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PEAK OIL AND ENERGY CRISIS NEWS ARCHIVES 2010

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"The world's oil reserves have been exaggerated by up to a third, according to Sir David King, the Government's former chief scientist, who has warned of shortages and price spikes within years. The scientist and researchers from Oxford University argue that official figures are inflated because member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when competing for global market share.  Their new research argues that estimates of conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that demand may outstrip supply as early as 2014. The researchers claim it is an open secret that OPEC is likely to have inflated its reserves, but that the International Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take this into account in their statistics. 'It is necessary to investigate ambiguities and sources of error that are broadly acknowledged but not taken into account in public data due to political sensitivities,' the researchers said. The paper also raises concerns that public statistics have started to incorporate non-conventional reserves such as the Canadian tar sands, where oil and gas are much more difficult to extract and may never be economically attractive to develop. Sir David said that although the IEA was doing a good job of warning that more investment in oil and gas exploration is needed, governments need to pay more attention to independent research. 'The IEA functions through fees that are paid into it by member companies and has to keep its clients happy,' he said. 'We're not operating under that basis. This is objective analysis. We're not sitting on any oil fields. It's critically important that reserves have been overstated, and if you take this into account, we're talking supply not meeting demand in 2014-2015.' The concept of 'peak oil' has gained traction in recent years, although energy companies such as BP and Shell insist that production will be able to keep pace with growing Asian energy needs. Sir David said he was 'very concerned' that Western governments were not taking the concept of 'peak oil' – where demand outstrips production – seriously enough, while China is throwing all its efforts into grabbing as many energy resources as possible....Dr Oliver Inderwildi, who co-wrote the paper with Sir David and Nick Owen for Oxford University's Smith School, believes radical measures such as switching freight transport to airships could become common in future. 'The belief that alternative fuels such as biofuels could mitigate oil supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of relying on those silver bullet solutions, we have to make better use of the remaining resources by improving efficiency.'"
Oil reserves 'exaggerated by one third'
Daily Telegraph, 22 March 2010

"Bankers and the financial sector may have displaced energy from the front pages of the newspapers right now, but Energy Security remains at the top of the global political and economic agenda....The need to balance energy security, jobs and economic development while addressing the problem of climate change all contributed to the challenge politicians faced in Copenhagen. And that challenge means that energy security will dominate politics and policy for the next 12 months and considerably beyond.... Reliable and affordable supplies of hydrocarbon energy were taken for granted through much of the 20th century and laid the foundation for the world’s extraordinary economic progress. When concerns arose, it tended to be at times of war or turbulence, notably in the Middle East, or, closer to home, with industrial action. What’s different now is that energy security has become a defining issue for the 21st century, as one element in a complex energy challenge with strategic, economic and environmental dimensions.... Opening access to a range of potential operators encourages the most efficient solutions, and often involves partnerships that provide new combinations of skills. Iraq is a very good example. BP is teaming up there with CNPC of China and Iraq’s South Oil Company to drive a major investment programme that will nearly triple production from the super-giant Rumaila field. With this and the other agreements concluded with national and international oil companies in the last six months, Iraq has the potential to contribute 10mmb/d to global supplies in the next 10-15 years. That’s a big piece of the additional resource we need....The current debate about Copenhagen and sustainability add new urgency and importance to the broader discussion of energy security.  The challenge of creating a low-carbon economy is far from easy, requiring the wholesale re-engineering of the global economy over time."
Tony Hayard, Chief Executive of BP
The Challenge of Energy Security
Speech at London School of Economics, 4 February 2010

"Global production of crude probably peaked in 2006, and increasing demand will have to be met from more-difficult-to-extract forms of oil such as tar sands, International Energy Agency Chief Economist Fatih Birol said. 'The age of cheap oil is over,' Birol said at a conference in Madrid today.... The depletion of crude reserves may benefit countries such as Canada and Venezuela, which have tar sands that yield oil. Those resources are more expensive to extract and only become economical when the price of oil rises."
Global Crude Output Likely Peaked in 2006, IEA's Birol Says
Bloomberg, 16 November 2010

"The IEA, in its 2010 World Energy Outlook, said crude oil output had already peaked and would flatten out in the next 10 years, boosting reliance on costlier and more polluting unconventional sources such as oil sands. 'Production in total does not peak before 2035, though it comes close to doing so,' the IEA said in the executive summary of the report. That projection was according to the report's central case, the New Policies scenario..... Oil prices would rise even further if governments did not act to curb consumption, the IEA's chief economist and lead author of the report, Fatih Birol, told Reuters in an interview. 'The message is clear, the price will go up, especially if consuming countries do not make changes in the way they consume oil, especially in the transport sector,' Birol said. Oil hit $87.63 a barrel on Tuesday, the highest since October 2008, after hovering around $70-80 most of the year. The world needed higher oil prices to change consuming habits substantially and spur investment as markets were becoming less sensitive to price changes, Birol said. 'All the net growth comes from non-OECD countries, almost half from China alone, mainly driven by rising use of transport fuels,' the IEA said in the report. While the IEA saw higher prices, it also cut its world oil demand estimate for the next 25 years by 6 million barrels per day (bpd) to 99 million bpd. That remained an increase of 15 million bpd, equal to one and a half times the output of top global producer Russia.... Unconventional oil -- including supplies from oil sands in Canada and Venezuelan heavy oil, and liquid fuels obtained from natural gas and coal -- is expected to play a bigger role as growth in crude oil tails off. 'Crude oil output reaches an undulating plateau of around 68-69 million barrels a day by 2020, but never regains its all time peak of 70 million barrels per day reached in 2006,' the IEA said. Last year's edition of the report said global oil production was not forecast to peak before 2030 and conventional oil production was 'projected to approach a plateau towards the end of the projection period.'"
IEA sees oil supply peak looming, raises price outlook
Reuters, 9 November 2010

"Moves made to address carbon emissions are varied, but many governments seem to be prioritizing low-carbon energy programs as an alternative to fossil fuels. Fatih Birol [IEA Chief Economist] recently told the US Council on Foreign Relations of his certainty that developing states are interested in climate negotiations – and in reducing emissions – far more for energy security reasons than for climate ones. Diplomatically, he did not suggest that major industrial states might be acting for much the same reasons."
Shane Mulligan - Heads in the Sand? Or, Why Don’t Governments Talk about Peak Oil?
The Oil Drum, 5 January 2010

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2010

"For the last year, Deutsche Bank's Paul Sankey, one of the best long-range energy minds on Wall Street, has been distributing a series of provocative, deeply researched, and forward-looking notes to clients under titles like 'The Peak Oil Market' and 'The End of the Oil Age.' Last week, Sankey produced a sixth note called '2011 and Beyond -- A Reality Check.' Among the takeaways: As of 2010, the new electric car age is coming upon us faster than expected -- far beyond this year's conspicuous arrival of the General Motors Volt and Nissan Leaf, and the race among the world's industrial nations to dominate this technology. Converging even more rapidly, says Sankey, are far higher oil and gasoline prices, starting in 2012. Such shifts could have enormous geopolitical ramifications -- as a consequence, some countries will become poorer, and some richer, with corresponding impacts on their global influence. Starting with the second forecast from this 59-page report, 2010 has seen a comparatively gentle respite in an otherwise unprecedented, decade-long period of turbulence in oil markets. According to Sankey, this calm is about to break.  Sankey's forecast is based on the salient factor of 'spare capacity.'.... Global spare capacity is actually not 5 million barrels a day, but 4 million barrels a day when one takes into account what countries really produce, versus what they report. From there, Sankey projects that global demand will rise by 2.5 million barrels a day next year, and an equal volume in 2012. Looking at the future through this lens, you can see how we will rapidly work through our spare capacity buffer, and arrive right back on the knife's edge. Interestingly, however, Sankey sees a ray of light in this coming crisis. He classifies the consequent years-long oil price spike (peaking at $125 a barrel in 2015) as the very reason that we are at the end of the oil age. He says that heavy petroleum consumers will finally absorb the message that they must at last wean themselves off of oil, and predicts that they will begin dieting -- permanently. Because of this new consciousness, in Sankey's model global demand will peak at about 96 million barrels a day in 2020, before commencing a long, slow decline..... In Sankey's view, this demand destruction will come almost wholly in the United States. The reason is that Chinese demand is inexorable -- its economy is so hot that Chinese demand can be tempered only so much -- and Europe is already rationing through the use of high government taxes on gasoline. That leaves the United States as the sole remaining source of trimmable high demand. Sankey acknowledges that heavyweight prognosticators at ExxonMobil and the International Energy Agency differ when it comes to global demand; both see global demand rising to about 105 or 110 million barrels a day by 2030 (versus Sankey's projection of around 90 million barrels a day that year). The reason for this divergence is Sankey's view of the impact of higher prices. He gambles much more heavily than the others on an American efficiency binge, which includes a sharp turn toward hybrid and electric cars. When one adds in the coming dramatic global shift to natural gas, one easily understands Sankey's logic. Which brings us smoothly to the electric car age. Sankey blends a forecast from Deutsche Bank's automobile analysts into his note: We are in the midst of a plunge in the price of the most expensive single component of a hybrid or electric car -- the lithium-ion car battery, Deutsche Bank says. DB's auto team forecasts that the price of a lithium-ion car battery pack will fall from the current $16,250 to $11,250 in 2012 -- and $6,250 in 2020. If this trajectory holds, it means that in a decade, car batteries will reach the magic threshold sought by all battery-makers: a cost of $250 per kilowatt hour (the 2009 cost was $650 per kilowatt hour). The reason $250 is the magic threshold is that, at that cost per kilowatt hour, hybrids and electric cars will more or less stand on their own without a subsidy; the buyer's payback period, when accounting for fuel savings, will fall to about three years, the point at which the DB team believes consumers will start to look at these vehicles on an equivalent basis with gasoline-driven models, and not as a lifestyle choice. Once that happens, car sales will spiral upward until, in both China and the United States, some 70 percent of new car sales will be either hybrid or electric models by 2030, DB forecasts."
The electric car age just got a little closer
Foreign Policy, 29 December 2010

"China is considering new export quotas on rare earth alloys, a report said Thursday -- a move that would further restrict shipments of the minerals used in a variety of high-tech industries. The country -- which has a near-monopoly in the industry -- is also mulling separate export quotas for heavy and light rare earths, Dow Jones Newswires reported, citing an unnamed official with knowledge of the plans. The commerce ministry declined to comment on the report when contacted by AFP. So far, China has issued a single export quota for rare earths -- 17 elements critical to manufacturing everything from iPods to low-emission cars, wind turbines and missiles. Beijing has moved to tighten controls over the minerals by cracking down on heavily polluting producers, cutting quotas for overseas shipments and hiking export taxes. The commerce ministry on Tuesday announced a 35 percent cut in rare earth exports for the first half of 2011 compared to a year earlier, having slashed the quota by 72 percent for the second half of this year. But the government has so far yet to limit exports of rare earth alloys, which are compounds that include rare earth elements. Foreign ministry spokeswoman Jiang Yu told reporters on Thursday that China would continue to supply rare earths to the global market but called on other countries with reserves to also 'shoulder the responsibility'."
China 'mulls export quotas' on rare earth alloys
Agence France Presse, 29 December 2010
"For five years now Wall Street and its chorus in the financial media have ignored or denied that global oil production has reached a plateau after 150 years of steady growth. Those who did admit to a problem were quick to assert that the markets would find substitutes first in the form of endless quantities of coal waiting to be exploited and more recently 100 years' worth of shale gas would come seamlessly to the rescue. The nervousness of course is that once global energy production starts to decline, capitalism as we have known it for the last few centuries will no longer be the same.....A few weeks ago the most ominous news of year came out of Beijing when it was announced in muted voice that from here on out China's coal production would probably not be growing much further. Chinese coal, of course, is among the miracles of our time. Starting at around 100 million tons per year when Mao Zedong took over the country, by the turn of the century annual production had increased to 1 billion tons. Then production really took off with output climbing to circa 3.2 billion tons a decade later. With oil production faltering and production of much of the world's industrial output shifting to China, it was this steady increase in coal production that fueled China's and therefore much of the world's economic growth for the last decade. Now, with this final surge in the world's production of fossil fuels coming to an end the outlook for the global economy changes dramatically. Beijing, which is wedded to achieving an annual GDP growth of 8-10 percent, is already stepping up its imports of coal and is vigorously pursuing means of locking up as much foreign fossil fuel resources as the foreigners are willing to sell. If Beijing is unsuccessful in increasing its coal imports to the extent needed in the next few years, then it is likely to turn to increasing imports of oil and LNG. The IEA says that during 2010 global demand for oil grew by 2.5 million barrels a day (b/d) and reports that during the 3rd quarter the annual rate of demand increased to a 'giddy' 3.3 million b/d. As rates of growth in consumption this fast obviously cannot go on much longer in the face of very slow to flat increases in production, the IEA is saying that the increase in demand in 2011 will slow to an average of 1.3 million b/d. Just to support the 3rd quarters increase in demand, global stockpiles have been dropping by 1.3 million b/d. Thus far Saudi Arabia, which is the only country claiming substantial surplus production capacity, has shown little inclination to increase production.... Some are already saying that the IEA's forecast of a 1.3 million b/d increase for next year is much too low. The big unknown for the coming years is the size and availability of OPEC's spare capacity. If much of the 5 or 6 million b/d of productive capacity that OPEC claims to have in reserve does not really exist or cannot be opened in a timely manner, then much higher oil prices seem likely by spring. This, of course, will reduce demand again and we are off on another cycle of falling demand, more economic damage, and eventually lower prices."
The Peak Oil Crisis: 2011 – A Pivotal Year?
Falls Church News-Press, 29 December 2010

