prospect that the loss of
their capacity will be offset by new discoveries. The historic trend is that new
discoveries do little more than keep pace with depletion of nongiant fields....Compared to the period between 1940 and 1980, when 70% of the reserves
of the largest fields were discovered, the 3 subsequent decades have contributed only 12%,
even with the advantage of greatly advanced technology and access to a large portion of
the world’s prospective areas. Considering the advanced depletion and large portion
of global supply coming from the few giants and supergiants of the world, a sensitivity
analysis will identify these fields as the critical variables in the future delivery of
oil. The unanticipated decline of the largest fields
poses the greatest risk to future delivery, and the loss of their production without
replacement or energy alternatives would be economically catastrophic. The contribution of the smaller
fields and future additions will not have the capacity to mitigate the significant
disruption of the global economy brought on at some point by the decline of the largest
fields. Therefore, a widely accepted method of
forecasting supply is required.... Continuing to do what has been done before will not
secure future global oil deliveries or deploy alternative technology on a large scale.
Continued delay makes solutions increasingly difficult. By changing tactics, it is
possible to create a world body with the mandate to forecast oil deliverability. The
authors have proposed conventional modeling methods that require access to primary data
that can reliably forecast future oil supply. Though the World Energy Council has taken
tentative steps in this regard, a higher profile body with the capacity to cause
appropriate cooperation is warranted. In the US, the Obama administration has the
opportunity to take the initiative in calling for such a world body. In addition to the
US, the OPEC countries, Japan, China, India, the Euro zone, Brazil, and Russia need to
cooperate. Energy industry leaders can raise the
level of awareness of the world’s energy peril and
the need for a new approach. The inevitable transition from an oil-based economy is one of
the greatest global challenges and deserves a similar level of attention to nuclear
proliferation, global warming, and the current economic crisis. The stakes are too high to
choose inaction or further delay." Proposition: global effort to model largest oil fields Oil & Gas Journal, Vol 7, Issue 22, June 2009 |
| "Russian state uranium trader Techsnabexport has said it would sign
contracts worth atleast a billion dollars for the supply of low-enriched uranium to a
number of major US energy companies before the end of the year. This uranium would be
processed from highly-enriched uranium retrieved from nuclear warheads.....Russian state
uranium trader Techsnabexport has said it would sign contracts worth atleast a billion
dollars for the supply of low-enriched uranium to a number of major US energy companies
before the end of the year. This uranium would be processed from highly-enriched uranium
retrieved from nuclear warheads. The contracts are being signed under the HEU-LEU
contract, also known as the Megatons to Megawatts agreement. Under the provisions of this
agreement, signed in February 1993, some 500 metric tons of highly-enriched uranium (HEU),
the equivalent of approximately 20,000 nuclear warheads from dismantled Russian nuclear
weapons, would be converted into low-enriched uranium (LEU). This would then be converted
into nuclear fuel for use in US nuclear reactors. The agreement expires in 2013. Under the contracts signed this week, enriched uranium will be
supplied to the US companies from 2014 through 2020." Megatons to Megawatts: Russia to supply uranium to US companies domain-b.com, 30 May 2009 |
| "The earth has been shaking for a few days now all across
Pipelineistan - with massive repercussions for all the big players in the New Great Game
in Eurasia. United States President Barack Obama's AfPak strategists didn't even see it
coming. A silent, reptilian war had been going on for
years between the US-favored Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and
its rival, the Iran-Pakistan-India (IPI) pipeline, also known as the 'peace pipeline'.
This past weekend, a winner emerged. And it's none of the above: instead, it's the
2,100-kilometer, US$7.5 billion IP (the Iran-Pakistan pipeline), with no India attached. (Please see Pakistan, Iran sign gas pipeline deal, May 27, 2009, Asia
Times Online.) This whole saga started way back in 1995 - about the time California-based
Unocal started floating the idea of building a pipeline crossing Afghanistan. Now, Iran and Pakistan finally signed a deal this week in Tehran,
by which Iran will sell gas from its mega South Pars fields to Pakistan for the next 25
years. According to Iranian energy officials
speaking to the ISNA news agency, the final deal will be signed in less than three weeks,
slightly after the first round of the Iranian presidential election. The last 250 km of a
900-km pipeline stretch in Iran between Asalouyeh and Iranshahr, near the border with
Pakistan, still needs to be built. The whole IP
pipeline should be operational by 2014. The fact
that Islamabad has finally decided to move on is pregnant with meaning. For the George W
Bush administration IPI was simply anathema; imagine India and Pakistan buying gas from
'axis of evil' Iran. The only way to go was TAPI - an extension of the childish
neo-conservative belief that the Afghanistan war was winnable.... Pakistan is the absolutely ideal transit corridor for China to
import oil and gas from Iran and the Persian Gulf. With IP in place and with
multi-billion-dollar, overlapping Tehran-Beijing gas deals, China can finally afford to
import less energy via the Strait of Malacca, which Beijing considers exceedingly
dangerous, and subject to Washington's sphere of influence. With IP, not only China wins;
Russia's Gazprom also wins. And by extension, the Shanghai Cooperation Organization (SCO)
wins. Russian deputy Energy Minister Anatoly Yankovsky told the Kommersant business daily,
'We are ready to join the project as soon as we receive an offer.' The reason is so
blatant that Gazprom officials have not even bothered to disguise it. For Russia, IP is a
gift-from-above tool in rerouting gas from Iran to South Asia, and away from competing
with Russian gas. The big prize, in this case, is the Western European market, dependent
almost 30% on Gazprom and the source of 80% of Gazprom's export profits. The European
Union is desperately trying to keep the Nabucco pipeline project - which bypasses Russia -
afloat, so it may reduce its dependence on Gazprom.
But as anyone in Brussels knows, Nabucco can only work if it is provided enough gas by
either Iran or Turkmenistan. The Turkmenistan distribution system is controlled by Russia.
And a deal with Iran implies no more US sanctions - still a long way away. With IP in
place, Gazprom reasons, Nabucco is deprived of a key supply source....As for gas from the
Daulatabad fields in Turkmenistan, assuming TAPI ever gets built though war-torn
Afghanistan, that's much more unlikely. This all raises the crucial question: how will
Islamabad deal with ultra-strategic Balochistan - east of Iran, south of Afghanistan, and
boasting three Arabian sea ports, including Gwadar, practically at the mouth of the Strait
of Hormuz? The New Great Game in Eurasia rules that Pakistan is a key pivot to both North
Atlantic Treaty Organization (NATO) and the SCO, of which Pakistan is an observer.
Balochistan de facto incorporates Pakistan as a key transit corridor to Iranian gas from
the monster South Pars fields, and not to a great deal of the Caspian wealth of 'gas
republic' Turkmenistan. For the Pentagon, the birth of IP is mega bad news. The ideal
Pentagon scenario is the US controlling Gwadar - in yet one more prime confluence of
Pipelineistan and the US Empire of Bases." Pipelineistan goes Iran-Pak Asia Times, 29 May 2009 |
| "Economically viable concentrations of rare earths are known to exist
in only a handful of places -- mainly in China, Australia, and North America, with smaller
deposits in India, Brazil, Malaysia, and South Africa. China's reserves, which are located
mainly in Inner Mongolia and in soft clay ores in southern China, are, by a wide margin,
the world's largest. Realizing their strategic significance, Chinese leader Deng Xiaoping
said in 1992, 'There is oil in the Middle East; there is rare earth in China.' He clearly
understood the West's growing dependence on rare metals for high-tech industries and put
China on course to become the world's dominant supplier...A
single three-megawatt wind generator (modest, as utility-scale wind turbines go) contains
more than a ton of super magnets, more than 700 pounds of which is neodymium. A typical
hybrid car, such as a Toyota Prius, contains around 25 pounds of rare earth metals --
mostly lanthanum in its rechargeable battery and neodymium in its drive motor. 'The global annual production of neodymium, essentially all of which is
mined in China, is today at an all-time high,' Lifton says. 'There is no surplus -- the
existing demand uses up all that's produced each year. So to build more wind turbines and
hybrid cars, you'll need more neodymium. Where are you going to get it?'" Renewing Our Dependence OnEarth, 28 May 2009 |
| "Texas oilman and former corporate raider and Republican financier T.
Boone Pickens brought his plan to slash the United States' dependence on foreign oil to
the Mackinac Policy Conference Thursday and seemed to find a mostly receptive
audience. In remarks immediately following Gov. Jennifer Granholm's energy remarks.
Pickens criticized the United States for not having an energy plan for 40 years, and
ever-increasing percentages of American oil being imported from overseas. But he said
there had been little leadership on changing that because until recently, 'we had cheap
oil. Consequently America was never tasked to look at what would happen if it was cut off
from us.' When it comes to oil, Pickens said, 'at some point we are going to have to face
the fact that we are the problem.' He said the United States uses 25 percent of the
world's oil, despite only having 4 percent of the world's population and 3 percent of its
oil reserves, and needs to get its 'appetite in line with the rest of the world.' Pickens
also pointed out that America is importing its oil from America-hating nations. 'We are
importing oil from Venezuela, and we hear what that guy says about us. Yet we need his
oil, one million barrels a day. The Mideast, I don't know who there likes us, dislikes us
or hate us, there are countries in all three categories but I would guess not so many like
us.' Pickens' solution? A major push toward wind power,
along with transforming America's vehicle fleet to electric and compressed natural gas
power, along with clean coal and nuclear power. 'I'm for anything that's
American,' Pickens said. 'What your governor is talking about, I'm on board.' Pickens said America has abundant natural gas becuase it has developed
technology that can convert carboniferous shale into natural gas. It's
also easy to convert vehicles, combining to make 'a window of opportunity that we cannot
pass up.' He said that without changes, America within 10 years will be importing 75
percent of its oil at $300 a barrel." Pickens On Mackinac: Natural Gas Plus Wind Equals Less Foreign Oil WWJ Radio, 28 May 2009 |
| "The International Energy Agency
on Wednesday repeated its warning that reduced investment in energy could result in future
supply shortages and a new oil price spike in a few years' time. In a report prepared for last weekend's meeting of G8 energy ministers in
Rome, the IEA said it saw 'clear evidence' that energy investment across the world would
drop sharply this year, with global upstream oil and gas investment budgets already cut by
around 21% or almost $100 billion from 2008 levels. 'Between
October 2008 and end-April 2009, over 20 planned large-scale upstream oil and gas
projects, valued at a total of more than $170 billion and involving around 2 million b/d
of oil production capacity and 1 bcf/d of gas capacity, were deferred indefinitely or
cancelled,' it said. A further 35 projects, involving 4.2 million b/d of oil capacity and
2.3 bcf/d of gas capacity, had been delayed by at least 18 months, the agency said. IEA
chief economist Fatih Birol had already told Platts in a May 20 interview that lower
investment as a consequence of the global economic crisis threatened future energy
security as well as the effort to combat climate change. The paper prepared for Rome, entitled 'The impact of the financial and
economic crisis on global energy investment,' said the sharpest cuts in spending were
likely to be focused on exploration. 'It is likely that the upstream industry will reduce
spending on exploration most sharply in 2009--largely because the bulk of spending on
development projects is associated with completing projects that had already been launched
before the slump in prices,' the IEA said. Canadian oil sands projects account for the
bulk of the postponed oil capacity, the agency said, with the drop in upstream spending
most pronounced in regions with the highest development costs and where the industry is
dominated by small players and small projects. 'For these reasons, investment in non-OPEC
countries is expected to drop the most. In addition, cuts in spending on existing fields
risk pushing-up decline rates,' the IEA said. The agency said falling investment would
have 'far-reaching and... potentially grave effects on energy security, climate change and
energy poverty.' It said cutbacks on infrastructure spending 'will only affect capacity
with a lag, often amounting to several years,' so that the current demand weakness was
likely to see spare production capacity increase in the near term." IEA repeats warning of possible new oil price spike Platts, Petroleumworld, 27 May 2009 |
| "Global energy demand is expected to soar 44 percent over the next
two decades with most of the demand coming from developing countries such as China and
Russia, the U.S. government's top energy forecasting agency said on Wednesday. The
worldwide economic downturn has hit energy consumption, but an expected recovery next year
could respark demand and boost prices, the Energy Information Administration said in its
new forecast. U.S. oil prices are forecast to rise from an average $61 barrel this year to
$110 in 2015 and $130 in 2030. Oil prices 'begin to
rise in 2010-2011 period as the economy rebounds and global demand once again grows more
rapidly than non-OPEC liquid supply,' EIA acting
administrator Howard Gruenspecht told a news conference. Global
oil demand is expected to rise to 107 million barrels per day over the next two decades
from nearly 84 million bpd this year. Oil will
account for 32 percent of the world's energy supply by 2030 from about 36 percent in 2006.
Almost 75 percent of the rise in global energy demand through 2030 will occur in
developing countries, particularly China, India, Russia and Brazil, the agency said...The EIA's report also found that global natural gas demand will
increase by almost 50 percent to 153 trillion cubic feet. The agency said that
unconventional natural gas production, particularly from gas shale, will make the United
States 'virtually self sufficient in natural gas supply in 2030.'" Global energy demand seen up 44 pct by 2030-EIA Reuters, 27 May 2009 |
| "It may seem a strange idea in the region of the world that is
richest in hydrocarbons, but it is one that has been raising increasing concerns: the
possibility of a critical gas shortage in Middle East. The countries of the region,
particularly the wealthy Arab Gulf states, have one of the fastest growing rates of energy
demand, as populations swell and the accumulation of petrodollars during the recent oil
boom has driven rapid economic expansion. But they are finding to their cost that, after
years of focusing on oil production, too little attention was paid to gas, which is now
needed for power generation, desalination plants and to provide feedstock to the
energy-intensive industries they have been seeking to lure. By
some estimates, the cumulative supply shortfall for the six countries of the Gulf
Cooperation Council up to 2015 will be at least 7,000bn cubic feet. Of the GCC members – Saudi Arabia, Qatar, Kuwait, Oman and Bahrain
– only Qatar, which has the world’s third largest proven gas reserves and the
largest natural gas field, can avoid the problem. The recent economic slowdown, which has
caused a swathe of projects to be put on hold, will alleviate some of the short-term
pressures. But, experts say, the medium and long-term outlook remains critical. 'The
long-term issue of ensuring adequate gas supplies to fuel growth has not gone away,' says Rajnish Goswami, an analyst at Wood Mackenzie, the consultants.
'We see, with the exception of Qatar and Iran, every other country in the region facing
challenges in ensuring supply growth.' Qatar is
already piping 2bn cu ft a day to the United Arab Emirates, and is expected to provide
around 1m tons of LNG to Dubai from 2010, analysts say. Kuwait has also been in talks with
Qatar over gas imports, while Bahrain has been in discussions to buy gas from Iran –
in spite of concerns from the US. Yet, neither Qatar nor Iran will necessarily provide
answers to their neighbours’ predicament. Qatar has a moratorium in place on new
projects in its North Field that is expected to remain until at least 2013 while a study
is conducted into the reservoir. And even when it is lifted, there will be no guarantees
that Qatar will look to the region. When recently asked if Qatar would be under pressure
to help meet gas demand from its neighbours, Abdullah bin Hamad al-Attiyah, the energy
minister, was straighttalking. 'If this study [in the North Field] shows we can produce
more gas, then we will put this gas in a judgment where we should use it. Then we will see
what is the added value, what is the best for us to sell it in the region or convert it to
LNG or GTL,' Mr Attiyah says. 'At the end of the day I am concerned about what is the best
revenue for the country,' he explains. 'I’m not in a social security game. I’m
business-oriented here and we will see.' Iran is unlikely to provide a solution in the
near future, because of global and regional politics. Observers believe that
Bahrain’s discussions with Iran are in part designed to get its key allies, the US
and Saudi Arabia, to press Qatar to help Manama meet its demand. Mr Goswami says Gulf policymakers are aware of the gas issue, but
warns that much needs to be done. 'In our view, the steps that have been taken may be
adequate in terms of near- to mid-term planning, but, on a 10-year view, the supply
challenge is pretty enormous and more still needs to be done,' he says. Gulf countries, including Saudi Arabia, the UAE and Kuwait, already burn
fuel for power generation, and they are expected to have to divert more oil to domestic
use rather than exports. This creates an opportunity cost, has impact on global supply and
an obvious environmental effect. Saudi Arabia has been boosted by discoveries in the Karan
field – its first non-associated offshore gas discovery – which it hopes will
produce 1.8bn cu ft a day. Contracts for the field’s development were awarded this
year. But a second project involving international companies in the Empty Quarter has yet
to produce discoveries, and experts warn that gas shortages will become a serious issue
for the kingdom. 'It will not be an issue for the
next couple of years,' says John Sfakianakis, chief economist at SABB Bank. 'But if they
continue to build like this, develop industry and do not become more efficient and do not
find more gas, it will become a crisis.'” Middle East: Oil-rich region faces gas shortfall Financial Times, 26 May 2009 |
| "The next generation of nuclear
power stations will not be built unless the Government steps in with financial assistance,
the head of the UK's biggest nuclear generator has warned. Energy companies fear generous
subsidies for wind farms will make investing in new reactors risky and might not bother. Vincent de Rivaz, UK boss of power giant EDF Energy, said in a newspaper
interview that a 'level playing field' had to be created to make building the power
stations attractive. His comments are an embarrassment to Energy Secretary Ed Miliband,
who recently promised that the new generation of nuclear plants could be achieved without
subsidy. The Government announced in April it had identified 11 potential sites for the
new power stations....EDF is also worried that incentives for wind power will lead to so
many wind farms that nuclear power stations will have to be shut down at times,
jeopardising their chances of making a profit. The new generation of nuclear power
stations are intended to maintain Britain's ability to generate its own energy after
existing nuclear and coal-fired stations are shut down. The first station could go live in
2017. While critics warn that the move could mean a £75billion clean-up bill to deal with
the waste produced by the new facilities, there is hope that the planned stations will
bring jobs. A spokesman for EDF Energy was unable to comment." Subsidise nuclear power stations or they won't be built, energy giant warns ministers Daily Mail, 26 May 2009 |
| "Russia's state uranium trader said on Tuesday it would sign a
landmark deal to supply uranium directly to U.S. utilities, including PG&E Corp (PCG.N),
from 2014. Russia's Techsnabexport (Tenex) said it
would sign the deal on Tuesday with a structure partly created by Californian utility
Pacific Gas and Electric Co, a unit of PG&E Corp (PCG.N), and
two other partners, which were not identified. 'The contract we are signing today comes
into force immediately,' Tenex CEO Anatoly Grigoryev told reporters. 'Supplies will start from 2014. Russia, one of the world's biggest
sellers of uranium enrichment services, currently sells the United States only uranium
recovered from dismantled Russian nuclear weapons under a programme known as 'megatons to
megawatts'. Those sales are carried out through U.S.
uranium trader USEC Inc (USU.N). All
other sales of uranium to U.S. companies have been subject to U.S. anti-dumping measures
but Moscow and Washington signed a deal last year to allow direct sales to other U.S.
firms. Tenex is a unit of Russia's state atomic company, Atomenergoprom, one of the
world's biggest players on the nuclear market." Russia to sell uranium directly to U.S. utilities Reuters, 26 May 2009 |
| "The site, at Whitelee on Eaglesham Moor, has cost ScottishPower, its
developer, £300 million, but this is a tiny fraction of what will be required to upgrade
Britain's power network. According to Ernst &
Young, the total cost of doing so and meeting tough targets to cut carbon emissions by 34
per cent by 2020 will be no less than £233.5 billion. Although some of that burden is
likely to be shared with power companies, the figure, divided among the UK's 26million
households, implies a total bill of up to £8,977 each — or £598 a year for the next
15 years. Tony Ward, power and utilities partner at
Ernst & Young, said that about half of the total, or £112 billion, will need to be
spent building new supplies of renewable energy, including vast new offshore wind parks -
each many times the size of Whitelee — as well as biomass-fired power stations, tidal
and wave-energy projects. Britain must also renew almost all of its ageing nuclear power
plants, which account for about 20 per cent of the country's electricity supply, a project
that is expected to add £38.4 billion to the cost. A further £28 billion or so will have
to be poured into the grid to build a transmission network capable of supporting new
reactors and remote wind parks sited as far north as the Shetlands and in the North Sea.
This excludes the cost of building new coal-fired stations equipped with carbon capture
and storage technology (CCS), bolstering the UK's gas storage facilities, new gas-fired
power plants and a rollout of “smart meters” in every home and business in the
country. Steve Holliday, chief executive of National Grid, whose company will be at
the centre of this effort, said: 'It's very clear from the renewables and new nuclear
stations being planned that there is going to be a need for a substantial increase in
investment to build a modern, 21st-century grid.' He expects National Grid alone to spend
up to £5 billion a year from 2012 and he is already drawing up plans for a network of
seabed cables feeding renewable electricity from Scotland to consumers in the South, as
well as sweeping reinforcements to conventional high-voltage lines that criss-cross the
country....Ernst & Young's figures might underestimate the total expense because they
do not include regular maintenance costs, Mr Marchant said, suggesting that a figure of
£300 billion could be closer to the mark. However, he is optimistic that dramatic
improvements in energy efficiency could mean that consumer bills will remain stable or
even fall in the long term. The fear is that in Britain's liberalised energy market this
tidal wave of required investment simply will not materialise. Dr Lowrey believes that,
under its current structure — which relies on market forces plus consumer-funded
incentives designed to boost investment in renewable energy — the scale of investment
needed is unlikely either to meet expectations or to be allocated in the way that the
Government or society wants. It is a concern that has been compounded in recent months by
a collapse in funding that has accompanied the credit crunch and the plunging value of the
pound, forcing up the cost of imported power-generating equipment. The falling prices of
oil, coal and gas have also undermined the economic rationale of many investments in more
costly, alternative forms of energy. 'There is a need for greater intervention to make
this investment a reality,' Dr Lowrey said. 'We need a guiding hand from
government.'” Whitelee's wind of change merely heralds stormy debate London Times, 25 May 2009 |
| "Britain has signed up to an ambitious EU plan to generate 35 per
cent of its electricity from renewable energy, such as wind and wave power, by 2020 —
a dramatic increase from today's figure of less than 5per cent. Many in the industry doubt
that this target is achievable, given the funding and planning wrangles faced by the wind
developers and the complexity of linking schemes to the National Grid. Nevertheless, the
Government is pushing hard for as many of these schemes to be built as possible. Meanwhile, a host of new gas-fired power stations is also on the
way. The share of Britain's electricity produced by
burning gas has already risen from 2 per cent in 1992 to 35 per cent. The figure is
expected to rise further, with gas-fired plants under construction at Pembroke in West
Wales, the Isle of Grain in Kent and Langage, outside Plymouth. Cheap and relatively quick
to build, they may emit carbon but tend not to stoke the public ire against new coal
plants. However, they do raise other problems. With
domestic supplies of North Sea gas being depleted fast, the UK is becoming increasingly
reliant on imports of the fuel from countries such as Russia, Qatar and Algeria, a trend
that has raised concern about UK energy security." Striking a balance between urgency, climate change and energy security London Times, 25 May 2009 |
| "Russia,
already a large supplier of nuclear-reactor fuel to Europe and Asia, is expected on
Tuesday to sign its first purely commercial contract to supply low-enriched uranium to
United States utilities. With the signing, Russia’s nuclear-fuel trade with the
United States will shift to a commercial footing, similar to Russia’s dealings with
other consumers of fuel, like France and the Netherlands, both longtime buyers of Russian
uranium. For the United States, the change is a sign that Washington is acquiescing to the
idea of a major Russian role not only in the international nuclear power market, but also
in the domestic market. Russia’s outsize role in supplying uranium to American
utilities had previously been justified because the fuel was a byproduct of a program to
eliminate nuclear
weapons. Now the Russians will be selling nuclear
fuel from virgin uranium. Yet the contract signing,
after North Korea’s nuclear test on Monday,
also underscores a counterintuitive element of American nonproliferation policies. The
policy of buying diluted, or blended-down, Russian weapons-grade uranium yielded a clear
nonproliferation benefit. The new mode — of having the Russians enrich new uranium
for United States markets — is not directly beneficial for nuclear security because
it does not remove weapons-grade uranium from stockpiles....Techsnabexport, the Russian
state company that exports low-enriched uranium, is expected to sign the contract in
Moscow with a consortium of American nuclear companies. Techsnabexport declined to
identify its American partners or the size of the contract on Monday. The new contract is separate from a program to dilute surplus
weapons uranium into civilian fuel for use in American reactors. Under that so-called
megatons to megawatts program, begun in 1993, Russia
is already the largest supplier of enriched uranium to American utilities and provides
about half of all uranium consumed in civilian reactors in the United States. Yet Russia
has been prohibited from selling directly to the utilities by provisions of American law
to prevent dumping at below-market prices, and it was compelled to deal only through a
monopoly importer, the United States Enrichment Corporation....In a negotiated settlement
in February 2008, the United States agreed to allow Russia to sell low-enriched uranium
directly to domestic utilities without the involvement of the enrichment corporation. But
all sales of diluted weapons uranium will still go through the corporation. A spokeswoman
for the company said the initial direct Russian sales will be small and will not harm its
business. Nuclear reactors run on uranium that is composed of 3 to 5 percent uranium 235.
In nature, uranium is only 0.7 percent uranium 235. Uranium used in weapons and in the
reactors that power nuclear submarines use more than 90 percent uranium 235.
“Enrichment” means raising the proportion of 235 compared with the dominant
type, 238, and the Russian industry was set up to provide large volumes of high-enriched
uranium for weapons and marine reactors." Russian Uranium Sale to U.S. Is Planned New York Times, 25 May 2009 |
| "The world may witness a new
crude oil price spike in two to three years - potentially worst than a peak of $147 a
barrel seen last year - if oil producers don't invest enough, Saudi Arabia's oil minister
said Monday. The world's largest oil producer is the
latest to warn about the risk associated to under-investment after the International
Energy Agency, which represents energy consumers, voiced similar concerns. Speaking at a
G8 Energy ministers summit in Rome, Saudi oil minister Ali Al- Naimi said his country is
'continuing to invest now in both the upstream and downstream to help ensure an
uninterrupted supply of energy when the global economy recovers.' But 'if others do not
begin to invest similarly in new capacity expansion projects, we could see within two to
three years another price spike similar to or worse than we witnessed in 2008,' he
added." Saudi Oil Min: Price Spike In 3 Yrs If Investment Lags Dow Jones Newswires, 25 May 2009 |
| "When oil collapsed more than 70 per cent from its July 2008 record
high, many major oil firms slashed their exploration budgets because the lower prices did
not cover the expenses of today's high-cost reserve plays. The
worldwide credit scarcity didn't help. In nations within the Organization of Petroleum
Exporting Countries (OPEC), as many as 35 new projects have been delayed to 2013. About
$100 billion worth of Alberta tarsands expansion projects are on hold....Officials at the International Monetary Fund are especially concerned
about the impact of an oil-price rebound on impoverished economies. They regret that the
current period of lower drilling costs was not seized upon as an opportunity to get
long-term projects underway. 'The lower that oil prices drop now the greater the negative
impact on future supply,' John Lipsky, first deputy managing director of the IMF said at
an OPEC summit in Vienna in March. As oil prices were peaking last spring, Yergin's firm
was projecting an increase in world oil capacity to 109 million barrels a day. The
subsequent 'capital strike' by exploration companies has forced Yergin to revise that
figure down to a current 101.4 million barrels a day. That's a 'squeeze' scenario similar
to the recent years of escalating prices, when the gap between supply and demand became
been razor-thin. French oil producer Total S.A., one of the few companies to maintain an
aggressive exploration program, including efforts to build a large presence in the
Athabasca tarsands, is gloomier still. Christophe de Margerie, Total's CEO, said the
proliferation of project cancellations means the world's producers will be struggling by
the middle of the next decade to keep supply at even 90 million barrels a day." |
| "Imperial Oil Ltd (IMO.TO) on
Monday said it would go ahead with its C$8 billion ($7.1 billion) Kearl oil sands project,
the first major new development to be approved in the
region of northern Alberta since the recession forced a spate of cancellations. Imperial,
Canada's biggest oil exploration and refining firm, said it expects to complete the
project's first 110,000 barrel per day stage by late 2012." Imperial to go ahead with C$8 bln Kearl project Reuters, 25 May 2009 |
| "Falling energy investment will have far-reaching and, depending on
how governments respond, potentially grave effects on energy security, climate change and
energy poverty. Cutbacks in investment in energy infrastructure will only affect capacity
with a lag, often amounting to several years. So, in the near term at least, weaker demand
is likely to result in an increase in spare or reserve production capacity. But there is a real danger that sustained lower investment in supply
in the coming months and years, could lead to a shortage of capacity and another spike in
energy prices in several years time, when the economy is on the road to recovery. The faster the recovery, the more likely that such a scenario will
happen.... These concerns justify government action to support investment in energy
efficiency and clean energy. Many countries recognise this: a small but significant share
of the additional public spending in short-term economic stimulus packages announced to
date (about 5% of a total of $2.6 trillion) is directed at energy efficiency and clean
energy – either direct investment or fiscal incentives for low-carbon power
technologies and the development and commercialisation of more energy-efficient end-use
technologies. These moves are a positive step in the right direction, potentially killing
three birds with one stone: tackling climate change, enhancing energy security and
combating the recession. But much more needs to be done. The
investment needed to put the world onto an energy path consistent with limiting the rise
in global temperature to around 2C far exceeds the additional investments that are
expected to occur as a result of the stimulus packages so far announced. Our analysis
suggests that, relative to their recent announcements, governments should be looking to
increase the level of new funds they commit to energy efficiency and low-carbon energy
policies by a factor of around four. And, at a minimum, this level of investment would
have to be sustained each and every year for decades to come. The IEA, therefore, encourages world leaders attending the 2009 G8 Summit
under the Italian Presidency to push for such action on a global scale – a Clean
Energy New Deal – to exploit the opportunity the financial and economic crisis
presents to improve energy efficiency and effect a permanent shift in investment to
low-carbon technologies including carbon capture and storage. This
must be seen as a long-term commitment that extends well beyond the limited time horizon
of the economic stimulus packages." The Impact of the Financial and Economic Crisis on Global Energy Investment IEA Background Paper For The G8 Energy Ministers' Meeting 24-25 May 2009 |
| "The UAE, which has got an approval from the United States to proceed
with its nuclear plans, is expected to have its first nuclear reactor completed by as
early 2015, making it the first operator of a nuclear plant in the region, experts told
Emirates Business....Mahmoud Nasreddine, Advisor to the Secretary General of the League of
Arab States expects the first plant to be completed by early as 2015. This is
substantially shorter as the IAEA guidelines calls for about 10 to 15 years of planning,
preparation and execution, before a nuclear power plant is online. On March 23, 2008, the
UAE became the first country to approve nuclear plans although on the next day, Bahrain
also penned a deal with the United States to co-operate on a civil nuclear power. The US
State Department held out the deals as model for nations seeking to to meet their energy
needs and cut their greenhouse gas emissions....One of the UAE's fast-tracking measures
was its voluntary renunciation of its rights to enrich uranium under the non-proliferation
treaty (NPT)....Nasreddine, said the UAE government's
decision to adopt a nuclear option is based on the rapid increase in demand for
electricity and fresh water. He said as many as
2,300 nuclear scientists, technicians and support staff will be needed to run the UAE's
proposed three-reactor civil nuclear programme....In the past, Arab countries, especially
oil-rich countries have not been in favour of electricity generation by nuclear energy.
Such option has been excluded due to the abundance of cheap fossil fuels. 'As they undergo
economic growth, their needs for fresh water and electricity increased. Decision makers
are obliged to consider their energy strategies and to agree on different available
options – nuclear and renewable energies,' Nasreddine said." UAE to have first Arab nuclear power plant in 2015 Emirates Business 24/7, 24 May 2009 |
| "OPEC has announced three separate rounds of production cuts since
September in a bid to steady prices. In all, it has vowed to trim its output by 4.2m
barrels a day (b/d). That leaves them with as much as 6m b/d of spare capacity. Despite
this growing glut, however, the price of oil has been rising steadily in recent weeks (see
chart 2). On Wednesday May 20th it closed above $60 a barrel for the first time in more
than six months. That marks an increase of more than 75% since February. The price of
futures contracts suggests that energy traders see the price rising higher still in the
coming months and years. (During the day on Friday it appeared to be nearing $62 a
barrel.) The explanation is simple. Oilmen are worried because they believe that many of
the factors behind the record-breaking ascent last year remain in place. Much of the
world’s 'easy' oil has already been extracted, or is in the hands of nationalist
governments that will not allow foreigners to exploit it. That leaves firms to hunt for
new reserves in ever more inhospitable and inaccessible places, such as the deep waters
off Africa or the frozen oceans of the Arctic. Such fields take a long time and a lot of
expensive technology to develop. Worse, new discoveries tend to be smaller than in the
past and to run dry faster. So oil firms must work doubly hard to replace declining fields
and to increase output. Yet the oil industry is short of equipment and manpower, thanks to
underinvestment in the 1980s and 1990s, when prices were low. As soon as the world economy
starts growing again, the theory runs, demand for oil will once again outstrip the
industry’s ability to supply it. In other words, the global recession has only
interrupted the 'supercycle' of which many analysts used to speak, during which the normal
boom-and-bust cycle of oil and other commodities would give way to a protracted period of
high prices, as ever-growing demand from emerging markets swallowed everything the
extractive industries could produce. Oil bosses, OPEC ministers and anxious bankers all
agree on what is needed to prevent this scenario becoming reality: lavish investment in
the development of new fields and in exploration. Yet the reverse is happening. The oil
industry is cutting its spending, bringing fewer new fields into production and exploring
less. The International Energy Agency reckons that overall investment will drop by 15-20%
this year....Saudi Aramco, the world’s biggest
oil producer, recently completed a five-year scheme to expand its production capacity from
10m b/d to 12.5m b/d, at a cost of $70 billion. But in Russia, the world’s
second-biggest oil producer, output is falling largely because private capital has been
scared off by a series of expropriations, while the state starves the firms it controls of
sufficient cash for investment. And most oil-rich
states, naturally enough, are happy to see the price rise. Many have become used to bumper
revenues in recent years and have struggled to balance their budgets since the price
slumped last year.....there is little sign that governments are willing to grant oil
companies easier access to the most promising territory for exploration. Iraq’s plans
to sign big new contracts with foreign firms are years behind schedule, as is its new oil
law. American sanctions continue to impede investment in Iran. The Nigerian government has
been unable to quell the insurgency in the Niger delta, making it difficult for oil firms
to operate there. Even in America, despite years of debate, most coastal waters and much
of Alaska remain off-limits to drilling. So when demand begins to revive, a sharp rise in
prices is inevitable. That does not mean that a price spike is just around the corner,
however. The speed with which it arrives will depend on the strength of the global
recovery." The oil price: Bust and boom The Economist, 23 May 2009 |
| "Europe's economic slowdown has
led to a collapse in demand for natural gas, while January's crisis has triggered a new
push by EU states to find alternatives to Russian imports. Added to that, many industry analysts are revising down their long-term
projections for natural-gas use in Europe, with far-reaching implications for Russia's
resource-based economy. 'The days of high growth rates for European gas consumption are
surely over,' Bernhard Reutersberg, chief executive of German energy company E.ON Ruhrgas
AG, told a conference in Berlin this week....As oil and gas prices rose, Gazprom's
ambitions grew. It talked of increasing its share of the European gas market from 25% to a
third by 2015. Last summer, it boasted it would be the world's most valuable company by
2015, with a capitalization of $1 trillion. But as recession demolished Europe's appetite
for gas, Gazprom's fortunes turned. IHS Global
Insight says it expects gas demand in Europe to fall nearly 10% this year. Gazprom has responded by slashing production: Output fell 28% in April,
to the lowest level in a decade. Gazprom's market cap is now around $85 billion. 'The bottom line is Gazprom's revenues will fall 30-40% this
year,' said Jonathan Stern, director of gas research at the Oxford Institute for Energy
Studies. 'We've never had a decline in demand as dramatic as this.' Gazprom's exports should start to rise again later this year. The gas
price in its long-term supply contracts is linked to the price of a basket of oil
products, but with a six-to-nine month lag -- so the price Gazprom charges its customers
will fall sharply in a few months' time. Many of them are delaying purchases till then.
But the gas monopoly could find itself under pressure from customers to renegotiate some
of those traditional long-term contracts, especially as alternative sources of gas emerge.
A huge wave of liquefied natural gas from countries
like Qatar will hit global markets over the next two years, much of it finding its way to
Europe. Many analysts expect rising competition between LNG supplies and pipeline gas in
the years to come. 'If the global recession lasts, or the recovery is slow, the market
will be awash with LNG,' says Pierre Noël of EPRG, an energy research group at Cambridge
University. 'The timing couldn't be worse for Russia.'" Russia Faces Uncertain Times Selling Natural Gas to Europe Wall Street Journal, 23 May 2009 |
| "Energy policymakers should not waste the opportunity that lower oil
prices provide to address US supply concerns, two experts told the congressional Joint
Economic Committee on May 20. 'The recent rise in oil
prices again underscores the present reality of long-term challenges. Even if we see
significant short-term gains in global oil production capabilities, if demand from China
and elsewhere returns to its previous rate of growth, it will not be too long before the
same calculus that produced the oil price spike of 2007-08 will be back to haunt us
again,' warned James D. Hamilton, an economics professor at the University of California
at San Diego. 'Once global economic growth resumes, so will growth in oil demand. That
will once again put energy security, and the relation of energy to economic well-being,
back at the top of the agenda. Given the lead times to develop new supplies, policy
decisions made today should take into account the likelihood of future cycles, and what
they mean to the American economy and to American consumers,' added Daniel Yergin,
chairman of IHS Cambridge Energy Research Associates. The two experts returned to testify amid dramatically different conditions
from their last appearance, observed Rep. Carolyn B. Maloney (D-NY) who chairs the joint
House-Senate committee. 'The most recent estimate from the Energy Information
Administration is that regular gasoline prices will average $2.21/gal over this summer's
driving season and that diesel fuel prices will be $2.23/gal. That's a far cry from the $4
or more a gallon for gasoline and diesel that drivers faced last summer,' she said in her
opening statement. 'When I had the opportunity to testify to the committee almost a year
ago, oil prices were on a sharp upward trajectory. Sixteen days after that very timely
hearing, they reached an all-time peak of $147.27/bbl. Although some people then were talking about $200, $250 or $500/bbl oil,
it seemed clear to use at IHS CERA that a 'break point' was nearing on prices that would
market the beginning of a reversal, which we have seen,' said Yergin. When oil's price hit
its peak on July 11, it was more than two months before Lehman Bros. Holdings collapsed on
Sept. 15, taking the US economy from 'moral hazard' to the much more frightening world of
'systemic risk,' with the threats of credit freezes, economic free fall, and overall
breakdown, Yergin said. 'It is well-recognized that the main drive of the deepest
recession since the Great Depression was the failure of the US and global debt and credit
systems. But the surge in commodity prices, notably oil, was a very significant
contributing factor,' Yergin said. High oil prices hit consumers hard, notably those with
lower incomes, making them reduce spending, he said. They also put an unexpectedly heavy
burden on many businesses, both large and small. Most notably, they helped knock the US
auto industry 'flat on its back,' reducing consumers' ability to buy cars and leaving
Detroit stranded with a product mix that it could not change quickly enough as motorists
quickly moved away from what if offered. 'The automobile industry was knocked flat on its
back not by the collapse of Lehman Bros. but by the price at the gasoline pump,' Yergin
said. Oil prices doubled between June 2007 and June 2008, Hamilton observed. 'In my mind,
there is no question that this latest surge in oil prices was an important factor that
began in the US in 2007's fourth quarter,' he said. He disputed assertions that financial
speculators pushed crude oil prices higher, saying that several other factors contributed
to the run-up. 'World oil production decreased slightly between 2005 and 2007. Declining
production from mature oil fields in the North Sea and Mexico played a role, as did
political instability in Nigeria. Saudi Arabian production, which many analysts had
expected to increase to meet rising demand, fell by 850,000 bbl a day between 2005 and
2007. These declines were enough to offset production gains in places such as Angola and
Central Asia, with the result that total global oil production dropped slightly,' he said.
Meanwhile, demand continued to grow, according to Hamilton. 'World petroleum consumption
increase by 5 million b/d during 2004 and 2005, driven largely by a 9.4% increase in
global [gross domestic product]. Over the next two years, 2006 and 2007, world GDP grew an
additional 10.1% which, in the absence of an increase in the price of oil, would have
produced further big increases in quantities consumed,' he said. 'Even with price
increases, Chinese oil consumption increased by 870,000 b/d between 2005 and 2007. With no
more oil being produced, that meant that residents of the US, Europe, and Japan had to
reduce our consumption by a comparable amount. The price of oil needed to rise by whatever
it took for us to do so,' Hamilton said. Consumers finally began to respond when
gasoline's US average price was more than $4/gal, he said. The abrupt spending changes
which resulted can seriously disrupt certain key parts of the economy and seemed to be
part of the mechanism by which earlier oil price shocks contributed to previous economic
recessions. 'The kinds of economy responses we saw between the fourth quarter of 2007 and
the third quarter of 2008 were, in fact, quite similar to those observed following
previous dramatic oil price increases,' Hamilton indicated.....Policymakers should pursue all options, the two analysts agreed. 'As
part of a longer-term view, we need to get beyond the 'either/or' energy debate and take a
more ecumenical approach, ensuring that combination of conventional energy, renewables and
energy efficiency are all developed with appropriate environmental and climate-change
considerations,' Yergin said. Major initiatives in research and development, innovation,
and what he called the 'green stimulus' can have significant long-range impacts, he said.
'Indeed, we have never seen anything like the embrace of energy efficiency that is taking
place today all across the spectrum,' he said. 'But there is no single answer to the
energy needs of our $14 trillion economy. Today, fossil fuels (oil, natural gas, and coal)
supply over 80% of our total energy. Oil by itself is about 40%. That alone makes clear
the importance of oil, and the evolution of the oil market, to our economy and security in
the decade ahead,' Yergin said." Experts urge US policymakers to address long-term challenges Oil & Gas Journal, 21 May 2009 |
| "Mexican oil exports plunged 18.2% in April to levels unseen since
1990 outside hurricane seasons, in more grim news for a key economic motor relied on for a
major chunk of government revenues. Crude export volumes tumbled to 1.177 million barrels
per day as yields at Mexico's aging Cantarell field continued to plummet, state oil
monopoly Pemex said today. Oil production declined 4.2% year-on-year to 2.642 million bpd
in April, the fourth month in a row that it has been below a targeted level of 2.7 million
bpd, according to a Reuters report....Mexico is a top three oil supplier to the United
States but production has declined steadily since 2004 as the country struggles to replace
capacity lost at Cantarell. The United States risks becoming more dependent on less
politically stable sources of oil as Mexico's output dwindles. Cantarell, which was pumping more than 2 million bpd in 2004,
yielded only 713,000 bpd in April, down more than 35% from a year ago, according to energy
ministry data. The latest fall at Cantarell was
partially offset by increased output at the nearby Ku Maloob Zaap offshore heavy oil
field. Ku Maloob Zaap, which recently overtook Cantarell as Mexico's biggest producer,
yielded a record 814,000 bpd in April, near the maximum 820,000 bpd Pemex thinks it can
produce. Output at Ku Maloob Zaap is expected to begin to decline to 810,000 next year,
however. Pemex has vowed to end this year with oil output at 2.7 million bpd. Executives
say meaningful increases in production from the Chicontepec onshore project starting in
July should reverse the trend of declining output in the first half of the year. Analysts
remain skeptical that Pemex will be able to achieve its production goals at Chicontepec,
where billions of barrels of crude oil are tightly locked in isolated geological
formations, making oil production costly and challenging." Mexico oil exports plummet Upstream Online, 21 May 2009 |
| "What do you get from an Austrian, a Hungarian, a Kurd and two
Emiratis? If you believe in the deal signed at the weekend between OMV, the Austrian
energy group, MOL, its Hungarian neighbour, the Sharjah-based Crescent Petroleum and
Crescent’s affiliate Dana Gas, you get the most
important energy project to come out of Iraq since the removal of Saddam Hussein. With luck and a following political wind, the $8 billion (£5 billion)
investment by Pearl Petroleum in Kurdish Iraq could be the
most significant since the discovery of oil at Kirkuk by the Iraqi Petroleum Company in
the 1930s. It could equally well be sunk by
squabbling Baghdad politicians, dysfunctional ministers in Brussels and bellicose generals
in Ankara. That would be a pity, because the Pearl partners have a plan to extract gas
from Khor Mor and Chemchemal, two giant fields in Kurdish Iraq, and pipe it across the
Turkish border. From there, the gas would be carried
by Nabucco, an as-yet-unbuilt European Union flagship pipeline, into Central Europe. This
may be the last chance for Nabucco, a project to bring Central Asian and Middle Eastern
gas into Europe that has been on the drawing board for seven years. Last week, Gazprom, arch-foe of Nabucco, was trumpeting a deal with Eni,
the Italian energy group, that would double the size of South Stream, a rival pipeline
project that would bring Russian gas across the Black Sea and into the Balkans, avoiding
troublesome transit through Ukraine. Until Sunday,
Nabucco’s prospects seemed bleak. Backed by the former Bush Administration, as well
as by Brussels, Nabucco has been a pipeline seeking a gasfield. One by one, initially
enticing gas reserves in Central Asia vanished as geopolitics and geography intervened.
Turkmenistan grew tired of talk about trans-Caspian pipelines and looked to China for an
alternative customer. After years of debate and the sight of Russian tanks entering
Georgia, Kazakhstan and Azerbaijan decided that discretion and Gazprom’s offer of a
better gas price were better than valour and a speculative deal with Nabucco’s
partners. Until Sunday, there was no other supplier bar Iran, still a bridge too far. Iraq’s gas reserves are unknown, but sure to be big. The old regime
never bothered to develop its gas. There are small gas recovery projects in the south and
Shell is toying with a plan to win gas from the Kirkuk oilfield. The Pearl partners reckon that their two fields alone could deliver
three billion cubic feet a day into pipelines heading north, equal to a third of UK daily
consumption. Swift to protest, the Oil Ministry in
Baghdad denounced the deals, insisting that Kurdish Iraq could not export gas without
central government consent. There is jealousy in Baghdad over the upstart Kurdish regional
government’s success in developing an independent oil industry. Baghdad initially
blustered over exploration licences for tiny foreign explorers in Kurdistan, arguing that
the Kurds were giving away too much oil profit to foreigners. But a fortnight ago, Baghdad
granted export licences for two Kurdish projects. Meanwhile, impatience with the failure
of Iraq’s central government to bring oil output to even the levels before the 2003
invasion is turning to anger. A petition signed by 140 Iraqi MPs last week criticised the
Oil Ministry. The mood is also changing in Ankara,
where Turkish distrust of Kurds is giving way to realpolitik and business deals. Turkey’s Government wants stability in Iraq, but also aspires to the
role of Europe’s eastern energy hub. In a future
Iraq, without the iron glove of American security, the Kurdish region is an oil and gas
prize, lonely, unprotected, bordered by a hostile Iran and a chaotic cauldron to the south
and west. If not Turkey, who will protect Kurdistan?" Old enmities are put aside in fight for gas London Times, 20 May 2009 |
| "The Obama administration plans to set tougher fuel economy and
emissions rules for car manufacturers in a move likely to please environmentalists but add
to the industry’s challenges. A senior administration official on Monday said that
the new plan would bring 'historic levels of fuel efficiency', introducing the first rules
designed to reduce carbon emissions from cars and accelerating by four years an existing
plan for new vehicles to achieve an average of about 35 miles per gallon by 2020. The corporate average fuel economy standard, which was first
introduced in 1975 as a response to the oil embargo imposed on the US by Arab oil
producers, had been due to rise from 25.3mpg today to 35mpg by 2020 but the new efficiency
target would rise to 35.5mpg between 2012 and 2016." Obama to unveil tough fuel rules for cars Financial Times, 19 May 2009 |
| "In the post-war years, there has been a clear link between oil
prices and global growth: the long boom of the 1950s and 1960s was an era when crude was
dirt cheap; all four major recessions (1974-75, 1980-82, 1990-92 and 2007 to now) followed
a spike in oil prices. The last trough in oil prices occurred at the end of the 1990s,
coinciding with the dotcom bubble and talk in the US of the new paradigm economy. Since
then, the trend has been inexorably up, with supply struggling to keep up with strong
demand from the mature markets of the developed world and the big emerging economies such
as China and India. Chris Sanders, of Sanders
Research Associates, traces the origins of the current crisis back to the turn of the
millennium, when the fall in production from the big finds of the late 1970s –
Alaska, deepwater Mexico and the North Sea – ended the era of cheap oil. A serious
recession in the wake of the dotcom bubble was only averted because policymakers –
Alan Greenspan in particular – manipulated interest rates to create another
unsustainable boom. This did not mean the problem had been solved; indeed, putting it off
for another day simply meant the problem grew bigger. Seen from this perspective, what we are witnessing is not the early
stages of a new bull market, but a temporary lull in a much longer crisis that will
see recovery hampered by high and volatile energy prices. Indeed, the volatility of crude
over the coming years is likely to be as damaging as the fact that fuel will be becoming
steadily more expensive....Price signals do matter, and oil companies are far more likely
to beef up their spending on exploration and new refineries if the oil price is $100 a
barrel than if it is $10 a barrel. That's the good news. The bad news is that even if the
peak oil sceptics are right and there is plenty of untapped crude in the South Atlantic,
Canada's tar sands or Central Asia, it is going to be more expensive to extract it. Oil
has been critical to the development of industrial societies but energy firms,
unsurprisingly, went for the oil that was easiest to get at and of the highest quality,
since that meant low extraction costs and high profits. In other words, the energy required to get fuel out of the ground was small; the
energy return on energy investment (EROI) was high. But as companies have moved to tougher
environments, the EROI on oil and gas production has fallen – one estimate is from
33:1 in 1999 to 19:1 in 2005. This global trend mirrors what happened in the US, where oil
is still produced in large quantities but much less efficiently than it was 75 years ago.
From an estimated 100:1 in 1939, the EROI for American oil production dropped to 30:1 by
1970 and 11:1 in 2000. As Sanders puts it: 'Today we
are attempting to extract oil and gas in commercially viable quantities from offshore
deposits that lie under more than 25,000 feet of water, rock and hot salt. It may well be
possible to do so, but what is highly unlikely is that it will be possible to do so in
sufficiently large flows to make a material difference to general prosperity. Another way
of putting this is that economic growth rates are going to have to slow.' On the basis of
what has happened in the recent past, we are likely to see oil prices on an upward trend
but with wild gyrations. Frequent oil spikes when the global economy appears to be on
the mend will be followed by a crash in prices as the impact of dearer energy raises
business costs and bites into consumer spending power." Brain power can meet the energy crisis Guardian, 18 May 2009 |
| "A group of retired senior U.S. military officers has concluded that
the country's reliance on fossil fuels undermines its capacity to defend itself. Citing a
'serious and urgent threat to national security,' the group has urged the Pentagon to take
the lead in shifting to a new age in energy. The dependence on oil-based fuels left the
U.S. military seriously over-extended in Iraq and Afghanistan, according to the officers'
report, issued on May 18 by CNA, a military think tank based in Alexandria, Va. The
62-page report asserts that the true cost of fuel, including logistics and the military
protection of sea lanes, can run to hundreds of dollars a gallon. 'Our energy posture is
not sustainable. It can be exploited by those who want to do us harm,' retired Air Force
Lieutenant General Larry Farrell, a co-author of the report, said in an interview. Finding
a suitable alternative fuel and scaling it up to the size of the U.S. economy 'is a
30-year project,' Farrell said. 'We've got to get started now.' The report, called
'Powering America's Defense: Energy and the Risks to National Security,' was written by
CNA's military advisory board, comprised of 12 retired generals and admirals. It's a
follow-up to a 2007 report by the advisory board called 'National Security and the Threat
of Climate Change.'...Jim Jones, President Barack
Obama's national security adviser and a former marine general, is expected to create a new
senior slot on the National Security Council for global energy." U.S. Reliance on Oil an 'Urgent Threat' Steve LeVine, Business Week, 17 May 2009 |
| "The Jordanian government on
Sunday signed an agreement with Royal Dutch Shell for the exploitation of the country's
huge oil shale reserves. The accord, which could
involve an eventual multi-billion-dollar investment, was signed by the Minister of Energy and Mineral Resources
Khaldoun Qteishat and Shell's Vice Chairman Malcolm Brendid. Under the agreement, Shell
pledged to spend 540 million dollars in the course of preliminary exploration operations, which could take at least 10 years before commercial production begins, Qteishat said. The concessionary agreement will cover about 22,000
square kilometres and involves four stages at the end of which Shell will evaluate the
outcome of its operations and decide whether to proceed to the next stage or halt the
project, Maher Hijazin, director of the natural resources authority said. 'If Shell
completes all stages it could arrive at a marathon project involving an investment of multi-billion dollars, whereby the country will not only
reach self-sufficiency in energy but becomes an exporter of oil,' he added. Jordan
currently imports more than 95 per cent of its energy needs, estimated at about 110,000
barrels of oil per day, from Saudi Arabia at market prices. Official estimates put
Jordan's oil shale reserves at about 40 billion tons." Jordan signs accord with Shell for oil shale exploitation Deutsche Presse Argentur, 17 May 2009 |
| "Russia and Italy agreed on
Friday to increase the capacity of the planned South Stream gas pipeline under the Black
Sea, in a move that will intensify concerns about the European Union’s reliance on
Russian supplies. The South Stream project is
intended to open a new route for Russian gas to reach the west, avoiding Ukraine. Disputes
between Russia and Ukraine have disrupted Europe’s gas supplies, most seriously in
January this year when 20 countries suffered shortages. Vladimir Putin, the Russian prime
minister, and Silvio Berlusconi, his Italian counterpart, oversaw a deal between Gazprom,
the Russian gas export monopoly, and Eni of Italy to double South Stream’s capacity
to 63bn cubic metres a year – enough to supply more than four-fifths of Italy’s
total gas consumption. Paolo Scaroni, Eni chief executive, said South Stream would improve
Europe’s energy security. 'What is the meaning of this capacity extension of South
Stream? It means 1bn cubic meters more here will be 1bn cubic meters less gas crossing
Ukraine.' South Stream is a rival to the
Europe-backed Nabucco project to bring Caspian gas to Europe across the Caucasus and
Turkey, easing Europe’s dependence on Russian supplies. But Nabucco investors have
struggled to secure gas supplies for the pipeline, a drawback underscored last week when
Turkmenistan and Kazakhstan refused to join Azerbaijan, Turkey and Greece in committing to
the project." Russia and Italy sign gas supply deal Financial Times, 15 May 2009 |
| "Top oil exporter Saudi Arabia needs to rein in fast-growing power
demand that threatens to eat into future exports, Saudi Oil Minister Ali al-Naimi said in
remarks published late on Wednesday. An economic
boom fuelled by record oil revenues this decade and subsidised domestic prices have led to
a rapid rise in electricity consumption in the kingdom. Gas
supplies were insufficient to meet all demand for power, so Saudi Arabia burns oil
products and some crude to meet demand. 'If this
trend in power consumption in the kingdom continues it will impact the size of exports and
will affect the kingdom's income, which necessitates the implementation of a national
programme to rationalise power consumption,' Naimi said in remarks published by the
official Saudi Press Agency. Power demand grew at an
average of around 5.6 percent per year from 2001-2008, up from 3.6 percent in 1995-2000,
due to industrial expansion and cheap prices, he said. Demand for gas and refined products was also growing quickly, he said.
Gas demand grew at around 7 percent per year and oil product demand around 5 percent per
year since 1990. Those rates outstripped the average real GDP growth of 3.4 percent since
1990, he said. Saudi Arabia was studying the use of solar energy to replace oil and gas
for power generation." Saudi must rein in soaring power consumption Reuters, 14 May 2009 |
| "The International Energy Agency cut its oil-demand forecast for a
ninth consecutive month, predicting consumption this year will fall the most since 1981 as
the recession lingers. The Paris-based adviser to 28
nations cut its global oil demand estimate 'slightly' to 83.2 million barrels a day this
year, down 3 percent from 2008, it said today in its
monthly report. That is 230,000 barrels a day lower than it forecast last month. The
revision comes a day after OPEC reduced its 2009 forecast, predicting oil demand of 84.03
million barrels a day. 'Demand continues to look very, very weak,' David Fyfe, head of the
IEA’s oil industry and markets division, said in a phone interview from Paris.
'Although there has been a lot of talk about the green shoots of economic recovery, we
think it is still a little bit early to be flagging any start of a full blown recovery.'
Oil prices have climbed 34 percent this year, trading above $60 in New York this
week for the first time in six months on increasing optimism about an economic recovery
and record production cuts by the Organization of Petroleum Exporting Countries. Still,
U.S. crude stockpiles remain near the highest since 1990 as the recession saps fuel
demand. OPEC crude production is beginning to rise as higher prices encourage members to
pump more than their quotas. Demand is weakest in the world’s most developed nations,
where consumption will drop by 5.1 percent this year, the IEA said. The IEA cited 'very
weak' demand data in April for the U.S., and to a lesser extent, Europe. Crude inventories
in developed nations are at their highest since 1993. Stockpiles were equivalent to 62
days of consumption as of the first quarter of the year, according to the IEA...The energy
adviser said it expects consumption in developing economies to contract for the first time
since 1994 as China and Russia 'continue to exhibit sustained weakness.' Demand in these
economies will average 38.1 million barrels a day this year, a decline of 0.4 percent, or
140,000 barrels a day compared with 2008. The IEA demand estimate is based on a forecast
that global GDP will shrink 1.4 percent in 2009 and the world economy won’t start to
markedly recover until 2010 at the earliest, it said. Should the world economy see
'strong' economic recovery this year, the IEA’s oil demand could be 'too
pessimistic,' according to the group. 'If we get an economic bounce in the second half of
the year, demand could be stronger than we are showing,' Fyfe said. Non-OPEC supply will
fall by 300,000 barrels a day this year, a second annual decline, to about 50.3 barrels a
day. The IEA increased its forecast 50,000 barrels a day compared with last month because
of 'stable' supply from the North Sea and higher-than-expected Russian output. Supply from
OPEC rose for the first time in eight months in April as members backtracked on production
cuts, according to the IEA." IEA Cuts Oil-Demand Forecast, Projects Biggest Drop in 28 Years Bloomberg, 14 May 2009 |
| "At some point, the message that Jeff Rubin wanted to give began to
diverge from the message he was expected to deliver as CIBC's chief economist. You could
see it in his research reports over the past 18 months – talk about the urgent need
for energy conservation, the inevitability of carbon pricing, oil at $225 (U.S.) a barrel
by 2012, and how the high cost of transportation as a result of peak oil will throw the
machinery of globalization into reverse....Rubin had just completed a new book, Why
Your World Is About to Get a Whole Lot Smaller, much of it based on his research at
the bank. An ambitious book tour was being planned, and Rubin had to choose between Bay
Street and Main Street....In chapter 7, Rubin lays out in detail how high oil prices,
which peaked near $150 in July 2008, led to inflation and rising interest rates that
triggered the U.S. mortgage crisis and sent the economic dominoes, including global trade,
falling....Why should anyone believe Rubin? He
accurately predicted oil's rise to $50, then $100, and most recently $150. In 2005 he said
the Canadian dollar would reach parity with the U.S. dollar, and it did....Rubin
acknowledges in the book that many considered him 'out to lunch' when oil plunged back
down to earth. He reminds, however, that it wasn't that long ago that oil was considered
expensive at $40, and that it will shoot back up once the economy begins to recover and
fast-rising demand bumps up against slow-moving supply. Easy, cheap oil is gone, regardless of what the oil giants tell you. One
thing he's learned, he writes, 'is that it is pretty much impossible to convince anyone of
something they just don't want to believe.' More are believing. Analysts at Raymond James
said earlier this month that global production of petroleum actually peaked early last
year. They called it a 'paradigm shift of historic proportions' and urged society to 'get
ready to live in a peak-oil world.'" |
| "Russia raised the prospect of
war in the Arctic yesterday as nations struggle for control of the world’s dwindling
energy reserves. The country’s new national security strategy identified the
intensifying battle for ownership of vast untapped oil and gas fields around its borders
as a source of potential military conflict within a decade. 'The presence and potential escalation of armed conflicts near
Russia’s national borders, pending border agreements between Russia and several
neighbouring nations, are the major threats to Russia’s interests and border
security,' stated the document, which analysed security threats up to 2020. ' 'In a
competition for resources it cannot be ruled out that military force could be used to
resolve emerging problems that would destroy the balance of forces near the borders of
Russia and her allies.' The Kremlin has insisted that it is not 'militarising the Arctic'
but its warnings of armed conflict suggest that it is willing to defend its interests by
force if necessary as global warming makes exploitation of the region’s energy riches
more feasible. The United States, Norway, Canada and
Denmark are challenging Russia’s claim to a section of the Arctic shelf, the size of
Western Europe, which is believed to contain billions of tonnes of oil and gas. An earlier
Kremlin document declared the Arctic a strategic resource for Russia and said that
development of its energy reserves by 2020 was a vital national objective. It set out plans to establish army bases along the Arctic frontier to
'guarantee military security in different military-political situations'. The strategy
published yesterday was approved by President Medvedev and drawn up by the Russian
Security Council, which includes the Prime Minister, Vladimir Putin, and heads of the
military and intelligence agencies. Mr Putin accused the West last year of coveting
Russian energy reserves, saying: 'Many conflicts, foreign policy actions and diplomatic
moves smell of oil and gas. Behind all that there often is a desire to enforce an unfair
competition and ensure access to our resources.'... Dmitri Rogozin, the Russian Ambassador
to Nato, warned the military alliance in March not to meddle in the Arctic, saying that
there was 'nothing for them to do there'. The Foreign Minister, Sergei Lavrov, also
criticised Norway, a Nato member, over military exercises based on 'a conflict over access
to resources'. Norway responded that Russia was expanding its military presence in the
region. A team of explorers led by Artur Chilingarov, the Kremlin’s special
representative to the region, used mini-submarines to plant a titanium flag on the Arctic
seabed in 2007 to stake Russia’s claim to the massive Lomonosov Ridge....The strategy document predicted that the struggle over energy
resources would increasingly dominate international relations. It identified the Barents
Sea and Central Asia, where Russia and China are vying for influence, as further areas of
friction. The Caspian Sea is critical to the European Union’s hopes of breaking its
dependence on Russian gas by building export routes for alternative supplies from Central
Asia. Russia, Kazakhstan, Azerbaijan, Turkmenistan and Iran are locked in talks on
dividing the seabed and its energy riches. The
strategy paper also condemned as unacceptable threats to Russian securityAmerican plans
for a missile defence shield in Eastern Europe and the expansion of Nato into the former
Soviet republics of Ukraine and Georgia." Russia warns of war within a decade over Arctic oil and gas riches London Times, 14 May 2009 |
| "Russia has warned that military
conflicts over energy resources could erupt along its borders in the near future, as the
race to secure oil and gas reserves gains momentum.
A Kremlin policy paper, which maps out Russia's main challenges to national security for
the next decade, said 'problems that involve the use of military force cannot be excluded'
in competition for resources. The National Security Strategy's release coincides with a
deadline for countries around the world to submit sea bed ownership claims to a United
Nations commission, including for the resource-rich Arctic. The
paper, signed off by Dmitry Medvedev, Russia's president, says international relations in
the next 10 years will be shaped by battles over energy reserves. 'The attention of international politics in the long-term perspective
will be concentrated on the acquisition of energy resources,' it said. 'Amid competitive
struggle for resources, attempts to use military force to solve emerging problems can't be
excluded. 'The existing balance of forces near the borders of the Russian Federation and
its allies can be violated,' it added. The document said regions including the Middle East, the Barents Sea, the Arctic, the Caspian Sea and
Central Asia could all be at the centre of competing
claims for resources. Russia, the world's biggest natural gas producer, has already
accused the United States, with which it shares a small sea border, of coveting its
mineral wealth. But Moscow is also finding its control over natural gas exports under
threat, as the European Union seeks alternative supply routes that would bypass Russia and
the Ukraine. The country is also embroiled in a territorial dispute with Norway over
claims to the Arctic sea bed, where around 25 per cent of the world's untapped
reserves are believed to lie underneath the ice. The National Security Strategy also
pointed to the US and Nato as major threats to global security. It criticised a US plan to
deploy a global missile shield in Eastern Europe, which has already infuriated
Russia." Moscow warns of future energy wars Al Jazeera, 13 May 2009 |
| "Oil rose above $59 a barrel on Wednesday, a day after hitting a
six-month high, supported by a U.S. government report that showed a surprise drop in crude
stocks in the world's top consumer....'The amazing run over the last months on building
crude stocks had to come to an end. We're starting to feel the impact of OPEC production
cuts,' said Phil Flynn,
analyst at Alaron Trading in Chicago....A forecast from the
Organization of the Petroleum Exporting Countries that world oil demand in 2009 would be
even weaker than previously thought and a fall in U.S. retail sales in April limited the
upside for prices. OPEC also said in a monthly report
said its production rose in April for the first time since July 2008, suggesting higher prices prompted some members to relax adherence to
agreed output targets." Oil rises over $59, EIA says US crude stocks fell Reuters, 13 May 2009 |
| "Kazakhstan approved its
participation in a Moscow-led gas pipeline, which could divert potential supplies away
from Europe's Nabucco project, days after refusing to commit to the EU-backed plan to cut
reliance on Russia. President Nursultan Nazarbayev signed Kazakhstan's agreement with
Russia and Turkmenistan into law on Wednesday, according to the presidential website
akorda.kz. Diplomats who attended a summit in Prague
last week said Kazakhstan, Turkmenistan and Uzbekistan had refused to sign a final
declaration to speed up work on the European Union-backed Nabucco project to bring Caspian
gas to Europe. Russia agreed with Central Asian producers in 2007 to carry more of their
gas to Russia by increasing the capacity of the Central Asia-Center pipeline system, which
would allow Moscow to keep regional gas flows under its control....Russia could sell the
additional Caspian gas on to Europe through its proposed South Stream pipeline project
which is seen as a direct rival to Nabucco. Gazprom currently buys about 50 bcm of gas a
year from Turkmenistan, about 15 bcm from Uzbekistan and less than 10 bcm from Kazakhstan
using a Soviet-era pipeline. All countries in the region plan to boost output in the
future but the West hopes that these additional volumes would be exported through new
routes bypassing Russia. A source close to the Nabucco project told Reuters the three
countries wanted guarantees and tangible incentives to supply the pipeline. Turkmenistan,
the region's biggest gas exporter, which also plans to begin shipments to China through a
new link later this year, has said it could fill all the planned pipelines." Kazakhstan commits to Russian-led gas pipeline Reuters, 13 May 2009 |
| "The first super-tanker from Qatar has begun delivering frozen gas at
–160C to the South Hook LNG Terminal in the south-west Wales port of Milford Haven,
which was formally opened on Tuesday. The biggest and most advanced LNG terminal in
Europe, it will boast five giant storage tanks as large as the Albert Hall by the end of
the year. The hi-tech project is a joint venture by Qatar Petroleum, ExxonMobil and Total.