"A gas field offshore from Israel holds an estimated 450 billion cubic metres (16 trillion cubic feet) of natural gas, positioning the Jewish state as an exporter, Noble Energy said on Wednesday. The new estimates, announced by the US firm which has a major stake in the field, said the Leviathan gas field dwarfs Israel's next biggest offshore field, Tamar. 'Leviathan is the latest major discovery for Noble Energy and is easily the largest exploration discovery in our history,' the firm's chairman Charles Davidson said in a statement. This discovery has the potential to position Israel as a natural gas exporting nation,' added company president David Stover. Further tests are required to discover the final estimated capacity of the Leviathan field, which lies offshore near the northern Israeli town of Haifa. But the capacity announced on Wednesday is encouraging news for Israel, which is hoping natural gas reserves offshore could give the Jewish state energy independence and allow it to export to Europe eventually. The Tamar field, with an estimated capacity of 178.4 billion cubic metres (6.3 trillion cubic feet), is not yet operational. It has been dogged by international squabbles between Israel and neighbouring nations over access, and a domestic brawl over the taxes and royalties the state can levy on the field. In a statement, the chairman of Israel's Association of Oil and Gas Exploration Industries hailed the news. 'The results of the Leviathan drill are the beginning of the transformation of Israel into an energy power and a gas exporter,' he said."
Gas field size puts Israel as exporter: US firm
Agence France Presse, 29 December 2010

"... in 2008, Russia surpassed Germany as Turkey’s largest trading partner, with bilateral trade expected to top $40 billion by the end of 2010. Russia provides Turkey with 68 percent of its natural gas and 20 percent of its imported oil. Thousands of Russian tourists visit Turkey every year and the two countries recently signed an agreement to waive visa restrictions. Moreover, Turkey recently removed Russia from the 'Red Book' -- a national security document that lists Turkey’s external security threats. Much of the growth in trade volume is due to Turkey’s growing energy imports from Russia. Turkey finds itself at the center of the energy-rich Middle East and Eurasia region and has made it a priority to establish itself as Europe’s oil and gas hub. Russia, which is keen on controlling natural gas supply routes to Europe, sees Turkey as a vital strategic choke point and is intent on making a number of diplomatic inroads to ensure that its energy and economic interests are protected. These two complementary goals often serve as the catalyst for other agreements. For example, Russia’s agreement to build Turkey’s first nuclear power reactor is tied up in both countries’ desire to deepen energy cooperation. Atomstroyexport and Inter RAO have agreed to build four reactors with a total capacity of 4.8 GW for roughly $20 billion. The scale of this deal is unprecedented, if completed; Turkey will be home to one of the largest reactor complexes in the world, according to an analysis by STRATFOR. Russia does not even have a plant this large in its own country, nor has it announced plans to build a reactor complex on this scale in the near future.... Geopolitically, Turkey and Russia share a number of overlapping political goals in the countries bordering the Black and Caspian Seas. The Caucuses have traditionally been an area where Turkey and Russia competed for political influence. Turkey supported the independence of Azerbaijan, Armenia and Georgia and extended assistance to the Chechen independence struggle until the Second Chechen War. In turn, Russia was a strong advocate of Kurdish rights and supported the Kurdistan Workers’ Party (PKK). However, after the signing of the Eurasia Cooperation Action Plan in December 2001, the two countries agreed to cease their support for separatists in Kurdistan and Chechnya, thus removing a serious source of tension from the relationship. This coincided with the deterioration of US-Russian relations over Ukraine, Georgia and the Bush administration’s unilateral abrogation of the anti-ballistic missile treaty. For Turkey, these events coincided with the rapid break down of US-Turkish relations over the invasion of Iraq.... Turkey believes that any regional security architecture should include Russia and that 'outside powers' (i.e., the United States) should refrain from meddling in their immediate sphere of influence. Moreover, Ankara recognizes Russia’s role in resolving the region’s frozen conflicts, especially between Armenia and Azerbaijan. In the near to medium term it seems likely that Turkey is intent on pursuing a balanced foreign policy that maximizes its political self-interest, even in spite of its traditional Western allies. Moscow is intent on limiting Western attempts to circumvent Russian oil and gas pipelines, in order to maintain its geo-political influence in Europe. Conditions certainly seem ripe for both countries to deepen bilateral ties in the near future. From a Turkish political standpoint, deepening cooperation with Moscow fits nicely with Turkey’s 'zero problems' foreign policy, while serving a number of Turkey’s immediate foreign policy goals."
Pipeline politics: Turkey’s Russian rapprochement
Zaman (Turkey), 27 December 2010

"Oil is back above $90 a barrel. Copper and cotton have hit record highs. Wheat and corn prices are way up. Over all, world commodity prices have risen by a quarter in the past six months. So what’s the meaning of this surge? Is it speculation run amok? Is it the result of excessive money creation, a harbinger of runaway inflation just around the corner? No and no. What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story. Some background: The last time the prices of oil and other commodities were this high, two and a half years ago, many commentators dismissed the price spike as an aberration driven by speculators. And they claimed vindication when commodity prices plunged in the second half of 2008. But that price collapse coincided with a severe global recession, which led to a sharp fall in demand for raw materials. The big test would come when the world economy recovered. Would raw materials once again become expensive? Well, it still feels like a recession in America. But thanks to growth in developing nations, world industrial production recently passed its previous peak — and, sure enough, commodity prices are surging again. This doesn’t necessarily mean that speculation played no role in 2007-2008. Nor should we reject the notion that speculation is playing some role in current prices; for example, who is that mystery investor who has bought up much of the world’s copper supply? But the fact that world economic recovery has also brought a recovery in commodity prices strongly suggests that recent price fluctuations mainly reflect fundamental factors.... In particular, today, as in 2007-2008, the primary driving force behind rising commodity prices isn’t demand from the United States. It’s demand from China and other emerging economies. As more and more people in formerly poor nations are entering the global middle class, they’re beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies. And those supplies aren’t keeping pace. Conventional oil production has been flat for four years; in that sense, at least, peak oil has arrived. True, alternative sources, like oil from Canada’s tar sands, have continued to grow. But these alternative sources come at relatively high cost, both monetary and environmental."
The Finite World
New York Times, 26 December 2010

"It's a deep pit in the Mojave desert. But it could hold the key to America challenging China's technological domination of the 21st century. At the bottom of the vast site, beneath 6 metres (20ft) of bright emerald-green water, runs a rich seam of ores that are hardly household names but are rapidly emerging as the building blocks of the hi-tech future. The mine is the largest known deposit of rare earth elements outside China. Eight years ago, it was shut down in a tacit admission that the US was ceding the market to China. Now, the owners have secured final approval to restart operations, and hope to begin production soon. 'We will probably never be the largest [mine] in the world again. It will be hard to overcome China's status in that regard, but we do think we will be a very significant supplier,' Mark Smith, chief executive of Molycorp Minerals which owns the mine, told reporters during a tour of the site. So far as the Obama administration is concerned, the mine can't open soon enough. A US department of energy report warned on 15 December that, in the absence of mines such as this one, America risks losing control over the production of a host of technologies, from smart phones to smart bombs, electric car batteries to wind turbines, because of a virtual Chinese monopoly on the rare earth metals essential to their production. China controls 97% of global rare earth metals production. Such total domination of a strategic resource became impossible to ignore in October when China cut exports of rare earth elements by more than 70% over the previous year, disrupting manufacturing in Japan, Europe and the US. Prices of even the cheapest of the 17 rare earth elements rose 40%. Now America, like Japan and Europe, is desperate to find alternatives.... At the 15 December seminar at the Centre for Strategic and International Studies, one PowerPoint presentation lingered on a slide that showed only the Chinese flag. The room filled with nervous laughter. By 2015, global demand for rare earths is expected to reach 205,000 tonnes. 'If we don't get alternative supplies up and running we are going to have this supply gap that is going to cause a lot of issues,' Smith said. Those issues forced their way onto the government's agenda this autumn when China began squeezing raw material exports of rare earth minerals. Some US media reports have speculated China is trying to use its control over the supply lines for political leverage. But a number of analysts say China is trying to get better control over an expensive, dirty and dangerous mining process, and to get more factories to set up shop inside the country. Rare earths are extracted through opencast mining and generate radioactive waste. 'I don't believe that China is trying to chop the west off at the knees but it has a growing internal market that is driving the demand,' said Gareth Hatch, an analyst at Technology Metal Research. 'That reduces the amount they are willing to export.' That is where Molycorp – the frontrunner for now in a global race to develop alternative production of rare earth materials – hopes to step in..... By mid-2012, Molycorp aims to produce 20,000 tonnes a year of nine of the 17 rare earths or about 25% of current western imports from China. Smith suggested the company could possibly ramp up production to 40,000 tonnes within the next 18 months. He says Molycorp has exposed just 55 acres of the 2,200 acre site. But even production on that scale may not be enough to guarantee the supply of metals needed to move to a clean energy economy: lanthanum for batteries for hybrid cars, neodymium for the permanent magnets for wind turbines, especially offshore, europium for energy efficient lighting. 'You would need seven mines the size of Molycorp's just to meet the demand for wind turbines and that would mean no neodymium for motors or any other applications,' said Jim Hedrick, who until last year was the rare earth expert at the US Geological Survey. 'Obviously there is a demand for 10 or 20 mines through the world to meet all the different demands for these products.' Some companies, such as General Electric, are already moving to reduce their use of rare earths. 'What we are going to absolutely have to do is diversify our sources and optimise the use of these materials in manufacturing,' said Steve Duclos, who heads GE's global research division. In Japan, meanwhile, Hitachi has started a recycling effort to recover rare earths from hard drives and other materials..... Aside from raw materials, it is also unclear whether the US still has the expertise for the complicated process of turning minerals into usable clean tech components. Such challenges were unthinkable half-a-century ago when prospectors looking for uranium stumbled instead on a rich deposit of rare earths about an hour's drive from Las Vegas. By the 1960s, the mine was booming, largely through sales of europium, used to produce the bright red tones of colour televisions. But prices fell as China came on the market, with its low production costs. A pipeline accident in the late 1990s, which leaked radioactive fluid into the desert and a nearby town, led to an expensive clean-up. The mine closed in 2002. The central pit in the 55-acre site became a pool of bright green water. White bales of minerals – some mined eight years ago – were stockpiled until such time as prices would rise.... The company is also confident it can head off competition from a slew of new mines due to begin coming online from Australia, Wyoming, Quebec and South Africa. 'The growth in demand for these minerals is just phenomenal,' Smith said. 'A 6% average growth rate for us would be very, very good but when you start adding things like hybrid vehicles and wind turbines to the rare earth sectors now you are talking about double digit growth, and you still don't know where that will end.' At this point, though, Molycorp is not even at the beginning. 'The road to the green world of the future starts from the black earth. But first you have to get the materials out of the ground,' said Hatch. 'The whole clean-tech energy industry is hinging on it.' The 'rare earth elements' are a group of 17 naturally occurring metallic elements used in small amounts in everything from high-powered magnets to batteries and electronic circuits. The materials (including scandium, yttrium and a group of elements called the lanthanides) have chemical and physical properties that make them useful in improving the performance of computer hard drives and catalytic converters, mobile phones, hi-tech televisions, sunglasses and lasers. With global demand for hi-tech goods increasing the market for rare earth elements has doubled in the past decade. Despite their name, rare earth elements are not actually all that rare, but China has a near-monopoly on mining the elements. In a report on the elements published this year, the British Geological Survey put their natural abundance on the same level as copper or lead. According to the BGS China has 37% of the world's estimated reserves, about 36m tonnes, but controls more than 97% of production. The former Soviet bloc has around 19m tonnes and the US 13m, with other large deposits held by Australia, India, Brazil and Malaysia. Other sources, untapped as yet, include Greenland. Estimates suggest the land mass could meet 25% of global demand for REEs. South Africa also has potential for rich REE deposits, as do Malawi, Madagascar and Kenya."
Rare earth metals mine is key to US control over hi-tech future
Guardian, 26 December 2010