Qatar's LNG fleet will send one ship to Wales every
three days, each supplying enough to meet Britain's gas needs for 24 hours. It is hoped that the new trade from Qatar's vast fields in the Persian
Gulf will guarantee Britain a reliable source of gas as the North Sea basin goes into
rapid depletion. As the world's biggest exporter of LNG, Qatar provides a counter-weight
to Russian control of pipelines feeding Europe's grids – prompting Moscow's frantic
efforts to rope Qatar into an OPEC-style gas cartel. The revolution in LNG technology over
the last decade has opened up Qatar's off-shore gas fields, transforming the tiny sheikdom
of 1.5m people (240,000 citizens) into the planet's richest country per capita. By 2013,
Qatar aims to produce 5.5m barrels per day of oil equivalent, half as much as Saudi Arabia
but with a fraction of the population. The task for
Britain is to ensure that the fleet of LNG tankers keep sailing to Wales rather going
East, where prices have been higher. Abdullah Al-Attiya, Qatar's energy minister, said
yesterday: 'Asia demand for LNG now, in other parts such as India and China, is becoming
very high. 'China's needs are still not satisfied. They need huge amounts of gas. So now
China is the centre of the new LNG compass.'" Qatari gas to reduce Russian dominance Daily Telegraph, 13 May 2009 |
| "Norway, the world’s fourth
biggest crude exporter, said Monday that its oil production fell a sizeable 7% in April to
1.99 million barrels a day last month from 2.15 million barrels a day in March. Though preliminary, the data highlight one of the big underlying supply
problems in non-OPEC states that many oil analysts believe is likely to send crude prices
back over the $100 a barrel mark in coming years. Oil closed Friday at $58.63, its highest
settle since mid-November. It is trading around $57.75 a barrel this morning. The
Norwegian situation is being replicated in other non-OPEC oil producers, such as Mexico
and the U.K. These regions are mature and giving up less oil, meaning that keeping
production flat is getting harder and harder." Oil Prices: Norwegian Supply Falls; Is $100 Oil Far Away? Wall Street Journal, 11 May 2009 |
| "Common knowledge about coal is that major producing nations like
China, the United States and Australia, have enough to last hundreds of years, far beyond
the reach of oil, which may already be in its twilight years. But worldwide coal production could plateau as early as 2025, according to one new estimate, and a growing group of scientists are
concerned that fossil fuel supplies may begin dwindling by mid-century. Last year, David Rutledge of the California Institute of Technology analyzed the coal production patterns of five regions around the world --
eastern Pennsylvania, France, Germany's Ruhr Valley, the United Kingdom and Japan -- each
of which was producing at less than a tenth of its peak levels. He found that each of the
depleted regions followed a rough bell curve of production; initial production was
followed by a steep ramp-up, a plateau near peak levels, and then a consistent
decline.When he applied the same formula to coal data from around the world, the results
were startling: the United Nations Intergovernmental Panel on Climate Change's maximum
estimate for extractable coal is about 3,400 billion tons. Rutledge's calculations suggest
just 666 billion tons. The problem with the IPCC estimate is that it lumps coal 'reserves'
which are easy to mine with coal 'resources,' which may be impossible to mine. And
Rutledge's study shows that, historically, national governments in the five regions have
overestimated their reserves by a factor of four on average. 'These appraisals are
large-scale issues,' he said. 'But they're done by governments. What's the incentive for
governments not to give a number that is too high?' James Murray of the University of
Washington agrees. In a talk being presented later this month at the American Geophysical
Union Joint Assembly, he plans to call for a re-evaluation of IPCC emissions scenarios,
all 40 of which overstate humanity's ability to emit the greenhouse gas carbon dioxide,
according to Rutledge's numbers. The committee's projections call for CO2
levels in the atmosphere to approach 500 parts per million by 2050, if emissions
continue on their current trend. But Rutledge's work suggest that even if humans burn all
the coal and oil we can get our hands on, we won't be able to push CO2 past 450 ppm. Oil
sands and other unconventional fossil fuels probably won't add much to that total. Murray
and Rutledge diverge on the question of climate effects, though. Using IPCC models,
Rutlgedge argues that global temperatures won't get higher than 2 degrees Centigrade (3.6
Fahrenheit) above preindustrial levels, at the lower end of what scientists think might
spark 'dangerous' climate change. 'We're still going to have global warming, and it's a
serious threat,' Murray said. 'I have no doubt the IPCC dramatically underestimates
climate sensitivity.' Regardless of climate impacts, the concern over looming energy
scarcity may be more acute than ever. 'I think we'll
see peak coal somewhere between 2025 and 2035,' Richard Heinberg of the Post Carbon
Institute in California said. 'This has huge
economic implications. Without growth in our energy supplies, it's very difficult to see
how we're going to grow the economy.'" Coal Supply May Be Vastly Overestimated Discovery News, 11 May 2009 |
| "The government’s latest plans to turn coal into a 'clean' fuel
are coming under increasing attack by climate-change activists and scientists. They say
the technology to be used (see below) would miss the majority of new coal-plant emissions
– if it works at all. Carbon Capture and Storage (CCS) has been proven only on small
power stations that generate about 30MW of electricity, but new coal plants would produce
50 times that power. CCS-fitted plants also require
more coal to operate, using up 25% to 40% of the total power generated to run the carbon
capture equipment. Even the government’s former chief scientific adviser is perplexed
by the plan. 'The energy needed to run CCS is significant and that of itself is a real
problem,' said Sir David King. The bigger concern, said King, is that most of the
emissions from new coal plants could go unabated. 'All new coal plants should be fitted
with precombustion technology, where 90% of carbon emissions are captured, if we are to
meet our climate-change targets,' said King. The
government wants to experiment with different types of CCS. According to a letter from
Downing Street obtained by The Sunday Times, of the four new coal stations planned, at
least one would be fitted with the precombustion system. Eon
has drawn up plans for a 400MW precombustion plant in Lincolnshire, though there are a
number of other candidates. Another station would be fitted for postcombustion, where the
carbon is removed after the coal is burnt, capturing only 20% to 25% of emissions. The other two plants are undecided. A Downing Street official said testing
various technologies is the best way of working out the costs of CCS – currently
estimated to add £800m to each new coal station. 'Britain can lead the global CCS market,
but we need to make it cost-effective. If we demonstrate different technologies then we
have a wider range of expertise to sell to the world.' Under the government’s
proposal, no new coal-fired power station will be licensed unless at least 400MW of gross
capacity is fitted with CCS. However, this represents only about 25% of the total
generating capacity of proposed coal plants. The government said the entire capacity of
the plant must convert to CCS within five years of the technology being technically and
commercially proven. But nobody knows how long it will take to prove CCS works on a large
scale. The government is banking on it working by 2025, but it could take longer. There is
also the question of how the government will enforce its plan. It is unlikely to pull the
plug if a power company argues CCS is not a commercially viable option and delays
installing it." You just can’t clean coal, warn activists Sunday Times, 10 May 2009 |
| "The relentless rise of white van man has been halted by the
recession, with the first fall in van mileage for more than 15 years. A decline in overall
traffic, which began last year amid high fuel prices, accelerated in the first three
months of this year, with 2.7 billion fewer miles driven than in the same quarter in 2008.
With fewer vehicles on the roads, average journey times became considerably quicker on
motorways and A-roads. Boosted by the trend towards shopping online and home deliveries,
van traffic increased by 40 per cent in the past decade. Boosted by the trend towards
shopping online and home deliveries, van traffic increased by 40 per cent in the past
decade. But as the recession took hold, falling consumption of goods and services resulted
in a 2 per cent decline in van traffic in the three months to March 31, the first
quarterly fall since records began in their current form in 1993. HGV traffic, which has
fluctuated in recent years, fell by the steepest amount on record in the first quarter,
down 12 per cent. The number of HGV drivers claiming jobseeker’s allowance also rose
fourfold in the past year, up from 3,280 in March last year to 15,255, according to the
Office for National Statistics....The Department for
Transport said part of the reason for the 3.5 per cent decline in overall traffic in the
first quarter was the heavy snow in February when millions of people stayed at home for
one or two days. However, traffic has now fallen for four successive quarters. Some transport analysts believe that this may be the beginning of a
permanent shift in travel habits, with people choosing to make fewer journeys and travel
shorter distances. Journey times on the most congested tenth of the motorway and A-road
network have fallen by 12 per cent since 2007. Drivers on these roads are saving 30
seconds for every ten miles they travel compared with two years ago." White van man halted by credit crunch and higher fuel prices London Times, 8 May 2009 |
| "One of the few good pieces of news in the current economic crisis
(maybe the only one) is that oil prices have gone from the 147$ a barrel of July 2008 more
than 100$ down to less than $50 a barrel on the international markets. However, in the
last days we have seen oil prises rising and reaching the price of $58 a barrel for the
first time in nearly six months. Nevertheless low oil prices are also good news for gas,
since gas prices are normally linked to those of oil....However, we should not be under
any illusion. The current fall of oil prizes is just the consequence of an even more
dramatic fall in demand due to economic crisis....But the
fundamentals that drive the energy markets have not changed. Once the economic crisis is
over demand for hydrocarbons will soar again, particularly in the developing world. And
some countries are preparing for that. For example the Chinese government has
granted a credit to Russian State owned oil companies Rosneft and Transneft $25 bn.
against daily supplies of 48,000 tonnes of oil for the next 20 years. The world is aware
that the production of the existing oil wells is decaying and that new discoveries are
more scarce and more expensive....The lower prices that we are enjoying now can be in fact
bad news. At this price oil producers have been forced to postpone many necessary
investments in new production capacity. These investments take decades to be accomplished.
In consequence, if the current economic crisis finished and demand recovers we could be
facing huge shortage of supplies that can lead to extremely high prices....The current relatively low oil prices give a respite to prepare for
the coming new oil crisis. We have to reduce our dependency in all those areas in which
black gold is not indispensable, such as heating, or electricity production. For those
areas which will have to continue to depend on it, like transport, we need to accelerate
the research for alternatives, like biofuels, electric cars or hydrogen. And in all
sectors, we have to accelerate our efficiency being aware that every barrel of oil that we
are using is one of the last." Are we moving towards a new oil crisis? EU Energy Commissioner Andris Piebalgs (European Commision Blog), 8 May 2009 |
| "The European Union will provoke fury in Moscow when it begins an
unprecedented drive to forge a new pact with former Soviet states. Ignoring Russian
condemnation, EU ministers will effectively open up a third front in an escalating
East-West row on Thursday by meeting ex-Soviet bloc leaders in Prague for two summits that
could reduce Moscow's energy stranglehold over Europe and its political influence over
neighbouring states. Kremlin anger with the West has grown steadily in recent days,
culminating with the formal expulsion on Wednesday of two Canadian diplomats assigned to
the Nato mission in Moscow. The ejections took place after Nato withdrew the accreditation
of two Russian diplomats at its Brussels headquarters after accusing them of spying.
Further stoking tensions in what Moscow calls
its 'near abroad', Nato meanwhile began a military exercise in Georgia, a move denounced
by Dmitry Medvedev, the Russian president, as 'blatant provocation'. Russia and Georgia fought a five-day war last year that some commentators
said was partly caused by the Kremlin's opposition to the Nato membership ambitions of
Georgia and Ukraine. Western aspirations for an improved relationship with Russia have
been further dented by Kremlin objections to the EU's summit with its recently created
'Eastern Partnership', a six-member bloc incorporating the ex-Soviet states of Belarus,
Ukraine, Moldova, Armenia, Georgia and Azerbaijan. Mr Medvedev, outlining his foreign
policy doctrine last year, insisted Russia was entitled to a sphere of 'privileged
interest' in the former Soviet Union....Until this
year Moscow appeared to have beaten the West in the 'New Great Game' to secure control
over the gas resources of Central Asia, seen as a vital alternative for Europe to Russian
energy. But a rare show of European unity over a long-stalled pipeline project in the
Caspian sea region and the blossoming of relations with gas-rich Turkmenistan have revived
hopes that a last-minute deal to cut out Russia could be secured at the summit. 'It is a
make or break summit,' one European diplomat said. 'If there is no deal, the gas goes to
Russia or China." EU to forge pact with ex-Soviet states Daily Telegraph, 7 May 2009 |
| "Power capacity in Britain is sufficient to charge electric cars in
the medium term, according to a new report. The study, which was carried out by a team of
representatives from companies such as Ricardo, Jaguar-Land Rover, E.ON and Amberjac
Projects, suggested that a ten per cent increase in
electric cars and plug-in hybrids would raise power demand by less than two per cent. It also revealed that the increase in demand for energy would most likely
be spread over the market and be distributed evenly. Neville Jackson, group technology
director at Ricardo, said: 'The increasing electrification of road vehicles is likely to
be a key enabler for future significant reductions in transport-related CO2 emissions.
'While the provision of publicly accessible street level infrastructure in the form of
recharging points remains a challenge, the research findings published today show that
existing UK power grid capacity will be sufficient in the medium term to support a
significant expansion of plug-in hybrid and electric vehicle use and is therefore not a
constraint on implementation.'" UK power capacity 'sufficient for electric cars' Energy Saving Trust, 6 May 2009 |
| "Britain is facing an energy crisis as a rise in renewable power is
pushing the 'outdated' National Grid to breaking point, experts warned yesterday. Analysts
say the network cannot cope with the extra electricity generated by wind, wave and solar
sources. They fear the increase in renewables will overload a system that was not designed
to accept so much incoming power. Inenco, the UK's largest energy analyst, said Britain
could be plunged into darkness unless the infrastructure was updated. Inenco analyst Ian
Parrett said the overhaul could cost the government between £5 billion and £10bn. He
said: 'The UK's electricity infrastructure is so outdated and expensive that the
renewables push towards wind farms and other forms of micro-generation is going to place
an impossible strain on the network. 'It was not
designed for two-way power generation, where smaller generating sources put energy back
into the grid, and this will continue to be the case unless the government invests heavily
in upgrading the grid.'" Surge in renewable power fuels fears of energy crisis The Scotsman, 5 May 2009 |
"Oil production in the Gulf of Mexico could peak at more than 1.8
million barrels per day by 2013 under the
industry’s best-case scenario, but natural gas production will likely continue its
decadelong decline, according to a government study released Monday at the Offshore
Technology Conference. About 1.1 million barrels of oil per day were produced in the Gulf
in 2008, according to the Minerals Management Service, with about 829,000 coming from
deep-water fields — those drilled in more than 1,000 feet of water. Natural gas
production was about 6.43 billion cubic feet per day, with about 2.6 bcf coming from the
deep water. Oil production from projects the industry has currently or is committed to
starting up could peak at 1.6 million barrels by 2011, according to the agency’s
forecast, but if announced discoveries and undiscovered resource estimates are included,
the peak could reach 1.8 million barrels by 2013. 'The deep-water frontier has entered a
new phase,' said Mike Prendergast, chief of staff for the agency’s Gulf of Mexico
region, with technology developments leading the charge to larger and deeper projects. The
Gulf of Mexico accounts for about 25 percent of domestic oil production and 15 percent of
natural gas output, according to the agency. Royal Dutch Shell’s Perdido platform, in
8,000 feet of water 200 miles south of Freeport, represents the trend’s cutting edge
and will be the new oil and gas deep-water champion when it comes on next year with a
130,000-barrel-per day capacity. The Anadarko Petroleum-operated Independence Hub is also
in 8,000 feet of water about 185 miles from New Orleans. It just pumps natural gas. The
number of production projects operating in depths greater than 1,000 feet grew 8 percent
last year to 141, according to the report, while 57 percent of Gulf oil and gas leases in
2008 were in the deep water, up from 54 percent a year ago. Gulf
natural gas production peaked in 1997 at 14.1 bcf
but has dropped since then due to both the decline in production in mature shallow-water
fields and the fact that the deepest formations tend to have much more oil than natural
gas. Of the deep-water finds under development, it’s predicted that 84 percent of the
output will be oil and only 16 percent natural gas." |
| "An average of analysts' predictions reckons on a reduction in demand of 1.5m barrels a day for 2009 over last
year, while the International Energy Agency is
predicting a fall of 2.5m barrels, but an estimate based purely on current economic growth
figures would put the overall decline at 3m." Rising reserves of unused oil put strain on storage Daily Telegraph, 4 May 2009 |
| "A new generation of engineers hover over their computers, making the
refinements needed to produce an estimated 11,500 of the machines by 2012 to form what
engineers call a 'cascade,' or a plant that produces enriched uranium. Rebuilt with super
high-strength carbon fiber components and fashioned by computers and robotics not even
imagined in 1985, the machine is the U.S.-built centerpiece for a high stakes, five-way
race to see who will dominate the globe's nuclear fuel business....The competition USEC
faces, both here and abroad, is formidable. Three competitors with foreign connections are
setting up operations here to compete directly with USEC for the U.S. nuclear fuel. In
addition, Russia -- which currently supplies about half of the U.S. nuclear fuel market
with uranium fuel whose enrichment is blended down from dismantled nuclear weapons -- has
its own global nuclear market ambitions....If it works, the laser enrichment process could
open up vast new supplies of enriched uranium because, unlike centrifuge technologies,
lasers might be able to extract more U-235 out of old uranium mining and processing
wastes, which are called uranium 'tails.' The United States has a great abundance of them.
While other parts of the picture of a nuclear 'renaissance' may still seem somewhat murky,
industry officials are elated about future fuel supplies. 'With four planned new
enrichment facilities in the works, we are approaching a robustness of fuel supplies that
we have not seen in decades,' said Alex Flint, senior vice president for government
affairs at the Nuclear Energy Institute. Thomas Neff, a senior researcher at the
Massachusetts Institute of Technology who has followed the nuclear fuel industry for 30
years, is not that sanguine. He worries that not all these timetables will work out, and
that there could be a fuel shortage as early as 2013,
when the Russian government has said it will pull out of the U.S. market. Russia wants to
use its uranium fuel to feed a growing internal need for nuclear fuel and to compete in
other rapidly growing nuclear markets, such as India and China. The end of the fabled
'Megatons to Megawatts' deal, which Neff helped inspire, will leave a big hole in the U.S.
market. Neff is particularly skeptical of USEC's
ability to compete in the future enrichment market, where he thinks it could be
underpriced by more advanced competitors. That could leave the United States, the pioneer
of both centrifuge enrichment and the nuclear power plant, without a totally domestic
source of enriched fuel. Referring to the 40-foot-high centrifuges, dredged out of past
U.S. experiments and much larger than either the Russian or the European versions, Neff
worries they may prove to be too expensive to compete. 'The other problem with these
40-foot monsters is that nobody knows how long they will last,' he adds. Still, Neff and
others involved with the nuclear fuel cycle have difficulty seeing a coherent U.S. energy
policy without a future nuclear component." A 'robust' new fuel supply for nuclear power plants is emerging New York Times, 4 May 2009 |
| "Russia is planning a fleet of floating and submersible nuclear power
stations to exploit Arctic oil and gas reserves, causing widespread alarm among
environmentalists. A prototype floating nuclear power station being constructed at the
SevMash shipyard in Severodvinsk is due to be completed next year. Agreement to build a
further four was reached between the Russian state nuclear corporation, Rosatom, and the
northern Siberian republic of Yakutiya in February. The
70-megawatt plants, each of which would consist of two reactors on board giant steel
platforms, would provide power to Gazprom, the oil
firm which is also Russia's biggest company. It would allow Gazprom to power drills needed
to exploit some of the remotest oil and gas fields in the world in the Barents and Kara
seas. The self-propelled vessels would store their own waste and fuel and would need to be
serviced only once every 12 to 14 years." Russia to build floating Arctic nuclear stations Observer, 3 May 2009 |
"China, with ambitious plans to
boost the amount of electricity produced from nuclear power, is in talks with Cameco Corp.
[CCO-T] about a potential uranium supply agreement. The Asian giant has
become a significant buyer of the radioactive metal on the spot market as it increases its
nuclear power capacity, and has entered talks with Saskatoon-based Cameco, the world's
largest uranium producer. China is actively taking advantage of weak prices to secure
supply of the metal used to make nuclear fuel....Cameco spokesman Lyle Krahn said the
company is currently in discussions with China regarding a potential uranium supply
agreement. The Asian superpower expects to have 75 gigawatts (a gigawatt is one billion
watts) of nuclear power generating capacity by 2030. That represents just three-quarters
of current capacity in the U.S. – the largest nuclear power producer – and only
10 per cent of China's total electricity demand. 'The uranium market potential in China is
absolutely huge,' Mr. Krahn said. Scotia Capital Inc. China strategist Na Liu said the
market is underestimating the speed at which China is adding nuclear capacity. He is
forecasting that China will have total nuclear capacity of 35 gigawatts by 2015 and 75
gigawatts by 2020, up from the 9.068 gigawatts operating today. China is currently
building 20 new nuclear reactors, with approximately one gigawatt of capacity each. Scotia Capital predicts that by 2020, China will consume 15,700
tonnes of uranium a year. 'At this rate, China's currently known uranium resources can only
last for five to 10 years. Clearly, in our opinion,
it is imperative for China to secure long-term supply through imports or investment,' Mr.
Liu said in a recent note to clients. China has also recently held discussions with
Australian producers regarding potential supply agreements." |
| "Kazakhstan will supply over
2,000 tonnes of uranium to India for its existing nuclear plants. Both sides are negotiating the price. India could also take up equity
stake in Kazakh uranium mines and join the nuclear research centre being set up with
active Japanese collaboration. These issues were discussed during a recent telephonic
conversation between Prime Minister Manmohan Singh and Kazakhstan President Nursultan
Nazarbayev, said reliable sources. The leaders were due to interact when Mr. Nazarbayev
was here as the chief guest at Republic Day, the first Central Asian President conferred
the privilege. But the meeting did not happen as Dr. Singh was indisposed. The uranium supply will be for five years and comes with no strings attached." Kazakh to supply 2,000 tonnes of uranium The Hindu, 1 May 2005 |
| "The worldwide rig count dropped
dramatically in March, to 2,313, its lowest level since June 2004. According to Baker
Hughes, the total was down by nearly 16% compared with February and by 29% against
March 2008, with North America showing the biggest
declines (see Figure 1). But despite Opec secretary-general Abdullah El-Badri's
announcement in February that 35 drilling projects across the organisation's member states
would be scrapped this year, the Middle East's rig count remains relatively healthy. The
region saw a fall of just 2.6%, to 262, in March 2009 compared with the same period a year
earlier." Mideast still drilling despite world rig-count slump Petroleum Economist, May 2009 |
| "Lockheed Martin is best known for building stealth fighters,
satellites and other military equipment. But since late 2006 the company has taken on a
different kind of enterprise — generating renewable power from the ocean. The
technology is still being developed in the laboratory, but if it succeeds on a large
scale, it could eventually become an important tool in the nation’s battle against global
warming and dependency on foreign oil. Lockheed
and a few other companies are pursuing ocean thermal energy conversion, which uses the
difference in temperature between the ocean’s warm surface and its chilly depths to
generate electricity. Experts say that the balmy
waters off Hawaii and Puerto Rico, as well as near United States military bases on islands
like Diego Garcia in the Indian Ocean or Guam in the Pacific, would be good sites for
developing this type of energy. Hawaii and many other islands rely on imported oil to
generate most of their electricity, which is expensive, and last year’s spikes in oil
prices have reinvigorated their search for homegrown alternatives. In the approach
that Lockheed is pursuing (with another company, Makai Ocean Engineering), the water on
the ocean’s surface is used to heat a pressurized liquid, usually ammonia, which
boils at a temperature slightly below that of warm seawater. That liquid becomes gas,
which powers a turbine generator. Cold water is then pumped from the ocean’s depths
through a giant pipe to condense the gas back into a liquid, and the cycle is repeated. An
important advantage of this method of producing energy is that it could run all the time,
unlike solar plants, which cannot work at night, or wind
turbines, which stop in calm conditions. In the approach that Lockheed is pursuing
(with another company, Makai Ocean Engineering), the water on the ocean’s surface is
used to heat a pressurized liquid, usually ammonia, which boils at a temperature slightly
below that of warm seawater. That liquid becomes gas, which powers a turbine generator.
Cold water is then pumped from the ocean’s depths through a giant pipe to condense
the gas back into a liquid, and the cycle is repeated. An important advantage of this
method of producing energy is that it could run all the time, unlike solar plants, which
cannot work at night, or wind
turbines, which stop in calm conditions." Generating Energy From the Deep New York Times, 29 April 2009 |
| "It is a dazzling vision of a clean energy future. An entire
continent powered by solar panels, wind and wave turbines, geothermal and hydroelectric
power stations — and all stitched together by a European 'supergrid' stretching from
the sunbaked deserts of the south to the windswept North Sea, from the volcanoes of
Iceland to the lakes of Finland. It may sound like the stuff of science fiction but this
is a vision that the European Union wants to make a reality. The concept is gaining ground
among policymakers, including leaders such as President Sarkozy and Gordon Brown, who are
concerned about Europe's carbon emissions and its steadily growing dependence on Russian
gas. Adam Bruce, chairman of the British Wind Energy Association (BWEA), is convinced that
a European supergrid that could eventually banish polluting fossil fuels altogether, is
only a matter of time. 'We are only limited by our own ambition,' he says. 'The capacity
is there. There is the potential for wind alone to supply 50 per cent or more of our
energy needs.'....Such dreams of renewable energy
certainly catch the imagination but for Britain, which generates just 1 per cent of its
electricity from renewables — the least in the European Union after Malta and
Luxembourg — the gap between ambition and reality seems particularly stark. The truth is that, despite the Government's talk of a green energy
revolution, Britain's renewable energy industry is in crisis. About 40 per cent of the
UK's power stations were built before 1975 and urgently need to be replaced. But the
combined impact of the credit crunch, falling oil and coal prices and the weaker pound now
threaten to hold up wind projects just as the UK has raised its commitment to green
electricity....In last week's Budget, the Government announced incentives designed to
bolster investment in huge offshore windfarms and ensure that Britain hits its target of
raising the share of electricity produced from renewable sources to 35 to 40 per cent by
2020. So will they work? Not according to Jim Skea, director of the UK Energy Research
Centre. He has just undertaken a big research project into how the UK can slash its carbon
emissions by 80 per cent by 2050. 'In none of the scenarios we looked at were renewables
picked up nearly fast enough to meet the 2020 targets,' said Professor Skea. 'It will be a
big struggle. We are not spending nearly enough.' Wind power, easily the most economically
attractive form of renewable energy in the UK, remains hugely expensive when compared with
gas and coal. A recently approved gas-fired station in Pembroke will cost £1 billion and
will be the largest in the UK, producing 2,000MW. It would cost six times as much to build
a windfarm of similar capacity." Europe's green energy vision puts UK in dark London Times, 30 April 2009 |
| "Government plans to generate more than a third of Britain's
electricity from green energy sources, such as wind and solar power, by 2020 are doomed to
failure without a dramatic increase in state support, according to a leading energy
research group. Despite fresh incentives to increase investment in offshore wind parks
announced in last week's Budget, the UK Energy Research Centre (ERC) said on Wednesday
that it was virtually impossible for the UK to meet the target imposed by Europe of
generating 15 per cent of total energy from renewable sources by 2020 — which equates
to about 35 per cent of total electricity. Jim Skea, research director, said: 'Renewables
can make a significant contribution, but if you look at the scale of what is required, I
think that is very, very challenging and 2020 is almost tomorrow when you look at what
needs to be achieved.' Professor Skea said that Britain urgently needed to set a higher
carbon price to hasten the adoption of low carbon technologies and to boost investment in energy research — which has collapsed from
£700 million a year in the 1970s and 1980s to just £100 million annually." UK Government green goals face failure London Times, 30 April 2009 |
| "William Hague yesterday became the first
member of the Tory leadership to predict a Conservative victory next year and said that
his party was psychologically prepared for government.... In a sign of the
leadership’s increasing confidence about the election, Mr Hague disclosed details of
handover talks with the Civil Service — and contrasted them with the 'fantasy
politics' that marked the talks he had held as Conservative leader in 2001. Mr Cameron’s team has instructed the Permanent Secretary of the
Foreign and Commonwealth Office to prepare for a 'national
security council'. Headed by Mr Cameron, it would include the
defence, foreign, home and energy secretaries.... There was consensus with the Government on much foreign policy, but a
Cameron administration would give higher priority to relations with the Gulf states and India." We'll win the next election, says William Hague London Times, 29 April 2009 |
| "The world can burn only a quarter of proven reserves of oil, gas and
coal to be confident of staying within safer climate limits, unless untested carbon fixes
work, experts said on Wednesday. In two studies published this week in the journal Nature,
scientists honed the basis for urgent climate action as the world tries to map by the end
of this year agreement on a new treaty to replace the Kyoto Protocol. People could burn no more oil, gas and coal in their homes, cars
and factories after 2024, at current rates, to limit to one in five the chance of
exceeding 3.6 degrees (Fahrenheit) warming worldwide, one article found. 'It really casts doubt on whether any investment into more fossil fuel
exploration is really a good investment,' said the Potsdam Institute's Malte Meinshausen,
who led the study." Study: World can 'safely' burn only 25% of oil Reuters, 29 April 2009 |
| "With oil prices stuck at less less than $50 a barrel, Tony Hayward,
BP’s chief executive, is confronting perhaps the most difficult choice of his career.
Should he cut the dividend and face the wrath of investors – and run the risk of
losing his job – or curb the group’s spending plans at the expense of future
production and growth? Yesterday, he appeared to offer his answer to this familiar
industry dilemma. BP, he claimed, could hold its dividend and spending plans with oil at
$55-$60 a barrel. But in the meantime it will set out to rein in its $20 billion capital
expenditure programme this year. 'We believe we can do $20 billion of work for less than
$20 billion,' he said. It sounds like a tempting idea and BP is right to try to force down
costs during the downturn, when suppliers are squeezed and the cost of raw materials such
as steel and cement are tumbling. But there are risks in taking this approach too far. BP
had already announced plans to whittle down its spending plans from $22 billion in 2007 to
as low as $20 billion this year. Now it says it wants to spend less than this, although it
would not be drawn yesterday on how much less. The
danger for BP is that forcing suppliers to reduce costs too much could threaten their
ability to carry out the work properly or even to stay in business. Cheap deals struck
with desperate subcontractors are often bad news for everyone, with corners cut and
projects delayed – or worse. At BP, the results
of this approach may take a while to feed through. But
if Mr Hayward is not careful, their impact will come in the end in the form of lower oil
production and engineering problems on key pieces of
kit." Danger of having BP contractors over a barrel London Times, 29 April 2009 |
| "Kazakhstan's national nuclear
corporation, Kazatomprom, has signed a deal to supply 24,200 tonnes of uranium to China
Guangdong Nuclear Power Co (CGNPC) by 2020, Zhou
Zhenzing, the general director of CGNPC Uranium Resources Co, told reporters in Almaty.
Kazatomprom and CGNPC signed a memorandum on Wednesday to form a joint venture to build
nuclear power plants in China. This does not include uranium that a joint venture,
Semizbai-U, will ship to China. Kazatomprom owns 51% and CGNPC has 49% of the joint
venture. Semizbai-U will develop the Irkol uranium field in the Kyzyl- Orda region in
southern Kazakhstan and the Semizbai field in the Akmola region. The fields should produce
750 tonnes and 500 tonnes of uranium per year, respectively. CGNPC intends to develop
another uranium mine in Kazakhstan with reserves of 40,000 tonnes." Kazatomprom to Supply 24,200 Tonnes Uranium to Cgnpc By 2020 InterFax, 29 April 2009 |
| "China's
oil demand fell by nearly six per cent year-on-year in the first quarter of 2009, Energy Intelligence (EI), the US-based energy advisory firm has
said...In a new update, EI said that Chinese net crude imports and domestic production
averaged 7.39 million barrels per day. That is 5.6 per cent lower than the corresponding
figure in 2009....EI in its report said that the key factor was crude imports, which slid
9 per cent year-on-year to 3.33 million bpd. Domestic output slid 0.6 per cnt to 3.75
million bpd, it added....several other figures are not encouraging. 'China's power output,
a key barometer of industrial activity, fell 1.3 per cent year-on-year in March and is
likely to drop four per cent this month,' EI said." China's oil demand fell by nearly 6% in Q1 of 2009 Emirates Business 24/7, 28 April 2009 |
| "Crude oil output growth from deepwater areas may stagnate because
current oil prices make it unprofitable to tap new deposits and large discoveries dwindle,
a consultant said. 'The pace of growth will slow and then become flat for the next few
years,' Michael Rodgers, a partner at PFC
Energy, said in an interview at the Offshore Vessels conference in Singapore yesterday.
'There were not a whole lot of large commercial discoveries in the last couple of years.'
Production from deepwater blocks grew 67 percent a year between 2005 and 2008 following
discoveries off Angola and Nigeria. That beat a growth of 1.3 percent in total crude oil
output during the same period. Global deepwater oil
production may peak at 7.5 million barrels a day in 2013, Rodgers said....'Falling investment in commercial deepwater development
will require fewer deepwater platforms in the next five years compared to the last five
years,' Rodgers said. Production of oil from the deep seas accounted for 8 percent of
global crude produced last year....Output in deepwater areas, or those at water depths of
more than 1,000 feet (305 meters), soared in the past five years as companies discovered
large deposits in Angola, Nigeria and the Gulf of Mexico, Rodgers said. The majority of deepwater areas have reached 'maturity' and
current projects are facing delays, he said. Oil and
gas explorers are postponing or scrapping deepwater projects, potentially reducing crude
supplies by as much as 2.4 million barrels a day in 2011, Morgan Stanley said in a report in March. Oil prices in New York have
declined more than 66 percent from a record $147.27 a barrel in July last year. Out of a
sample of 46 deepwater projects in places including Brazil, Africa, Norway, Asia and the
Gulf of Mexico, about 27 may have an internal rate of return of less than 15 percent, the
minimum required for international oil companies to invest in deepwater developments,
according to Rodgers. Oil must reach $50 a barrel for some developments to achieve more
than 15 percent in returns, he said. No new contracts
have been awarded since August 2008 when Morgan Stanley estimated that companies needed
139 new production platforms to develop fields in deep seas. Since then, 11 orders have
been canceled and 46 delayed by an average 15 months, according to last month’s
Morgan Stanley report. Worldwide spending on oil and gas exploration may drop 12 percent
in 2009 to $400 billion, according to a report in
December by Barclays Capital Research." Deepwater Oil Production Growth May Stagnate on Low Prices Bloomberg, 28 April 2009 |
| "On the basis of depletion alone,
world oil production will begin to decline around 2010, and coal
production around 2025 or 2030. Since coal will peak
later, that means that a greater proportion of our energy will be coming from coal than
from oil. Therefore emissions may not decline so much or so fast as total
energy—unless we implement emissions reduction agreements." Italian magazine interviews Richard Heinberg Energy Bulletin, 27 April 2009 |
| "Petroleo Brasileiro SA, Brazil’s
state-controlled oil company, may be hurt by a rig shortage as it begins development of
the Tupi field, the largest discovery in the Americas since 1976, according to Jefferies
& Co. Inc. The company expects to almost double the numbers of rigs operating in
deepwater offshore Brazil to 68 by 2012, from 38 today, according to Jefferies analyst Jud Bailey. It’s 'questionable'
whether six of these rigs can even be built because the contractors are 'small marginal'
players, Bailey said April 24 in an interview from Houston. Others rigs may be delivered
as much as a year late, he said. Tupi, which starts pumping oil on May 1, and other Santos
Basin fields may contain about 100 billion barrels of oil, according to Marcio Mello, head of Brazil’s
petroleum geologists association. That’s enough
to supply all needs in the U.S., the world’s largest consumer, for more than 13 years, according to BP Plc. Petrobras is scouring the world in search of
billions of dollars to finance the fields’ development. Demand for vessels that can
drill in ocean depths up to 10,000 feet is growing faster than the supply of rigs, forcing
oil companies to pay escalating rates even after crude lost two-thirds of its value in the
past nine months. Producers are betting subsea discoveries will tap pools of crude so
large that they will be profitable regardless of oil prices....A drop in oil prices has
made it difficult for small rig builders to complete orders as margins narrow, Bailey
said. Brazil’s government has also required Petrobras to hire local builders, who are not necessarily
capable of building the rigs or don’t have the money to do it, he said. Petrobras
would have to step in and 'backstop' some of these companies financially to allow them to
produce the equipment in time, he said. 'The down side for Petrobras is that the world
capital crunch will make it hard for many companies to finance new ships and drill rigs,' Peter Ping Ho, an oil and gas analyst
with Planner Corretora De Valores in Sao Paulo, said April 24. Rio de Janeiro-based
Petrobras, whose Tupi field is the largest discovery since Mexico’s Cantarell, is
tapping overseas partners to help fund a $174.4 billion five-year investment plan. Chief
Financial Officer Almir Barbassa was last week touring
Asia to persuade equipment manufacturers and shipbuilders to expand their operations in
Brazil....Tupi may hold as many as 8 billion barrels
of oil. The field and nearby deposits in
Brazil’s so-called pre-salt may almost double Petrobras’s oil reserves, the
company said in January. The company is targeting a 53 percent increase in production to
3.66 million barrels a day through 2013. Petrobras will start pumping as much as 30,000
barrels of oil a day to test Tupi. A pilot 100,000 barrel a day project is scheduled for
2010. The oil is 320 kilometers (200 miles) off Brazil’s coast beneath almost 2,000
meters of water and another 5,000 meters of rock and salt." Brazil’s Tupi Oil Field May Be Hurt by Rig Shortage: Week Ahead Bloomberg, 27 April 2009 |
| "After several years of speculation, the Alberta government last
month released a long-awaited 'expert’s
report' on nuclear power and oil sands and has now embarked on a series of province-wide
public consultations. The move comes on the heels of a
decision
last month by Bruce
Power, a private company that operates a publicly-owned nuclear station in western
Ontario, to seek approval to build a $10 billion nuclear station at a site known as
Whitemud, about 310 miles northwest of Edmonton.