"If you look at the world energy outlook from the IEA two things really stand out. About 80 per cent of the oil they expect the world to be consuming by 2035 hasn’t been found or developed. About 70 per cent of the oil being produced today will be depleted by then. The second interesting thing is that for an organization that’s always denied the existence of peak oil, they’ve basically acknowledged it by saying that conventional oil production – that is, the type we can afford to burn – peaked in 2006."
Jeff Rubin, former chief economist of CIBC World Markets
Oil to revisit triple-digit prices next year: Rubin
The Star (Canada), 23 December 2010

"China has refused repeated U.S. requests to eliminate export restraints on rare earths that have created concern among its trading partners, the U.S. Trade Representative's office said on Thursday. 'Going forward, the United States will continue to pursue vigorous engagement with China on this issue and will not hesitate to take further action, including WTO dispute settlement, if appropriate,' USTR said in an annual report on how well China has complied with commitments it made when it joined the World Trade Organization in 2001.... The warning came one day after USTR said it had begun a legal challenge at the WTO against certain Chinese subsidies for wind power equipment manufacturers. U.S. officials said on Wednesday they could file additional cases against China, and the new report amplifies U.S. concerns over China's export restrictions on rare earths."
U.S. threatens WTO action on China rare earth curbs
Reuters, 23 December 2010

"The debate [on shale gas] is about the real cost. If you exclude the natural gas liquids that come with most shale projects, is the real cost $4 per Mcf (1,000 cubic feet) or is it $8? If the real cost is $8 then a lot of people, like Chesapeake Energy, the biggest gas producer in the U.S., have a big problem. Is shale gas the sub-prime mortgage market of the natural gas market? Is this one giant con and investors are being conned into thinking there’s a huge supply of gas at $4 when it really costs $7 or $8 to bring it to market? In the fullness of time economics will assert itself, just as it did in the sub-prime mortgage market. But let’s, for the sake of argument, say shale gas is sustainable at $4 and that we don’t really care about the ground-water contamination or we’ve figured out a way to manage that in some sense, the question is, what has it done? It certainly hasn’t pulled down the price of oil. Boone Pickens aside, we can’t use natural gas to substitute for oil as a transit fuel. So if shale gas is real at $4 all it means is oil is going to be increasingly used only as a transit fuel around the world, though gas will be able to substitute for oil entirely as both a feedstock for petrochemicals, as a home heating fuel, and as a power generation source."
Jeff Rubin, former chief economist of CIBC World Markets
Oil to revisit triple-digit prices next year: Rubin
The Star (Canada), 23 December 2010

"The world's biggest gas-guzzling nation has limits after all. After seven decades of mostly uninterrupted growth, U.S. gasoline demand is at the start of a long-term decline. By 2030, Americans will burn at least 20 percent less gasoline than today, experts say, even as millions of more cars clog the roads. The country's thirst for gasoline is shrinking as cars and trucks become more fuel-efficient, the government mandates the use of more ethanol and people drive less. 'A combination of demographic change and policy change means the heady days of gasoline growing in the U.S. are over,' says Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of a Pulitzer Prize-winning history of the oil industry. This isn't the first time in U.S. history that gasoline demand has fallen, at least temporarily. Drivers typically cut back during recessions, then hit the road again when the economy picks up. Indeed, the Great Recession was the chief reason demand fell sharply in 2008. But this time looks different. Government and industry officials — including the CEO of Exxon Mobil — say U.S. gasoline demand has peaked for good. It has declined four years in a row and will not reach the 2006 level again, even when the economy fully recovers. In fact, the ground was shifting before the recession. The 2001 terrorist attacks, the war in Iraq, Hurricane Katrina and pump prices rising to a nationwide average of $3 a gallon for the first time in a generation reignited public debates about the political and economic effects of oil imports and climate change. Also, the popularity of SUVs began to wane, and the government started requiring refiners to blend corn-based ethanol into every gallon of gasoline. Americans are burning an average of 8.2 million barrels — 344 million gallons — of gasoline per day in 2010, a figure that excludes the ethanol blended into gasoline. That's 8 percent less than at the 2006 peak, according to government data. The decline is expected to accelerate for several reasons. • Starting with the 2012 model year, cars will have to hit a higher fuel economy target for the first time since 1990. Each carmaker's fleet must average 30.1 mpg, up from 27.5. By the 2016 model year, that number must rise to 35.5 mpg. And, starting next year, SUVs and minivans, once classified as trucks, will count toward passenger vehicle targets. • The auto industry is introducing cars that run partially or entirely on electricity, and the federal government is providing billions of dollars in subsidies to increase production and spur sales. • By 2022, the country's fuel mix must include 36 billion gallons of ethanol and other biofuels, up from 14 billion gallons in 2011. Put another way, biofuels will account for roughly one of every four gallons sold at the pump. • Gasoline prices are forecast to stay high as developing economies in Asia and the Middle East use more oil. There are demographic factors at work, too. Baby boomers will drive less as they age. The surge of women entering the work force and commuting in recent decades has leveled off. And the era of Americans commuting ever farther distances appears to be over. One measure of this, vehicle miles traveled per licensed driver, began to flatten in the middle of the last decade after years of sharp growth. 'People wildly underestimate the effect that all this is going to have' on gasoline demand,' says Paul Sankey, an analyst at Deutsche Bank. Sankey predicts by 2030 America will use just 5.4 million barrels a day, the same as in 1969. Aaron Brady, an analyst at CERA, predicts a more modest drop, to 6.6 million barrels a day. As a result, families will spend less on fuel, the country's dependence on foreign oil will wane and heat-trapping emissions of carbon dioxide will grow more slowly. The shift from SUVs began in 2004 and has saved Americans $15 billion on gasoline this year, according to the National Resources Defense Council. By 2020, improved fuel economy is expected to lower annual carbon dioxide emissions by 400 billion pounds, the equivalent of taking 32 million cars off the road. In reality, there will be 27 million more cars on the road — a total of 254 million — a decade from now, according to government projections.... While America's diminishing demand will temper global demand, it will be more than offset by rapidly growing demand in China, India, the Middle East and Africa. As a result, declining U.S. gasoline demand will not bring lower pump prices. Worldwide oil demand will hit a record 88.3 million barrels per day next year, according to the consulting firm Wood Mackenzie. Put simply, 'we're entering a period where the U.S. motorist is no longer the king of the road,' Yergin says."
US gas demand should fall for good after '06 peak
Associated Press, 20 December 2010

"The weekly US stocks report showed a record drop of nearly 10 million barrels in US crude inventories, although some of this drop may be due to refineries deliberately delaying imports to avoid local inventory taxes along the Gulf Coast. The stocks report also showed that refined products supplied to US consumers climbed in November to 20.2 million b/d, the highest in nearly two years. The American Petroleum Institute issued a report also saying that US demand for petroleum products increased significantly to 20 million b/d and that consumption during the first 11 months of 2010 was up by 2.4 percent to 19.2 million b/d over last year. The API notes that demand for distillates was up 14 percent in November to over 4 million b/d and concludes that these numbers suggest that the US economy is rebounding nicely. As other indicators do not show the US economy rebounding at anywhere near this rate, it suggests that an increased portion of US distillate production may be going to exports."
Review
ASPO, 20 December 2010

"Chevron Corp., the second-largest U.S. energy company, said a pilot project to boost production by injecting steam into an oil field shared between Saudi Arabia and Kuwait showed 'very promising' results. Chevron is trying to boost production from the Wafra field in the so-called Neutral Zone shared between the two countries by as much as 600,000 barrels a day once a new method for injecting steam is applied on a large scale. 'We have 16 steam-injection wells in the field and I can tell you that the results that came out were very promising,' Ganesh Thakur, Chevron’s vice president and global adviser for reservoir management, told an industry conference today in Dharan, Saudi Arabia. The Wafra field will become the world’s largest project for oil recovery with steam injection, once the company applies it to the entire field, Thakur said. Chevron began injecting steam at the site in June 2009 to extract more crude. The San Ramon, California-based company is still testing the steam-flooding technology on a small part of the Wafra field. The cost of the pilot project is $340 million and to apply the technology to the entire field would cost several billion dollars, Gary Greaser, an assistant to the Chevron president, told Bloomberg on Oct. 19. The decision to apply the technology to the entire field will be made in 2013, Greaser said."
Chevron Says Saudi-Kuwait Oil Field Steam Trials ‘Promising’
Bloomberg, 18 December 2010

"The world's first nuclear fuel bank of low enriched uranium (LEU) was officially launched in Russia on Friday, which aspiring nations could use for nuclear reactors instead of making it themselves. 'The LEU Reserve would be made available for back-up supply to any eligible IAEA member state that might face a non-commercial disruption of supply of LEU to be used in nuclear fuel for power reactors, thereby facilitating the development of nuclear energy for peaceful purposes,' Yukiya Amano, director general of the International Atomic Energy Agency (IAEA), said at the LEU Reserve's inauguration ceremony in the Siberian city of Angarsk. In March 2010, the IAEA signed an agreement with Russia to establish the LEU Reserve."
Russia launches world's 1st nuclear fuel bank of low enriched uranium
Xinhua, 18 December 2010

"Household electricity bills are set to nearly double over the next 20 years as the Government sets out plans to artificially raise power prices to subsidise the building of new nuclear plants and thousands of wind turbines. However, consumer groups said that householders should not bear the brunt of the rises, and have called on the Government and power companies to help to shoulder the burden. Manufacturing bosses said that rising energy prices would make them less internationally competitive. Power companies warned that the new incentives and subsidies might put off investors. Chris Huhne, the Liberal Democrat Energy and Climate Change Secretary, announced yesterday what he billed as the biggest shake-up of the electricity market since the Thatcher years and the privatisation of the industry. 'This will be a seismic shift,' Mr Huhne told MPs in the House of Commons. 'It is about securing investment in cleaner, greener power and delivering secure and affordable low-carbon energy for decades to come.' Mr Huhne said that his aim was to replace the 25 per cent of the nation’s electricity generating plants that will shut in the next decade as dirty coal and oil-fired stations and ageing nuclear plants are retired, with thousands of megawatts of new nuclear and green energy facilities. Consultation documents sent out yesterday are to be turned into a White Paper in March, with plans for legislation in 2012. He aims to introduce three new financial levers to attract investment but which will force up the price that electricity producers charge consumers. First will be the introduction of a minimum carbon price at which coal and gas-fired power stations are effectively forced to pay a pollution tax to the Treasury. The second will be a 'feed-in tariff' using a mechanism that sets the price of electricity on long-term contracts at a level high enough for green energy investors to see a return on the tens of billions that need be pumped in. And third, subsidies are to be paid to the builders of, for instance, new gas power stations, to ensure a reserve generating capacity when the wind is not blowing and thus not producing green electricity. The Energy Department says that these measures would mean an increase, in today’s money, of about a third in household bills by 2030. Department officials, however, concede that their projected forecast on bills is based on a significantly lower usage of electricity by householders in the years to come. Gas accounts for about £650 and electricity accounts for about £500 in the average annual household energy bill. With inflation, the electricity portion is likely to rise to about £900 by 2030, or more if households do not cut consumption. Consumer Focus, the energy watchdog, said: 'Consumers can’t be expected to write a blank cheque to fund this. A balance must be found on how this is funded between government, energy customers and the industry.'
Electricity bills to double by 2030 to fund new nuclear power stations
London Times, 17 December 2010