Bruce Power hopes to begin an environmental assessment next year. Its proposal calls for
two to four 1,000-megawatt reactors, with three vendors – Atomic Energy of Canada Ltd.,
Westinghouse and Areva – competing to
supply the equipment. According to the expert panel
report, almost 90 percent of Alberta’s electricity comes from coal or natural gas,
and demand is projected to jump 74 percent within the next 15 years, largely due to the
needs of the oil sands projects — which consumes roughly 1 billion cubic feet of
natural gas daily. At the same time, the National
Energy Board has projected a drop in long-term natural gas production in Western
Canada, and continued consumption by oil-sands production could turn the province into a
net importer within the next few decades....But
anti-nuclear activists and critics of Alberta’s oil sands industry are questioning
the idea of using nuclear energy as an alternative. Andrew Nikiforuk, a Canadian
journalist and the author of the 2008 book, 'Tar Sands: Dirty Oil and the Future of a
Continent,” said Royal
Dutch Shell has been testing a bitumen extraction process in Colorado that relies less
on natural gas and instead uses long electrodes that can be driven down into the shale to
gradually separate the trapped oil....Beyond the customary objections to nuclear power,
Mr. Nikiforuk observes that the project may serve to further impair Canada’s
international reputation on energy policy. 'The first country to use nuclear power to
produce fossil fuels will not be highly regarded on the planet.'” Using Nuclear Power to Extract Oil? New York Times (Blog), 27 April 2009 |
| "Kazakhstan's newest in-situ leach (ISL) uranium mine, Kharasan 1,
has been officially opened at a ceremony attended by Kazakh, Japanese and Canadian
dignitaries. The 24 April ceremony was led by Kazakh prime minister Karim Massimov and
attended by official delegations headed by Japanese and Canadian diplomats,
representatives from the companies involved in the Kharasan 1 project, and Kazakh
dignitaries. The mine is expected to produce 180
tonnes of uranium in 2009, reaching its full capacity of 3000 tonnes of uranium per year
in 2014. It is expected to operate until 2053." Kazakh uranium mine starts World Nuclear News, 27 April 2009 |
| "The recovery of Iraq’s oil industry is still a mirage. The
government aims to nearly double production – to 4.5m barrels a day – over the
next five years. It can’t do that without foreign help. But for the moment,
foreigners aren’t especially welcome. True, Royal Dutch Shell has signed a
preliminary agreement with the oil ministry to capture flared gas in the Basra region. But
the oil and gas committee of the Iraqi parliament says the $4bn deal is invalid. It says
parliament, not the ministry, has the final word. Then there’s China’s National
Petroleum Company, which has a 20-year service contract to develop the al-Ahdab oilfield.
MPs are threatening to revoke that, too. Security is still a concern for oil majors. But
the energy companies are hoping the violence will continue to subside. Some 32 of them
have thrown their hats into the ring in a tender process to develop more fields. But as
the Shell dispute shows, without a solid national hydrocarbon law the politics are risky.
Political bickering has kept any law from passing parliament for over two years. The division of spoils, both within Iraq and between Iraq and the
foreigners, is hotly contested. The political impasse explains why so few contracts have
been tendered." Iraqi oil recovery still a mirage Business Standard, 27 April 2009 |
| "'All targets and no trousers' seemed to be the gist of the reaction
from environmentalists to last week's Budget. Greens welcomed the introduction of new,
legally binding, carbon-reduction goals but attacked the lack of a clear road map showing
how they could be achieved. Some applauded policies such as the extra subsidy for offshore
wind and investment in building efficiency, but attacked overall funding of £1.4bn as
miserly in comparison to the enormity of the climate crisis and recent financial bailouts.
But for those who are more worried about oil depletion, the Budget was utterly hollow. The
car scrappage scheme came without efficiency conditions attached, the return to
inflation-plus fuel duty increases was welcome but timid compared to the escalator that
was killed off by the petrol protests of 2000, and tax breaks for North Sea operators will
do little to stem the decline in output. Production has halved since its peak in 1999, and
is now dropping at 7 per cent a year, dragging Britain ever deeper into import dependency.
Still less will the Budget improve the global oil outlook. The International Energy Agency
forecasts a 'supply crunch' early in the next decade, Shell predicts a production plateau
from 2015, and the head of the Libyan National Oil Company sees peak oil looming. In
contrast, the big energy announcement of the week looked far bolder. The Energy Secretary,
Ed Miliband, said new coal-fired power stations would only be approved if they included a
demonstration plant for carbon capture and storage (CCS) from day one, and a commitment by
the energy company to retrofit the entire power station once the Environment Agency judged
CCS to be technically and commercially proven. This came beside plans to fund four of the
new pilot plants through a 2 per cent levy on customers' bills. The move was welcomed by
environmental groups and is an advance on the Government's previous dither in this area.
But it is also a spectacular gamble and has three obvious risks. One, pilot plants will
capture only a quarter of new power station emissions. Two, the technology may not be
viable, at least not in time, posing a dilemma in the mid-2020s: whether to close the
power stations or sacrifice the climate. Three, coal may be less abundant than the
Government assumes. In 2000, the global coal supply
was expected to last 277 years, but by 2006 that had plunged to 140 years as consumption
rose and estimates of reserves were revised downwards. One forecasting group predicts peak
coal as early as 2025, Mr Miliband's deadline for retrofitting CCS. The Government seems too timid to confront peak oil publicly, but
reckless enough to gamble on potentially unabated coal emissions and the coal supply. Why
not bet on true sustainability: get serious about energy efficiency, renewables,
electrification of transport and a European supergrid, and commit the sort of money they
have recently been throwing at the banking industry? The stakes are even higher." A Government still addicted to petrol Independent, 26 April 2009 |
| "Oil could approach the record
prices of last July as the global recession halts investment in exploration and energy
projects, the Organization of Petroleum Exporting Countries (Opec) warned last night. At a meeting in Toyko, OPEC, the cartel of oil-producing countries, and 13
Asian finance ministers, called for greater monitoring of global oil prices, claiming
volatility is not in the interest of either producers or consumers. The leaders expressed concerns in a joint statement that the world
is heading for an oil price spike when it recovers from the economic crisis. ‘Price extremes have been unjustifiable and unsustainable,’
said the Saudi Arabian oil minister, Ali al-Naimi. ‘I have often cautioned that if
prices remain too low for too long, they can carry the seeds of future spikes and
volatility.’ …’The drying up of liquidity to fund projects underpinning
economic growth in emerging and developing economies has been a significant consequence of
the recession,’ said Mr al-Naimi.” Oil will hit peak after recession, says OPEC Telegraph, 26 April 2009 |
| "Mexico's state-run oil giant
Petroleos Mexicanos (Pemex) on Tuesday reported that its first quarter oil output was
averaged at 2.667 million barrels per day (bpd), down 7.8 percent from the same period of
2008. Cantarell, Mexico's largest oil producing
field for decades, produced 787,000 bpd of oil, down more than 34 percent year-on-year.
The deposit has averaged between 40 percent and 60 percent of the nation's total oil
output at least over the past 20 years. The oil output at Ku-Maloob-Zaap, now the nation's
biggest oil producing field, averaged 797,000 bpd, up nearly 20 percent from a year
earlier. The two fields, which are offshore in the Gulf of Mexico and are close to the
southeastern Mexico state Campeche, accounted for around 60 percent of the nation's
production during the first quarter of 2009. The firm had initially estimated that its
output would be 2.8 million bpd this year. But last week a senior Pemex official told the
press that it may be as low as 2.6 million bpd.... Mexico
is the third-largest oil supplier to the United States. Oil is Mexico's top foreign currency earner, financing about 40 percent of
its annual budget." Mexico Oil Output Down 7.8% in First Quarter Xinhua News Agency, 22 April 2009 |
| "Japan opened a major uranium mine in Kazakhstan on Friday, gaining
access to alternative energy supplies from resource-rich Central Asia. Khorasan-1, tucked
away in the arid steppes of southern Kazakhstan, is being developed by a group of Japanese
firms including Toshiba Corp (6502.T), as
well as Kazakh state uranium company Kazatomprom and a unit of Canada's Uranium One (UUU.TO).On
Friday, a delegation of Japanese executives, the head of Kazatomprom and other officials
flew to the remote location for an official ceremony which marks Kazakhstan's growing
resolve to become the world's top uranium exporter as soon as this year. Kazakh Prime
Minister Karim Masimov pressed a symbolic button at the site, officially launching
production....Kazakhstan produced 8,521 tonnes of uranium last year, up from 6,637 in
2007. Analysts say Kazatomprom is now on track to edge out Canada's Cameco this year as
the world's No.1 producer....Dzhakishev said he saw
2009 production at 12,200-12,300 tonnes, significantly higher than last year's but below
Kazakhstan's projected full capacity output of 20,000 tonnes. 'We will have to hold back production a bit because we will produce only
as much as the market wants,' he said." Japan opens major uranium deposit in Central Asia Reuters, 24 April 2009 |
| "A new generation of coal-fired power stations is to be built to plug
Britain's energy gap, but ministers have insisted that they must be capable of stripping
out and burying all carbon emissions by 2025. The move aims to place Britain at the
forefront of an international drive to master carbon capture and storage (CCS), an
unproven technology that advocates say is critical to global efforts to tackle climate
change. But sceptics warned that Britain was taking a huge and potentially costly gamble
with an immature technology that could force tens of thousands of British families into
fuel poverty by driving up their bills. The technology is expected to add at least £700
million to the cost of building each new coal power station. The costs will be borne by
consumers through a levy on energy bills of 2 per cent by 2020, an average of almost £30
per household per year.... The new stations would also bolster the security of Britain's
future energy supplies and could reinvigorate the North Sea as a hub for stored carbon
emitted from plants across Britain and Europe, he said. CCS, in which the carbon emitted
from burning fossil fuels is stripped out using chemical scrubbers and piped for storage
in old gasfields beneath the seabed, remains an untested technology on a commercial scale.
The largest pilot project in the world is attached to a 30MW power plant but under the
terms of the scheme announced yesterday, companies will be granted permission to build new
coal plants if they apply CCS to 400MW of power generation, or a quarter to half of a
typical plant. In a reversal of policy, Mr Miliband
said that power companies must be able to capture and bury all the CO2 emissions from the
new coal plants by 2025 at the latest, if the Environment Agency rules that CCS works. Last night there were still a range of unanswered questions about how the
scheme would work. A Department for Energy and Climate Change spokesman said that it was
unclear whether power companies would be allowed to generate electricity from the
untreated section of a new coal-fired power plant before its CCS demonstration project is
shown to work." New life for old king coal, but this time without CO2 London Times, 24 April 2009 |
| "Alistair Darling committed the UK to cutting
greenhouse gases by 34 per cent by 2020 in the first legally binding 'carbon budget' in
the world. The ambitious target will transform the
way the UK generates and uses energy and the Chancellor announced £1.4 billion of new funding
to aid the transition. This will include £525 million to increase the number of homes
powered by offshore wind farms by 2.8 million and £375 million to improve energy
efficiency in businesses and homes through insulation and more efficient heating systems.
He also found £45 for small scale renewables like wind turbines on houses and £25
million for community heating schemes - where villages or small residential communities
share energy generated from waste or wood. Some £405 million will go towards encouraging
so-called 'green collar' jobs in the environment industry through boosting manufacturing
in low carbon goods like solar panels. More controversially, he announced £90 million for
research into carbon capture and storage (CCS) on fossil fuel power plants, such as coal,
oil or gas. The money will go towards up to four plants demonstrating the new technology
that captures carbon dioxide from coal-fired power stations and stores it underground.
However experts said the spending would not be enough to meet the ambitious emissions
targets and criticised the Chancellor for failing to introduce more green measures to
stimulate the wider economy. Environmental groups had high hopes for this year's budget
following President Barack Obama's 'new green deal' in America and the Government's
earlier commitment to cut greenhouse gases by 80 per cent by 2050. Lord Stern, the former
World Bank economist who first advised the UK on the dangers of climate change, said the
UK will have to up the target to 42 per cent following any international agreement to on
climate change in Copenhagen at the end of this year. He also said the UK will have to
increase funding for renewables if the targets are to be met in the long term. 'The
transition to a low-carbon economy cannot be achieved overnight and it is important to
acknowledge that it will continue to make demands on the public finances over the next 10
years, and that there will be areas in which consumers must pay more, for instance through
an increase in fuel duty,' he said. Mr Darling said the 34 per cent target will be met by
cutting emissions in the UK rather than buying offsets from abroad but he failed to commit
to the 42 per cent target at Copenhagen. Andy Atkins, Executive Director of Friends of the
Earth, said it was a 'massive missed opportunity'." Greenhouse gas emissions will be cut by a third in world's first carbon Budget Daily Telegraph, 23 April 2009 |
| "China is shaping as a multibillion-dollar new uranium export market
as it looks to Australia to supply the resources it needs to underpin a massive expansion
in its nuclear power industry. Chinese officials this week announced they would start
building five extra power plants this year on top of the 24 already under construction and
11 already in operation. Chinese analysts say the country's dearth of uranium is "the
tiger in the road" to fulfilling its nuclear power ambitions and that Australia is
the most obvious solution. 'There are not enough
uranium resources in China to support the aggressive nuclear power development plan for
the next 20-30 years,' said Professor Liu Deshun, of
China's Institute of Nuclear and New Energy Technology. 'Australia has the uranium
resources that could be exported and in China we have the demand,' he said. The
acceleration of China's nuclear power plans stems from mounting concerns about climate
change, energy security and the more immediate task of kick-starting the economy as part
of the Government's 4 trillion yuan stimulus plan. Vice-Premier Zhang Dejiang announced at
a Beijing conference this week that China would 'accelerate the development of nuclear
power and increase the ratio of clean energies like nuclear power'. But a Chinese official
at the same conference raised concerns about nuclear waste disposal and operational
safety. 'If we are not fully aware of the sector's over-rapid expansions, it will threaten
construction quality and operation safety of nuclear power plants,' said Li Ganjie,
director of National Nuclear Safety Administration. Chinese companies are lining up to
invest directly in Australian uranium mining and exploration companies and sign long-term
supply contracts with Australia's established mining companies, if expansion plans receive
Government approval." Billions in uranium bound for China The Age, 22 April 2009 |
| "The high oil prices in July
2008 were not due to manipulation, but as a result of complex market dynamics said Pierre
Barbi, a senior director at French international oil company Total. 'There was a good
reason for the market to spike in 2008. We have never before seen the kind of oil demand
that we saw from 2003-04 onwards. This justified the big increase in prices,' , said
Barbi, speaking at the Middle East Petroleum and Gas Conference 2009 in Dubai on 20 April. 'As a result, Opec increased its production to around its maximum
capacity. Then people started to focus on peak oil [a peak in global production levels
which cannot be surpassed],' added Barbi. 'In 2006, we saw a big increase in the level of
inventories and a surge in stocks globally, and as a result Opec decreased
production.'This, accompanied by the increasing presence of financial players in the
market who increased the volume of trading, aided the peak in prices seen in July 2008
when the US' benchmark West Texas Intermediate (WTI) crude traded at $147.50. 'Oil markets
do not suffer from major malfunctions,' he said. 'They do suffer from distortions which
can be solved by light-touch regulation.' Governments should apply regulation to
non-conventional oil traders such as banks and other financial institutions, he
said." Oil price peak not due to manipulation, claims Total Middle East Business Intelligence, 22 April 2009 |
| "Gordon Brown is to risk a clash with the green movement by throwing
the government’s weight behind the construction of a new generation of coal-fired
power stations. Ministers intend to give power companies permission to construct at least
two new coal-fired stations, with more to follow. The move will anger climate change
scientists and campaigners because coal produces more CO2 for each unit of energy
generated than any other fuel. Brown and Ed Miliband, his energy secretary, will argue
that Britain urgently needs more coal-fired generating plants to prevent future power
shortages as old plants are shut down. They will soften the blow by pledging that any new
plants will be designed so they can be fitted at a later date with equipment to capture
CO2 — a technology that is still unproven. The plan may also be mentioned in Alistair
Darling’s budget this week. The government is understood to want initially to approve
2.5 gigawatts (Gw) of generating capacity. This is equivalent to two fairly large power
stations. The proposed plant at Kingsnorth in Kent, seen as the most likely to be approved
first, would generate 1.6Gw. The plant has already been the focus of large-scale protests
by green activists....In theory, so-called carbon capture could be capable of capturing up
to 90% of the CO2 emissions from power plants. It would then be pumped underground for
permanent storage. However, no industrial-scale CCS
plant has yet been built anywhere in the world and the technology remains unproven. Britain burns about 63m tons of coal a year, with 84% used to generate
power. Coal-fired plants generate about a quarter of the 560m tons of CO2 that Britain
produces each year." PM stokes row with ‘clean’ coal plan Sunday Times, 19 April 2009 |
"The good news for Britain's energy supply is that the sheer scale of
the recession has cut our electricity demand and carbon emissions. An impending energy
security crunch has been postponed. The bad news is
that the recession will almost certainly delay investment in Britain's energy
infrastructure and encourage complacency....For the
past two decades we have had ample reserves to absorb the shocks: now the margins are
beginning to wear thin. Many of the existing power stations were built in the 1970s or
earlier. All the coal-fired stations are more than 30 years old, as are most of the
nuclear ones. They are all coming to the end of their lives and their reliability is
inevitably beginning to suffer. Although significant numbers of gas power stations have
been added, North Sea gas and oil supplies have been depleted at breakneck speed. After
decades as an energy exporter, Britain now relies increasingly on imports of gas and coal.
By [2015].... the remaining coal power stations will be facing closure because of the
pollution control requirements of the EU directive on large combustion plants. By then all
except one of the existing nuclear stations will also be closed or facing closure. Having
to replace so much coal and nuclear capacity in such a short period is unprecedented -
except perhaps in wartime. And at the same time because of the EU Renewables Directive the Government has committed itself to a crash programme to
increase wind's share of electricity generation from the current 5 per cent to perhaps 35
per cent by 2020.... [Wind] is also expensive and
may even reduce the security of supply. It is uncertain too. Few think that wind supply on
this scale will be achieved - though, unsurprisingly, few politicians will admit this in
public. The security problem arises because wind is intermittent. When it does not blow,
back-up capacity is needed; and when it does blow, it reduces the profitability of power
stations whose alternative energy supplies it displaces. If
current capacity were around 70GWs, by 2020 even if demand stayed the same we might need
as much as 90-100GWs of capacity to meet peak demand. So not only do we need to replace at
least 30GWs of existing power stations, but we also need to add another big tranche of
capacity to support the vagaries of wind power. Wind
power is largely additional to the existing system: it does not replace the capacity that
is being closed.... We will be lucky if even a single
new nuclear station comes on stream by 2020. The carbon emissions from new coal stations
will need to be sequestrated underground, and that technology is not likely to be
commercially available until well after 2020. So before 2020 it would have to be
'unabated' coal - which sits uncomfortably with the climate change objectives....The Russians are not increasing investment in new gas resources and
doubts remain about their ability to meet Europe's demand. Liquefied natural gas will be
used to plug this gap, but the sources of supply are quite limited and again lots of other
countries (especially the US and Japan) will want it too. The scale of the investment
required to plug the energy gap while pursuing renewables is enormous. The cost of
building not only power stations, but also new transmission networks and gas storage
facilities, fitting smart meters, developing an offshore wind industry and implementing
energy efficiency measures will run to tens of billions, possibly
more than £100 billion in the next decade. Though
the recession has brought a breathing space on the demand side of the equation, it has
markedly worsened investment on the supply side. The credit crisis has made it harder and
more expensive to finance investment; just when the investment is needed, finance has
dried up. ... Unless reform is quick, the best hope for Britain's energy supply from a
security perspective is that the economy does not recover quickly - a long hard
Japanese-style recession would keep demand (and carbon emissions) low. But that's hardly a
sound energy policy." |
| "The rebirth of Britain’s nuclear power industry moved closer
yesterday after the Government announced a list of sites for new reactors. Each of the 11
proposed nuclear power stations, which will be built on sites from West Cumbria to the
Kent coast, will cost nearly £4.5 billion and have a capacity of up to 1,600 megawatts of
electricity, enough to supply two million homes for up to 60 years. But energy experts warned that the first plant would not be
operational before 2017 at the earliest, too late to plug a gap opening up in
Britain’s energy supplies as ageing coal and nuclear power stations close. The gap is
likely to be filled by the rapid construction of gas-fired power stations, which are
powerful and relatively quick and cheap to build....Craig
Lowrey, head of energy markets at EIC, an independent consultancy, said that the new
plants would not help Britain to avoid a dangerous slide towards an overreliance on
electricity produced from gas-fired power stations, just as domestic supplies of gas from
the North Sea are running short and Britain is seeking to slash its carbon emissions. 'The
UK is potentially in quite serious trouble,' he said. 'We are set to lose a quarter of our
current generating capacity before [the first nuclear plant is built] and it is not clear
how that gap is going to be filled.' The total generating capacity of Britain’s
current fleet of power stations, including coal, gas, nuclear, hydroelectric, wind and
biomass stations, is about 83,500 megawatts. Ageing nuclear plants are due to be closed. A
number of coal-fired stations are also set to close by 2015 to meet new emissions rules.
Dr Lowrey said that the Government’s failure to take firm early action meant that it
was now inevitable that the gap would be filled by new, easy-to-build gas-fired power
stations. However, the depletion of North Sea gas
means that Britain will be forced to import more and more raw fuel from countries such as
Russia, Algeria and Qatar, while consumers will be
left increasingly exposed to fluctuations in the wholesale price of gas. Official figures
show that the share of Britain’s electricity produced by burning gas has risen from 2
per cent in 1992 to 35 per cent today. It is expected to rise further, with gas-fired
plants under construction at Pembroke in Wales, the Isle the Isle of Grain in Kent and
Langage, near Plymouth. Dr Lowrey also gave a warning that the replacement of ageing power
stations with new gas and nuclear plants and wind farms would be an enormously costly
exercise that would hit consumers in the pocket. Calling for greater state involvement in
the programme, he said: 'You cannot underestimate what the impact of this will be on
consumers’ electricity bills.'" All-clear for nuclear plants ‘too late to plug power gap’ London Times, 16 April 2009 |
| "Deflation has returned to the US for the first time in more than
half a century, taking the pressure off cash-strapped consumers but raising the stakes in
the Obama administration's battle to restore economic growth. Consumer
prices were 0.4 per cent lower last month than in March 2008, the first year-on-year drop
since August 1955, as the effects of last summer's oil price collapse fed through into
energy bills....David Buik, a market analyst at BGC
Partners in London, said the March deflation may prove only temporary. 'The decline in
year-on-year terms is all due to the spike upwards and subsequent reversal in energy
prices last year – it does not reflect the beginnings of a widespread deflation this
year. With oil prices now stable at close to $50 a barrel, there is no near-term prospect
of a further substantial decline in energy prices.'...Consumer energy bills have plunged
23 per cent since March 2008, according to yesterday's figures. Transportation costs
– including petrol prices and the cost of new and used cars – were down 13 per
cent. Most other bills are rising on a year-over-year basis, however, with health care,
education and food among the most robust." Oil price fall sees deflation return to US for first time since 1955 Independent, 16 April 2009 |
| "Armenia is now free of Soviet control. But the Turkish-Armenian
border, sealed during the Cold War years when it marked the tense boundary between Nato
and the Soviet Union, remains closed. And though Armenians gaze across at Ararat’s
elusive peak, they still cannot cross over into the lost provinces of their historic
homeland that lie in northeast Turkey. Something, however, may at last be moving. Ali
Babacan, Turkey’s Foreign Minister, will visit Yerevan today for a meeting of the
Black Sea Economic Cooperation Council, an 11-nation regional grouping set up in 1992. But
the real issue for him and for his Armenian hosts is the border. Can both countries set
aside their historic animosities and suspicions and dismantle the last Cold War
barbed-wire barricades? An open border would not only bring huge economic benefits to both
sides: it could also help to thaw one of the last “frozen conflicts” in
Europe’s backyard, the military stand-off between Armenia and Azerbaijan over control
of the ethnically Armenian enclave of Nagorno-Karabakh. It could also help Russia to
regain its balance within the turbulent Caucasus and Turkey to extend its reach to its
cultural Central Asian hinterland....Reconciliation with Armenia, however, and an end to
the Caucasus stalemate could benefit everyone. It would confirm the status of Turkey as
the superpower within the Black Sea council. Turkey may look to the EU as a supplicant,
but to its neighbours it looks an economic giant. Armenia, blocked to the north by the
instability in Georgia and fearful of being too dependent on Russia, would have an
alternative outlet to the world through Turkey. And economic cooperation could soothe
historic hatreds. For Russia, there would also be gains. Paradoxically, the Russians have
never had better relations with Turkey than now, largely because of the huge volume of
trade, the massive flow of Russian tourists and the reduced threat from a Nato member on
Russia’s borders. But these smooth relations are fragile. Historic competition for influence and for the region’s
energy resources could flare up again. Russian
actions in Georgia raised hackles in Turkey." A promise of peace in the shadow of Ararat London Times, 15 April 2009 |
| "Biomass power - such as burning wood for energy - could do more harm
than good in the battle to reduce greenhouse gases, the Environment Agency warns. Ploughing up pasture to plant energy crops could produce more CO2
by 2030 than burning fossil fuels, if not done in a sustainable way, it said. Its study found waste wood and MDF produced the lowest emissions, unlike
willow, poplar and oil seed rape. The EA wants biomass companies to report all greenhouse
gas emissions. The agency is calling on the government to introduce mandatory reporting of
greenhouse gas emissions from publicly-subsidised biomass facilities, to help work out if
minimum standards need to be introduced. Wood-burning stoves, boilers and even power
stations are seen by many as critical to Britain's renewable energy targets. Biomass is
considered low carbon as long as what is burnt is replaced by new growth, and harvesting
and transport do not use too much fuel. The EA's report reiterated the belief that biomass
had the potential to play a 'major role' in producing low carbon, renewable energy to help
meet future energy needs and help cut greenhouse gas emissions. But the report Biomass:
Carbon Sink or Carbon Sinner also found that the greenhouse gas emission savings from such
fuels were currently highly variable. At its best, biomass could produce as little as 27kg
of CO2 (equivalent) per megawatt hour - 98% less than coal, saving around two million
tonnes of CO2 every year. However, the study also found that in some cases overall
emissions could be higher than those of fossil fuels. This was particularly true where
energy crops were planted on permanent grassland, it said." Biomass energy 'could be harmful' BBC Online, 14 April 2009 |
| "All that separates Armenia and Turkey is a narrow bridge across the
River Araks and almost a century of enmity that began with the massacres of Armenians in
Ottoman Turkey in 1915 and continued with the Iron Curtain that divided the Soviet Union
from the West. The Soviet legacy in the Caucasus and the painful burden of history have
conspired to keep the border closed long after the end of the Cold War. Now more than 70
years of separation may be only weeks from ending as relations between Turkey and Armenia
undergo a remarkable thaw. The opening of the border is being seen as a pivotal moment in
Turkey’s rise as a major force in the Caucasus and beyond to Central Asia. With
Russia also resurgent in the Caucasus after last summer’s war with Georgia the stage
is being set for an intensified struggle for control of the region’s energy
resources....The West views the Caucasus as a key
channel for pipelines to link Central Asia’s massive oil and gas reserves with
Europe, bypassing Russia. The opening of the border
has special resonance in Margara, however, an impoverished village 40km (25 miles) from
Yerevan, where refugees crossed the river to safety." World Cup invitation brings down final part of Iron Curtain London Times, 14 April 2009 |
| "Britain’s wind energy industry increased its call for state aid
yesterday, after new figures showed that investment in the sector has collapsed by nearly
80 per cent. The amount invested in British renewable energy schemes, including wind,
solar and wave power, fell from £377 million during the first three months of last year
to £79 million during the same period this year, according to figures from New Energy
Finance, a research group that monitors industry trends. The figures have raised fresh
questions over the Government’s ability to fulfil its pledge to slash Britain’s
carbon emissions and produce more than one third of the country’s electricity from
green energy by 2020. Adam Bruce, the chairman of the British Wind Energy Association,
(BWEA), said that the figures reflected the need for the Chancellor to introduce new
measures to support the industry, which is struggling
to secure finance because of the credit crunch. It
is also suffering from the weak pound, which has driven up the cost of turbines and other
equipment — most of which is produced outside Britain — and the falling price of
coal, oil and gas. There were signs yesterday that the Government was considering the
inclusion of measures in the April 22 Budget to prevent the cancellation of large projects
such as the London Array, a £3 billion scheme to build the world’s largest offshore
wind farm in the Thames Estuary, which Gordon Brown has backed....Paul Golby, chief
executive of E.ON UK, one of Britain’s 'big six' energy companies and one of the
project’s backers, told The Times he now thought that it would be impossible for the
country to meet its target of generating 15 per cent of total energy from renewable
sources by 2020, which amounts to 35 per cent of its electricity. The target is a key part
of Britain’s promise to cut its carbon emissions by 80 per cent by 2050." Green energy feels the chill in harsh economic climate London Times, 11 April 2009 |
| "The International
Energy Agency expects global oil demand to decline by 2.4 million barrels a day this
year, about the same amount that Iraq produces, as
the economic slump reduces consumption to the lowest since 2004. The adviser to 28 nations
cut its 2009 forecast for an eighth consecutive month, slashing last month’s estimate
by 1 million barrels a day, or 1.2 percent, to 83.4
million barrels a day. The IEA also said oil supply
from outside the Organization of Petroleum Exporting Countries will drop this year. 'The
pace of contraction is close to early 1980s levels, with a growing consensus that economic
and oil demand recovery will be deferred to 2010,' the Paris-based adviser said in a
monthly report today. Demand will shrink by 2.8 percent this year as worldwide gross
domestic product shrinks by 1.4 percent, according to the IEA, which until now had assumed
the global economy would expand in 2009. The decline outpaces supply from OPEC’s
third-largest producer, Iraq, which last month pumped 2.27 million barrels a day. The
outlook 'implicitly discards' the agency’s earlier view that industrial activity, and
demand for fuels, would recover in the second half of the year. Consumption during the
first three months of this year was revised lower by 700,000 barrels a day. The collapse in demand will be concentrated in the world’s
most developed nations, the Organization for Economic Cooperation and Development, where
an 'unusually severe recession' will curb consumption by 4.9 percent this year. As a result, crude inventories in these nations are at their highest
since 1993, the IEA said. Stockpiles were equivalent to 61.6 days of consumption as of
February. In December, OPEC ministers had expressed concern that a level of about 57 days
was too high. Non-OPEC supply will fall by 300,000
barrels a day this year, a second annual decline, to 50.3 million barrels a day. This is
'largely because of adjustments on the biofuels side,' David
Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris. That forecast is 320,000 barrels a
day lower than last month’s, when the IEA expected non-OPEC output to be unchanged
year-on-year. Supplies from outside OPEC may be curtailed by a further 360,000 barrels a
day by the end of next year because of spending cuts in North America, the North Sea and
Russia....Over the next five years global supplies
will be 'severely constrained by today’s lower prices and lower investment,' the report said. Spending on new production will likely be constrained by
around 20 percent this year." IEA Cuts Oil Demand Forecast to Lowest in Five Years Bloomberg, 10 April 2009 |
| "French power station leading the way in the world's sluggish move
towards using environmentally vital CCS technology The
world's first retrofit of a power plant with carbon capture and storage (CCS) technology
will begin operating this month in the south of France. At a power plant at Lacq, energy company Total has upgraded an existing
gas-fired boiler with CCS technology – a crucial step towards reducing carbon
emissions from fossil-fuel power plants worldwide....The 60m euro Lacq project will
transport and store 60,000 tonnes of carbon dioxide every year in the nearby depleted gas
field at Rousse – once the biggest onshore natural gas field in Europe, but which is
now almost empty. It is the first to link together all parts of the carbon capture chain
from burning natural gas to isolating CO2 from flue gases and burying it underground.
Reusing an existing pipeline that has been transporting natural gas from Rousse to Lacq
for 50 years, Total engineers plan to push the carbon dioxide from the power plant in the
other direction, injecting the gas into the Rousse reservoir at a depth of around 4,500m. The Lacq project will run for two years, after which engineers
will monitor the Rousse gas field to demonstrate that the carbon dioxide remains safely
trapped inside. Last year, the Schwarze Pumpe power
station in north Germany became the first demonstration experiment to build a a 12MW
fossil fuel-fired boiler from scratch with full CCS – it will bury 100,000 tonnes of
CO2 a year 3,000m below the surface of the depleted Altmark gas field....Despite agreement
from almost all sides that CCS must be made commercial if the world can ever hope to meet
its carbon-reduction targets, a full-scale system remains years away, largely because of
the costs involved in its development. As a result, many leading power companies have been
reluctant to fund CCS individually, arguing that governments should also shoulder some of
the financial risks. The UK government wants to fund a single demonstration plant using
post-combustion capture technology and is running a competition to decide which new power
station will get the go-ahead. Within the next few weeks, ministers are expected to
announce proposals on how to fund further CCS projects in the UK beyond the competition.
But the British government's procrastination has forced many CCS projects planned in the
past decade to be abandoned or moved abroad. These include BP's plans to build a carbon
capture plant at Peterhead and Centrica's Eston Grange project....At Lacq, Total has
fitted one of the plant's 30MW gas-fired boilers with oxyfuel technology, where the fossil
fuel is burned in an atmosphere enriched with oxygen. The resulting exhaust gas is then
composed almost entirely of carbon dioxide and water vapour, which can be easily separated
and stored. 'Total needs to master this new technology,' said Luc de Marliave, climate
change coordinator at the energy company. 'Oxycombustion had never been tested at this
scale in such an integrated CCS scheme.'" New era for fossil fuels as first carbon capturing power plant begins work Guardian, 8 April 2009 |
| "ConocoPhillips Chief Executive Jim
Mulva didn't mince words with Wall Street analysts when, in the face of a slowing economy
and lower oil prices, he outlined the oil major's nearly $2 billion cut in capital
spending for 2009 and other belt-tightening measures. Against this backdrop, experts and energy company officials are now debating whether the
cutbacks in production and infrastructure spending could lead to energy shortages and to
another price spike down the road....The reduced activity reflects not only from depressed
prices and demand, but also the lending structure between banks and independent oil and
gas producers....While few experts call for a sharp
price jump or oil shortage in 2009 or 2010, some warn that the collapse in prices could
cause a big supply cut over the next few years. Experts at Cambridge Energy Research
Associates, or CERA, a unit of IHS Inc.asserts that current scale-backs could
hamstring the pace of future growth in crude stocks. The
group's new 'Long Aftershock' study concludes that about 7.6 million barrels of oil per
day, out of total potential future net growth of 14.5 millions of barrels a day from 2009
to 2014, are at risk. If all 'at risk' supply fails to materialize, the world's oil
production capacity five years from now could reach 101.4 million barrels a day, down from
the precollapse CERA projection of 109 million.