"Chris Huhne, the Energy Secretary, will outline government plans today to encourage energy companies to develop low-carbon power plants, including nuclear power stations and wind farms. Energy analysts say the Coalition's plans will put Britain on course for a 'high cost, low carbon' electricity market where consumers pay the price for environmentally friendly generating technology. Energy companies say that the shift will require them to invest more than £200 billion in new power stations and networks over the next 20 years. According to uSwitch, the price comparison website, funding that investment will cost households more than £500 a year on top of the current total average energy bill of £1,157. Mr Huhne's officials dispute that figure and insist that the direct costs of specific government policies will be much lower. A new consultation will push energy companies into investing billions of pounds in technology, costs that companies say will be passed on to consumers.... A new tax could be levied on fossil fuels such as coal and gas, making them more expensive relative to low-carbon sources of energy such as nuclear and wind power. Mr Huhne will tell MPs that the reforms will wean Britain off imported gas, and curb inevitable price rises, meaning household bills will ultimately be lower than they would have been otherwise. Writing in the Business section of The Daily Telegraph today, Mr Huhne hails his plans as the most far-reaching reform of the electricity market since privatisation in the 1980s. 'These reforms can unlock private investment on an unprecedented scale, and ensure that we undergo the low-carbon electricity revolution at the lowest possible cost to consumers,' he writes. David Porter, chief executive of the Association of Electricity Producers, said ministers and companies needed to be honest and admit that the shift towards low-carbon generation would cost households more."
£500 on electricity bills to pay for green energy
Daily Telegraph, 17 December 2010

"In May this year the State Oceanic Administration, a body under the Ministry for Land and Resources, stated close to the end of a 574-page report – as if it were a well-known fact – that China had proposed a programme for aircraft carrier construction last year.... Beijing is anxious not to trigger concern about its rising military and political prowess while also advancing its declared goal of rising to global greatness. Aircraft carriers are, according to military officials, both symbols of such power and necessary for a naval force venturing ever further beyond regional waters. Admiral Wu Shengli, the PLA Navy’s commander, has said the navy is modernising because of China’s 'expanded national interests'. These include protecting vital sea lanes through the South China Sea and the Strait of Malacca all the way to the Middle East, where most of China’s oil comes from, according to China’s defence white paper. The PLA Navy has shown it is serious by sending anti-piracy forces to the Gulf of Aden since late 2008."
Carriers back China’s global reach
Financial Times, 17 December 2001
"The United States risks major supply disruptions of rare earth metals used in clean energy products unless it diversifies its sources of the minerals, the Energy Department warns in a report due to be released later on Wednesday. The United States and other countries are worried that China, which controls 97 percent of the world trade in rare earth metals, will use those supplies as a political weapon and cut back their export when it is in a dispute with another country or to grow China's clean energy technology sector. 'The availability of a number of these materials is at risk due to their location, vulnerability to supply disruptions and lack of suitable substitutes,' U.S. Energy Secretary Steven Chu said in a report, due to be unveiled on Wednesday at a rare earth metals conference at the Center for Strategic and International Studies. The release of the report coincides with trade talks in Washington between the United States and China. U.S. officials are expected to push Chinese officials to loosen export restraints on rare earth elements. China, which said on Tuesday it planned to raise export taxes on some rare earth metals beginning next month , holds 37 percent of known rare metal reserves, the United States has 13 percent and the rest is in other countries.... However, mining rare earth metals can be very expensive and the lead times for new mining operations are long, ranging from two to 10 years."
US at risk of rare earths supply disruptions
Reuters, 15 December 2010

"A year-long European Union investigation into biofuels has concluded that their green credentials might be partly compromised by indirect side-effects, which should be tackled, EU officials said. The multi-billion-dollar industry fears barriers will be further raised against unsustainable biofuels from food, but the long-awaited European Commission report, due next week, will stop short of proposing any new actions. Instead, it will recommend six months more of studies. The report follows a one-year internal battle among experts within the Commission, which has thrown into doubt EU plans to create a $17-billion-a-year market for biofuels from producers such as France, Germany, Brazil, Malaysia and Indonesia. Investment in European biofuels has slowed to a halt due to doubts over the sector's green credentials and the challenging investment climate.... Recent uncertainty over investments has largely been caused by a new concept known as 'indirect land-use change' (ILUC). In essence, that means that if you take a field of grain and switch the crop to biofuel, somebody, somewhere, will go hungry unless those missing tonnes of grain are grown elsewhere. The crops to make up the shortfall could come from anywhere, and economics often dictate that will be in tropical zones, encouraging farmers to hack out new land from fertile forests. Burning forests to clear that land can pump vast quantities of climate-warming emissions into the atmosphere, enough, in theory, to cancel out any of the climate benefits the biofuels were meant to bring. 'Indirect land use (change) is a concrete danger,' Oettinger said. 'It's a normal economic process that acres with agriculture will be used as acres for production of biofuels.' 'There's a danger that deforestation follows,' he added. 'It's in our interest to have an instrument to avoid this process.' The Commission has run 15 studies on different biofuel crops, which on average conclude that over the next decade Europe's biofuels policies might have an indirect impact equal to 4.5 million hectares of land -- an area the size of Denmark. If that was gained by clearing wild land, as economics often dictate, it could result in a one-off release of at least 200 million tonnes of carbon -- about the same as the annual fossil-fuel emissions of Germany, according to Reuters calculations."
EU plans to tackle unwanted impacts of biofuels
Reuters, 15 December 2010

"While the Paris Basin may hold 100 billion barrels, the amount of recoverable reserves hasn’t been estimated, according to the French Energy Ministry. Typically between 30 percent and 50 percent of the oil remains in the source rock, of which 1 percent could be recoverable, according to McKenzie. That may mean about 300 million barrels of oil are potentially recoverable."
Toreador Plans to Drill in Paris Basin for Shale Oil Starting Next Month
Bloomberg, 15 December 2010

"China and India may increase imports of coal by 78 percent to 337 million metric tons next year, further driving up prices from the highest in two years and diverting supplies from Europe to Asia. China may buy 233 million tons more of the fuel than it exports next year, up from net imports of 143 million in 2010, Citigroup Inc. said in a Nov. 29 report. India faces a shortfall of 104 million tons in the 12 months ending March 2012, mjunction Services Ltd., a Kolkata-based commodity trader, said in a note on Dec. 6, citing Coal Minister Sriprakash Jaiswal. Asia’s two fastest-growing major economies are burning more of the fuel as economic expansion raises demand for electricity. The International Monetary Fund forecasts that China’s gross domestic product will next year expand 9.6 percent and India 8.4 percent. China added about 51 gigawatts of coal-fired capacity last year, more than half the total capacity of the U.K., according to data from Daiwa Capital Markets and the U.S. Energy Department..... China will need 2 billion tons of coal over the next 10 years to fuel the country’s industrial development, the China Securities Journal reported today, citing Dai Yande, deputy head of China’s Energy Research Institute. 'The thermal-coal market will remain tight as strong demand from emerging markets, particularly China and India, drives record levels of imports,' said Daniel Brebner and Xiao Fu, London-based analysts at Deutsche Bank AG. 'Supply is anticipated to be constrained in key producing regions such as China, Indonesia and Australia.'... Coal use in Asia climbed 6.4 percent last year, more than a 0.8 percent increase in oil consumption, according to BP Plc. Prices have also surged because of supply disruptions from heavy rain and flooding at mines in Indonesia, Colombia and Australia, while South Africa’s export growth has been crimped by a lack of rail capacity. Xstrata Plc, the world’s largest exporter of thermal coal, has declared force majeure on some Australian shipments on Dec. 7 because of flooding of mines.... Such disruptions have prompted South Africa and Colombia to divert supplies from traditional markets in Europe to higher- paying Asia. South Africa accounted for about 30 percent of India’s thermal coal imports this year, according to ministry data. Shipments in the first nine months of this year increased 16 percent to 15.2 million tons, while China’s purchases surged to 5.1 million tons until October compared with 1.52 million tons it imported for the entire 2009, according to mjunction Services, which is backed by Tata Steel Ltd. and Steel Authority of India Ltd., and Chinese customs data. 'Robust Chinese coal demand and import growth will continue throughout 2011,' Jeffrey Landsberg, president of New York-based Commodore Research & Consultancy, said Dec. 10 in an e-mailed response to questions. 'China still has many decades left to develop. Only a fraction of the population, and really just the eastern part of the nation, has experienced profound growth. The rest of the country needs to develop as well.'”
Coal Imports May Rise 78% to China, India, Drive Up Prices: Energy Markets
Bloomberg, 14 December 2010

"The leaders of Afghanistan and Pakistan were in the capital of gas–rich Turkmenistan Saturday to push forward on ambitions to build a pipeline across their countries. The pipeline, which would terminate in India, would bring huge amounts of gas to underdeveloped regions and could earn impoverished Afghanistan hundreds of millions of dollars in transit fees. But it would cross both Taliban–intensive stretches of Afghanistan and parts of Pakistan's unruly tribal areas. The leaders, along with Turkmenistan's president and India's oil minister are expected to sign a document expressing support for the project. The next step would likely be to seek proposals and bids from energy companies. Efforts to get the pipeline — called TAPI after the countries involved — under way have intensified in recent months as Afghanistan seeks ways to kick–start its economy, while Pakistan and India explore how to slake their energy thirst. The project has also won vocal support from the United States, which is strongly opposed to India and Pakistan drawing supplies from Iran through another proposed gas pipeline. Turkmenistan, which is believed to hold the world's fourth–largest gas reserves, is eager to find new markets for its potentially gargantuan energy exports amid flagging interest from Russia, its traditional client. Plans to build a pipeline transporting the former Soviet nation's gas to Western Europe to date remain hazy ambitions.... The TAPI pipeline would stretch some 1,700 kilometers (1,050 miles) from Turkmenistan's Dovletabad field to the Indian township of Fazilka, just over the border with Pakistan. Its cost is estimated at about $8 billion. Sections of the pipeline's intended path — across deep Taliban country in Afghanistan's Kandahar Province and then into Pakistan's restive tribal areas. That raises concern among experts about its near–term feasibility. 'The issue is not only security in the sense that you can't actually guarantee the safety of the pipeline, but actual construction is going to be difficult as well,' said Maria Kuusisto, an Asia analyst at Eurasia Group. With the capacity to deliver more than 30 billion cubic meters of gas annually, TAPI would come as welcome relief for energy–parched nations along the route. According to a preliminary breakdown, India and Pakistan would each stand to receive around 38 million cubic meters of gas out of the 90 million cubic meters shipped daily. Afghanistan would get the remainder.... Attempts to build a pipeline through Afghanistan date back to the mid–1990s, when the U.S.–led consortium Unocal was locked in fierce competition with Argentina's Bridas to win a deal to construct and run the route. But as the Taliban gained control of Afghanistan, those ambitions were shelved and remained so during the next decade's war."
Agreement sought on Afghan-Pakistan gas pipeline
Associated Press, 14 December 2010

"Afghanistan will deploy up to 7,000 troops to secure a major transnational gas pipeline slated to run through some of the most dangerous parts of the war-torn country, an official said on Sunday. The pledge comes a day after Turkmenistan signed broad agreements with Afghanistan, India and Pakistan at a summit in its capital Ashgabat on the ambitious venture. The 1,700-kilometre (1,050-mile) TAPI pipeline, Ashgabat’s dream project that first appeared in 1995, has been on hold for many years due to the Taliban insurgency in Afghanistan. The pipeline aims to transport over 30 billion cubic metres of gas annually from the Dauletabad gas fields in southeast Turkmenistan and could turn into a cash cow for Afghanistan in transit fees. 'This huge project is very important for Afghanistan,' Wahidullah Shahrani, the minister of mines and industries, told a press conference in Kabul. 'Five thousand to seven thousand security forces will be deployed to safeguard the pipeline route.' The proposed Afghan section of the pipeline passes through southern Taliban heartlands including Helmand and Kandahar, where the central government has a tenuous grip on the territory.... The pipeline will allow the Afghan government to earn 'hundreds of millions of dollars each year' from transit fees, he added. Construction of the pipeline is due to start in 2012 and be completed and operational by the end of 2014, he said. The pipeline is slated to go through the Quetta area in Pakistan and end in Fazilka, an Indian city near the India-Pakistan border."
Afghanistan to deploy 7,000 troops to secure gas pipeline
Agence France Presse, 13 December 2010

"In this month’s Oil Market Report, the IEA once again pushes its estimates for global oil demand higher with the increase for 2010 up by 130,000 b/d and for 2011 up by 260,000 b/d to an annual average of 88.8 million b/d. While the increase in demand this year will be 2.5 million b/d, next year’s increase in demand is forecast to fall to 1.3 million b/d as consumption in China slackens. The 2.5 million b/d increase in demand which will occur this year is the largest annual increase in at least 30 years. The Agency says that November oil production increased by 400,000 b/d, largely due to increased output from Canada, Kazakhstan and Brazil. The IEA says that OPEC production in November increased by 45,000 b/d, while Platts says that OPEC production fell by 70,000 b/d last month. OPEC’s production capacity, however, is due to fall in 2011 due to depletion from existing fields and then increase between 2012 and 2015 as new projects come online. Much of this increase, however, is supposed to come from Iraq which is still very much of an open question. The IEA’s monthly report notes that in retrospect demand for oil in the 3rd quarter was exceptional. Price increases were due mainly to market fundamentals rather than speculation. In making forecasts for 2011 and beyond, the Agency is faced with the problem of feedback from higher prices slowing growth or possibly even driving demand lower as happened two years ago. Last week OPEC released its monthly forecast for future demand. The cartel is forecasting that demand will increase by only 1.18 million b/d to an annual average of 87.1 million b/d next year — well below the 88.8 million b/d forecast by the IEA. While the lower OPEC forecast supports the cartel’s decision not to increase production at this time, it is also based on expectations that the global GDP increase in 2011 will not be as robust as some suggest."
Peak oil review, 13 Dec
ASPO USA, 13 December 2010