Peter Jackson of CERA said world oil demand will likely fall in 2009 by about 1 million
barrels a day -- faster than last year's decline. Demand could start picking up again in
2010. If project cutbacks continue, the flow of new
oil may prove to be inadequate by 2014. 'If the recovery is gentle, there shouldn't be a
problem, but if it's faster than expected and companies have cut back multiyear projects,
we could see a return to the conditions that we saw last year,' Jackson commented. Energy producers face the double challenge of a current
supply glut, coupled with relatively high costs of building energy projects. While oil
prices are half of what they are a year ago, the price tag for building deep-sea oil rigs
and other infrastructure remains about double what it was a decade ago, and hasn't fallen
that much since energy prices burst last year." Energy-spending cutbacks spark price-spike talk MarketWatch, 8 April 2009 |
| "Petroleos Mexicanos, the state oil company, may recover an extra 3
billion barrels from its Cantarell field, or 20 percent more than planned, by using a
technology that extracts hard-to-reach crude. Pemex would inject so-called liquid foam to
draw out oil from Cantarell’s rock under the process, Heber Cinco Ley, director of
the Mexican Petroleum Institute, said in an interview April 6. The
technology, which may be ready in three years, would shake loose oil that has seeped back
into the rock walls after the field’s pressure fell, he said. The company’s
output fell at its fastest rate since 1942 last year because of slowing production at
Cantarell, which has lost pressure after producing almost a third of Pemex’s oil
during the past three
decades. The company expects to produce only half the 30 billion barrels Cantarell
holds. Three billion barrels is enough to supply the
U.S. for six months....The company is spending $29.1
billion on exploration and production at deepwater and onshore deposits through 2012 to
offset Cantarell’s decline. Proved deposits at Pemex fell for a 10th year to 14.3
billion barrels last year. Chief Executive Officer Jesus Reyes Heroles said in August that
output at Cantarell may fall 33 percent to 500,000 barrels a day by 2012, when it is
expected to stabilize. The deposit once accounted for 2.2 million barrels a day, or about
two- thirds of the company’s output. Pemex pumped 2.663 million barrels of oil a day
in February, 8.5 percent less than a year earlier. Cantarell, stretched over 15,500 square
kilometers in the Gulf of Mexico, fell behind Ku-Maloob-Zaap, an offshore field, as the
second- largest field in Mexico in January. The company plans to raise $10.5 billion this
year by issuing local and international bonds and taking loans from commercial banks to
pay for its $19.5 billion capital spending budget. The company registered in February to
sell 70 billion pesos of bonds during the next five years in the local market. In 1938,
President Lazaro Cardenas seized the assets of
companies that later became Chevron Corp. and Exxon Mobil Corp., the world’s largest oil company. Mexico created
Pemex later that year, and prohibited private, non-Mexican companies from exploring or
producing oil until last October when Congress revised the law. Pemex remains the only
domestic refiner." Pemex May Squeeze Extra 3 Billion Barrels From Cantarell Field Bloomberg, 8 April 2009 |
| "The installation and adjustment of main equipment for the China Experimental Fast Reactor
(CEFR) has been completed. The sodium-cooled, pool-type fast reactor is being constructed
with some Russian assistance at the China Institute of Atomic Energy (CIEA), near Beijing,
which undertakes fundamental research on nuclear science and technology....The thermal
power of the CEFR is 65 MW, matched with a 25 MWe turbine generator. A 600 MWe prototype fast reactor is envisaged by 2020 and there are outline plans for a 1500 MWe version by 2030. In October 2008, the Russian-Chinese Nuclear Cooperation Commission
called for construction of an 800 MWe demonstration fast reactor similar to Beloyarsk 4, currently the world's only commercial fast breeder reactor. Unlike most of the reactors used today for nuclear power generation,
fast neutron reactors (FNRs) make maximum use of uranium resources by generating a
certain amount more fuel than they consume. They do this by using fast neutrons to 'burn
up' uranium and plutonium mixed oxide (MOX) fuel, which can be surrounded a uranium
'blanket' in which slightly more plutonium is created than is used. The MOX fuel uses the
plutonium recovered when spent fuel, including that from conventional light water
reactors, is reprocessed." Chinese fast reactor nears commissioning World Nuclear News, 7 April 2009 |
| "Total SA, Europe’s third-largest
oil company, may postpone an investment decision in the Joslyn permit of Canada’s oil
sands due to costs and has suspended and may dismantle a pilot project. 'The final
investment decision on Joslyn may be pushed back a few months,' Total spokesman Kevin Church said by telephone today,
adding the production potential of the project is 230,000 barrels of oil a day. 'We are
studying costs and talking to the contractor.' Total was scheduled to make a decision on
Joslyn, in which it has a 74 percent interest, at the start of next year. A Total
production unit within the permit that started in 2006 didn’t reach an expected
output level and has been stopped, the Paris- based company said in its 2008 annual report
published on its Web site April 3. 'Both the mothballing of this site’s
facilities and the possible complete removal of assets from this site are being studied,'
the report said. Reserves for the site were 'debooked' from the end of last year. Total
earmarked more than $10 billion during the next 10 years to boost production from Alberta’s oil sands, which are about 750 kilometers (466 miles)
northeast of Calgary and are estimated by the provincial government to hold the largest
oil reserves in the world outside of Saudi Arabia. Total has said it will make final
investment decisions on projects in the region next year and that developing the reserves
are an 'important part' of its strategy. The Joslyn
pilot project using a technology called steam assisted gravity drainage, or SAGD, did not
reach the expected 10,000 barrels a day production plateau 'due to constraints on the
pressure of the steam being injected,' Total said in the report. The company had expected to reach this peak output as early as the
beginning of last year through the use of the technique to extract oil from the tar sands
using steam rather than mining equipment. Pairs of wells are drilled in the oil sands and
steam is pumped through one, heating the bitumen and allowing it to flow out the other.
The Joslyn permit is expected to be developed through mining techniques in two development
phases of 100,000 barrels a day of bitumen each, according to the Total report.
Joslyn’s production potential compares with Total’s overall output in the fourth
quarter of last year of 2.35 million barrels of oil equivalent a day." Total May Delay 230,000 Barrel Oil-Sands Project Bloomberg, 6 April 2009 |
| "BP Plc, Total SA and Royal Dutch Shell Plc are asking oilfield-service companies to cut
project costs by up to 40 percent as the industry battles its worst slump since the
mid-1970s. Executives at contractors including Technip SA, CGGVeritas and Saipem SpA said
Europe’s biggest oil companies are pressing for discounts. In response, operators
says they cut the number of working drilling rigs by more than 25 percent and next will
take oilfield vessels out of service, threatening jobs. Projects
in the Canadian oil sands, where reserves are hard to access, and marginal shallow-water
fields are being trimmed, slashing the world drilling-rig total to a three-year low. The
64 percent plunge in oil from its July peak to about $50 a barrel is deterring new
investment and leaves the services industry, valued at more than $60 billion, vulnerable
as the order backlog shrinks. 'The pressure is much
higher' than last year to make cuts, Thierry Pilenko, chief executive
officer of Technip, Europe’s second-largest oilfield-services provider, said in an
interview at a Paris oil conference last week. 'Total are talking about 20 percent, BP are
talking about 40 percent, going back to the cost environment of 2004. That is much more
difficult.' The global rig count fell for five straight months, declining 7.4 percent in
February to the lowest since April 2006, according to data published by Baker Hughes Inc. Operating rigs decreased 28 percent from 3,557 in
September, the biggest drop since the last recession in 2001 and 2002." BP, Total Tell Suppliers to Cut Costs Amid $50 Oil Bloomberg, 6 April 2009 |
| "Crusader Energy (KRU) filed for bankruptcy Monday. Other oil and gas producers will likely follow. Like the Oklahoma City-based producer, many other over-stretched small
energy firms are seeing their booked reserves - the main collateral offered banks in
exchange for loans - shrink due to low prices. That's causing
creditors to tighten credit lines and, in some
cases, demand repayment. Small operators like Crusader, which relied on debt to fund
drilling and asset purchases during the recent boom in oil and gas prices, are in
increasingly fragile situations." Small Oil, Gas Producers Struggle With Debt Crunch Dow Jones Newswire, 2 April 2009 |
| "China's energy sector will
table a plan to nearly double
its 2020 nuclear power capacity goal and is urging firms to acquire uranium abroad to
build a fuel reserve, state press said Monday. The country's energy administration wants
to increase capacity to 75,000 megawatts, up from the 40,000 it had called for in a plan
put forward in 2007, the Shanghai Securities News said. The revised plan will soon be submitted to the State Council, the
cabinet, for approval, Cao Shudong, a senior official with the National Energy
Administration, told the paper. The 75,000 megawatt plan was 5,000 megawatts more than
previously reported. China currently has a combined capacity of 9,100 megawatts at 11
nuclear reactors, Cao said, meaning the new plan, if approved, would call for an ambitious
programme to construct new plants. In the past year, China has approved the building of 40
nuclear reactors, Cao said, while the construction of several plants has already started.
China is banking on nuclear power as a cleaner alternative to coal, which currently covers
about two thirds of its energy demand. Chinese
companies will also be encouraged to buy overseas uranium mines, as the lack of the
resource is increasingly straining the country's ability to boost nuclear power supply, Cao said." China energy arm plans to up nuclear capacity Agence France Presse, 30 March 2009 |
"Labor's return to government in
Queensland has halted the expansion of the uranium industry in the Sunshine State at a
time when the mining sector is suffering thousands of job losses. The debate over uranium
mining became an election issue after former LNP leader Lawrence Springborg threw his
support behind the industry. But the LNP's defeat means the status quo continues in
the mining state, with only uranium exploration allowed. Mining of the resource is still
not allowed....The Australian Uranium Association said there were between three and five
good prospects for mines in Western Australia. South Australia, with BHP's massive Olympic
Dam mine and the Northern Territory, with ERA's Ranger mine, are both pro-uranium states.
Victoria and NSW have blanket bans on both exploring and mining uranium. The latest
exploration spending figures from the Australian Bureau of Statistics show that uranium
exploration spending in the December quarter 2008-09 was $51.9 million, down from $56.7
million in the preceding September quarter and down $17.7 million compared with the
previous corresponding period. The executive director of the Australian Uranium
Association, Michael Angwin, said earlier this month that the latest results represented
the first decline in spending on uranium exploration for at least five years. But the
figures had also been previously enhanced by exploration activity at Australia's two
biggest operating uranium mines. Those drilling programs have now either ceased, in the
case of Olympic Dam, or are being wound up, in the case of the Ranger mine. 'We can expect
that these reductions in activity, coupled with the anticipated contractionary effects of
the global financial crisis, will see the decline in exploration spending continue for
some time,' Mr Angwin said. But Mr Angwin said the long-term fundamentals of the uranium
industry were extremely sound. 'World uranium demand
is growing steadily and continues to outpace supply,'
he said. 'The best evidence available suggests a profound shift towards low-carbon nuclear
energy is under way around the world, and Australia's uranium industry is well placed to
seize the opportunity this presents.' Energy Resources of Australia, a subsidiary of Rio
Tinto, is also confident of the long-term demand for uranium. In its annual report this
month, the company said the supply and demand for uranium markets pointed to sustained
higher prices in the medium term." |
| "The world may no longer be flat very soon. Contrary to what Thomas
Friedman told us after his analysis of globalisation, the world will indeed become a
'whole lot smaller' very soon, if a top Canadian economist
is to be believed. Jeff Rubin, who quit as chief economist of Canadian Imperial Bank of
Commerce (CIBC) here Friday to promote his book 'Why Your World Is About to Get a Whole
Lot Smaller,' said the coming oil scarcity will
change the world more profoundly than any other crisis. He added, 'We have all got our
eyes right now on the global financial meltdown, but I believe that oil scarcity will
change the global economy even more profoundly and in the process change all of our lives
- from where we work to where we live to what we eat.' The Canadian economist said his analysis of the oil economy for over 20
years led him to believe that its (oil's) scarcity will be the end of globalisation." Oil scarcity will spell end of globalisation: Economist Economic Times, 28 March 2009 |
| "Ministers were last night considering fresh incentives designed to
spur investment in renewable energy amid evidence that the
credit crunch is threatening government energy targets. The Energy Minister hit back at claims that the Government was failing
to deliver on an ambitious plan to foster a green energy revolution by building thousands
of onshore and offshore wind turbines. Mike
O’Brien told a meeting of renewable-energy chiefs that he was determined that Britain
would meet its goal of generating as much as 35 per cent of all UK electricity from wind,
wave and solar power by 2020, up from less than 5 per cent at present. Responding to news of a further collapse in financing for the UK wind
industry, he said that the Government was examining new ideas to increase investment,
which has been hit by the recession as banks rein in lending and the price of conventional
fuels plunges. Mr O’Brien said: 'We are fully aware of the investment challenges
facing some parts of the industry. We are examining how we can help ensure there is
sufficient finance and other support available for viable projects which are short of the
investment they need.' Mr O’Brien was speaking after The Times revealed yesterday
that Iberdrola Renovables, the Spanish energy company that is the world’s largest
investor in wind energy, plans to cut its UK investments in renewable electricity this
year by up to 40 per cent from as high as €700 million in 2008 to €400 million
(£374 million). Iberdrola, which blames the cut on the global economic crisis, said that
it remained committed to the UK market and hoped to raise the level of investment when
conditions improved. However, Xabier Viteri, the chief executive, also cited delays in
securing planning permission and access to National Grid connections as threats to
industry investment in the UK....Lifting the
UK’s share of renewable electricity generation to 35 per cent will cost an estimated
£100 billion, but a string of investments have collapsed in recent months because of the
credit crunch. Onshore wind energy generated only
1.14 per cent of UK electricity in 2007 and offshore wind accounted for only 0.2 per cent.
Hydroelectric schemes, some of which were built decades ago, accounted for the biggest
single slice at about 1.3 per cent." Ministers pore over incentives to save growth of green energy London Times, 27 March 2009 |
| "The latest setback to
Britain’s goal of producing more than a third of its energy from renewable sources is
the result of a global collapse in investment in green projects in recent months. The
credit crunch has undermined developers’ ability to borrow to fund big wind and solar
power schemes, while tumbling prices for conventional fuels like oil, coal and gas have
undermined the economics of the renewables industry.
Angus McCrone, of New Energy Finance, says that global investment in clean energy —
including wind, solar, biomass and tidal — hit a peak of $155 billion last year, up
from $148 billion in 2007. 'This year we will struggle to get anywhere near those levels,'
he said. The restricted supply of finance could not have come at a worse time, amid
growing concern about the need for urgent action to tackle climate change. The funding
squeeze is likely to be a key consideration at a United Nations meeting in Copenhagen in
December to hammer out a successor agreement to the Kyoto Protocol. Despite Gordon
Brown’s ambitious talk of a renewables revolution, progress has been slow in Britain,
which remains a relative backwater in terms of investment." When oil, coal and gas are cheap, who is going to throw their cash into the wind? London Times, 26 March 2006 |
| "Shortly before noon on September 12, 2001, a visitor stopped by the
palace, looking for Crown Prince Abdullah bin Abdel Aziz al-Saud, the Crown Prince. The
man who now sits on the throne of Saudi Arabia was kneeling in shock and prayer. He had
prayed there all night and had received news from Washington, but could still not believe
that the hijackers who crashed their planes into New York and Washington were his
countrymen. That experience is credited widely as part of the impetus behind King
Abdullah’s attempts to reform his reactionary kingdom. But Saudi Arabia remains as he
did that night – in deep denial. However, it is
also a rich and powerful country on which the West depends heavily for oil, and those who
do business with it have learnt better than to risk puncturing its self-deluding bubble....Terrorism remains its most sensitive point. Since September 11 Saudi
Arabia has declared itself at the forefront of the fight against terrorism, cracking down
on home-grown militants, inviting Western journalists to film its antiterrorist forces in
training and launching a much vaunted project to rehabilitate violent Islamists. It also
sought to remake its international image as a factory of extremism with the sponsorship of
an interfaith conference in New York. But Saudi billions fund the promotion of
extreme forms of Islam around the world. Saudi is the home of Wahhabism, the austere
interpretation of Islam that it has pioneered and the faith espoused by Osama bin Laden
and his al-Qaeda followers. An estimated $90 billion (£62 billion) of Saudi money has
gone to build mosques and madrassas, distribute religious literature and fund Islam across
the world, with a portion of it, according to terrorism experts, directly or indirectly
funding the violent expression of those beliefs. Jonathan Evans, the director-general of
M15, told the Government last year that the Saudi Government’s multimillion-dollar
donations to British universities had led to a 'dangerous increase in the spread of
extremism in leading university campuses'. Official slights like these are rare. Saudi Arabia, in the words of a former diplomat there, 'gets away
with things other countries could not' because of the West’s dependence on it –
for oil, for arms contracts, for intelligence, for military bases and for being a firm
friend in an often unfriendly neighbourhood." West turns blind eye to friend it dare not offend London Times, 26 March 2009 |
| "Britain’s ambition to
become a global leader in renewable energy suffered a major setback last night when the
world’s biggest investor in wind power said that it was slashing its investment
programme. The announcement comes less than two
months after ministers backed a string of huge gas-fired power stations, prompting concern
that the Government cannot fulfil its promise of a green energy revolution. Iberdrola
Renewables’ decision to cut its investment in Britain by more than 40 per cent, or
£300 million — enough to build a wind farm powering 200,000 homes — is the
latest obstacle to Gordon Brown’s target of generating 35 per cent of the
country’s electricity from renewable sources by 2020. Lifting it to that level from
the current 5 per cent would cost an estimated £100 billion. But wind energy investments
have collapsed as funding dries up in the credit crunch and the price of oil, gas and coal
has fallen. Delays obtaining access to the national grid and planning permission have
compounded the industry’s woes. Shell and BP have shelved or pulled out of renewable
energy projects, including a £3 billion project for 341 turbines in the Thames Estuary,
and questions have been raised over the future of npower’s £2.2 billion Gwint y Mor
farm off the Welsh coast." Green energy plans in disarray as wind farm giant slashes investment London Times, 26 March 2009 |
| "The global financial crisis and collapse in the oil market have
stalled vital investment in oil exploration and production and are likely soon to lead to
a sharp spike in prices, an energy consultant and financier says. Matt Simmons, founder of
Houston-based investment bank Simmons & Co, argues the underlying rate of decline of
the world's aging oilfields is as much as 20 percent a year and only high levels of
investment can reduce that to single digits. With credit tight and oil prices almost $100
a barrel below their highs last year, oil companies are unable to sustain previous levels
of spending and the result is falling production, he said in an interview on Thursday. 'We
are three, six, maybe nine months away from a price shock. We are not talking about three
to five years away -- it will be much sooner,' Simmons told Reuters in London. 'These
prices now are dangerously low. The lower prices fall, the less oil will be produced and
the greater the chance of an oil spike,' he said....Simmons' concerns over the impact of
the credit crisis and the
dramatic fall in oil prices are shared by many other, more conservative bodies, including
the International Energy Agency (IEA), which advises 28 industrialized nations. IEA Deputy Executive Director Richard Jones warned the oil market
this week that so far as much as 2 million barrels per day (bpd) of new upstream capacity
due to come on stream had been deferred for now due to lack of funds and low oil prices. The IEA is also worried recent cuts in oil production by the
Organization of the Petroleum Exporting Countries in an attempt to bolster prices have
left oil inventories dangerously low, leaving little room for maneuver when oil demand
recovers. Simmons says many OPEC oil producers will find it difficult to bring output back
to previous levels once prices recover. 'When you have an old oilfield whose flow is being
maintained by extremely high levels of investment and you reduce production, you rarely if
ever get back to where it was.' Because of this and natural declines in output, oil use
may not need to rise much before production fails to meet demand. 'Unless oil demand falls
by 10 or 15 percent per annum, which it is not going to do, then we don't need to wait for
oil demand to come back before we have a supply crunch,' he said." Financier sees oil shock from credit crunch Reuters, 26 March 2009 |
| "Britain’s largest oil storage facility has been put up for sale
after its troubled American owner filed for bankruptcy protection from creditors. The sale
of Sem Logistics, operator of more than 50 huge tanks at Milford Haven, Pembrokeshire,
with the capacity to store 8.5 million barrels of
crude oil, or about 10 per cent of global daily production, is being handled by Blackstone Group, the American private equity firm.
The auction, which is well advanced, follows the collapse of Sem Logistics’ parent,
the oil trading and services group Sem, which was once one of America’s 20 largest
private companies. Last year it suffered hedging losses of more than $2 billion (£1.4
billion) when it was caught on the wrong side of the extreme volatility in global oil
prices...The deep-water port of Milford Haven is one of the largest petro-chemical
complexes in the United Kingdom. It hosts two refineries, which are operated by Chevron
and Murco, as well as two new liquefied natural gas (LNG) terminals and the Sem Logistics
crude storage site." Sem Logistics oil storage site for sale London Times, 24 March 2009 |
| "A sharp drop in U.S. drilling spurred by lower oil prices, scarce
funding and potential tax hikes may thwart the Obama administration's plans to end U.S.
reliance on foreign oil. U.S. oil output is poised to rise 8 percent this year to 5.4
million barrels per day -- the first increase since 1991 after a six-year rally in prices
fed exploration and production projects -- according to the U.S. Department of Energy. But
the drilling spree has collapsed alongside a 65
percent slump in oil prices since last July, putting any increase in domestic output at
risk and raising the specter of increased foreign dependence in years to come. 'Drillers are like farmers; we only increase activity when the future
looks good,' said Dewey Bartlett Jr., who chairs the National Stripper Well Association.
'I'd expect a sharp decline in U.S.-produced oil and gas a year or two from now.' Since
September, the number of U.S. rigs drilling for oil and natural gas has dropped almost 50
percent to 1,085 rigs, the quickest decline since 1986, according to data from oil
services company Baker Hughes (BHI.N)." U.S. may need more foreign oil as drilling falls Reuters, 24 March 2009 |
| "Milford Haven is one of the world's greatest natural harbours. 'How
far is it/ To this same blessed Milford?' Leonatas Posthumus asks in Cymbeline. 'And by
the way/ Tell me how Wales was made so happy as/ To inherit such a haven'. That happiness
has now returned to this lonely Pembrokeshire inlet, brought by a red-hulled tanker as it
rounded the headland and glided towards a gleaming steel and concrete jetty. It was
carrying 216,000 cubic metres of liquefied natural gas (LNG) from Qatar, the first
consignment in a vast new project to supply Britain with energy from the Gulf....The LNG
terminal is a colossal project. It has taken six years to build, at a cost of £1.1
billion, and comprises a new jetty and five vast gas storage tanks, each of which could
easily contain the Albert Hall. A huge pipeline, buried its entire length, runs 200 miles
from Milford Haven, over the mountains of South Wales, to Gloucestershire, where it
connects with supply routes to Birmingham and the rest of the country. Ships carrying gas
refrigerated to minus 160C and compressed to one six-hundredth of its volume will arrive
about once a week from Qatar at the South Hook plant, where it will be regasified. The LNG will account for around a quarter of Britain's gas
consumption, and by 2020 imports will amount to 80 per cent of the UK's gas needs,
compared with 28 per cent today." Security in the Pipeline London Times, 24 March 2009 |
| "A Shell Oil official confirmed Friday that the 'in-situ' oil shale production the company is researching at its
Mahogany facility near Rangely currently consumes about three barrels of water for every
barrel of oil produced. But, he said, contrary to
recent media reports on an environmental study of energy
company water rights on Colorado’s Western Slope, Shell is not trying to 'corner
the market on water' in the Colorado and White River basins. 'We’ve been working for
quite a number of years to acquire a pretty broad diversity of water rights in different
areas that will allow us to have the flexibility so that we can source water from
different locations so that the impacts to the agriculture and the other historical and
traditional users will be minimized,' said James Thurman, a government affairs manager for
Shell....Thurman added, extraction technology is still being developed, and water-to-oil
ratios could improve by the time oil shale production is commercially viable in the coming
10 to 15 years." Shell official confirms thirsty nature of oil shale, denies push to ‘corner water market’ The Colarado Independent, 23 March 2009 |
| "Exxon Mobil oil discovery off the coast of Brazil may hold enough
crude to rival the nearby Tupi prospect as the Western Hemisphere’s largest find in
three decades. Exxon Mobil’s Azulao-1 well tapped a reservoir that could contain 8
billion barrels of recoverable oil, said Luiz Lemos, a partner at TozziniFreire Advogados,
a Brazilian law firm that represents foreign energy companies with projects in the South
American nation....A floating drilling rig began boring a second well, called Guarani,
into the reservoir in BM-S-22 earlier this week, said Patrick McGinn, a Houston-based
spokesman for Exxon Mobil. 'We have no idea how big it is,' McGinn said in a telephone
interview. 'We’re nowhere near that yet. It’s premature to speculate until all
of the appraisal work has been done.'....Exxon Mobil
Chief Executive Officer Rex Tillerson last week said oil from Brazilian fields in the area
around Tupi probably won’t begin flowing onto world markets for years because of
technical challenges and harsh operating conditions." Exxon Mobil's Brazil 'very huge' oil discovery runs counter 'peak oil' Business Intelligence Middle East, 20 March 2009 |
| "Brazil needs $270 billion in investment over the next 10 years to
develop massive new deepwater oil reserves, its energy minister said on Thursday. The
largest oil discovery globally in at least 20 years could put Brazil among the world's
largest oil producers, but needs huge investment. 'We need $270 billion and that will be
just for 10 years,' Energy Minister Edison Lobao told reporters at an OPEC seminar. The
money would come from state oil company Petrobras (PETR4.SA) own
resources, from partnerships with big international oil companies and from development banks, he said. Falling oil demand, lower prices and tight credit have cast doubt
over Brazil's oilfield development plans. Deepwater
oilfields are among the most expensive projects and were among the first to feel cutbacks
as the oil industry adapted to a lower price environment. U.S. crude CLc1 has fallen
around $100 a barrel from a peak last July." Brazil needs $270 bln over 10-yrs for deepwater oil Reuters, 19 March 2009 |
| "The U.S. Energy Information Administration expects Mexican oil
production to slip 10% this year as the giant Cantarell oil field sheds production at an
alarming rate, according to a report published on the EIA's Web site this week. Mexican oil production fell 9.2% last year and is down 21% from
peak levels in 2004. If
the slide continues it will put the country's economy at risk and strip the U.S. of a
traditional source of crude imports within five years. 'The decline is driven mainly by falling production at the super-giant
Cantarell field, which has only been partially offset by higher production from other
areas,' said the EIA in its Mexico Country Analysis Brief. The EIA expects total Mexican
petroleum liquids production, including crude oil, condensates and natural gas liquids, to
average 2.9 million barrels a day this year and 2.7 million in 2010, down from 3.19
million in 2008. Last year Mexico slipped to seventh place in the EIA's global production
ranking from sixth in 2007. '2008 was the first time since the 1970s that Canada's oil
production exceeded that of Mexico,' said EIA spokesman Jonathan Cogan in an email to Dow
Jones Newswires. State oil monopoly Petroleos Mexicanos expects crude production to fall
only 1.4% this year to 2.75 million barrels a day, which would be a major achievement
following the severe decline last year. Pemex's projections only include crude oil,
excluding the other liquids included in the EIA estimates. The most recent Mexican output
data for January paints a bleak picture - crude output slipped to a 13-year low of 2.69
million barrels a day, below Pemex's target for the year. Last year Cantarell output fell
by one-third to an average of 1 million barrels a day, and stood at 772,000 barrels a day
in January. Pemex still expects Cantarell to average 756,000 barrels a day this year
thanks to increased investments in drilling and well maintenance. The EIA did not provide
a specific estimate for Cantarell, but the International Energy Agency recently predicted
average output at the field will sink to 600,000 barrels a day in 2009." EIA Expects Mexico Oil Output To Drop 10% In 2009 Dow Jones Newswires, 19 March 2009 |
| "Royal Dutch Shell provoked a furious backlash from campaigners
yesterday when it announced plans to scale back its renewable energy business and focus purely on oil, gas and biofuels. Jeroen van der Veer, the chief executive, said that Shell, the world's
second-largest non-state-controlled oil company, was planning to drop all new investment
in wind, solar and hydrogen energy. 'I don't expect them to grow much at Shell from here,
due to portfolio fit and the returns outlook compared to other opportunities,' he said,
speaking at the Anglo-Dutch group's annual strategy briefing. He said that instead Shell
would focus its remaining renewable energy investments on biofuels, where it is conducting
research into 'second generation' fuels, so far with little commercial success." Anger as Shell reduces renewables investment London Times, 18 March 2009 |
| "It sounds absurd, that a tiny market, buffeted by local news, should
become a proxy for values across a nation, not to mention the world, but that is roughly
what has happened in the global oil market. Consider the benchmark US crude blend, West
Texas Intermediate. It is the foundation of the US Light Sweet Crude Oil contract, traded
on the New York Mercantile Exchange. Nymex WTI is the most widely traded oil futures
contract. Every 24 hours, the volume in barrels traded exceeds by three times the 85
million barrels of crude consumed daily round the world. The all-time 'peak' oil price of
$147 per barrel recorded in July was a US Light Sweet Crude price. Then consider
this: the daily output of WTI is less than 300,000 barrels. The Nymex contract is based on
dwindling deliveries of WTI crude at a pipeline hub in Cushing, Oklahoma. It is a
landlocked market serving Midwestern American refineries without access to the ocean. The
WTI price is buffeted by refinery shutdowns, hurricanes and local bumps and wrinkles....Light, low-sulphur ('sweet') crudes, such as WTI or Brent, are
becoming rare and the global oil market is shifting to the sour, heavier Russian and
Middle Eastern grades." Crude truth behind numbers that govern our lives London Times, 18 March 2009 |
| "Oil prices jumped Mar. 16 with crude topping $47/bbl after Federal
Reserve Chairman Ben S. Bernanke said over the weekend the US recession likely will end
this year if the government can revitalize the banking system....At KBC Market Services, a
division of KBC Process Technology Ltd. in Surrey, UK, analysts said, 'OPEC finally
admitted that the collapse of the world economy is too great a force to resist. If 4.2
million b/d of production cuts has not succeeded in moving the world oil price much above
$45/bbl for any meaningful length of time, then another cut of 1 million b/d—widely
thought to be under serious consideration—is hardly likely to do the trick. So OPEC
decided to roll over its agreement and meet again in Vienna on May 28 to see if they can
spot any green shoots of economic recovery.' Markets also were encouraged when Algerian
Oil Minister Chakib Khelil said compliance with production quotas among OPEC members will
improve to 95% by the time the group meets in May. Sources reported OPEC was in 79%
compliance in February with its December decision, which in conjunction with an earlier
quota adjustment was to have reduced output by 4.2 million b/d to 24.85 million b/d (OGJ
Online, Mar. 16, 2009). However, crude prices were down in early trading Mar. 17. Jakob
observed, 'Saudi Arabia has now to prepare for the US withdrawal from Iraq and probably
did not want to upset the new US administration with an OPEC cut 2 weeks before the king
meets [President Barack] Obama at the G20 meeting (Apr. 2). The Algerian oil minister has
confirmed on different newswires that the G20 meeting was a 'factor' that led to OPEC
(i.e. Saudi Arabia) leaving things unchanged over the weekend.' Analysts at Pritchard
Capital Partners LLC, New Orleans, reported Saudi Arabia has reduced its production 18% to
7.86 million b/d since July and is willing to keep output below its quota level of 8
million b/d unless consumers want more. Analysts
noted an oil price of $60-75/bbl will be necessary for production of higher-cost oil
resources such as ethanols, tar sands, and heavy oils. In other news, Chevron Corp. said Mar. 16 it shut in 10,000 b/d of crude
production in Nigeria after rebel attacks ruptured an oil pipeline at the Abiteye flow
station near Warri in the Niger Delta. Pritchard
Capital Partners reduced its crude price estimates to an average $52.50/bbl for 2009 from
its previous projection of $60/bbl. The reduction was to $65/bbl from $75/bbl for 2010. It lowered its natural gas price estimates to $4.75/Mcf from $6.25/Mcf
for 2009 and to $6.25/Mcf from $7.50/Mcf for 2010. 'Although the crude oil markets appear
to have bottomed, signs of weakness in the natural gas markets persist.
Lower-than-expected industrial and consumer demand coupled with an increasing potential
for LNG imports and US shale resource plays taking flight should put downward pressure on
natural gas prices through the first half of 2009,' analysts said." Crude prices top $47/bbl in optimistic market Oil and Gas Journal, 17 March 2009 |
| "A price war between liquefied natural gas and coal could lead to the
temporary closure of coalmines, according to leading energy consultants, because of a
surge in shipments of the gas from the Middle East into Europe and North America. Gas
prices, already tumbling as a result of the recession, are suffering a triple whammy,
according to Cambridge Energy Research Associates (Cera): from recession in the Far East;
a long-awaited build-up in new supplies of liquefied natural gas (LNG); and unexpected discoveries of new gas reserves in the United States. The emerging gas glut could even displace coal in the supply of fuel to
power stations in Europe, Michael Stoppard, managing director of Cera, said. In the teeth
of a recession, the LNG industry is about to take a big upward step, Mr Stoppard said.
'Over the next 18 to 24 months, LNG capacity will increase by 30 per cent,' he said.
'Where is the stuff going to go? The answer will be in the Atlantic basin.'....the gas
market is braced for a surge in LNG output from Indonesia, Russia, Yemen and Qatar.
Britain will be a significant beneficiary of imports of frozen gas from Qatar when South
Hook LNG, a regasification terminal at Milford Haven, Pembrokeshire, receives its first
cargo, expected next month. Natural gas prices have tumbled in recent months, falling in
the United States from an average of $12.61 in 2008 to $4.54 in February. In Britain, the
fall has also been precipitous, from $13.46 to $6.79. According
to Mr Stoppard, it was assumed that America’s demand for power for air-conditioning
in the summer would absorb any excess Asian LNG that found its way West. However, the
unexpected discovery of new gas reserves in shale deposits has changed the equation....The price of coal has collapsed, peaking last year at $220 per tonne
for deliveries into Europe and presently trading at about $60 per tonne. According to
McCloskey Group, the price is dropping close to a level at which the economics of some
Russian coalmines may come into question. 'Prices for coal out of the Baltic are around
the level of cash costs,' Mr Howland said....The key question is whether enough LNG can
make its way into the European market and displace other energy sources, according to Mr
Stoppard. Britain will become a leading market for LNG with the launch of
ExxonMobil’s South Hook terminal and the expansion of National Grid’s Isle of
Grain facility in the Thames Estuary." Surge of cheap gas may put coalmines out of action London Times, 16 March 2009 |
| "Last week saw a spate of new forecasts for the global economy and
the demand for oil during 2009. The International
Monetary Fund and the World Bank issued forecasts
that were much bleaker than those issued by private forecasters. Both foresee the world economy shrinking for the first time since
World War II. The three major oil forecasting
organizations, the US’s EIA, the OECD’s IEA and OPEC, also issued increasing
pessimistic numbers during the week. The EIA now foresees a 0.8 percent reduction in the
world GDP during 2009 with a 2.6 percent rebound in 2010. Average
annual world oil consumption is seen as shrinking by 1.4 million barrels in 2009. This is
3 million b/d lower than the forecast six months ago. The IEA now foresees global demand
for oil in 2009 shrinking by 1.2 million b/d to 84.4 million b/d, a drop of 270,000 b/d
since last month. The agency sees non-OPEC supply as
stagnant at 50.6 million b/d during 2009. Problems in Azerbaijan and the major drop in
Mexican production are seen as offsetting increases elsewhere. Despite the economic problems, the IEA still foresees Chinese
demand increasing by 0.6 percent during 2009. The
IEA continues to warn that the OPEC production cut of 4.2 million b/d, which they seem
likely to accomplish, will continue for several months and that there is no growth in non-OPEC production, so world stockpiles
will drop swiftly unless, of course, demand falls more than the 1.2 -1.4 million b/d
currently forecast. The heart of the issue remains
the course of the global economy and the success of the many stimulus initiatives
currently underway." Peak Oil Review ASPO USA, 16 March 2009 |
| "Saudi Arabia's oil minister
said Monday that petroleum-producing countries need a price of at least $60 a barrel to
bring more energy resources on the market. 'If
we want all hydrocarbon resources developed worldwide, 40 dollars is not enough,' Ali
al-Naimi told reporters in Geneva, where he was attending an energy conference. Crude
oil returns are key, he said, because they can allow companies and countries to invest in
new and potentially valuable fuel source such as ethanol, tar sands and
heavy oils." Saudi Arabia says oil needs to be at $60-$75 Reuters, 16 March 2009 |
| "Russia announced Sunday that it is cutting oil exports - welcome
news for OPEC oil ministers looking for ways to bolster prices by reducing supply without
further hurting the global economy. Russian Deputy Premier Igor Sechin spoke to oil
ministers of the Organization of the Petroleum Exporting Countries before they decide how
best to support prices without sending a new shock through economies of major consumer
countries battling with the fallout of the financial meltdown....Russia will 'be cutting
oil exports while increasing domestic consumption and expanding oil refining, said Sechin,
adding that his country also would delay the
development of two oil fields in the northwest. And
he told the OPEC meeting that Russian oil production had already decreased by 1.9 percent
in the first two months of the year. The cuts
appeared to be a way of dressing up Moscow's inability to keep up present output levels
because of lagging investment that is expected to result in an output decline of around 2
percent this year. At its peak in early 2008, Russia
was producing 9.5 million barrels of crude a day. One focus of the OPEC meeting is
individual member compliance with cuts agreed on since September that were meant to take a
daily 4.2 million barrels off the market. The 11 members under production quotas are still
overshooting their joint daily target level of just under 25 million barrels by about
800,000 barrels a day." Russia says it is cutting oil output Associated Press, 15 March 2009 |
| "The great American drilling boom is over. The number of oil and gas
rigs deployed to tap new energy supplies across the country has plunged to less than 1,200
from 2,400 last summer, and energy executives say the drop is accelerating further. Lower
prices are bringing to an end an ambitious effort to squeeze more oil from aging fields
and to tap new sources of natural
gas. For the last four years, companies here drilled below airports, golf courses,
churches and playgrounds in a frantic search for energy. They scoured the Rocky Mountains,
the Great Plains, the Gulf of Mexico and Appalachia. But the economic downturn has cut
into demand. Global oil prices and American natural gas prices have plummeted two-thirds
since last summer. Not even an unseasonably cold winter drove down unusually high
inventories of natural gas. The drop has been good news for American consumers, with
gasoline now selling for $1.92 a gallon, on average, down from a high of $4.11 in July.
But the result for companies is that it is becoming unprofitable to drill. The reversal of fortune could have important implications for the
future health of the nation’s energy companies, for consumer wallets and for national
aspirations to rely less on foreign energy sources.
The drilling cutback has been particularly stark for natural gas. Gas exploration had
soared in recent years after technology advances enabled the exploitation of gas trapped
in huge shale beds found around Fort Worth, western Pennsylvania, upstate New York and
elsewhere. But that boom has created such abundant supplies that companies are not only
drilling less but also deciding not to pump from wells already drilled....Energy experts
and company executives warn that oil and gas companies now cutting back on investments
will be unable to respond quickly to a future economic recovery. John Richels, Devon’s president, said that if the slump
lasted two years, it could then take 18 to 24 months for companies to reassemble rig
crews. That means a glut could rapidly turn to
scarcity, sending energy prices soaring again. Already, experts are predicting that lower
domestic gas production by the end of the year will require increased imports of liquefied
natural gas from places like Qatar. Through most of this year, gas supplies are not likely
to decline sharply because so many shale wells came on line recently. But those wells
should start to decline in productivity by next year, potentially leading to tight gas
supplies if industrial and residential use picks up significantly in the second half of
2010." As Oil and Gas Prices Plunge, Drilling Frenzy Ends New York Times, 14 March 2009 |
| "A uranium supply crunch could be around the corner due to
industry-wide cuts to development projects, rising demand, and uncertainty about Russia's
plans for its decommissioned nuclear arsenal, the CEO of top uranium producer Cameco Corp
(CCO.TO)
said on Wednesday. Speaking at the Reuters Global Mining
and Steel Summit in New York, Cameco Chief Executive Jerry Grandey also said the
company planned to take advantage of low valuations among uranium miners to make
acquisitions, and said deals worth more than $2 billion were a possibility....'I think the
financial crisis is clearly impacting the ability of every supplier to raise capital,' he
said. 'When you see project cancellations, you see expansion derail, you see some projects
that will just go slower. That is just simply taking away future supply and sowing the
seeds of the next spike in the uranium price.' Spot uranium prices have been among the
most volatile in the resource sector over the past decade, rising from a low of $7 a pound
in 2000 to a high of $136 a pound in 2007. Prices have since come down, and were at $43.50
on Wednesday. Despite the recent decline, Grandey said the industry's mined output still
lags consumption that has risen due to the resurgence of nuclear power as a non-greenhouse
gas producing alternative to fossil fuel generation. He said global mined output is 115
million pounds a year, compared with consumption of about 180 million pounds that he
expects to grow at between 2 and 3 percent per year. The shortfall has been made up by
stockpiles, as well as annual sales of about 24 million pounds of uranium from
decommissioned Russian nuclear weapons, which Cameco manages along with two partners under
a 1999 commercial agreement. That deal expires in 2013, and Grandey said questions linger
about how much uranium Russia may sell past that date, and how much may have degraded past
the point where it can be sold. He said many expect Russian sales could fall by half. 'Somewhere between 24 and 12 million pounds of supply will drop
out after 2013,' he said. Also factoring into the picture is the future of Cameco's Cigar
Lake mine, which Cameco had initially expected to come to production by 2007, but has been
continuously delayed following a flood in 2006....Cameco had hoped to bring the mine --
which had been expected to produce 18 million pounds a year -- to production by 2011. The
company recently dropped that target, and Grandey said he didn't want to speculate when it
might be up and running. However, he said he was
confident the high-grade mine would come to production at some point. 'We are absolutely
dedicated to moving this project along,' he said." Mining Summit-Cameco CEO sees uranium supply crunch,M&A Reuters, 11 March 2009 |
| "The Tories released figures from the National Grid showing that the UK now only holds enough gas to meet 4.1 days of demand. Gas reserves are usually at their lowest at the end of winter, but the
current holdings are less than half the size of the 9 days of reserves held two years ago,
and down from the 4.3 days in storage last year....Britain's maximum reserves are about 15
days' consumption. Germany and France can both hold around 100 days' of gas. Government
sources insisted the reserve figures are "misleading." Because Britain routinely
imports gas through several different routes, there is no realistic threat of supply
interruptions, officials said. 'We get most of our gas from the North Sea and imports from
Norway so we have less need for dedicated storage in comparison to other countries which
are more heavily dependent on imports,' said Mike O'Brien, the energy minister." Britain has only four days of gas left in reserves Daily Telegraph, 5 March 2009 |
| "Gazprom, the world's largest producer of natural gas, posted solid
third-quarter profit but said it will be forced to cut spending this year due to falling
demand in key markets. Natural-gas demand is
crumbling in key markets as national economies slow,
and gas-export prices are set to decline significantly later this year. As a result,
state-controlled Gazprom's earnings are expected to fall throughout 2009, possibly
affecting the Russian company's ambitious investment plans. Gazprom's output fell in the
first two months of the year, and data from the first
days of March show output down by one-fifth from average production in March 2008. This has triggered concern among analysts that lower demand will cut
into its profit. 'The big question is how much demand will fall this year,' said Ron
Smith, chief strategist at Russia's Alfa Bank. 'It's already clear we'll have to
revise the production plan approved late last year,' said Andrei Kruglov, deputy chairman
of Gazprom, noting lower demand in Europe, the company's key export market. 'We simply
won't be able to sell such volumes,' he added. Mr. Kruglov also said Gazprom might revise
its investment program several times this year. The company usually reviews its spending
plans twice a year." Gazprom Sees Drop In Demand, Output Wall Street Journal, 4 March 2009 |
| "US biodiesel exporters face additional tariffs after the European
Union on Tuesday announced temporary anti-dumping and anti-subsidy duties . A European
Commission trade committee has imposed tariffs ranging from €29 (£20.60, $36) to
€41 per 100 kg for an initial period of six months, according to people familiar with
the matter. The move is the latest in a series of transatlantic trade spats and comes at a
time of rising fears over protectionism. It highlights the perilous state of an industry
that is suffering overcapacity and thin margins. European producers blame their woes
almost entirely on imports of US biodiesel, which
benefit from a $1 per gallon government subsidy.
Those subsidies, they claim, have helped US exports to Europe grow from just 60,000 tonnes
in 2006 to more than 1.5m tonnes last year." EU slaps tariffs on US biodiesel Financial Times, 4 March 2009 |
| "British industrial demand for
electricity has fallen by up to 6 per cent over the past year as the recession bites. Dorothy Thompson, chief executive of Drax Power, who announced a 10 per
cent fall in 2008 earnings to £454 million, said there were also signs that households
were using electricity more frugally after unprecedented rises in electricity bills last
year. Drax operates Britain’s largest power station, near Selby in North Yorkshire,
where six coal-powered turbines produce about 7 per cent of the country’s
electricity." Drax reports less demand for power London Times, 3 March 2009 |
| "The IEA says global oil demand
will drop by 980,000 b/d this year but will rise again by about 1 million b/d in 2010.
IEA’s Nabuo Tanaka worried that demand will snap back, starting a trend that will
lead to higher prices and no spare production capacity by 2013. (2/28, #4) The current financial crunch has already led to the
postponement or cancellation of over $100 billion worth of oil projects in the past six
months, which will aggravate the 'supply pathology' when recovery begins. (2/27, #20) The EIA predicted that world oil demand this year would fall by
1.17 million bpd from 2008 to 84.7 million. That
would be down from peak demand of 85.9 million bpd in 2007. (2/27, #16) A new Deutsche
Bank analysis finds that with investment now falling, the downside risks of low oil prices
to supply forecasts are increasing. The average oil price necessary to achieve good return
on new development projects is now $68/bbl in Angola, $62/bbl in the US Gulf of Mexico,
$60/bbl in deepwater Nigeria, and around $60/bbl in Brazil (2/28, #21) BP’s oil and
gas production business in the North Sea is unsustainable at current low oil prices and
high costs. The cost of developing and running oil and gas fields in the North Sea has
increased 50 percent since 2004, but the oil price is now back at 2004 levels. (2/24, #16)
World oil production may slide rapidly over 3-4 years past 2009 due to a short burst in
decline of the resource base, then reach a gentler decline regime after 2010. Production
from the super-giant and giant fields is the cornerstone of modern oil production. In the
top 20, 16 of them are in decline." Peak Oil Review ASPO, 2 March 2009 |
| "Iraq hopes to turn around years of sluggish oil production and boost
output by over 300,000 barrels per day (bpd) by the end of next year, its oil minister said....Iraq now produces
an average of 2.3-2.4 million bpd, less than it did before the US-led invasion to oust
Saddam Hussein in 2003 sparked years of bloodshed and destruction. It is also looking to
boost exports, now averaging around 1.8-1.9m bpd, to 2m bpd this year. Exports, which have
been hindered by technical problems, hit a post-invasion peak of 2m bpd last May. 'We are
in a race against time. Every day that passes in which the oil industry is halted, we lose
a chance to develop,' Prime Minister Nuri Al Maliki said at the conference." Iraq plans to boost output to 300,000 bpd Reuters, 1 March 2009 |
| "A shortage of oil could trigger another global recession around
2013 – says the IEA. By 2010 the price will
reach new highs. The IEA in Paris is warning of a new, much more severe global economic
crisis around 2013. The reason is that investments in oil from new projects are being
cancelled by large oil companies. If demand starts increasing in 2010, the oil price could
explode, fire up inflation and put global growth at risk. 'We are concerned, that oil
companies are reducing their investment levels. When demand returns a supply shortage
could appear. We are even predicting that this shortage could occur in 2013.' Said Nobuo
Tanaka, head of the IEA in an interview with Sueddeutsche Zeitung. He is alarmed, because
he has data that shows that the global oil supply capacity is declining and that oil
reserves will likely be markedly reduced by 2013. The stronger oil demand will be in a
recovery starting in 2010, especially in the US, China and India, the sooner the shortage
will appear and strangle global growth. According to the IEA, the oil price could then
exceed the records achieved in the summer of 2008 and reach $200 per barrel. 'We could be
steering into a new crisis which could be greater than the current crisis', said Mr.
Tanaka. 'That is why we are warning oil companies to invest', said Mr. Tanaka. Despite
billions in profits in the prior year, oil companies are cancelling their investments
because at the current price of $40, they are barely profitable. The investment levels are
already down 25% from a year ago. The OPEC countries are reducing production, because they
do not see sufficient demand. Of 130 large oil projects, 35 have been frozen by February,
said OPEC general secretary Abdullah al-Badri....The investments however, are necessary to
meet demand when it starts picking up again. This is not a matter of oil running out, but
IEA studies prove that the oil produced from 580 of the largest 800 fields is declining. The CEO of the French oil company Total, Christophe de Margerie,
is even predicting that global production will never exceed 89 million barrels per day,
because the peak has passed and oil can only be extracted with ever increasing technical
inputs....Mr. Tanaka stated his intention to appeal
to the governments. 'When the heads of state of the leading industrialised economies meet,
we will be warning them about the consequences of lacking investment in the energy
sector.'" The IEA warns of shortages - 'The next oil crisis is coming' Suedeutsche Zeitung, 27 February 2009 |
| "Sam Laidlaw, chief executive of Centrica, has warned that coal
plants fitted with carbon capture storage (CCS) equipment are unlikely
to be ready to make big cuts in Britain's emissions before 2030. The country's geology is not suited to the technology, which is
expensive and unproven, he said. This meant it would take 'at least 15 years and probably
closer to 20 years' before companies were in a position to deploy the technology on a
large scale. This week, energy and climate change secretary Ed Miliband confirmed reports
in the Guardian that the government wanted to fund more than one CCS demonstration project
to accelerate development of the technology. The government favours
"post-combustion" technology which could be retrofitted to clean up existing
coal plants to capture their emissions." Carbon capture won't work until 2030, says energy boss Guardian, 26 February 2009 |
| "BP PLC's (BP) oil and gas production business in the U.K. North Sea
is unsustainable at current low oil prices and high costs, a spokeswoman for the company
said Tuesday. The company, which is one of the largest producers of oil and gas in the
North Sea, needs to act quickly to make sure it can continue investment in business, she
said. BP has opened talks with key contractors and suppliers about reducing costs. The
talks are still at an early stage but BP is looking for a quick response from oil service
companies, she said. 'It's essential to have these contacts if we want to sustain a
successful business in the North Sea ... doing nothing is not an option,' she said. The
cost of developing and running oil and gas fields in the North Sea has increased 50% since
2004, but the oil price is now back at 2004 levels, she said. BP wants to see a
'significant reduction' in costs, she said, without giving figures...Industry lobby group Oil and Gas U.K. said earlier this month that
investment in the North Sea could fall 30%, accelerating production decline in a province
that is already well past its peak." N Sea Oil Operations Unsustainable At Current Price,Cost-BP Dow Jones Newswires, 24 February 2009 |
| "Analysts have long warned of a
looming peak in non-OPEC production that could occur as soon as next year, but in a recent
report, analysts at Merrill Lynch say the peak may already have happened. Merrill argues
that production of crude in non-OPEC countries will not increase and, fuelled by the
current slowdown in investment, could even decline by as much as two million barrels per
day (bpd) by 2015. The investment firm’s views
have widespread support among oil experts. 'Non-OPEC
crude production is probably about as high as it’s going to get,' says Michael
Rodgers, an upstream expert and partner at PFC Energy,
the Washington-based consulting firm. 'We’ve been in a bullish oil price market since
2000. When companies were going 110 per cent on everything, we still weren’t able to
increase our non-OPEC supply.' Over the past decade, international companies have tapped
some of the most difficult and costly sources of oil in the world. In the Gulf of Mexico
and offshore Brazil, firms have drilled the deepest holes on record. The next frontier
will be the waters of the Arctic, experts say...In a landmark study released in November,
the International Energy Agency (IEA), a Paris-based group of major energy consuming
countries, concludes that production from existing
oilfields worldwide is declining by 4.1 per cent per year. In non-OPEC fields, the figure
is 4.7 per cent. Every two years, the oil industry must introduce new production
equivalent to Saudi Arabia’s capacity in order to make up for reservoir depletion and
satisfy growing energy demand, the IEA says. More of
the world’s oil is coming from smaller fields, which decline faster than larger
reservoirs. The problem is compounded by the economic crisis that has dried up investment
in oil projects and threatens to create a supply crunch next year, when demand should pick
up, warns the executive director of the IEA, Nobuo Tanaka. 'We are already seeing that
decline rates are increasing, but if we don’t invest now it will start to increase
even more,' he has told Reuters. 'The resources underground are there if we are prepared
to invest.' Merrill Lynch says the credit crunch has
hit the industry harder than expected and decline rates are expected to accelerate as
investment drops. Allocations for capital
expenditures are dropping at the big international firms and enhanced oil recovery and
deepwater drilling will be hit hard. 'Broadly, oil production decline rates are a function
of the size and age of the fields and investment rates' Merrill writes. 'In our base-case
scenario we see non-OPEC oil production pretty much stuck in the current 49 million bpd to
50 million bpd range until 2015... Should production decline rates accelerate to 6 per
cent, however, non-OPEC production could decline precipitously towards 47 million
bpd." The great oil output race The National (Abu Dhabi), 21 February 2009 |
| "Cameco Corp. is putting itself in position to consolidate the beaten-down uranium sector. The Saskatoon-based company announced yesterday it is raising as much as
$460-million in a bought deal financing. Combined with its current cash position, Cameco
will have a war chest that could exceed $700-million. And it made no mystery of what it
hopes to do with the cash, noting it wants financial flexibility to allow it to 'take
advantage of opportunities that may emerge from the current industry environment.' When
the market meltdown began last fall, Cameco chief executive Jerry Grandey made it clear
that he hopes to capitalize on the weakened conditions and make acquisitions. He struck
one major deal last August, buying the Kintyre project in Australia from mining giant Rio
Tinto Ltd. Rio Tinto is still looking to sell assets to pay down debt, and industry
experts said yesterday that Cameco could be interested in Rio's Rossing uranium mine in
Namibia, or some assets out of Rio subsidiary Energy Resources of Australia Ltd." Cameco uranium war chest at $700M Financial Post, 19 February 2009 |
| "World oil demand could begin to peak over the next decade as worries
over security of supply, extreme price swings and climate change force a move towards
other forms of energy, consultancy Arthur D. Little said. In a report entitled 'The
Beginning of the End for Oil?,' the consultancy's Peter Hughes suggests the extraordinary
price moves over the last year, environmental pressures and concerns that most of the
world's oil is imported from volatile regions has concentrated minds in the big consuming
countries....'The penny has dropped. To varying degrees, governments across the globe are
acknowledging publicly, many for the first time, that decreasing
reliance on imported oil -- and quickly -- is becoming an energy policy imperative,' the report said." Oil demand may begin to peak soon Reuters, 19 February 2009 |
| "Switch on the light. Is the filament glowing because of a heavy gust
of wind, or is it nuclear fission? If you flick a switch today, the light goes on because
of coal. Almost half the power generated in Britain
on Tuesday came from coal and a bit more than a third from natural gas. Nuclear power
stations were contributing 17 per cent and windmills provided 0.6 per cent....The wind has failed, as it does during periods of intense heat and
cold, and although we have built, with enormous subsidy, enough wind turbines to generate
5 per cent of our electricity, no more than 1 per cent is operational when we need it.
Like Coleridge's ancient mariner, the nation is becalmed, a painted ship on a painted
ocean and we have gone back a century, hewing the same coal that first put Britain on the
fast track to the Industrial Revolution. The reason
why we are still stuffing black lumps of carbon into furnaces is simple: it makes economic
sense and the financial markets are shouting this message louder than ever before....The
price of European Union allowances to emit carbon dioxide has collapsed and it has reached
a level where even the greenest of utilities might be tempted to flirt with a hod of dirty
brown coal. Mills and factories throughout Europe are dumping their allowances on the
market and grabbing the cash. You will remember that the allowances (EUAs) were issued
free to power companies and other carbon emitters, but the volume was capped to ensure
scarcity and that was expected to drive up the price, forcing polluters to reduce
emissions or pay for expensive permits....Recession
has changed the equation and energy consumption is falling. Factories are running at
half-capacity, the suppliers are demanding cash up front, the banks are not lending and
somebody in the Treasury found a bundle of certificates, EUAs. In July, a tonne of carbon
sold for €35, but today it fetches less than €9. Too bad, thinks the finance
director, dump them anyway. If the politicians are still quacking about the climate in two
years' time, we will buy them back, if we still have a business...Meanwhile, the UK must
make a huge decision. We have promised to shut down seven old coal plants by 2015 because
they emit too much sulphur. These can supply 12 gigawatts, or a sixth of UK capacity.
Ideally, we would fill the gap with nuclear power, but EDF has made it clear that the
first new British nuke won't be ready until 2017, supplying less than 2 gigawatts. It is
self-evident that we must carry on burning coal for the time being and politicians must
stop telling lies about energy. They must begin to set plausible targets, explain their
true cost and how they will be achieved. The impact of recession on industrial demand is
one reason why the carbon price is weak. The other reason is credibility." Windmills flap helplessly as coal remains king London Times, 18 Feb 2009 |
| "The China Development Bank and Brazil's state-run oil company
Petrobras are finalizing a deal for the bank to extend a $10 billion line of credit in exchange for future oil supplies, a Brazilian newspaper said on Wednesday. Petrobras Chief Executive Jose
Sergio Gabrielli said on Monday that the company was seeking financing from foreign
governments to bankroll an aggressive investment plan, but he gave no details on the
amounts or sources....The financing is in line with China's policy of attempting to shore
up future supplies in natural resources such as petroleum, agricultural goods and minerals
for its voracious economy. On Tuesday, the China Development Bank, Russia's state oil
champion Rosneft and pipeline monopoly Transneft signed a $25 billion financing deal
in exchange for future oil from the huge new East
Siberian oil fields that China hopes will power its economy for the next two decades. Petrobras said on Monday it was negotiating with up to four oil consumer
countries to receive financing from them in exchange for future oil supply guarantees. The
company needs financing to help it cover the massive costs of exploring large new
discoveries of high-grade light oil and natural gas. Analysts estimate the so-called
subsalt reserves could contain up to 80 billion barrels of oil, catapulting Brazil into
the top 10 of the world's oil producers. This would be the first time Petrobras will have
negotiated this type of financing, the company's finance director, Almir Barbassa, said
earlier this week." China to lend Petrobras $10 bln for oil - report Reuters, 18 February 2009 |
| "Investments in the oil industry in the Gulf region have faced a
major contraction due to the global financial crisis which could endanger the future of
the industry, a survey claims. The value of such
investments fell dramatically as the economic downturn forced projects to be deferred,
acting director general of OPEC Adnan Shehab-Eddin said in the survey....an average 20 percent of the projected total investments will have to
be deferred as a result of the financial crisis, the survey said, indicating that the
percentage could vary from country to country. No projects in the oil industry in the Gulf
region have been recently cancelled and the 20
percent of delayed projects was less than delays of projects globally which is estimated
at 30 percent, according to the survey. The review also said that the cancellation or
postponement of projects risked cutting the oil supplies on the global market and could
trigger sharp fluctuations in the oil prices which
would not be in the interest of the oil exporting countries in the long run." Oil industry investments take hit during crisis - survey arabianbusiness.com, 18 February 2009 |
| "Russia and China have signed a
$25bn (£17.54bn) deal that will see Beijing supplied with oil from Siberian fields in
exchange for loans to Russian firms. China
Development Bank will lend $15bn to Russian state oil firm Rosneft, and $10bn to pipeline
firm Transneft. In return Russia will supply 15 million tons - 300,000 barrels a day - of
oil annually for 20 years. China is the world's second biggest oil importer, and has
looked to diversify its imports away from the Middle East. Chinese Premier Wen Jiabao said
the deal was one of 'political importance'.' In recent years China has turned to Russia,
Kazakhstan, and countries in Africa and South America, as it seeks new oil supply avenues.
Russia views China and Japan, another huge importer of oil, as key markets for its East
Siberian oilfields. 'Rosneft and Transneft can't
borrow easily, so China steps in...with a lot of
funds to lend because of China's huge wealth funds,' said Leo Drollas, deputy director and
chief economist at the Centre for Global Energy Studies. 'They have trillions of dollars
of reserves and they're saying 'we'll lend you this amount to develop the oil fields and
the pipeline infrastructure needed' and it will be paid for by deliveries of oil,' Mr
Drollas added." Russian and China sign $25bn deal BBC Online, 17 February 2009 |
| "Oil prices edged higher after the International
Energy Authority (IEA) warned there would be supply shortages next year once demand picked
up. Nobuo Tanaka, the IEA's executive director, said the squeeze was due to investment
plans being shelved in the recession. 'Currently the
demand is very low due to the very bad economic situation,' he said. 'But when the economy
starts growing and recovery comes again in 2010 and onward, we may have another serious
supply crunch if capital investment is not coming.' Mr
Tanaka was speaking on the sidelines of a conference in London where he said he expected
world demand for oil to rise by about 1m barrels per day from next year....The comments
from the IEA, which advises 28 industrialised countries, helped lift oil prices in London,
up 29 cents to $45.10 a barrel, and New York, ahead 65 cents to $38.16. However, those
levels were a far cry from the near $150 a barrel reached last year when soaring demand
from China and other emerging economies forced the price to record levels. Mr Tanaka also
warned recession and the slump in the oil price had conspired to slow investment in
renewable and nuclear energy, which would create serious global problems in the
future." IEA warns of oil 'supply crunch' Daily Telegraph, 16 February 2009 |
| "Economic slowdown and the
recent collapse in oil prices is slowing investment in alternative energy, needed to wean
the world off dependence on hydrocarbons, the
International Energy Agency (IEA) said on Monday. IEA Executive Director Nobuo Tanaka told
Reuters in an interview the sharp decline in the oil market, which has seen prices
collapse by more than 70 percent from a peak of almost $150 per barrel last year was also
slowing the search for new sources of oil as existing fields were depleted. 'Unfortunately
we are seeing a deceleration occurring in the switch to renewables -- and also nuclear --
as both are very capital intensive,' Tanaka said. 'While the economic slowdown itself
serves to reduce CO2 emissions, if we don't invest now we will have serious problems in
the future. Tanaka said oil demand may already have peaked in the developed countries of
the Organization for Economic Co-operation and Development (OECD) but failure to invest
now in renewables could store up problems in the future. 'I don't see much chance it
(demand) could come back now, but if we do not invest in renewables now, it could bounce
back when the economy starts to grow again,' he said. The Paris-based IEA, which advises
28 industrialized countries, has said that even assuming no growth in oil demand, the
world needs to bring on line an extra 45 million barrels per day of oil production by 2030
in order to compensate for declines in aging oilfields. 'We are already seeing that
decline rates are increasing, but if we don't invest now it will start to increase even
more,' he said. 'The resources underground are there if we are prepared to invest.' Tanaka
said earlier on Monday there could be an oil supply crunch from 2010 as global demand
begins to recover. He forecast world oil demand would rise by 1 million bpd, or about 1
percent, in 2010 as growth resumes outside the OECD." Crisis slowing investment in renewables: IEA Reuters, 16 February 2009 |
| "Britain’s shortage of gas storage capacity is driving up
wholesale prices, leaving businesses and consumers facing higher bills in the future,
energy analysts have warned. During the recent cold snap, the gas price on the wholesale
market leapt to 62p a therm, up 55 per cent from 40p in November. It eased on Friday to
45p. Ian Parrett, of Inenco, the energy consultancy, said that the price changes reflected
the fact that Britain had been drawing almost the maximum daily flow from its largest gas
storage facility, at Rough in the North Sea – about 45 million cubic metres a day
– to help to meet total UK demand of about 380 million cubic metres a day. At the
same time, the UK has had to compete with the rest of Europe for extra gas supplies piped
in from the Continent. Supplies from both storage and piped-in imports are more expensive
than the dwindling supplies from the North Sea, Mr Parrett said....Britain’s gas storage capacity is 4.3 billion cubic metres,
providing no more than 15 days of supply, against 99 days in France. The facility at
Rough, 18 miles off the East Coast, accounts for most of it – three billion cubic
metres of the total – but it can pump only 45 million cubic metres a day, meaning
that in periods of peak demand the UK could run out of gas relatively quickly as demand
outstripped supply. Mr Parrett said that the
shortage of storage is likely to force Britain to top up domestic supplies by importing
gas via pipeline or ship as liquefied natural gas. In both cases, this would involve
paying at a premium, pushing up costs for British consumers." UK’s shortage of gas storage will cost users dear, analysts say London Times, 16 February 2009 |
| "While panic is not the prescription, experts are warning that the
time to begin taking Peak Oil seriously is past. 'It's not about believing. It's about
facts,' said Gord Miller, Ontario's environmental commissioner. Miller has been warning
about Peak Oil for years. He thinks we hit peak around early 2007. 'If we're not there,
we're awful close,' said Dave Hughes, a geoscientist who once ran Canada's national coal
inventory. Peak Oil doesn't mean we have run out of the stuff. It means that we have
crested the top of a bell curve of supply. Then it's a roller-coaster ride down. Depending
on who you ask, that ride will either be slow and uncomfortable or teeth-rattling and
destructive. 'Depletion is taking somewhere between 5 and 6 per cent of (existing) world
oil production per year,' said Hughes. 'The reason that oil price is where it is today is
that the economy has reduced demand.' No one has found a major new oil field since the
1960s. It's getting harder and more expensive to bring up the oil we know is there. All
these signs point toward the peak. What happens now? The
first stage is price volatility, a little like the
$100-per-barrel drop we've seen in less than a year. The current low price 'will increase
demand to a certain extent, which will then increase price,' Hughes said. 'There will be a
few cycles of that. That is, until depletion kicks in for good.' Hughes guesses a barrel
of oil could cost $200 (U.S.) within the next two to four years. It sits at $41 today.
Andrew Nikiforuk, author of Tar Sands, imagines it could go as high as $300 in
that time. 'The second stage is supply shortages,' Hughes said. 'We could see a replay of the (oil crisis of the) early
'70s.' Canada might initially be insulated from supply shocks, owing to our huge deposits
in the Alberta oil sands. Of course, most of that oil is pumped into the U.S. Since
Ontario, Quebec and the Maritimes get most of their oil from overseas, we are vulnerable.
And then? 'It will be a slow deterioration in our quality of life, in the reliability of
transportation, in the availability of certain foods as well as price spikes for food,'
Nikiforuk said. 'It will cause pandemonium in both the public and private spheres.' So
what should we do? 'Save your capital. Reduce your consumption. A lot. Make yourself
accessible to mass transit,' Hughes said. 'And forget about buying things at Wal-Mart that
were shipped here from halfway around the world.' 'You prepare by walking more, operating
one vehicle. You prepare by buying more food locally and talking to your friends about
getting engaged in the political process,' said Nikiforuk. 'Oil has made us fat and lazy.
... It was a 150-year addiction to an energy source
we didn't appreciate or use particularly wisely. It
distorted our economy. Now it's going. And we can't go back to business as usual.'" |
| "The Iraq war was just the first
of this century's 'resource wars', in which powerful countries use force to secure
valuable commodities, according to the UK government's former chief scientific adviser. Sir David King predicts that with
population growth, natural resources dwindling, and seas rising due to climate change, the
squeeze on the planet will lead to more conflict. 'Future historians might look back on
our particular recent past and see the Iraq war as
the first of the conflicts of this kind - the first
of the resource wars,' he told an audience of 400 in London as he delivered the British
Humanist Association's Darwin Day lecture. Implicitly rejecting the US and British
governments' claim they went to war to remove Saddam Hussein and search for weapons of
mass destruction, he said the US had in reality been
very concerned about energy security and supply,
because of its reliance on foreign oil from unstable states. 'Casting its eye around the
world - there was Iraq,' he said....Commenting on the idea of 'resource wars', Alex Evans,
of the Centre for International Co-operation at New York University, who last month wrote
a report on food security for the Chatham House thinktank, said he believed King was
right...King summed up by saying that with growing population and dwindling resources,
fundamental changes to the global economy and society were necessary. 'Consumerism has
been a wonderful model for growing up economies in the 20th century. Is that model fit for
purpose in the 21st century, when resource shortage is our biggest challenge?'" UK's ex-science chief predicts century of 'resource' wars Guardian, 13 February 2009 |
| "Urgent measures are needed to
prevent the effects of the global recession combined with the banking crisis from
dampening new investment in the recovery of the UK's still significant oil and gas
reserves, Oil & Gas UK warned this week.
The annual Oil & Gas UK 2008 Activity Survey, which summarizes planned expenditure on
the UK continental shelf (UKCS) by 75 oil and gas companies, reveals that the combination
of low oil prices and the freezing of capital markets will have a marked effect on
exploration and development activity over the next 12 to 18 months....Oil & Gas UK
Chief Executive Malcolm Webb said: 'The UKCS is clearly a mature oil and gas province but
production has responded to a step-up in investment in 2005-2006 and as a result, the
annual rate of decline has slowed from 7.5 percent to 5 percent in 2008. This
year and next, however, capital investment in exploration and development is forecast to
drop, thus hitting future production. We cannot stand by and simply allow the decline rate
to accelerate. 'Of the UK's remaining 25 billion boe, the survey tells us that companies
have plans to invest GBP44 billion (US$63 billion) to recover 9.6 billion boe. Our
research shows that if investment could be sustained at around GBP5 billion (US$7 billion)
per annum, the industry could hold production decline
at 4-5 percent a year on average. However, if investment falls, that decline
will again accelerate.' Oil & Gas UK's latest
estimate is that capital investment in new and existing fields fell from a peak of GBP5.6
billion (US$8 billion) in 2006 to just under GBP5 billion (US$7 billion) in 2008, despite
the rise in oil prices over the period. Scarcity of capital now means that new investment
is being secured for only the most attractive projects; accordingly, it is anticipated
that investment will fall to somewhere in the range of GBP3.5-4.5 billion
(US$5-6.5) in 2009 and could decline to between GBP2.5 billion (US$3.6) and GBP4
billion (US$5.7 billion) in 2010. Meanwhile, the cost of developing and producing UK oil
and gas in 2008 rose by 12 percent compared with 2007. The break even oil price for new field investment is now over
US$40. Indeed, only a third of new developments now
under consideration break even at current costs, a US$50 oil price and the present UK
fiscal regime which taxes production at a marginal rate 50-75 percent. Webb said, 'Since
the oil price was last in the US$40-45 per barrel range four years ago, the cost base and
supplementary charge on corporation tax have both doubled. The fundamental mismatch of the
tax rate and business environment is detracting from the value of investments, rendering
them less competitive. This becomes particularly apparent when oil prices are lower.'