"Desire Petroleum, the oil explorer, said further tests showed it did not make an oil discovery in the Falkland Islands, days after it said it believed it had found oil. Shares in the Aim-listed oil explorer plunged 50pc after the company said in a statement on Monday that additional analysis of data from Rachel North well did not support initial indications of oil being found in significant quantities. Last Thursday, Desire said: 'Preliminary data collected indicate that this well is an oil discovery.' Today Stephen Phipps, the chairman, said: 'It is extremely disappointing that the subsequent wireline logs and fluids sampling have dashed all the earlier promise of this being Desire's first oil discovery in the North Falkland Basin.'"
Desire Petroleum says no Falklands oil discovery
Daily Telegraph, 11 December 2011

"Switching from coal to gas power could save European nations 450bn euros ($596bn; £377bn) in the next two decades and cut carbon dioxide (CO2) emissions, a group of gas firms says. European coal-fired power stations emit 70% more CO2 than modern gas plants, the European Gas Advocacy Forum said. Gradually replacing coal power stations with gas could help Europe cut CO2 emissions by 80% by 2050, it said. But sceptics say renewable energy rather than gas is the way forward. The European Gas Advocacy Forum, which is made up of eight gas companies - Centrica, ENI, E.On Ruhrgas, Gazprom Export, GDF Suez, Qatar Petroleum, Royal Dutch Shell and Statoil - would like to see coal's share of the energy mix fall from 24% currently to between 4% and 9% by 2030. During this period, power stations using gas, biomass, other renewable energy sources and nuclear energy would produce more to fill the void, the group said in a joint position paper presented to the European Commission on Friday. The gas companies insist gas should fill most of the void during the initial two decades as this would be the quickest and cheapest solution. 'The reason why it is cheap is that gas power requires lower investments than coal and nuclear power plants,' the head of Statoil's gas division, Rune Bjornson, told BBC News.... Another reason why many are sceptical to increasing the use of gas relates to the security of supply. Such concerns are largely based on a perception that Europe could become dependent on supplies from Russia's Gazprom in particular, a scenario widely deemed undesirable following its rows with Ukraine in recent years. Such concerns are overdone, said Mr Bjornson, insisting that global estimates point to more than 250 years of economically recoverable natural gas resources at current consumption levels. 'Availability of gas and the number of supply sources have never been better than they are today,' he said."
Coal-to-gas power shift 'to cut energy costs'
BBC Online, 10 December 2011

"The drive by foreign companies to grab a piece of the action in gas-rich Turkmenistan is reported to be producing some strange bedfellows -- like PetroSaudi, owned by the son of King Abdallah, and Merhav, an Israeli conglomerate run by former intelligence officer Yosef Maiman. According to Intelligence Online, a Paris-based Web site that covers global security issues, the companies from these longtime Middle Eastern adversaries are negotiating a partnership 'through intermediaries' to explore the Serdar field that straddles the border between Turkmenistan and oil-rich Azerbaijan. It is reported to contain the equivalent of at least 1 billion barrels of recoverable oil. Turkmenistan is the world's 10th-largest gas producer. The United States, Europe, China, Russia and Iran are all clamoring for access to its vast gas fields. These contain an estimated 20 trillion cubic meters of natural gas -- enough to supply Europe for 66 years. Maiman once worked for the Mossad, Israel's foreign intelligence service, and is reputedly linked to a network of companies owned by the agency. He has been moving into Central Asia for some time, spearheading an Israeli effort to secure influence -- and a significant intelligence presence -- in the energy-rich Caspian Sea basin, the economic center of the five former Soviet republics that make up the Muslim region. The Merhav Group has been involved in Turkmenistan's natural gas industry for years. In 2004 The Jerusalem Post described Maiman, a familiar figure in the Turkmen capital of Ashgabat, as a 'leading figure' in Central Asia's gas sector. According to some reports, Maiman was made a citizen of Turkmenistan by decree of the country's eccentric and authoritarian president, Saparmurad Niyazov, who died of heart disease Dec. 21, 2006. According to Intelligence Online, Maiman was behind the appointment of Israel's first ambassador to Turkmenistan, Reuven Dinia, by Foreign Minister Avigdor Lieberman recently. Dinai is another ex-Mossad officer, who once ran its Moscow station until he was expelled in 1996. Merhav has reportedly dominated foreign business in Turkmenistan, including brokering energy projects in the country. Turkmenistan and Azerbaijan are closely linked to Israeli commercial interests -- not to mention Israeli intelligence -- and Maiman appears to be well-placed to broker an agreement between them over the disputed Serdar field, which Ashgabat and Baku both claim, and secure a contract. The German-born entrepreneur, who became an Israeli citizen in 1971 and founded Merhav five years later, also has longstanding business links with Saudi Arabia. These connections may well expand as Israel and Saudi Arabia both find themselves in confrontation with nuclear-wannabe Iran. Maiman has traveled to Riyadh several times in recent years on his collection of non-Israeli passports. PetroSaudi, headed by Turki bin Abdullah bin Abdulaziz, one of the sons of the Saudi monarch, thus may be a front-runner in Turkmenistan if it cements its partnership with Merhav. They face competition from Total of France, Eni of Italy, Royal Dutch Shell, TNK-BP, Lukoil of Russia and Chevron of the United States. These companies are being welcomed in Ashgabat because the country was badly hit in April, when Russia suddenly stopped importing Turkmen natural gas. That slashed Turkmenistan's exports by 84 percent, because Russia was experiencing a gas glut. Without Russia as a customer, Turkmenistan is losing an estimated $1 billion a month. 'Right now Turkmenistan is looking for any energy deal it can make with almost any player, because Russia's sudden halt to natural gas imports has cut off most of Ashgabat's cash flow,' according to the U.S.-based security consultancy Stratfor. Turkmenistan does not have a viable alternative export route and, warns Stratfor, 'could go bankrupt if energy revenues do not start coming in from somewhere.' Moscow, which remains the dominant power in Central Asia, is unhappy about Turkmenistan's efforts to bring in new energy partners. China, with its insatiable appetite for energy to fuel its expanding economy, is likely to take Russia's place. Russia does not want to see any challenge to its influence in Central Asia. Neighboring Iran is another energy-hungry prospect. 'The geography of Central Asia, the competition among its five countries for resources and the increasing competition among outside powers for Central Asian energy seem to indicate that a fight for the region's energy resources in inevitable,' according to Stratfor."
'Saudi, Israel tie-up' in Turkmenistan
United Press Intenational, 10 December 2009

"Total SA, France’s largest crude producer, has yet to find 'doable' oil or natural gas from shale deposits in Europe, said Chief Executive Officer Christophe de Margerie. Europe’s system of petroleum royalties, in which producers share revenue with the government, doesn’t benefit private landowners, de Margerie said at an event at the French Consulate in New York today. Landowners have no incentive to permit drilling, in contrast to the U.S. where they share in royalties, he said. Total entered the U.S. shale-gas business in January, agreeing to pay $800 million for 25 percent of Chesapeake Energy Corp.’s assets in the Barnett Shale field in Texas. Total committed to spend another $1.45 billion to cover 60 percent of Chesapeake’s share of drilling costs. The company also has a shale-oil joint venture in the U.S., de Margerie said. Shale formations consist of dense rock that can be broken apart using water, sand and chemicals to release oil or gas. Europe is less accepting of shale production than the U.S., de Margerie said. Local groups are mounting opposition to Total’s shale-exploration plans in southern France because of potential environmental damage."
Total Has Yet to Find ‘Doable’ Shale-Gas Production in Europe
Bloomberg, 10 December 2010

"Biomass has low energy density relative to fossil fuels, and thus a conversion facility must have easy logistical access. In most cases, this means that biomass must be sourced close to the facility. This puts some limits on the size of biomass facilities, so they suffer from the lack of economies of scale....cellulose generally makes up less than 50% of the composition of biomass, limiting the biomass fraction that can be converted into ethanol. The fraction that is converted ends up as a dilute beer of generally around 4% ethanol and 96% water. This makes the energy requirements of purifying cellulosic ethanol very high.....In early 2010, 100 years after the first cellulosic ethanol plant was built in the U.S., the EPA recognized that the cellulosic ethanol mandates could not be met. They subsequently reduced the 100 million gallon mandate for 2010 to 6.5 million gallons. (Actual qualifying production of cellulosic ethanol through October 2010 is zero gallons).  The U.S. DOE’s Energy Information Administration has completed its predictions for next year’s cellulosic biofuels production and estimates that actual production levels will be much lower than anticipated. Earlier this year, the U.S. EPA proposed a reduction in the cellulosic biofuels portion of the 2011 renewable fuel standard (RFS) to between 5 and 17.1 million gallons, down drastically from the 250 million gallons initially called for in the 2007 RFS. But according to an Oct. 20 letter sent from EIA Administrator Richard Newell to EPA Administrator Lisa Jackson, the EPA’s reduced target is still too high. The EIA suggests that a more likely 2011 production total for cellulosic biofuels is approximately 3.94 million gallons. Additionally, the EIA said half of the facilities on the EPA’s list won’t produce biofuels next year. So the EIA projects that 2011 cellulosic ethanol production will be 3.94 million gallons, less than 2% of the originally mandated amount. They suggest that the EPA, having cut the 2011 estimate from 250 million to the range of 5 to 17.1 million gallons, is still much too optimistic, and that half of the facilities that the EPA expects to produce cellulosic fuel will not. Following the EIA story, the EPA has come back and revised their 2011 numbers down to 6.6 million gallons of cellulosic ethanol."
Cellulosic ethanol reality begins to set in
The Oil Drum, 8 December 2010

"Two related events occurred recently which affect the world of energy and climate science....The second event was the publication of a comment in the science journal Nature called The End Of Cheap Coal. The authors Richard Heinberg and David Fridley give their rationale for sounding a warning— 'World energy policy is gripped by a fallacy — the idea that coal is destined to stay cheap for decades to come. This assumption supports investment in ‘clean-coal’ technology and trumps serious efforts to increase energy conservation and develop alternative energy sources. It is an important enough assumption about our energy future that it demands closer examination. There are two reasons to believe that coal prices are likely to soar in the years ahead. First, a spate of recent studies suggests that available, useful coal may be less abundant than has been assumed — indeed that the peak of world coal production may be only years away. One pessimistic study published in 2010 concluded that global energy derived from coal could peak as early as 2011. Second, global demand is growing rapidly, largely driven by China. Demand rose modestly in the 1990s (0.45% per year), but since 2000 it has been surging at 3.8% per year. China is both the world’s biggest producer of coal (40% of global production) and its biggest consumer. Its influence on future coal prices should not be underestimated. Economic shocks from rising coal prices will be felt by every sector of society. Better data on global coal supplies is long overdue and energy policies that assume a bottomless coal pit need rethinking urgently.'"
Dave Cohen - Coal, climate, and confusion
Decline of the Empire, 6 December 2010

"Consumers are facing big increases in their energy bills to pay for a £130 billion plan to create a new generation of 'green' power stations over the next decade. Ministers will reveal the cost and shape of Britain’s energy generation in the next few weeks. It will entail the construction of new nuclear plants and 'cleaner' gas-fired and coal-fired power stations. Several billion pounds are also to be spent on building a national grid for carbon dioxide — a network of pipes to collect the waste gas from such power stations and pump it underground. Charles Hendry, the energy minister, said consumers could expect to pay significantly more for their power in coming years as the nation’s ageing coal-fired and nuclear plants have to be replaced. 'There is going to be a price to pay for having energy security but there would be an even bigger price for energy insecurity if we did nothing. There will be a cost to consumers for what we are planning,' he said.... A big chunk of the £130 billion cost arises from the government’s pledge to cut greenhouse gas emissions by 80% by 2030. At present, Britain emits the equivalent of about 600m tons of CO2 a year. In practice, this means slashing the amount of fuel used in motor vehicles — and the gas used in heating homes — to almost nothing by 2030. This could only be achieved by switching to electric vehicles and electric space heating but this would demand an enormous increase in the nation’s ability to generate power, from 80 gigawatts (GW) a year now to about 120GW in 2030. Almost all this energy generation would have to be from low-carbon sources or the switch would be pointless. Hendry said: 'We need to invest £100 billion in sustainable power generating systems and another £30 billion in rebuilding power transmission and other systems by 2020.'... All options would mean householders paying significantly more than the current average annual energy bill of more than £1,000. Dieter Helm, professor of energy policy at Oxford University, estimates the increase at up to 40%. For scientists and engineers the real challenge lies in building low-carbon power stations fast enough to meet demand. The government has already approved sites for about eight new nuclear plants but, privately, ministers acknowledge that the nation will need at least double that number by 2030. This, however, will not be enough so the government also wants a new generation of coal and gas-fired plants equipped with the kit to capture CO2 and then pump it away for storage. The government has already announced plans to invest up to £4 billion in four industrial-scale trial projects to assess the feasibility of such carbon capture and storage schemes. If they succeed, the eventual aim would be to install high- pressure CO2 pipes around areas such as Humberside, Teesside, the Thames estuary and the Firth of Forth, where there are clusters of power stations. The pipes would collect the gas and take it out to a rig in the North Sea which would inject it into bedrock more than 2,600ft beneath the seabed. Chris Train, network operations director for National Grid, said it would be technically quite simple to construct a network of high-pressure pipelines to carry waste greenhouse gases. 'What this all depends on is simply getting the economics right,' he said."
Your £130bn bill for green energy
Sunday Times, 5 December 2010

"Iraq’s proved oil reserves, at 143 billion barrels, are exceeded only by Saudi Arabia and Venezuela. However, its troubled history has left tracts of the country unexplored and some geologists believe that its oil wealth could be the greatest in the world. For companies such as BP, Shell, ExxonMobil and dozens of Chinese, Russian, Korean and French groups, the challenges involved are equally daunting. Iraq’s infrastructure remains shattered. BP will not only have to import rigs and equipment but also build new roads, power stations, pipelines and shipping terminals at a cost of billions. 'Mission creep' may be a military term but Western oil executives use the same phrase to describe their fear of being drawn into the sort of nation-building activities that Donald Rumsfeld fretted about in 2003. One of the biggest problems is an acute lack of water. Many of the big oilfields awarded to foreign companies by the Iraqi Government were originally discovered in the 1950s and 1960s. They still contain huge reserves but the crude must now be pumped out artificially by injecting water into underground rock formations. Exxon, BP, Shell and others are pressing ahead with a $10 billion (£6.4 billion) scheme to pipe seawater from the Persian Gulf into the deserts of southern Iraq. The International Energy Agency estimates that more than $160 billion of investment will need to be poured into Iraq’s oil industry by 2017."
Oil fields need billions of dollars but missing out will cost more
London Times, 3 December 2010

"Oil headed for its biggest weekly gain in a month on speculation that U.S. fuel demand will increase as the economic recovery gathers pace in the world’s biggest oil consumer.... The January contract was at $87.94 a barrel, down 6 cents, or 0.1 percent, in electronic trading on the New York Mercantile Exchange at 3:22 p.m. Singapore time. It closed yesterday at $88 a barrel, the highest since October 2008. U.S. employers added 150,000 workers last month, a Bloomberg survey showed before the Labor Department report today. Data yesterday showed pending sales of U.S. existing houses unexpectedly jumped by a record 10 percent in October, while claims for jobless benefits over the past month on average dropped to a two-year low. Brent crude for January settlement was at $90.81 a barrel, up 11 cents, on the London-based ICE Futures Europe exchange. The contract increased $1.82, or 2 percent, to end the session yesterday at $90.69, the highest close since Oct. 1, 2008."
Crude Oil Heads for Biggest Weekly Gain in a Month on U.S. Economy Outlook
Bloomberg, 3 December 2010

"The US shale gas boom has the hallmarks of a technology bubble: firms need continual re-capitalization but their gas output is not demonstrably profitable. Value is instead based on reserves and technology. The switch from gas to oil suggests shale gas can survive only through cross-subsidization not on its own merit. Perpetual expansion cannot forever disguise a serious problem with the bottom line. Shale gas has been an extraordinary success in the United States, changing the country's gas balance from one of growing importer to potential exporter. It has reversed the decline in US proved natural gas reserves and boosted production to such an extent that storage is close to capacity and prices have dropped significantly. The claims made by the shale gas industry are that they have discovered sufficient gas reserves to supply the US with cheap natural gas for the next 100 years. Not only that, but they have now claimed that they can produce shale gas at prices below $1/MMBtu. The US success story has not gone unnoticed around the world and major integrated oil and gas companies have spent billions buying into US shale reserves and accessing the relevant drilling technology.... In Europe, shale gas has met its skeptics. They argue that Europe's shale resources are unproven, that harsher environmental regulation, less amenable subsurface rights and more densely populated regions will all retard the industry's development. Significantly, the barriers to shale gas development in Europe are all regionally specific. They take for granted that the fundamental economic case for shale gas production is sound. Unfortunately, there are some good reasons to think otherwise. ..... Chesapeake Energy is probably the most well-known shale gas company in the US, and, as such, the entire world. It has expanded aggressively and holds large positions in the major US shale plays. It can boast exceptional share price growth since its beginnings in 1992, backed by increasing production and an expanding resource base. The company is emblematic of the shale gas revolution...... despite the impressive expansion, growing production, the huge reserves, and the equally huge expenditures, Chesapeake does not appear to have created a base from which it can derive a steady and sustainable profit. Chief executive officer Aubrey McClendon described 2009 as 'a very successful year for Chesapeake,' but the company saw a net income loss of $5.83 billion, which effectively wiped out all the net income reported by the company since its foundation. Since 1992, the company has reported a cumulative net income of minus $368 million. And this is before the precipitous fall in US natural gas prices in 2010. Chesapeake's operating costs have been growing faster than production since 1999, while the sales price of the gas produced has been falling since 2006. 1999 appeared to be a breakthrough year. Excluding oil, in 1998, Chesapeake had spent $1.234 billion in operating costs to produce 94 Bcf of natural gas. In 1999, it spent just $247 million to produce 109 Bcf of gas, the equivalent of $2.266 million per Bcf of gas produced. However, this figure has risen steadily since, hitting $7.86 million per Bcf of gas produced in 2007, $13.13 million in 2008 and $19.94 million in 2009."
Can oil save Chesapeake?
Platts, 3 December 2010

"Expectations of demand from Chinese nuclear reactors has pushed uranium spot prices to recent highs and threatens to cause a supply deficit. China's need for nuclear fuel to serve its growing energy requirements had heightened the potential for supply problems in the uranium industry, Laramide Resources and Australia's Encounter Resources said on the sidelines of the Mines and Money Conference in London....Encounter's exploration director, Peter Bewick, said: "We have seen the spot price go up to above $US60 a pound, which is certainly at least a 50 per cent rise in the last four months. 'When the weapons processing program finishes in 2013 there is just generally a shortage of uranium going forward -- so it is a supply-demand issue.' In the post-Cold War era, secondary sources of the metal, such as from decommissioning Russian nuclear weapons, became a significant supply for the energy industry. Steve Kidd, director of strategy and research at the World Nuclear Association, told the conference that 'primary supply does need to increase sharply' due to increased demand, especially from China. He said in order to achieve this, development companies 'need to talk to the Chinese about off-take agreements and equity investments, but they will (eventually) come running when they need more supply in 2020'."
Expectation of Chinese demand drives up uranium price
Australian, 3 December 2010

"The Obama administration is considering forcing energy companies to reveal more details about the chemicals they use to help extract natural gas from public lands, Interior Secretary Ken Salazar said Tuesday. The federal government is weighing the new disclosure requirements for natural gas wells on public lands that are stimulated using a technique called hydraulic fracturing, amid mounting fears that the practice can contaminate nearby drinking water supplies. 'There is a bright future with respect to natural gas in the United States of America,' Salazar said at an Interior Department forum. But, he added, the nation must 'move forward in a way that can reassure the American public that what we are doing is in fact safe and is protective of the environment.' Energy companies use hydraulic fracturing techniques - high-pressure injections of water, sand and chemical mixtures deep underground - to release natural gas locked in shale rock formations. Combined with horizontal drilling, hydraulic fracturing, called 'fracking' in oil field parlance, is allowing companies to produce gas from rock that is barely permeable, unlocking what industry analysts generally describe as a 100-year supply of natural gas. But environmentalists worry that chemicals used in fracking or natural gas escaping from poorly designed wells could taint water sources. On Monday, those fears prompted the New York State Assembly to pass legislation that would bar approvals of new hydraulically fractured wells in the state until May. The state Senate passed the measure earlier this year, and New York Gov. David Paterson is expected to sign the moratorium into law."
Natural gas drillers feeling pressure
Houston Chronicle, 30 November 2010

"BP has risked further anger from environmental groups by committing to the development of its Canadian oil sands project, calling it 'a significant milestone' for the company. BP, which owns 50pc of the Sunrise oil sands project in northern Alberta but will spend the first $2.5bn on the scheme, said it was 'a significant milestone' for the company. It added that the development represented a '40-year secure and stable source of production for North America'. The Canadian investment is the oil major's first large commitment since the Gulf of Mexico oil spill on April 20 and reflects the company’s plan to seek growth by making large investments in a few selected areas. BP's partner in the project, Husky Energy, predicts that Sunrise will produce 60,000 barrels of oil per day from 2014. BP believes the site has reserves in excess of 3bn barrels, with the potential to produce more than 200,000 barrels a day."
BP pushes ahead with Canadian oil sands project
Daily Telegraph, 29 November 2010

"Two past episodes offer important lessons: the Great Depression of the 1930s and the 'lost decade' associated with the debt crisis of the 1980s. In the 1980s many countries were hit by adverse world market conditions in the aftermath of the second oil shock — the fall in production and rise in prices prompted by the Iranian revolution and the Iran-Iraq war — which made servicing their debts difficult. After Mexico’s inability to meet its obligations in 1982, other governments unilaterally rescheduled their debts to postpone repayment."
When defaulting was all the rage
Sunday Times, 28 November 2010

"Two past episodes offer important lessons: the Great Depression of the 1930s and the 'lost decade' associated with the debt crisis of the 1980s. In the 1980s many countries were hit by adverse world market conditions in the aftermath of the second oil shock — the fall in production and rise in prices prompted by the Iranian revolution and the Iran-Iraq war — which made servicing their debts difficult. After Mexico’s inability to meet its obligations in 1982, other governments unilaterally rescheduled their debts to postpone repayment."
When defaulting was all the rage
Sunday Times, 28 November 2010

"Cameco has agreed to supply 29 million pounds of uranium concentrate to state-owned China Guangdong Nuclear Power Holding Co. (CGNPC) under a long-term agreement through 2025. China's largest clean-energy enterprise operates three nuclear power stations and is building another 14 nuclear power plants, the most currently under construction worldwide. Earlier this month, CGNPC signed a 10-year supply deal with Kazakhstan's Kazatomprom for approximately 5.3 million pounds per year, as well as a US$3.5-billion, 5.6 million pounds per year agreement with Areva. The current rally in uranium stocks was sparked by Cameco's deal in June to supply China National Nuclear Corp. with 23 million pounds of uranium concentrate through 2020. "
Cameco's China deal may only be the beginning
Financial Post, 26 November 2010

"Toshiba Corp. has signed a memorandum of understanding with Mongolia's MNFCC LLC agreeing to discussions on cooperation in the development of Mongolia's mineral resources, including uranium, rare earth and rare metals products. Many of the obscure minerals, metals and their oxides are used in electronics manufacture and have been rising in price in recent years as China has developed a monopoly position in their supply. In July China reduced rare earth export quotas for the rest of the year by 72 percent, inflating prices more than six-fold for some rare earth materials vital to the energy, military, electronics and manufacturing sectors. China just has begun exporting rare earths to Japan after a two-month suspension due to a territorial row."
Toshiba to source rare-earths from Mongolia
EETimes, 26 November 2010

"Cameco has agreed to supply 29 million pounds of uranium concentrate to state-owned China Guangdong Nuclear Power Holding Co. (CGNPC) under a long-term agreement through 2025. China's largest clean-energy enterprise operates three nuclear power stations and is building another 14 nuclear power plants, the most currently under construction worldwide. Earlier this month, CGNPC signed a 10-year supply deal with Kazakhstan's Kazatomprom for approximately 5.3 million pounds per year, as well as a US$3.5-billion, 5.6 million pounds per year agreement with Areva. The current rally in uranium stocks was sparked by Cameco's deal in June to supply China National Nuclear Corp. with 23 million pounds of uranium concentrate through 2020. "
Cameco's China deal may only be the beginning
Financial Post, 26 November 2010