While Oil & Gas UK still estimates that the total future potential of the UKCS is up
to 25 billion boe, the recovery of the last 15 billion boe will require maintaining
sufficient exploration activity to access all those reserves. Exploration and appraisal
activity in 2008 (109 wells) was roughly the same as in 2007. However, Oil & Gas UK
fears a rapid reduction in 2009. A year ago, it was anticipated that up to 113 wells
would be drilled in 2009 whereas the latest survey predicts 77 wells, of which only 34
have a committed drilling rig......'Stimulating exploration for and investment in our own
reserves will help avoid the worst impacts of a
potential energy crunch on the UK economy. We are in
urgent and constructive discussion with the Government through the PILOT forum on all
these matters and I hope that measures to address the various issues will be announced
soon, certainly no later than this year's Budget.' Oil & Gas UK is the
major representative organization for the UK offshore oil and gas industry. Its
members are companies licensed by the government to explore for and produce oil and gas in
UK waters and those who form any part of the industry's supply chain." Global financial crisis puts UK oil investment at risk Energy Current, 13 February 2009 |
| "Economic relations between Saudi Arabia and China received a shot in
the arm with the signing of five landmark agreements aimed at taking ties to a new height.
The agreements, including the one for the ambitious Makkah mono-rail project, were signed
yesterday - the first day of a high-profile official visit from Chinese President Hu
Jintao. King Abdullah Bin Abdul Aziz and Hu were present at the signing ceremony. Earlier,
both leaders highlighted the significance of further strengthening bilateral relations
during their talks, which covered a wide-range of issues. The
agreements signed included cooperation in oil, gas and mining; in the field of health; on quality inspection and standards of goods and
services; a memorandum of understanding to set up a chapter of King Abdul Aziz Public
Library in Beijing and the Makkah railway project.....China
is keen to ensure huge supply of oil and petrochemicals for its industries from the
Kingdom while Saudi Arabia, the largest oil producer and supplier in the world, wants to
tap the potential of the most populous country in the world. China Petroleum and Chemical Corporation (Sinopec) and the Kingdom's oil
giant Saudi Aramco signed earlier agreements to establish oil refineries in the Kingdom.
Sinopec has been joining hands with Saudi Aramco in oil exploration since 2004. According
to Saudi Arabian officials, the Kingdom would spend 450 billion riyals ($120 billion) on
infrastructure projects over the coming five years. The report, released by the Chinese
embassy in Riyadh, showed that Saudi Arabia has been the largest trading partner of China
in West Asia and Africa over the past eight years and the value of trade exchange between
the two countries exceeded $41.8 billion in 2008." Saudi Arabia and China sign landmark agreements Gulfnews, 11 February 2009 |
| "World oil demand will contract by far more than previously expected
in 2009 due to extreme weakness in the global economy, the International Energy Agency
(IEA) said on Wednesday. Demand is expected to fall
by 980,000 barrels per day (bpd) in 2009 to 84.7 million bpd, the agency said in its monthly market report. The IEA's forecast last
month was for demand to contract by 500,000 bpd this year....World oil demand is now
expected to average 1.4 million bpd less than it did in 2007, before crude's price spike
and the slowdown in the global economy started to cut demand....The IEA
also cautioned that future oil supply growth has come under threat from the collapse in
prices, with decline rates in mature oilfields likely to accelerate if oil remains at $40
a barrel. 'Hand in hand with the downward revisions in demand is the impact on supply,'
said Fyfe at the IEA. 'The trend now is that downside demand revisions are being matched
on the supply side.' Oil prices peaked at $147.27 a barrel in July 2008 due in part to
burgeoning demand from economies such as China and India, but have since collapsed due to
the steep drop in demand. " World oil demand to fall by 980,000 bpd in 2009 - IEA Reuters, 11 February 2009 |
| "The number of passengers using
UK airports fell sharply in January, as demand for air travel continued to fall and
airlines cut capacity and removed some unprofitable routes. The sharp traffic decline along with the problems for potential bidders
of raising debt finance are making the sale of BAA airports, led by the disposal of
Gatwick, a fraught process for the UK group and Ferrovial of Spain, its majority owner.
BAA, which operates seven UK airports, said it handled 9.4m passengers in January, a 6.3
per cent decline from the same month in 2008 and the tenth successive year-on-year decline
in monthly passenger numbers. The number of flights to and from the seven airports, which
include Heathrow, Gatwick and Stansted, fell 7.5 per cent year-on-year in January. " UK airport passenger numbers drop 6.3% Financial Times, 11 February 2009 |
| "Less than a year ago, pundits were predicting $200-a-barrel oil,
endless growth in Chinese energy demand, and a world running out of crude. But at
CERAWeek, the big energy conference put on by data and advisory outfit IHS (IHS), running
Feb. 9-13 in Houston, the talk has now focused on industry consolidation, how to beat down
supplier costs, and just how low the price of oil might go.....'It has become painfully
clear that our understanding of market forces remains imprecise at best,' Ali Ibrahim
Al-Naimi, Saudi Arabia's Minister of Petroleum & Mineral Resources, told conference
attendees on the night of Feb. 10. 'Groupthink dominated financial markets. What many
forgot, ignored, or wished away is that markets are cyclical and recessions inevitable.'
Al-Naimi said that with a big new field coming on line, his
country would soon have some 4.5 million barrels per day of spare oil production capacity,
well above the 1 million to 2 million barrels per day the country typically maintains. Peter Mellbye, senior vice-president at Norwegian oil company Statoil
Hydro (STO), displayed a slide showing the cost to produce a barrel of oil all over the
world, from $20 in Saudi Arabia to more than $100 for
the viscous goo found in Venezuelan lake beds. In a
startling display of oil-company candor, Mellbye also showed Statoil's costs across all
its projects. The average was $40 a barrel, about where the price is today." Trouble Comes to the Oil Patch Business Week, 11 February 2009 |
| "Executives from major energy firms yet to cut prices in 2009 have
said they are 'optimistic' that gas and electricity bills will fall soon. But senior
figures from EDF Energy, E.On and Scottish Power did not tell MPs when such moves would be
made, and Npower was non-committal on cuts. British Gas and Scottish and Southern Energy
(SSE) have already trimmed bills for some of their customers. However, further cuts may
not be forthcoming, one executive warned. Wholesale
energy prices for summer 2010 are about 10% higher than they are now, SSE's chief executive Ian Marchant told the Energy and Climate Change
Committee. 'I'm concerned that if the wholesale price increases, we might see an
increase,' he said. 'I would have expected us to see another round of decreases [in energy
bills] later this year or early next year, but objective analysis suggests that this might
not happen.'" Energy prices 'will be cut soon' BBC Online, 11 February 2009 |
| "Gazprom is facing a cash squeeze as shrinking demand for energy in
Europe forces the world's largest utility to curb spending, postpone the development of
new gasfields and put its domestic customers on a regime of prepayments for fuel. The
Russian company, which cut off supplies to the Ukraine in January in a dispute over unpaid
gas bills, said that it was reviewing its budget for 2009 because of an anticipated
fall-off in export volumes and revenues. In a presentation to investors in London
yesterday, Gazprom said it was expecting volumes to
Western Europe to shrink by 5percent this year while prices would fall by almost a third. The utility giant reckons exports to former Soviet satellite states will
tumble 15percent and Andrey Kruglov, head of finance, said the budget would be revised and
financial efficiency would be improved....Gazprom had borrowings in June of $48 billion
(£33 billion) and must repay about $10 billion in borrowings this year. At the same time
the company has important commitments in spending on projects necessary to maintain gas
production with $29 billion already budgeted for 2009. The capital budget for this year is
a reduction of almost $10 billion from spending in 2007 and Mr Kruglov indicated that
capital expenditure would be trimmed again but the size of the cut would not be finalised
until the end of the first quarter. Cuts in spending
on new gas production are likely to create anxiety among Europe's gas importers due to
concern that Gazprom will be unable to meet increasing demand when economic growth picks
up." Gazprom to curb spending and delay development London Times, 11 February 2009 |
| "....the cyclical downturn in energy prices is pushing investment out
of the sector at a time global oil field decline rates are accelerating. In our base case scenario, we estimate global oil production
decline rates for mature fields of at least 5 per cent, and see non-OPEC oil output in the
current 49-50m barrels a day range over the next seven years. There is a risk, however,
that decline rates accelerate to 6 per cent if the investment drops further. This
situation could push non-OPEC production down precipitously towards 47m b/d by 2015 from
the current levels....With the ongoing upward shift
in the cost of credit, investors now require higher rates of return, and investment into
marginal energy projects such as oil sands is drying up. Therefore, even if governments
are successful in reigniting the global economy, physical energy supply constraints will
prevent a return to the high world GDP growth rates of recent years.....The commodity
super-cycle is not over, it is just pausing. For the world economy to resume growth of 5
per cent, energy supply must expand by a similar rate. But with lower oil prices and a
credit crunch, energy investment is plummeting, suggesting global energy demand will
eventually pick up more rapidly than productive energy capacity. Assuming the ongoing global recession does not turn into a
multi-year event that pushes energy demand down structurally, steep decline rates could
again put upward pressure on oil prices as soon as 2010 or 2011. In particular, if the low oil price/high cost of money environment
persists for most of this year and next, our base case scenario for non-OPEC production
could prove optimistic, exacerbating the second leg of the commodity super-cycle. If and
when the global economy starts to recover, too many dollars chasing too few barrels will
only lead to much higher oil prices." Francisco Blanch - Global head of commodities research at Banc of America Securities-Merrill Lynch Credit crunch will exacerbate the commodity super-cycle Financial Times, 10 February 2009 |
| "LNG terminals are being built around the world, especially in Asia.
The four big countries in LNG are Russia, Iran, Qatar and Indonesia. RBC Capital Markets estimates global LNG production will increase
more than 30% in the next two years, or just less than 10 billion cubic feet per day (bcf/d). All the shale gas in the United States has increased production
there by the same 10 bcf/d since 2002. So the new LNG supply is the same as adding 3-4
major shale gas plays." Could Natural Gas Replace Oil? Resource Investor, 9 Feburary 2009 |
| "Qatari Oil Minister Abdullah Al
Attiyah said Qatar would reach its target LNG capacity of 77 million tonnes per year by
2012, a newspaper reported on Sunday. Attiyah said Qatar's gas production currently stood
at 31 million tonnes a year and would increase by 46 million tonnes over the course of the
next three years, Al Watan reported. The oil
minister had recently said the world's largest liquefied natural gas (LNG) exporter would
ramp up production by 2010, while officials at state gas companies had said Qatar would
not reach the 77-million tonne target until 2012. The minister also said OPEC was becoming
accustomed to the rise and fall in oil prices but that there were expectations conditions
in the market would stabilise in 2010, Al Watan said." Gas output target to be reached by 2012 - Qatar oil min Reuters, 8 February 2009 |
| "Energy and Climate Change
Minister Mike O'Brien granted consent for the construction three new power stations on Thursday – the largest addition to the UK's
generating capacity since the construction of Drax power station in Yorkshire in 1986. The
new sites will generate a combined 4 gigawatts of electricity, enough for around four
million homes. The government has approved the construction at sites in Pembroke in West
Wales, King's Lynn in Norfolk and Hatfield in Hertfordshire. RWE's npower unit will build
a 2,000 megawatt combined cycle gas turbine power station at Pembroke, Powerfuel will construct a 900 megawatt integrated coal gasification gas-fired power station at
Hatfield and Centrica has permission to develop a 1,020 megawatt combined cycle gas turbine power station at King's Lynn. Each of these companies agreed during the planning process that they would
ensure that enough land was left available in the design to retrofit a carbon capture and
storage (CCS) plant....Mr O'Brien said: 'It is essential to replace older polluting power
stations that are reaching the end of their lives with new stations that operate more
efficiently. Investment like this in the energy sector will create new engineering and
construction jobs.' Gas fired power stations produce less than half of the carbon
emissions of traditional coal fired stations, according to government data." Three new gas power stations get approval Daily Telegraph, 6 February 2009 |
| "The melting of the Arctic may not be on the mind of anyone in
Britain today, with snow and ice still gripping the country. But this year will bring an
acceleration of the race for the 'High North' — the scramble for territorial rights
over the Arctic, which has been dubbed the new Cold War. At a Nato conference, the Secretary-General, Jaap de Hoop Scheffer, warned that
members might need a military presence in the Arctic because of growing tensions. Russia,
with a third of its territory north of the Arctic Circle, has been noisiest in its
claims....In the final weeks of his presidency, George W.Bush issued the US’s
strategy for the region. Why now? Two summers in which the Arctic ice has melted much
further than expected have suggested that the Northwest Passage, a hugely valuable sea
route, might open up through the once-frozen sea. Some scientists think that the Arctic
waters could be ice-free in summer within four years, decades earlier than previously
suggested. The retreat of the ice cap also offers the
chance of extracting the huge oil and gas reserves believed to lie in fields around the
North Pole." Russia leads Arctic race to claim Northwest Passage London Times, 6 Feburary 2009 |
"The
third-largest exporter of oil to the U.S. — Mexico — has real challenges of its
own and that poses greater problems for us. Its reserves are depleting very fast and within five years Mexico will move from being an oil exporter to
an oil importer. Mexico has announced that it will be significantly reducing its imports
to the United States to maintain its ability to provide for its own needs. When your third-largest supplier (the other two are Canada and Saudi
Arabia) cuts you off, that leaves you with only one answer to meeting our energy needs:
more oil from the rest of your foreign suppliers who, because they know you are importing
such a high percentage of your energy needs, have you, literally, over a barrel and will
charge you a higher price. Think about this. In 2007 (the last year for which full-year
figures are available) the countries that numbered four through seven on the list were:
Venezuela, Nigeria, Iraq and Angola. They shipped us about 3.2 million barrels of oil per
day. Think about having to replace oil from Mexico with more oil from Angola and Nigeria.
That’s not a very comforting thought." |
"Carlos
Macellari, director of geology for Repsol YPF, a private oil and gas company, said that re-exploring in existing oil and gas fields with more
sophisticated technological tools has yielded more in the last 20 years than new
exploration efforts....As companies rushed to drill
unconventional natural gas prospects and the technology improved for unlocking
tough-to-tackle reservoirs, the industry has produced too much gas. Natural gas for March
delivery settled at $4.60 per million British thermal units Wednesday on the New York
Mercantile Exchange, up 8 cents for the day but down 66 percent from the 2008 high of
$13.69 on July 2. Bahorich estimates there are 31 million acres of natural gas shale
prospects leased in the U.S. today, but 90 percent will languish over the next decade
because demand will not justify drilling." |
| "Sudan’s oil production
will peak next year before it starts to consistently fall, according to a new forecast. Oil and gas liquids production will increase by one third (30.3 percent),
with volumes peaking at 700,000b/d in 2010, according to a Business Monitor International
forecast. But the oil and gas volumes will then steadily fall to 596,000b/d by the end of
the 2018, according to Business Monitor. And growth is forecast to fall from 12.7 percent
in 2008 to 7.9 percent this year. The forecast comes at a time when the Government of
National Unity is preparing to bring new oil wells to production. GoNU energy and Mining
Minister Azhari Abdullah early January announced that a new oil field was set to start
operations at Qamari, Upper Nile. The minister told the press that those 75 oil wells will
cost Sudan 30 million US dollars to bring to production, and will produce 50,000 barrels
per day upon completion. Yet, as production falls, local oil consumption is forecast to
increase by 71 percent by 2018, according to the forecast. Local oil consumption will rise
from 94,000b/d in 2007 to 126,000b/d in 2013. Then the demand will rise to 161,000b/d by
2018, eating up nearly one third of all oil produced that year." Sudan's growth to fall after oil peak Daily Nation (Kenya), 4 February 2009 |
| "Kazakhstan's state-owned
nuclear energy company could become the world's largest uranium producer by this year, the company said in a statement Wednesday. Kazatomprom Chairman
Mukhtar Dzhakishev announced that the country's uranium output is expected to reach 11,935
tons in 2009, a more than 40 percent increase over the 8,521 tons produced last year, the
statement said. The final figure could vary depending on the situation in global
demand, Dzhakishev said....Canada and Australia are also leading producers of
uranium, which is used for nuclear power plants.According to the London-based World
Nuclear Association, Canadian uranium production reached 9,477 tons in 2007, the latest
full-year figure available, and has been declining recently. In Australia, uranium
output reached 8,603 tons in 2007, but could increase to more than 11,000 tons by 2012-13,
according to industry estimates. Planned production sites in Kazakhstan slated for
opening in 2009 include the Khorasan-1 and Khorasan-2 mines, which will eventually have
production capacities of 3,000 tons and 2,000 tons of uranium per year respectively, the
company said. 'By the middle of 2010, we will be able to complete the creation of the
technical foundations necessary for boosting
Kazakhstan's uranium output to 27,000 tons per year,'
he said." Kazakhs may be top uranium producer in 2009 Associated Press, 4 February 2009 |
| "Steep falls in oil production means the world now needed to replace
an amount of oil output equivalent to Saudi Arabia’s production every two years,
Merrill Lynch said in a research report. Non-OPEC
crude oil production may have already peaked and international oil companies faced the
prospect of both younger and older oil fields declining steeply, the firm said in the report released on Wednesday. It said the
cumulative decline of global oil production from today could amount to 30 million barrels
per day by 2015. 'As a result of these steep decline
rates, the world now needs to replace an amount of oil production equivalent to Saudi
Arabia’s production every two years,' said
Francisco Blanch, head of global commodities research at Merrill Lynch...Merrill Lynch
said the combined declines in OPEC and non-OPEC countries alike could lead to pressure for
higher oil prices as soon as 2010 or 2011, assuming the economic slowdown did not turn
into a multi-year event where global oil demand was pushed down structurally for the next
five years." Oil output could fall by 30m bpd by 2015 - Merrill Arabian Business, 4 February 2009 |
| "Some biofuels
cause more health problems than petrol and diesel, according to scientists who have
calculated the health costs associated with different types of fuel. The study shows that
corn-based bioethanol, which is produced extensively in the US, has a higher combined
environmental and health burden than conventional fuels. However, there are high hopes for
the next generation of biofuels, which can be made from organic waste or plants grown on
marginal land that is not used to grow foods. They have less than half the combined health
and environmental costs of standard gasoline and a third of current biofuels...Using
computer models developed by the US Environmental
Protection Agency, the researchers found the total environmental and health costs of
gasoline are about 71 cents (50p) per gallon, while an equivalent amount of corn-ethanol
fuel has associated costs of 72 cents to $1.45, depending on how it is produced. The next
generation of so-called cellulosic bioethanol fuels costs 19 cents to 32 cents, depending
on the technology and type of raw materials used. These are experimental fuels made from
woody crops that typically do not compete with conventional agriculture. The results are
published online today in the Proceedings of the
National Academy of Sciences. 'The dialogue so far on biofuels has been pretty much
focused on greenhouse gases alone,' said David Tilman, a professor at the department of
ecology, evolution and behaviour at the University of Minnesota. 'And yet we
felt there were many other impacts that were positive or negative not being included. We
wanted to expand the analysis from greenhouse gases to at least one other item and we
chose health impacts. ' The health problems caused by
conventional fuels are well studied and stem from soot particles and other pollution
produced when they are burned. With biofuels, the problems are caused by particles given
off during their growth and manufacture...So-called
cellulosic ethanol can be made from plants such as switchgrass or jatropha
that can grow with very little fertiliser on poor land, but the
technology to convert these plants into fuels is in its early stages." Biofuels more harmful to humans than petrol and diesel, warn scientists Guardian, 2 February 2009 |
| "If President Barack Obama's green-energy rhetoric is on the level,
this should be the year the U.S. gets clued in to what much of the rest of the world is
already betting: that jatropha, like other nonfood sources such as algae, will revive a
biofuels movement battered of late by charges that it diverts too many crops from too many
mouths. India has set aside 100 million acres for
jatropha and expects the oil to account for 20% of its diesel consumption by 2011. Australia, China, Brazil and Kenya have also embraced it. In December, a
Boeing 747 was successfully test-flown by Air New Zealand using a 50-50 blend of jatropha
and aviation fuel....'This is a superior biodiesel,' says Roy Beckford, a University of
Florida researcher and expert on sustainable farm development. He has been studying
different varieties of jatropha and in February plans to publish his findings that trees
like those the Daltons are growing (since 2006 they've planted 900,000 near Fort Myers)
thrive so well in Florida that they may yield up to eight times as much oil as they do in
places like India and Africa. That translates into as much as 1,600
gal. of diesel fuel per acre per year, vs. 200 gal.
for stocks that grow in the wild....Native to the Caribbean, Jatropha curcas was taken to
India in the 1600s by Portuguese sailors who used the seeds for long-burning lamp oil.
When Paul Dalton, 54, a Washington child-advocate attorney, decided to invest $500,000 in
an alternative-fuel venture, he followed the Portuguese trail to India and found prolific
new jatropha varieties being cloned in the city of Mysore. The fuel emits negligible
greenhouse gases, and the trees can capture four tons of carbon dioxide per acre (which
might make growers eligible for carbon credits on the global market). Says Ron Pernick,
co-founder of the alternative-energy research firm Clean Edge: 'Jatropha isn't a silver
bullet, but it looks very promising.'" The Next Big Biofuel? TIME, 29 January 2009 |
| "The airline industry reported on Thursday an 'unprecedented and
shocking' plunge in global air cargo traffic.Air freight accounts for 35 per cent of the
value of goods traded internationally and the
International Air Transport Association said traffic volumes had fallen by 22.6 per cent
year-on-year in December." Airlines report ‘shocking’ plunge in traffic Financial Times, 29 January 2009 |
| "The government must boost subsidies for renewable energy projects
urgently to have any chance of meeting its 2020 targets, the chief executive of Centrica,
owner of British Gas, has warned. In an interview with the Guardian, the chief executive,
Sam Laidlaw, said that the UK faces a energy crunch in as little as two years because
companies are shelving their investment plans. The cut-backs by firms, Laidlaw said, would
lead to much higher electricity and gas prices and threaten security of energy supply. He
believed the UK could struggle to cope unless the government soon put together a financial
support package for new power plants, particularly for offshore wind farms. Executives
from the 'big six' utility firms in the UK recently met Gordon Brown to discuss the issue.
The government is relying on the big utility companies to invest £140bn in new energy
infrastructure and power plants; about £100bn of this is needed to build enough wind
farms to meet the government's 2020 renewable energy targets. However, plunging carbon and
electricity prices, and the credit crunch, have made companies nervous about massive
offshore wind farms. This week, Paul Golby, the chief executive of E.ON UK, warned that
the economics of the building of the world's largest offshore wind farm, the London Array,
were on a knife edge. Laidlaw said: 'Investment is starting to fall off quite quickly. The big fear I have is that in two or three years' time the next
cycle [of high energy prices] will repeat, and security of supply ... will actually go
right back on to the top of the agenda, and we will be even less prepared to cope with it
unless we make the investment now.'" Gas chief warns of energy crunch Guardian, 29 January 2009 |
| "Consumers agreed with producers in Davos that the oil price must
eventually rise to ensure investment in future supply, while energy chiefs said more
should be done now to protect the climate. At its peak near $150 in July, oil was clearly
taking a toll on the global economy and eroding demand for fuel. But a $100-plus collapse
since then has slowed investment and raised the potential of tight supply when consumption
picks up. Many in the industry see $60-$80 as a more
desireable level, up to double Thursday's price of around $41 a barrel. 'That seems to be what you need to get investment,' BP Chief Executive
Tony Hayward told the World Economic Forum in Davos on Thursday....Nobuo Tanaka, executive
director of the International Energy Agency, which advises 28 industrialised countries,
agreed consumers would have to pay more. But low prices were needed now by a world economy
that the International Monetary Fund has said will be at a near standstill this year. 'To
stimulate the economy, you need a low price, but to stimulate investment long-term the
price should be higher,' he said on the sidelines of the forum. 'In the mid to long term,
oil prices will go up.'" Energy chiefs say oil price must rise to ensure supply Reuters, 29 January 2009 |
| "Canadian oil and gas drilling could fall 21 percent this year
because of slowing petroleum demand and low commodity prices, the Petroleum Services
Association of Canada said on Wednesday....'The world's rapid decline into recession has reduced demand for all commodities, including oil
and gas. This has triggered a dramatic deterioration
in commodity prices for oil and natural gas, leading to a significant reduction in related
field activity in Canada,' Soucy said in a statement." Canadian oil drilling seen dropping 21 pct in '09 Reuters, 28 January 2009 |
| "Central and southern European leaders have voiced strong backing for
a major pipeline project that could reduce EU reliance on Russia for gas. But the talks in
the Hungarian capital Budapest did not result in a pledge of direct financing for the
3,300km (2,050-mile) Nabucco gas pipeline. Nabucco
would bring Central Asian gas to western Europe via Turkey and the Balkans, bypassing
Russia. It is expected to account for no more than 5% of EU gas needs. The Budapest meeting followed serious disruption to European gas supplies
during Russia's recent dispute with Ukraine. Czech Prime Minister Mirek Topolanek, whose
country currently holds the EU presidency, insisted that Nabucco 'is not an anti-Russian
project'. Russia's plans for two alternative pipelines bypassing Ukraine - Nord Stream and
South Stream - are well advanced. Mr Topolanek said the Russian pipelines would 'maintain
the EU's high energy dependency on Russia' and called them 'a direct threat to the Nabucco
project'.Work is scheduled to start on Nabucco in 2011, with the first gas deliveries
expected in 2014. The major sources of gas for
Nabucco are expected to be Azerbaijan, Kazakhstan and Turkmenistan. But Mr Topolanek said 'we should also ask ourselves whether we are
capable of reaching an agreement with Iran on gas supplies for Nabucco'. The EU said it
could not go beyond offering loans and credit guarantees for the pipeline, which is
expected to cost about 10bn euros (£9bn; $12bn). It is planned to supply up to 31bn cubic
metres of gas annually. EU Energy Commissioner Andris Piebalgs, quoted by Reuters news
agency, said the commission would avoid a bigger commitment to Nabucco 'because then it's
not anymore the consortium's project but a public-private partnership and I'm not ready at
this stage to even consider such a type of option'." EU pipeline scheme gains momentum BBC Online, 27 January 2009 |
| "Doubts are surfacing over the future of BP's £5.8 billion project
to squeeze crude from the oil-rich sands of northern Canada after one of the chiefs of
Husky Energy, its joint-venture partner, resigned unexpectedly. Catherine Hughes,
vice-president of oil sands for Husky, based in Calgary, left the company last week amid
speculation that the project may be delayed after a collapse in the price of oil. A string of oil-sands projects, which depend on prices of as much
as $70 a barrel to remain economic, have been scrapped or delayed in recent months as
crude oil prices have plummeted, from highs of more than $147 last July to lows of less
than $40 this month....The nine billion-barrel
Sunrise project was scheduled to start in 2012 as an integrated production and marketing
operation. BP and Husky planned to use a technology that used a steam-assisted gravity
drainage project, whereby steam is pumped underground to loosen up tar-bitumen in the oil
sands so that it can be pumped to the surface in wells." Resignation of Catherine Hughes triggers fresh doubts about future of BP's oil-sands project London Times, 26 January 2009 |
| "Petroleo Brasileiro SA, Brazil’s state-controlled oil company,
will seek to cut costs by as much as $4 billion annually to prevent debt from swelling
after the company announced a $174.4 billion five-year investment plan....The biggest hurdle to developing ultra-deep oil deposits off
Brazil, which include the Tupi field, the largest discovery in the Americas in the last 30
years, are expenses after oil prices plunged, Exploration
Director Guilherme Estrella said." Petrobras to Cut Costs to Free Funds, Limit Debt Rise Bloomberg, 26 January 2009 |
| "Total oil product consumption
in the US now is down 4.7 percent as compared to the same 4 week period last year. Much of this decline is due to a nearly 14
percent decline in the consumption of jet fuel, a
9.9 percent drop in the consumption of residual fuel oil and a 7.2 percent drop in
propane/propylene. Consumption of gasoline, which
makes up nearly half the US demand for petroleum products, is down by only 1.6 percent and
diesel/heating oil is down by 2.6 percent....Analysis
of the latest world production figures shows a 1
million b/d jump in total liquids production between September and October 2008 after a
steep decline from the July 2008 production peak.
According to the IEA production was steady at around 85
million b/d in November and December.The IEA estimates that OECD consumption in November
2008 was nearly 3 million b/d lower than in November 2007 and that Chinese consumption in
November dropped by nearly 1 million b/d from October. If, after revisions, these numbers prove correct, it is clear that
amounts of oil well in excess of demand were coming onto the world markets last
fall." Peak oil review - World Production ASPO, 26 January 2009 |
| "While official figures showed the economy contracting at its fastest
since 1980, National Grid said demand for electricity had fallen over Christmas at homes
and factories across the land, and Poland confirmed that thousands of its citizens were
coming home from Britain and Ireland. National Grid said it was cutting its forecast for
electricity consumption this year because of the recession. The thousands of people being
laid off each week and the hundreds of firms cutting production are reducing demand.
Industry has suffered most in this recession and made the biggest contribution to the
slump in national output, which fell by a worse-than-expected 1.5% in the fourth quarter
of last year compared to the third - or around 6% on an annualised basis....National Grid said weekly peak electricity demand would fall by
600-1,000 megawatts, the equivalent of a large power plant, over the next year. The drop will ease the strain on power stations, some of which are facing
closure because of age or environmental rules. It will also reduce CO² emissions." Lights go out across Britain as recession hits home Guardian, 24 January 2009 |
| "In the last six months, oil prices have fallen by an unprecedented
amount and are currently bouncing around $40 a barrel depending on the news of the day.
This decline clearly is because supply began outpacing demand last summer and there is a
widely held belief that as the world economy contracts, the demand for oil will contract
faster. While it is true that the demand for oil is no longer growing, the available
numbers do not suggest that, as yet, it is exactly 'collapsing' either....This week the U.S. demand for oil is officially reported to be
down about 4 percent as compared to last year. Gasoline
consumption is down only 2.1 percent, which does not seem to be much for a country that is
laying off people by the millions and where all but the poorest of the poor drive cars as
part of their daily existence. A fair guess is that the consumption of gasoline is so
deeply imbedded in the American way of life that the economy is going to have to get a
whole lot worse, and prices are going to have to get a whole lot higher, before we see
more impressive declines in oil and gasoline consumption - say on the order of 10 or 20
percent. Although the growth in China's demand for
oil is slackening, it is still up, with December 2008 consumption 12 percent higher than
December 2007. Actually Beijing knows a bargain when
it sees one and is busily buying up crude to stash away in its new strategic reserve. The
International Energy Agency, which is sort of the official keeper of the world's oil
statistics now acknowledges that a global recession is in progress but only sees world oil
consumption for 2009 falling by 500,000 barrels a day (b/d) to 85.8 million. While these
projections will be revised again and again during the year, at the minute they do not
suggest anything that could be characterized as a 'plunge' in the demand for oil." The Peak Oil Crisis: What of 2009? Falls Church News-Press, 22 January 2009 |
| "Petroleos Mexicanos, Mexico’s state oil company, will probably
report its fastest drop in production since 1942, eroding revenue as plunging crude prices
limit the amount of cash available to drill for new reserves. Pemex last year likely
extracted 2.8 million barrels a day, down about 9 percent from the 3.08 million a day
pumped in 2007, representing a total of $20 billion in lost sales, according to data
compiled by the government and Bloomberg. The Mexico City- based company, which had
revenue of $104 billion in 2007, plans to report annual production figures tomorrow.
Falling output is leading Pemex into deepwater exploration as state-run peers Petroleo Brasileiro SA in Rio de Janeiro and Ecopetrol SA in Bogota invest billions to boost production.
Costs are rising at Cantarell, Pemex’s largest
field, after declining pressure reduced output in the past five years. Oil tumbled 77 percent from its July record to $34.08 a barrel in New
York. Pemex’s 'biggest problems have yet to come,' said Alejandro Schtulmann, head of
research at Empra, a political- risk consulting firm in Mexico City, in an interview. 'The
fall in oil prices and lower production is going to make expensive exploration projects
less attractive now.'...Sliding Pemex output risks
cutting supply to the U.S., which gets more oil from
Mexico than all countries except Canada and Saudi Arabia. Lower production also
comes as Venezuelan President Hugo Chavez, who has threatened to end oil shipments to the
U.S. and opposes U.S. influence in Latin America, holds a referendum that would end term
limits on his presidency.” Pemex Oil Output Declines at Fastest Rate Since World War II Bloomberg, 20 January 2009 |
| "Oil demand may never return to growth in the United States, Europe
and parts of Asia, easing the strain on long-term supplies and prices as emerging
countries burn ever more fuel. The surge in oil to a
record near $150 a barrel last year heightened concern the world will run out of crude and
supply will start to dwindle -- a theory known as 'peak oil'. Now a deepening recession
and oil price collapse have raised the issue of whether demand, not supply, is nearing its
peak. Oil use in the industrialised countries that
are members of the Organisation for Economic Co-operation and Development (OECD), such as
the United States, Japan and western Europe may have peaked already, according to some
analysts. 'There is a reasonable likelihood that OECD oil demand has peaked,' said Peter
Davies, former chief economist at BP Plc who was in charge of preparing BP's annual
Statistical Review of World Energy, a standard reference work. Among OECD economies, the
United States had sustained robust oil demand growth due to an expanding economy and less
focus on conservation, while western Europe and Japan were posting declines. U.S. patterns
could be about to change as the recession erodes consumption. By the time rich countries
return to economic growth, their efforts to use less oil and slow the impact of global
warming could be taking hold. Barack Obama, taking office as the 44th U.S. president, aims
to greatly increase alternative energy production in the world's top energy consumer.'More
and more analysts are sold on the idea that U.S. oil demand peaked in 2007,' Antoine Halff
and Veronique Lashinski, energy analysts at Newedge brokerage, said in a report. 'The
market meltdown is likely to entrench current demand losses not only in the U.S. itself
but in the world at large.' The peaking of OECD demand will not choke off growth in oil
consumption worldwide for the foreseeable future as emerging economies expand and billions
of people seek to improve their living standards. 'The West no longer rules the world,'
said a senior oil executive who requested anonymity. 'Whatever the OECD is doing, it will
not prevent worldwide energy consumption from growing, due to emerging country growth.' This issue has faded as economic slowdown eroded demand, meaning
supply is abundant for now and consumption is key to shaping oil market sentiment. 'The term (peak demand) has become fashionable over the last year, but
applied to OECD, not global demand,' said Newedge's Halff. 'Even the idea of a slowdown in
non-OECD demand that would keep it from offsetting contraction elsewhere stretches the
imagination at this stage.' Some believe global consumption of oil could reach a high
point in the next decades, as policies to tackle climate change are put in place. 'Peak demand is only likely to be generated by effective
implementation of climate change policies across a large part of the world,' said Davies, who is now a consultant after retiring from BP last year. 'I would not
expect this to occur within the next decade, although the policies could be in place by
then that will eventually lead to peak demand." Forget 'peak oil', West's demand growth peaking Reuters, 20 January 2009 |
| "Turkey signalled today it might withhold support from the Nabucco
gas pipeline, a project viewed as central to Europe’s drive for energy security,
unless the European Union unblocked the energy section of Turkey’s EU membership
talks....Question marks hang over Nabucco, because construction of the pipeline, due to be
completed by 2014, has not begun and the cost is estimated at €8bn ($10.5bn,
£7.2bn), up from €5bn when it was first proposed. Moreover, it remains doubtful that the countries identified by the EU as
potential suppliers have enough gas to provide Europe with the planned 31bn cubic metres a
year." Turkey links pipeline to EU membership talks Financial Times, 20 January 2009 |
| "US petroleum deliveries fell
last year at the most rapid rate since 1980, underlining the drop in demand amid a slowing
economy, plunging oil and natural gas prices and the credit squeeze. The new data from the
American Petroleum Institute showed deliveries falling by 6 per cent last year. US crude
oil production in 2008 also sank below 5m barrels per day for the first time since 1946,
as the result of lower Alaskan production and hurricane shutdowns in the Gulf of Mexico. The data emerged as the industry begins to feel the crunch from falling
demand. Drilling programmes are being curtailed, the leasing of acreage that took hold in
the backfields of the US last year is slowing to a crawl and layoffs have begun. Robin
West, chairman of PFC Energy, a consultancy, fears a repeat of the slowdown in the 1980s,
when industry cutbacks were so deep it took years for it to recover. "The oil and gas
industry is cyclical and the less investment now, the greater the rebound when demand
returns and prices begin to climb." Sharp drop in US demand for petrol Financial Times, 16 January 2009 |
| "ConocoPhillips said Friday that it
will trim 4% of its workforce, or about 1,300 employees, and scale back spending as the
energy company struggles with plunging oil prices....Conoco also said it has approved a
$12.5 billion capital spending program for 2009. That's down
18% from an estimated $15.3 billion in capital spending during 2008." ConocoPhillips to cut 4% of workforce CNN, 16 January 2009 |
| "Oil prices need to rise to
about $70 a barrel to sustain investments in fields and avoid shortages, Venezuelan Energy
and Oil Minister Rafael Ramirez said. Venezuela, the biggest oil exporter in the Americas, is discussing prices
with other members of the Organization of Petroleum Exporting Countries, Ramirez said
today in an interview in Machiques, Venezuela. 'We’ve spoken of a price band of $80
to $100 a barrel,' he said, declining to specify an immediate target. 'The priority is to
stabilize the market and avoid a cycle of
disinvestment,' particularly in projects such as
deep water and the Canadian tar sands...OPEC trimmed 2.46 million barrels a day from its
members’ production quotas at a Dec. 17 meeting. Ramirez said Chavez had mentioned a
possible further cut of 2 million barrels a day. Venezuela stopped shipments to oil
refineries in Sweeney, Texas, and Chalmette, Louisiana, which it owns in joint ventures
with ConocoPhillips and Exxon Mobil Corp., to meet the OPEC target, Ramirez said." Venezuela Says $70 Oil Needed to Maintain Investments Bloomberg, 16 January 2009 |
| "World oil demand will contract sharply in 2009 as global economic
slowdown further erodes consumption, the International Energy Agency (IEA) said on Friday.
The Paris-based agency joined the ranks of
forecasters predicting a fall in global oil demand this year, revising its previous 2009
estimate down by 940,000 barrels per day (bpd) to 85.3 million bpd -- a 500,000 bpd
year-on-year fall. 'Forecast global oil demand has
been sharply revised down for 2009, following a reassessment of global economic
prospects,' the adviser to industrialised nations said in its monthly report. The IEA's
940,000 bpd revision to its 2009 estimate is its biggest single month's revision in recent
times, David Fyfe, head of the IEA's Oil Industry & Markets Division, told Reuters. In
its previous report, the IEA forecast global oil demand would fall in 2008, but recover to
grow by 440,000 bpd in 2009, based on the resilience of emerging economies. However, the
agency now sees Chinese oil demand growth at just 90,000 bpd in 2009, as its GDP growth
contracts to 6.5 percent -- the slowest rate in eight years. Chinese demand for oil to
fuel its rapidly expanding economy was seen as one of the key reasons that crude prices
rose from around $20 a barrel at the start of 2002 to a peak above $147 in July 2008. Oil
prices have since collapsed to around $35 a barrel as the severity of the economic
downturn and subsequent drop in global fuel consumption became clear....Non-OPEC production fell by 150,000 bpd in 2008 to around 49.5 million
bpd, the IEA said, the first drop in output since 2005 due to supply disruptions and declining Russian production." World oil demand to shrink sharply this year-IEA Reuters, 16 January 2009 |
| "Plans to build vital facilities to help Britain secure its energy
supplies at a time of increasing fears about reliance on Russian gas are in doubt as a
result of the credit crunch, energy groups warn. Stag
Energy says the credit crunch is making it harder to raise the £600m for the Gateway
project to build a storage facility beneath the Irish Sea. It received planning permission
for the project in November. The UK has storage
capacity of about 4% of average annual consumption, or about 14 days' worth. This compares
to Germany's reserves equivalent to 21% of annual consumption and France's 24%." Plans to increase Britain's gas storage capacity left in tatters by credit crunch Guardian, 15 January 2009 |
| "Look west from the office towers of the energy companies that
dominate Calgary, and the view is spectacular: rolling prairies rise to tree-clad
foothills, with the jagged, snow-capped peaks of the Rockies on the horizon. Looking down,
however, is more unsettling. The city is dotted with motionless construction cranes poised
over the pits of abandoned projects. A five-year
energy boom here in the administrative heart of Canada’s oil patch and in the tar
sands far to the north has ended. The only debate is
how painful and persistent the bust will be—not just for the biggest city in
Canada’s richest province, Alberta, but for the whole country." A sticky ending for the tar sands The Economist, 15 January 2009 |
| "With Russia busy bribing Azerbaijan to cold-shoulder Europe's
proposed Nabucco
pipeline to transport its gas to Austria via Turkey, and Gazprom muscling in on a
projected trans-Saharan gas pipeline from Nigeria to Europe via Algeria, Europe is stuck
with high - and growing - dependence on gas that Gazprom, aka the Kremlin, controls. This
may seem a continental rather than a British emergency, but that is wishful thinking.
Britain is already short of generating capacity and will lose a third of the existing
60-gigawatt supply by 2020, as old coal-fired and nuclear stations are decommissioned. Within six years - a blink of an eye in the generating industry -
Britain's energy gap will endanger the national economy. A German consortium formed by E.On and RWE announced plans this week to
build four new nuclear plants that could plug half of Britain's energy gap, and EDF, which
has just acquired British Energy, plans four more smaller ones. But because Britain wasted
a precious decade pretending it didn't need or want nuclear energy, they cannot be built
in time to head of serious shortages. Offshore wind power cannot plug the gap. Ed Miliband's green light for new coal-fired stations is a U-turn
born of desperation. But gas will be a vital part of the solution, and Britain's North Sea
gas is rapidly running out....Europe's supplies will be even more vulnerable once the eastbound
trans-Siberian pipeline is built and China bids against it for Gazprom contracts. But the Kremlin picked a bad time for this showdown. A year ago,
Gazprom's market capitalisation made it the world's third-largest corporation, after
ExxonMobil and General Electric. Dazzled by Gazprom's 'trillion-dollar business'
prospectus, investors overlooked its splurging on acquisitions to the neglect of vital
infrastructure. But the credit crunch and falling energy prices have temporarily spiked
Gazprom's guns. Its share price is down 76 per cent; its debts are $50 billion. Given its huge revenue flows, Gazprom is not broke. But it cannot
keep gas flowing from its existing fields and also find £32 billion to finance two
pipelines that would bypass Ukraine, the Nord stream under the Baltic and the South stream
under the Black Sea." Putin has given us a wake-up call: we're vulnerable to blackmail London Times, 15 January 2009 |
| "America's demand for crude oil
fell to its lowest level since 2003 last year, as
record high prices to start the year and an ailing economy at the end of 2008 combined to
sharply curtail consumption, new statistics show. For all of 2008, U.S. petroleum
deliveries — a measure of demand — fell 6 percent to 19.4 million barrels a day,
with declines for all major products made from crude, according to a report released
Thursday by the American Petroleum Institute, the industry's trade association. Jet fuel
deliveries fell 6.1 percent, distillate fuel oil, including diesel, was down 5.8 percent
and gasoline deliveries slid 3.3 percent — the lowest level in five years, API
said....U.S. crude oil production last year dropped
below 5 million barrels a day for the first time since 1946, largely from lower Alaskan output and disruptions caused by hurricanes
Gustav and Ike in the Gulf of Mexico. The two storms shut down nearly 100 percent of oil
and natural gas production in the Gulf for a couple of weeks in September, and those
disruptions lingered for months afterward. API said Alaskan production fell 1.1 percent
last year, while Gustav and Ike contributed to a 0.6 percent drop in annual crude output
from the lower 48 states. Import levels also reflected weakening demand, as combined crude
and other product imports fell to 12.9 million barrels a day — the lowest level in
five years. On the refining side, production of gasoline fell 2 percent to 8.8 million
barrels a day, while output of ultra-low sulfur diesel surged more than 10 percent to 3.1
million barrels a day to meet growing demand." US petroleum demand in 2008 lowest in 5 years Associated Press, 15 January 2009 |
| "The world's third biggest major uranium supplier, after Canada and
Australia - reported a 28% increase in uranium production during 2008. The increase is in
line with Kazakhstan's plan to become the world's leading uranium supplier. KazAtomProm
announced that Kazakhstan's uranium production increased 28% in 2008 to 8521 tonnes,
compared with 6637 tonnes in 2007. Production in 2008 was, however, 1080 tonnes less than
planned....Kazakhstan plans to increase uranium output to some 18,000 tonnes by 2010,
which would make the country the world's largest producer of uranium. Kazakhstan has set a uranium production target of 30,000 tonnes
per year by 2018, the increase being due to a perceived shortfall being likely about 2014." Kazakh uranium output jumps in 2008 World Nuclear News, 15 January 2009 |
| "Consumers shouldn't get too comfortable with cheap gasoline, because
the planet is running out of oil and prices will go 'sky high' — as high as $20 per
litre — as petroleum reserves dwindle in the coming years. That's the view of Jim
Buckee, the British oilman who was CEO of Calgary-based Talisman Energy Inc., one of
Canada's largest energy producers, from 1993 to 2007....'Black oil has peaked,' he said in
telephone interview this week. 'The biggest oilfields in the world have been producing for
50 years and they're all getting tired.' He says no giant oilfield, capable of replacing
those in Saudi Arabia, Iraq or Kuwait that produce more than half-a-million barrels a day,
has been discovered and developed since the 1970s. That fact, coupled with rising demand
means 'we're going to need a new Saudi Arabia' to sustain existing reserves into the
future. He calls the current recession a mere
'hiccup' on the road to much higher energy prices. Once it's over, in 18 months or so, he
says the pressure on oil supply and demand will 'snap back higher, and stronger than
before.' Buckee says it's difficult for executives of the world's biggest oil companies to
speak plainly and honestly about the future. For one
thing, he says companies such as BP and Exxon are guided by the views of in-house
economists, who preach 'commodity prices always go down and that ingenuity always beats
scarcity — none of which is true.' Discussing peak oil is also just bad for business.
'If Exxon comes out and says, 'Sorry guys, the oil production rate is not going to go up,
this is it,' there'd be hell to pay (from investors). So they're better off just zipping
their lips.'... he says exports from OPEC countries will shrink as their own domestic
consumption increases, fuelled by large populations of young people in Saudi Arabia, Iran,
and Nigeria. And where will new supplies come from to solve the riddle of rising demand
and shrinking reserves? Of the planet's roughly 4,000 oilfields, the 14 biggest account
for 20 per cent of the global supply, and all of those were discovered before 1976. Today
all 14 are in decline. During the 1990s, 400 new oilfields were discovered, but only 2.5
per cent of those are now producing more than 100,000 barrels a day — about the size
of the Hibernia oilfield, Canada's largest. And while a 100,000 barrel-per-day field is a
big discovery, it is only a drop in the bucket when compared to the world's daily demand
of 80-million barrels. Buckee says the Alberta oilsands are overrated as a future source
of supply, partly because labour problems and environmental challenges such as water use
will complicate investment there. He also says there may be lots of oil in the Arctic,
'but can you really envisage another Saudi Arabia — eight-million barrels a day
— coming from sub-ice wells in such a hostile environment?'" Cheap oil not here to stay: Ex-Talisman CEO Calgary Herald, 14 January 2009 |
| "A lot of the uranium mines, which were for years touted as an
important source of new production, are proving to be total disappointments. The billions
of dollars raised by so-called uranium companies during the uranium bubble will result in
very few additional pounds of production...The world is still consuming more uranium than
it's producing. The U.S. still gets 40% of its
nuclear fuel not from uranium mines, but from Russian warheads under an agreement expiring
in 2011...If the enriched uranium from Russia stops being available after 2011, there will
be quite a price shock. The utilities in the United
States are going to begin to accumulate inventory in front of 2011, which put a bid under
the uranium price. One of the unanticipated consequences of the credit crisis is a
deceleration of the nuclear renaissance. Nuclear reactor construction requires large
amounts of debt and unless you're the U.S. Treasury issuing zero-coupon notes, no one
seems to be willing to lend anything. Even though nuclear reactors are fairly low risk
compared to other large-scale industrial projects, the absence of credit will inevitably
slow down nuclear reactor construction." Rising commodity prices to trigger renaissance for uranium and gold Mineweb, 14 January 2009 |
| "According to a new survey by BDO Seidman, LLP, one of the nation's
leading accounting and consulting organizations, 48
percent of chief financial officers (CFOs) at U.S. oil and gas exploration and production
companies agree that the world has reached its peak petroleum (liquid hydrocarbon)
production rate or will reach it within the next few years, while another 52 percent
disagree with that statement. There are similarly
differing opinions in predictions regarding when the world's demand for petroleum will
peak - 31 percent believe it will be in less than 10 years, 43 percent believe it will be
in 10 to 20 years, 14 percent believe it will be 20 to 30 years and eight percent think it
will reach peak more than 30 years from now. 'I think
perspectives have likely shifted dramatically in recent months on whether the world is
nearing a peak level of petroleum production. If you had gathered opinions only six months
ago on this issue, most were worried that existing sources were drying up. Now, people are
hedging their bets,' said Charles Dewhurst, a
partner and National Energy Industry Practice Leader at BDO Seidman, LLP. These findings
are from the BDO Seidman Natural Resources 2009 Outlook Survey which examined the opinions
of 100 chief financial officers at U.S. oil and gas exploration and production companies.
The survey was conducted in Q4 2008." Energy CFOs Are Split on World's Peak Petroleum Production Rate Business Wire, 12 January 2009 |
| "Two serving MI6 officers have
allegedly leaked confidential information to a firm of private consultants with links to
the family of the president of Kazakhstan. The consultants are said to have been
commissioned to obtain the information at a time when the American justice department was
investigating allegations of bribes paid by American oil companies to Nursultan
Nazarbayev, the Kazakh president, and his top officials. A 300-page report, said to have
been prepared by the consultants, purports to summarise confidential MI6 files on
political and economic issues affecting the oil-rich state. One MI6 officer is said to
have divulged that MI6 was 'closely observing' the role of Hurricane Hydrocarbons, a
Canadian oil company, and financial arrangements involving oilfields in Kazakhstan. A second MI6 officer is alleged to have revealed information that the
service held on Akezhan Kazhegeldin, the former Kazakh prime minister. The report also
contains information that it claims was given by Scotland Yard detectives....Mike Gapes is
chairman of the Commons foreign affairs committee which is responsible to parliament for
overseeing the affairs of MI6. He said he was alarmed
at suggestions that serving British intelligence officers might have leaked information
that could have found its way into the hands of people whom the agency was monitoring. 'If true, these allegations raise very serious concerns and I expect the
government to investigate them,' he said. The Sunday Times has seen a copy of a report by
Global Options Management, a firm of private security consultants with offices in
Washington and, previously, in London. The company is chaired by Alexander Mirtchev, who
is an economic adviser to the Kazakhstan government and a director of the country’s
sovereign wealth fund. Political opponents of the Kazakh regime claim that Mirtchev is
Nazarbayev’s 'point man' in Washington and that he helps to manage some of the Kazakh
leader’s wealth.....Rakhat Aliyev, the president’s former son-in-law, has
claimed that Nazarbayev has diverted billions of dollars in state assets and has long
taken commissions from foreign companies doing business in Kazakhstan." MI6 officers allegedly leak oil dossier to Kazakhstan Sunday Times, 11 January 2009 |
| "If the wrangle with Ukraine was designed to make the case for more
direct gas sales and transit between Russia and the EU, the plan has partly backfired. A chorus of European leaders believe that the big freeze of 2009
makes the case stronger for sourcing gas from farther afield – the Caspian and South
Caucusus countries of Azerbaijan, Turkmenistan and, eventually, Iraq. Russia’s row with Ukraine has flared as key dates approach for
decisions on final approval for work on Nord Stream, the first pipeline to carry Russian gas directly into the heart of
Europe. Gazprom is also trying to build the South
Stream pipeline to bypass Ukraine by routing gas
under the Black Sea to the EU via Bulgaria, again hampered by environmental and financial
concerns. That may remove Russia’s squabbles with Ukraine from the equation but will
give Russia increasing control over Europe’s energy future. Critics fear that it
could turn much of Europe into vassel states under a Kremlin energy umbrella. The alternatives are limited. Buying more from unstable regimes in
North Africa and the Middle East is one. The other is the proposed Nabucco pipeline, owned
by energy companies in Bulgaria, Romania, Hungary, Germany and Austria, which will avoid
Ukraine and Russia by running from Azerbaijan through Turkey to Vienna. But it lacks
funding and faces other huge pressures – such as Gazprom’s offer to buy all of
Azerbaijan’s gas and Turkmenistan’s decision to ship much of its gas east
through a new pipe to China. Russia also has some
powerful voices on its side. Gerhard Schröder, the former German Chancellor, reportedly
paid €1 million (£855,000) a year by Gazprom, was seen on television this week in
discussions with his friend, Vladimir Putin, the Russian Prime Minister, extolling the
virtues of Nord Stream, which will bring gas under the Baltic from St Petersburg to
Berlin." Turning away from Russia’s heat London Times, 10 January 2009 |
| "China will become increasingly
reliant on imports for its growing oil demand as domestic production sees no big
breakthrough in the years ahead, according to a
report published by the Ministry of Land and Resources. China's own oil output is expected
to increase by only 5 percent between 2010 and 2015, rising from 190 million tonnes (3.8
million barrels per day) to 200 million tonnes in 2015, said the report published on the
ministry's Web site (http://www.mlr.gov.cn/). That implies growth will stagnate in 2009 and 2010 after crude oil
output estimated at 189 million tonnes in 2008. The
ministry forecast that by 2020 the world's second-largest oil consuming country would need
500 million tonnes of oil a year (10 million barrels per day) to keep its economy going,
43 percent more than the 350 million tonnes it consumed in 2007. So Beijing will have to rely on imports for 60 percent of its oil
demand by 2020, up from 50 percent now. While oil
output barely edges ahead, gas production is expected to balloon to 110 billion cubic
metres (bcm) in 2010 and 160 bcm by 2015, double the 79 bcm produced in 2008. Gas produced
from coal-bed methane projects will also jump from 4.3 bcm in 2007 to 10 bcm in 2015, the
ministry said. Use of China's most abundant but dirtiest fuel, coal, will also keep
growing, although at a slower rate than in recent years. Production will hit 2.9 billion
tonnes per year by 2010, up 26 percent from 2007, and rise to 3.3 billion tonnes by 2015.
Consumption will exceed 3.5 billion tonnes by 2020, the ministry said. China also plans to
ramp up its efforts to find more oil and gas fields to boost its own oil production to
help meet demand. It aims to find at least six new big oil fields by 2010, each with more
than 100 million tonnes of geological oil reserves, and 6-8 new natural gas fields, each
with 100 billion tonnes of geological reserves, the ministry said. Beijing also plans on
finding another 10 major oil fields and 8-10 big natural gas fields between 2011 to
2015." China sees imports at 60 pct of oil use by 2020 Reuters, 8 January 2009 |
| "With its vast underground storage tanks and network of pipes, valves
and tubes, Baumgarten in the flatlands east of Vienna is one of Europe's biggest gas hubs.
The first gas to cross the iron curtain was pumped through thousands of miles of pipelines
from Siberia and into western Europe 40 years ago, arriving at Baumgarten for resupply
across the continent. The hub remains the most important junction today, matching Russia's
huge mineral riches to Europe's gargantuan appetite for natural gas. But a new energy
revolution is being plotted. With the Kremlin and the giant Russian gas monopoly, Gazprom,
locked in their annual spat with Ukraine, the main transit country for Europe's gas
supplies, over prices and politics, Europe is desperately seeking ways to diminish its
dependence on the 140bcm (billion cubic metres) of gas it currently imports from Russia.
The most favoured, most ambitious and most contentious idea is to build a new pipeline
beyond the grip of Gazprom, which controls 90,000 miles of gas delivery systems. Named
after a Verdi opera, the Nabucco pipeline is supposed to terminate at Baumgarten, ultimately pumping 31bcm of
Caspian gas through Turkey and the Balkans to Austria. 'Diversification on the terrestrial
route for gas is a must for Europe,' says Alexandr Vondra, deputy prime minister of the
Czech Republic, which has taken on the EU presidency and sees energy policy as a
priority....'This is an attempt at reverse
engineering in pipeline development,' said a senior industry source. 'Usually you find the
resource and then you build a pipeline. With Nabucco it's the other way round.' Pierre Noël, energy analyst at the European Council on Foreign
Relations, says: 'This is a project that does not exist except in the minds of Brussels
bureaucrats. They think you can build a pipeline and then the gas will flow. It's simply
not credible.'...The industry source said there was nowhere near enough to make Nabucco
viable. 'The most important issue regarding this project is to obtain enough gas,' the
Turkish president, Abdullah Gül, said last month. The first target for gas to fill the
pipeline is Azerbaijan, whose Caspian field Shah Deniz II should come onstream around
2013, when Nabucco is due to start pumping. 'This gas is expected from Azerbaijan,' says
Mitschek of the 8bcm, or quarter of the pipeline's capacity, needed to start Nabucco
operations. But Gazprom is competing fiercely for the Azerbaijani prize in a bidding war
with the Europeans, offering above- market prices for the gas while the Kremlin dangles
the political carrot of arranging the return of the disputed enclave of Nagorno-Karabakh
to Baku's control. 'The Russians have offered a deal,' says Elmar Mammadyarov,
Azerbaijan's foreign minister. 'But there are different options on the table. At the end
of the story, it's our gas.' A recent western audit of Turkmenistan's gas reserves cheered
officials in Brussels by confirming a doubling of the known resources. But experts caution
that it will be 20 years before sufficient Turkmen gas can be pumped for Europe to evade
Gazprom's control. Similar calculations apply to aims of filling Nabucco with gas from
Iraq or Iran, were there to be major political change in Tehran. Compounding the problems
is Turkey and its worsening relationship with the EU. Well over half the proposed pipeline
is to be located in Turkey. Brussels is attempting to negotiate an agreement making Turkey
the main transit country for Caspian gas to Europe. The Turks are insisting on 15% of the
gas at discounted prices, a demand that would wreck Nabucco financially, say officials in
Brussels." Europe's plan for alternative pipeline faces big problems Guardian, 7 January 2009 |
| "An Aberdeen-based oil exploration company has gone into
administration, it has been announced, putting dozens of jobs at risk. Oilexco North Sea
Ltd employs about 50 people. An Oilexco statement said Oilexco North Sea Ltd's operations
would continue to be conducted in a safe and orderly manner while a buyer was sought.
Canadian-owned Oilexco's announcement about its Aberdeen subsidiary had been expected. Tumbling share values and oil prices coupled with the difficulty
securing credit had left the company struggling to
secure the loans it needed to keep drilling." Oil firm goes into administration BBC Online, 7 January 2009 |
| "Canada's once booming oil sands industry is cooling fast as the
plunging oil price undermines investment. More than
US$60 billion (£41 billion) worth of projects to extract oil from the bitumen-rich sands
of northern Alberta have been delayed in the past three months, according to a study of industry figures by The Times. A string of
companies, including Royal Dutch Shell, Petro-Canada and SunCor, have been among those
that have frozen multibillion dollar projects - in some cases indefinitely." Canadian oil-sand mines stuck as crude price plummets London Times, 5 January 2009 |
| "The international body that advises most major governments across
the world on energy policy is
obstructing a global switch to renewable power because of its ties to the oil, gas and
nuclear sectors, a group of politicians and scientists claims today. The experts, from the
Energy Watch group, say the International Energy Agency (IEA) publishes misleading data on
renewables, and that it has consistently underestimated the amount of electricity
generated by wind power in
its advice to governments. They say the IEA shows 'ignorance and contempt' towards wind
energy, while promoting oil, coal and nuclear as 'irreplaceable' technologies. In a report
to be published today, the Energy Watch experts say wind-power capacity has rocketed since
the early 90s and that if current trends continue, wind and solar power-generation
combined are on track to match conventional generation by 2025. Rudolf Rechsteiner, a
member of the Swiss parliament who sits on its energy and environment committee, and wrote
today's report, said the IEA suffered from 'institutional blindness' on renewable energy. He
said: 'They are delaying the change to a renewable world. They continue touting nuclear
and carbon-capture-and-storage, classical central solutions, instead of a more neutral
approach, which would favour new solutions.' Today's
report compares past predictions about the growth of wind power, made by the IEA and
others, with the capacity of wind turbines actually installed. It says: 'By comparing
historic forecasts on wind power with reality, we find that all official forecasts were
much too low.' In 1998, the IEA predicted that global wind electricity generation would
total 47.4GW by 2020. This figure was reached in December 2004, the report says. In 2002,
the IEA revised its estimate to 104GW wind by 2020 – a capacity that had been
exceeded by last summer. In 2007, net additions of wind power across the world were more
than four-fold the average IEA estimate from its 1995-2004 predictions, the report says. 'The IEA numbers were neither empirically nor
theoretically based,' it says." International Energy Agency 'blocking global switch to renewables' Guardian, 9 January 2009 |
| "Oil production on the Norwegian
continental shelf may fall 9.7 percent this year, declining for a ninth year, the country’s Petroleum Directorate said. Crude output will fall to
about 110.8 million standard cubic meters, or 1.9 million barrels a day, in 2009, from
about 122.7 million standard cubic meters, or 2.11 million barrels a day, last year, the
directorate said in a report. Production will drop to 94.4 million standard cubic meters
in 2013. 'Between 2009 and 2013 we expect significantly reduced oil production,' Bente Nyland, head of the directorate,
said at a press conference in Stavanger. 'We expect cost growth to level off or decline
next year.' Norway, the world’s fifth-largest oil exporter and third- biggest
natural-gas supplier, pumped its first barrel of oil more than three decades ago in the
North Sea. The country is boosting production of natural gas and opening more of its
unexplored northern waters to drilling to counter a decline in oil output at maturing
fields...Total petroleum production is expected to fall to 236 million cubic meters of
marketable oil equivalents this year and to about 228 million in 2013, the directorate
estimates. Petroleum production was 242.2 million cubic meters last year, down 8 percent
from a record in 2004. A record 56 exploration wells were spudded on the Norwegian
continental shelf in 2008, up from 32 in 2007, the directorate said. With almost every
other well yielding a discovery, this resulted in a record 25 discoveries, of which four
were in the Barents Sea, nine in the Norwegian Sea and 12 in the North Sea, the agency
said. Natural gas output is forecast to rise to 102.9
billion cubic meters this year and peak at 112 billion cubic meters in 2011, the directorate said. Production was 99.3 billion cubic meters last
year, the agency estimates." Norway Sees Oil Production Falling 9.7% This Year Bloomberg, 8 January 2009 |
| "The era of cheap energy is over and will never return as Britain
pays the price of turning into a low-carbon economy, the former chairman of the
Environment Agency has warned. Sir John Harman accuses politicians of failing to be honest
with people about the costs of developing and delivering new forms of clean energy. And he
calls for measures to combat fuel poverty, through price controls, subsidies or higher
state benefits to prevent the creation of a new class of low-carbon poor." Era of cheap energy 'will never return' Independent, 8 January 2009 |
| "...nearly all of American life is intimately involved
in unrestricted access to our cars. This, of course, is why we have some 250 million of them running around our country and some 900
million running around the world....The
future of the car has become the subject of much debate. It seems likely that most large
gas-guzzlers will be out of production within a year or so. Nearly all automobile
manufacturers around the world are working on all-electric or plug-in hybrid electric cars
that are due to start coming on the market in two or three years. If it were possible to replace the world's light vehicle fleet
quickly with cars that ran at least partially on electricity or got over 100 miles per
gallon, then there is a chance that the demand for liquid fuels would fall faster than
depletion and the problem could be put off for several decades. For many observers, the notion of replacing our current fleet of cars
with some form of electric ones is absurd. Their argument is that there will simply not be
enough resources to make the transition. There will not be enough lithium for the
batteries; global warming carbon caps will limit industrial production; and consumers
impoverished by the continuing financial meltdown will not be able to afford what are
likely to be expensive replacements for our current cars. If as seems likely, much of the
world's capacity to produce automobiles is going to be shut down in the next couple of
years, the likelihood of gearing up and replacing hundreds of millions of cars before
sizeable declines in the world's oil production sets in is remote. Plug-in electric cars
of various stripes, of course, will come onto the market and it is likely that millions
will be produced and sold in coming decades, but this will only make a minor dent in the
U.S. fleet of 250 million passenger vehicles, not to mention the 900 million or more that
will be running around the world." The peak oil crisis: Cars - redux Falls Church News-Press, 8 January 2009 |
| "The reason for the price rise and the subsequent price crash will
doubtless be analysed in numerous future theses. Some consider that it was China’s
thirst for oil products before the Olympic Games that was the driving force when the price
was rising while others assert that it was the collapse of banking and the private sector
in the USA and the rest of the world that caused the price decline. At the moment the
price is wandering around US40 per barrel and the question is if this is the price
bottom....it was during the fourth quarter of 2007
that the world experienced it greatest demand for oil at 86.94 million barrels per day (data from the US Energy Information Agency, EIA). The figures supplied
by the EIA give averages for four week intervals. According to these figures the USA
consumed 21.80 mb/d at the end of February 2007 which is the highest average yet recorded.
One year ago in December consumption was 21.23 mb/d but approximately nine months later on
10 October consumption had collapsed by 2.62 mb/d to
18.61 mb/d. This collapse in demand certainly
contributed to the collapse in the price of oil by US$100 per barrel compared with the
highest price in June....Compared with the price one year ago, the future prices are still
very low. For us as consumers this is, naturally, an advantage but for those that wish to
develop alternatives it is a nightmare. The question is what this means for future
production. The fluctuations that we now see in global demand are so small that they are
only tiny fractions of the 31 billion barrels that we consume annually. This means that,
every year we empty oil fields equivalent to all the oil that has ever been discovered in
Norway. We know that today’s oil fields are old and that production is decreasing
every year. If the oil industry does not make large investments then we cannot continue to
produce 31 billion barrels of oil per year. It is expensive to develop new production and
many of the big players report that they are postponing their investments. The fact that
we have an oversupply of oil through decreased demand and not because we have found new
oil fields supports the argument for Peak Oil. The question is whether we really will
expand production with expensive projects in the oil industry or whether we seize the
opportunity to develop an alternative future – a future that we must, in any case,
adapt to." ASPO's Aleklett: The year that passed and the year ahead Kjell Aleklett, Aleklett's Energy Mix, 8 January 2009 |
| "Russian President Dmitry Medvedev had reason to look pleased when he
met Serbian President Boris Tadic in Moscow on Christmas Eve. The two leaders finalized an
agreement for Gazprom, Russia's behemoth state gas monopoly, to buy a controlling interest
in Serbia's state oil and gas industry — and a plan for Russia to construct a gas
pipeline through the country. Former Serbian Prime Minister Vojislav Kostunica, whose
government negotiated the deal, says it will end his country's crippling energy shortages
by guaranteeing gas supplies and using Russian capital to rebuild Serbia's decaying
infrastructure. 'We are in front of a very good solution,' he says. 'First of all, from
the point of view of the interests of Serbia, for its independence, it is very important
that the capitals of different countries are involved.' But critics say Gapzrom is
exploiting Serbia's weak economy in its push to boost control over the European energy
market. Many Serbians welcomed sacrificing control of their energy industry — for
political reasons as much as economic ones. Both Russia and Serbia are Slavic countries
that consider each other traditional allies. Moscow supported Belgrade during its bombing
by NATO in 1999, memories of which are still raw here..... There's much more at stake than simply the Serbian energy market. Belgrade
is part of a fierce struggle between Russia and the West over the future of energy
supplies to Europe. A number of European companies
had hoped to buy into Serbia's energy industry but withdrew because of the cost. But
despite the recent economic turmoil, Gazprom found the money because it wants to make
Serbia the European hub of its planned new South Stream pipeline from Russia. The project is meant to compete with a planned European Union pipeline
from the Caspian Sea that would cut out Russia by delivering Central Asian gas through
Georgia. The Georgians say energy was a major factor behind Russia's invasion of their
country last year. The United States champions the
European Union's Nabucco pipeline. U.S. Deputy Assistant Secretary of State Matthew Bryza,
who has led the effort, says Russia's plan is part of a strategy to win control over the
European gas market." Serbia Plays Key Role In Russian Gas Pipeline Plans NPR, 7 January 2009 |
| "Low oil prices and the credit
crunch are threatening to stall the green revolution.
The value of crude has dropped from a summer high of nearly $150 a barrel to below $40,
taking the wind out of the sails of turbine manufacturers and others trying to build
low-carbon alternatives. Jeremy Leggett, founder and executive chairman of Solarcentury,
says: 'Talk of the death of renewables is premature but clearly big solar farms and wind
projects are being cancelled. Everything is suffering in the current climate but its my
contention that the low oil price is a temporary thing and the growth of renewables will
resume.' Michael Liebreich, chief executive of information provider New Energy Finance,
says his leading index of clean-technology companies has fallen from a high of 450 points
12 months ago to 175 points, hit by a triple whammy of lower oil prices, higher costs of
capital and fear of more speculative start-up businesses." Green revolution stalls on cheap oil Guardian, 1 January 2009 |
| "On Monday the EIA released revised figures for US oil consumption in
October showing that demand had only fallen by
833,000 b/d from a year earlier rather than the 1.4
million b/d that had been reported in preliminary estimates. According to monitoring done
by the Department of Transportation, US highway travel in October was down by 3.5 percent
from a year earlier. Final US gasoline consumption figures for October show consumption of
8.98 million b/d, down by 250,000 b/d over October 2007. With the average US retail
gasoline price now down to $1.61, there are signs that at least gasoline consumption in
the US is rebounding. The EIA reports that while oil
products consumption during 2008 is down by 5.9 percent as compared to 2007, over the last
four weeks consumption is down by only 3.7 percent. The rebound is being led by gasoline
which, during the last four weeks, is down by only 2.2 percent. At least in the US market, consumption declines do not seem to fully
justify the low prices." Peak Oil Notes ASPO-USA, 1 January 2009 |
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