"Toshiba Corp. has signed a memorandum of understanding with Mongolia's MNFCC LLC agreeing to discussions on cooperation in the development of Mongolia's mineral resources, including uranium, rare earth and rare metals products. Many of the obscure minerals, metals and their oxides are used in electronics manufacture and have been rising in price in recent years as China has developed a monopoly position in their supply. In July China reduced rare earth export quotas for the rest of the year by 72 percent, inflating prices more than six-fold for some rare earth materials vital to the energy, military, electronics and manufacturing sectors. China just has begun exporting rare earths to Japan after a two-month suspension due to a territorial row."
Toshiba to source rare-earths from Mongolia
EE Times, 26 November 2010

"For a glimpse of a truly scary future dependent on volatile suppliers look no farther than Mr Huhne’s favoured approach, the dash for wind. Every wind turbine has a magnet made of a metal called neodymium. There are 2.5 tonnes of it in each of the behemoths that have just gone up to spoil my view in Northumberland. The mining and refining of neodymium is so dirty (involving repeated boiling in acid, with radioactive thorium as a waste product), that only one country does it: China. This year it flexed its trade muscles and briefly stopped exporting neodymium from its inner Mongolian mines. How’s that for dangerous reliance on a volatile foreign supply?.... The chief reason that living standards shot up in the Industrial Revolution was cheap energy. Coal had a peculiar property that marked it out from wood, wind and water: it became less costly the more of it you dug up. The drop in the price of energy compared with labour spurred the replacement of toil with automation, thus collapsing the price of fulfilling human needs and desires."
Here’s safe, clean, cheap energy. Why ignore it?
London Times, 25 November 2010

"Many countries have started to promote the use of biofuels as part of their commitment to reducing greenhouses gas (GHG) emissions and combating climate change. Member states of the EU, for instance, are legally required to derive 10% of their transport fuels from renewable sources that cut GHG emissions compared to fossil fuels by 2020. South Africa’s draft biofuel strategy calls for a mandatory 4.5% biofuel component in road transport fuel by 2013.... Studies have shown that there simply isn’t enough arable land to quench our fuel-thirst on biofuels. If current US and EU biofuel targets were to be met domestically, almost all of the soy and maize grown in North America would have to be used and Europe would be left with only about a third of its farmland to grow food on.... Earlier this month, a study commissioned by the Institute for European Environmental Policy estimated that in order to meet the EU’s 2020 biofuel targets, an additional 4.1 to 6.9 million hectares of land will have to be cultivated – much of it in developing countries – resulting in 80 to 167% more GHG emissions than if the demand was met through fossil fuels. The verdict? Biofuels are a dead end. While they can provide a limited amount of truly green and sustainable transport fuel, biofuels will never be able to satisfy our current fossil fuel addiction. Electric vehicles powered by renewable solar and wind energy, once they are widely available, are a much better bet."
The great biofuel delusion
News 24, 24 November 2010

"China's crude oil imports from Saudi Arabia will likely rise 11 percent next year to hit one million barrels per day, a pace slightly faster than 2010 but off the heady increases in previous years, industry officials told Reuters. China's refining expansion is expected to moderate next year and rising competition of mostly Russian oil via a Siberian pipeline means import growth for the high-sulphur Saudi oil would be limited, they said. At one million bpd, China stands a touch behind the United States as the Kingdom's second-largest crude buyer. US Energy Information Administration data showed Riyadh supplied 1.07 million bpd in the first eight months of 2010 to the U.S., largely flat from a year earlier."
China's Saudi oil imports seen up 11% next year - sources
Reuters, 24 November 2010

"Economic global coal reserves will run out faster than expected because of overly optimistic estimates and accelerating demand, leading to a surge in prices, Nature magazine reported in its Nov. 18 issue. 'The inevitable result of soaring demand and dwindling supply will be rising coal prices globally, even in nations that are currently self-sufficient in the resources,' Richard Heinberg and David Fridley, fellows at the Post-Carbon Institute in Santa Rosa, California wrote in an article in the magazine. 'Energy policies relying on cheap coal have no future.' China last year imported a record amount of coking coal, used for steelmaking, while India almost doubled purchases of energy coal for its power stations, pushing takeover activity in the sector. China, the world’s biggest producer and consumer of coal, has coal resources of 187 billion metric tons, second to the U.S., according to data collected in the 2000-10 national resource survey by China’s Ministry of Land and Resources, or about 62 years’ worth of coal, according to Heinberg and Findley. 'But the overwhelming global trend, as revealed by national coal surveys over the past few decades, is for the size of countries’ estimated reserves to shrink as geologists uncover restrictions,' Heinberg and Fridley said. 'Coal consumption is accelerating fast. This renders meaningless reserves-lifetime figures calculated on the basis of flat demand.' The peak of world coal supply 'may be only years' away as the world’s highest quality and most accessible coal reserves are depleted in light of growing demand, Heinberg and Fridley said, citing scientific studies."
Coal Running Out, Prices to Soar, Nature Reports
Bloomberg, 24 November 2010

"The Copenhagen accord, a non-binding document which was the best that could be salvaged from the summit, talks of trying to keep the world less than 2°C warmer than in pre-industrial times—a level that is rather arbitrarily seen as the threshold for danger. Many countries have, in signing the accord, promised actions that will or should reduce carbon emissions. In the World Energy Outlook, recently published by the International Energy Agency, an assessment of these promises forms the basis of a 'new policies scenario' for the next 25 years (see chart 1). According to the IEA, the scenario puts the world on course to warm by 3.5°C by 2100. For comparison, the difference in global mean temperature between the pre-industrial age and the ice ages was about 6°C. The IEA also looked at what it might take to hit a two-degree target; the answer, says the agency’s chief economist, Fatih Birol, is 'too good to be believed'. Every signatory of the Copenhagen accord would have to hit the top of its range of commitments. That would provide a worldwide rate of decarbonisation (reduction in carbon emitted per unit of GDP) twice as large in the decade to come as in the one just past: 2.8% a year, not 1.4%. Mr Birol notes that the highest annual rate on record is 2.5%, in the wake of the first oil shock. But for the two-degree scenario 2.8% is just the beginning; from 2020 to 2035 the rate of decarbonisation needs to double again, to 5.5%. Though they are unwilling to say it in public, the sheer improbability of such success has led many climate scientists, campaigners and policymakers to conclude that, in the words of Bob Watson, once the head of the IPCC and now the chief scientist at Britain’s Department for Environment, Food and Rural Affairs, 'Two degrees is a wishful dream.' The fight to limit global warming to easily tolerated levels is thus over. Analysts who have long worked on adaptation to climate change—finding ways to live with scarcer water, higher peak temperatures, higher sea levels and weather patterns at odds with those under which today’s settled patterns of farming developed—are starting to see their day in the uncomfortably hot sun. That such measures cannot protect everyone from all harm that climate change may bring does not mean that they should be ignored. On the contrary, they are sorely needed. Many of these adaptations are the sorts of thing—moving house, improving water supply, sowing different seeds—that people will do for themselves, given a chance. This is one reason why adaptation has not been the subject of public debate in the same way as reductions in greenhouse-gas emissions from industry and deforestation have. But even if a lot of adaptation will end up being done privately, it is also a suitable issue for public policy. For a start, some forms of adaptation—flood barriers, for instance—are clearly public goods, best supplied through collective action. Adaptation will require redistribution, too. Some people and communities are too poor to adapt on their own; and if emissions caused by the consumption of the rich imposes adaptation costs on the poor, justice demands recompense. Furthermore, policymakers’ neat division of the topic of climate change into mitigation, impact and adaptation is too simplistic. Some means of adaptation can also act as mitigation; a farming technique which helps soil store moisture better may well help it store carbon too. Some forms of adaptation will be hard to distinguish from the sort of impact you would rather avoid. Mass migration is a good way of adapting if the alternative is sitting still and starving; to people who live where the migrants turn up it may look awfully like an unwelcome impact....Even if the world contrives to keep feeding itself without too much ecosystem damage, many of those dependent on agriculture or in poverty could still suffer a great deal. Regional droughts could wreak havoc, with bad ones causing global surges in food prices."
Facing the consequences
Economist, 25 November 2010

"New European Union proposals for a tough cut in carbon dioxide emissions would have only a limited impact on the global warming process, International Energy Agency chief economist told Reuters on Monday. The EU has agreed a goal to cut greenhouse gas emissions by at least 20 percent by 2020 compared with 1990 levels, but proposals have surfaced that the cut should reach 30 percent. Fatih Birol, of the IEA, said the gains from the tougher EU reduction target would roughly equal only two weeks of China's emissions. 'The United States and China are essential for combating climate change globally. We estimate extending Europe's plan to cut emissions from 20 to 30 percent would roughly equal China's two-week gas output,' Birol said in an interview. Birol was skeptical about the chance of a breakthrough in the forthcoming United Nations climate summit in Mexico. 'The wind is not blowing in the right direction for fighting global warming. Frankly, there are virtually no chances for the Cancun summit to end in legally binding agreement,' Birol said, adding, 'I would be very happy to be proven wrong on this.'"
Global impact of EU 30 pct carbon cut small:IEA
Reuters, 22 November 2010

"Cameco Corp (CCO.TO) signed a long-term agreement to supply 29 million pounds of uranium concentrate to China's state-owned nuclear power company, at a time when the Asian superpower steps up its ambitious nuclear power programme. China Guangdong Nuclear Power Holding Co Ltd (CGNPC), the country's largest clean-energy enterprise, operates three nuclear power stations and is constructing 14 nuclear power plants. Cameco has agreed to supply uranium concentrate through 2025, it said in a statement late on Tuesday. CGNPC has about 17,000 megawatts (MW) of nuclear capacity under construction and expects over 50,000 MW by 2020. 'This long-term supply agreement with China Guangdong Nuclear Power is a significant step for our company in the world's fastest growing uranium market,' Cameco Chief Executive Jerry Grandey said. By 2010, China aims to produce 80-112 gigawatts (GW) of electricity from nuclear power, up from the current capacity of 11 GW. It will need an additional 82 million pounds of uranium to start and fuel those new reactors. Camceo, the largest uranium producer in Canada, said its expectation to double production by 2018 aligns well with China's nuclear reactor construction program. Global uranium demand is expected to grow 32 percent by 2015, according to RBC Capital Markets, a forecast that already has uranium producers' share prices climbing."
Cameco to supply uranium to China's nuclear power co
Reuters, 24 November 2010

"Uranium Energy Corp. (UEC) Chief Executive Amir Adnani expects prices for the radioactive metal to continue rising on tighter supplies over the next few years amid growing demand from the nuclear-power sector. 'Mine production for uranium is basically only enough to meet two-thirds of current demand,' or about 15 million pounds a year, Chief Executive Amir Adnani said. 'Over the next two to three years, you are going to have a very tight uranium market on the supply side,'..."
Uranium Energy CEO: Uranium Prices Headed Higher With Demand
Dow Jones, 22 November 2010

"Lord Jacob Rothschild and Rupert Murdoch have invested in an Israeli venture to produce oil from bituminous-bearing rock (shale) in the Elah Valley in the Judean foothills. Last week, they acquired 11% in equal shares of Genie Energy Corporation unit Genie Oil and Gas Inc. for a total of $11 million. Genie Energy, a subsidiary of IDT Corporation (NYSE: IDT), is the parent company (89%) of Israel Energy Initiatives Ltd. (IEI), which holds an exclusive shale oil exploration and production license covering 238 square miles in the Adulam district, which is between Beit Shemesh and Beit Guvrin. The company believes that its shale oil cracking technology can free the world from dependence on Arab oil and turn Israel into an energy powerhouse able to produce 300 billion barrels of non-conventional oil at a cost of up to $40 per barrel....Negotiations with Lord Jacob Rothschild and Murdoch began six months ago, and Lord Rothschild visited Israel during that time. Genie is involved in similar projects in Colorado and Mongolia. IEI president Effie Eitam, who served as minister of national infrastructures in the Sharon government, told 'Globes' that IEI hopes to obtain a permit from the regional planning and building commission within days to carry out a pilot shale oil project on a six-dunam (1.5-acre) site in the Elah Valley. Local residents strongly oppose IEI's venture. They fear possible environmental damage from the drilling. Residents claim that the drilling will harm the Adulam District's vistas and nature, as well as its vineyards, which have been called the Israeli Provence.....In July 2008, IEI obtained its shale oil and exploration license from the Ministry of National Infrastructures. Under the license terms, the company has to launch a pilot project to produce 500 barrel of oil in the Elah Valley by mid-2011. The project will heat shale strata at a depth of 300 meters to a temperature of 300 degree Celsius for two years."
Murdoch, Lord Rothschild invest in Israeli shale oil
Globes, 21 November 2010

"The UK must speed up the switch to alternative energy sources to protect the country from the impacts of rising oil prices, business leaders have urged. The group of companies warned that in the wake of the Gulf of Mexico oil spill, tightened regulation of deep water drilling could see oil prices rise, threatening the UK economy within the next five years. Sir Richard Branson, founder of Virgin Group, one of the businesses in the UK industry taskforce on peak oil and energy security, said the disaster in the Gulf of Mexico had increased the chances of an 'oil crunch' in the coming decade. He said: 'This will lead to much higher sustained prices which will in many ways rival the impact of the credit crunch of 2007 on UK growth, jobs and stability. 'The time to take out our insurance policies against such an outcome is now. We must do this to avoid the horrible shocks to the UK economy which will be mirrored in many other parts of the world.' The taskforce, which includes companies such as Arup, Solarcentury, Stagecoach group, Scottish and Southern Energy and Virgin, said deep water drilling would become increasingly important as it was likely to provide 29% of new capacity by 2015, compared to 5% today."
'Oil crunch' prompts energy warning
Press Association, 18 November 2010
"Oilpatch capital costs are slowly rising back to precession levels, according to a report by a prominent U.S. energy think-tank. According to IHS CERA's downstream capital cost index -- the group's version of a consumer price index -- the costs of building a large processing facilities such as refineries jumped three per cent from the start of the year and are just four per cent below the 2008 peak. According to IHS, a combination of factors including higher oil prices and a weaker U.S. dollar contributed to the rise, along with a stronger global economy.... In a news release, IHS CERA said the current index rose from 175 to 180 in six months. The values are indexed to the year 2000, meaning that a project that cost $100 in 2000 would cost $180 today."
IHS CERA study says oilpatch costs rising
Ottowa Citizen, 18 November 2010

"New forecasts suggest that coal reserves will run out faster than many believe. Energy policies relying on cheap coal have no future, say Richard Heinberg and David Fridley. World energy policy is gripped by a fallacy — the idea that coal is destined to stay cheap for decades to come. This assumption supports investment in 'clean-coal' technology and trumps serious efforts to increase energy conservation and develop alternative energy sources."
The end of cheap coal
Nature 468, 367-369 (18 November 2010) | doi:10.1038/468367a; Published online 17 November 2010

"It took just 32 seconds to extinguish faith in the airship and the hydrogen that once buoyed the Hindenburg, which erupted in a fatal inferno 73 years ago. Now hydrogen is being dropped again by the aviation industry. But this time the promised 'green' fuel for powering flights of the future has been quietly shelved in favour of biofuels and more fossil fuel-sipping aviation. And while hydrogen as a potential 'greener' fuel for foreseeable flights gets dumped worldwide, airlines and aircraft manufacturers are also jettisoning their once radical ideas for such hydrogen-burning, sci-fi-like, cryoplanes....Three times more efficient than oil but four times bulkier - even in its liquid state - hydrogen already powers several prototype cryoplanes around the world. But despite the millions poured into research, the promised commercialisation of such aircraft has to come to nothing as hydrogen failed to prove itself any greener then other energy sources. 'The energy costs of making hydrogen are enormous,' Professor Ian Poll, head of technology for the UK government-funded sustainable aviation Omega organisation tells the BBC. 'Currently it has to be created with an awful lot of energy. We need a source of electricity to make hydrogen that does not emit CO2, and there are not many of those around.'.... just 12 years ago, experts and much of the aircraft industry seemed bullish about hydrogen's chances as the new super fuel. Generated from hydropower, liquid hydrogen they thought would be the ultimate non-polluting fuel source that, with some modification, be readily used by today's aircraft. Radical redesign of the world's airline fleet was planned to carry the bulky liquified gas. The result would have been new-look cryo-jets reminiscent of Thunderbird 2, with short wings and a bulging fuselage containing the liquified gas..... Researchers found that aircraft would require fuel tanks four times larger than today's. Models showed that the larger exterior surface areas would increase energy consumption by well over a tenth, and overall operating costs by around 5%. Despite the drawbacks, reactions from the air industry were positive, with Airbus and its partners Daimler-Benz Aerospace avowing a goal of replacing kerosene with hydrogen to run their engines by 2020. But for the aerospace giants, hydrogen's appeal is now much diminished, and the emphasis seems to be on making fossil fuels go further. 'Kerosene is a very good fuel and very difficult to compete with,' explains Rainer von Wrede who works in Airbus's research and technology department. 'In principle it is possible to fly with hydrogen and we have a proof of concept but for the moment we can not produce enough hydrogen in an environmentally friendly manner for aviation.' Where Airbus, and the aviation industry as a whole, is devoting its research is into reducing consumption further and committing to developing what it calls greener synthetic kerosene and leaner planes and engines. Hydrogen, nuclear-powered planes, solar and electric powered commercial aircraft have all been shelved for the short- to mid-term."
Aviation industry 'ditches' hydrogen
BBC Online, 17 November 2010

"The implications of the International Energy Agency's (IEA) new report, World Energy Outlook 2010, are stark. Its 25-year 'New Policies Scenario' projects it is most probable that conventional crude oil production 'never regains its all-time peak of 70 million barrels per day reached in 2006.' In this scenario, crude oil production is most likely to stay on a plateau of around 68 million to 69 million barrels per day. There you have it. We are now, in all likelihood, living in a 'post-peak' world.... Is this the end of industrial civilization as we know it? The IEA insists: not yet. Despite the peak of conventional oil production, the IEA concludes that total growth in liquid fuels from other unconventional sources - like tar sands, oil shale and natural gas liquids - will not only make up for the shortfall in crude but actually rise as high as around 99 million barrels per day until around 2035. Despite this apparent optimism - under this scenario, there are no imminent fuel shortages - we have passed a historic tipping point. In the words of IEA Chief Economist Fatih Birol, 'The age of cheap oil is over.' The problem is that unconventional sources of oil and gas are far more expensive to get out of the ground and process into usable petroleum and are environmentally problematic. This means that over the next decade, oil prices are likely to significantly increase. Driven largely by industrial growth in places like China and India, demand is projected to grow 36 percent up to 2035; at which point, the price of oil will rise beyond $200 a barrel. On the way, by around 2015, we could see price hikes above $100 a barrel. Unfortunately, a large body of independent scientific literature suggests the IEA's favored scenario is far too optimistic on a whole range of issues. The agency forecasts, for instance, that Iraq will be able to triple its production by 2035 and that Saudi Arabia's production will double. Yet this looks rather unlikely. IHS Cambridge Energy Research Associates, a leading energy consultancy firm vehemently opposed to the idea of peak oil, nevertheless projects the most we can hope is for Iraq to increase its output to 6.5 million barrels per day by 2020 - half of Iraq's actual target.... The IEA's hopes that unconventional oil and gas could rise rapidly to meet expected demand may also be misplaced. 'If conventional oil production is at peak production, then projected unconventional oil production cannot mitigate peaking of conventional oil alone,' concluded a study by University of Newcastle chemical engineer Steve Mohr, published in Energy Policy. A Boston University study concurred, finding that the Energy Return on Investment (EROI) - the energy you get out compared to what you put in - is simply infinitesimal, at around 1:1 or 2:1, compared with conventional oil's EROI at the well head of 20:1.... If the IEA is right about everything, we are in for a rough ride. But if, as the above suggests, the IEA is right about us passing the peak of conventional oil in 2006 but almost fanatical in its faith in the prospects for expanded production from unconventional sources, then we are in for an even rougher ride. The 'post-peak' world clearly does not imply the end of the world. But it does imply an extremely volatile one whose dynamics will be difficult to predict. It is a world not of easy abundance, but of declining - and increasingly expensive - carbon-based resources. If we are to develop sufficient resilience to the various price shocks and converging crises of the 'post-peak' world, we will need to recognize they are symptomatic of an inevitable civilizational transition toward an emerging post-carbon age. There is no time for denial. Governments and communities need to start adapting now."
Running on empty
Prague Post, 17 November 2010

"What about unconventional gas? Although EROI is quite high at inception, the EROI of all gas production rapidly declines as energy costs of compression and distribution to consumers is factored in. An extensive analysis by former Amoco petroleum geologist and World Oil columnist Arthur Berman, who has consulted for ExxonMobil and Total, fundamentally undermines industry forecasts for natural gas production based on shale gas inputs. He argues that actual shale gas production rates are less than half of official industry projections - this is because production decline rates at shale wells are far higher than assumed. 'Many believe that the high initial rates and cumulative production of shale plays prove their success,' Berman says. 'What they miss is that production decline rates are so high that, without continuous drilling, overall production would plummet. There is no doubt that the shale gas resource is very large. The concern is that much of it is noncommercial even at price levels that are considerably higher than they are today."
Running on empty
Prague Post, 17 November 2010

"The idea of peak oil—the point at which global production reaches its maximum—has fixated the energy industry for years. Now, China is grappling with a new worry: peak coal. State-run media reported that Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy. 'China accounts for around 14% of global coal reserves but its share of global coal consumption is already over triple that at 47%, which is unsustainable,' Hong Kong-based brokerage CLSA Asia-Pacific Markets said in a report last month. Imposing a cap would be significant as China's mining sector is already finding it hard to keep up with domestic coal demand, which has grown around 10% annually over the past decade. Its net coal imports exceeded 106 million metric tons in the first nine months of the year—higher than the level for 2009 as a whole—and state companies have been aggressively acquiring overseas coal assets to secure long-term supply. In the three years to September 2010, Chinese companies spent $20.96 billion on overseas coal-sector acquisitions, according to Dealogic. An output ceiling would also underpin regional coal prices, which are near six-month highs on expectations that China will import record volumes of coal this month and in December. While China hasn't declared publicly it will impose a coal production cap, the idea is gathering momentum.... Policy makers are mulling an annual cap of between 3.6 billion tons and 3.8 billion tons in the next five-year plan, running from 2011 to 2015, the state-run Xinhua news agency reported earlier.... Even if no official limits are introduced, China can't keep growing coal output much beyond another decade, analysts say. The mining sector is constrained by chronic infrastructure bottlenecks, especially road and rail, and those coal deposits that are easiest to mine have already been tapped. Experts are starting to predict when China's coal reserves will run out—a nightmare scenario in a country where 70% of its energy is derived from coal. According to BP PLC, China can only continue at current rates of production for 38 years before its coal reserves are exhausted. That compares with 245 years in the U.S., and 105 years in India. BP estimates that China had 114.5 billion tons of proven coal reserves at the end of 2009, ranking it third behind the U.S. and Russia. The International Energy Agency says China could have as much as 189 billion tons of coal that it hasn't tapped yet.... not all coal has the same energy content. That's significant as many new discoveries in Inner Mongolia are of poorer quality than the coal reserves being depleted in Shanxi. But the strength of China's coal demand, and moves by miners to raise output in step, is worrying the market as well as Beijing. Even if China's annual coal demand growth halved to 5% then the country would run out of coal in 21 years unless it finds material new deposits, CLSA says, using 114.5 billion tons of reserves as a benchmark."
China's Coal Crisis
Wall St Journal, 16 November 2010

"Paladin Energy Ltd., the Australian mining company producing uranium in Africa, expects prices to keep rising as China drives demand for nuclear fuel. China has 'piled up' contracts to import uranium, Paladin Chief Executive Officer John Borshoff told analysts on a call today. 'Although they have sucked a chunk out of new production, they are nowhere near their target of acquiring in the vicinity of 45 to 50 million pounds per annum by 2020.'”
Uranium Demand Rising as China `Piles Up' Contracts, Paladin Energy Says
Bloomberg, 16 November 2010

"Global production of crude probably peaked in 2006, and increasing demand will have to be met from more-difficult-to-extract forms of oil such as tar sands, International Energy Agency Chief Economist Fatih Birol said. 'The age of cheap oil is over,' Birol said at a conference in Madrid today.... The depletion of crude reserves may benefit countries such as Canada and Venezuela, which have tar sands that yield oil. Those resources are more expensive to extract and only become economical when the price of oil rises."
Global Crude Output Likely Peaked in 2006, IEA's Birol Says
Bloomberg, 16 November 2010

"Norway, the world’s second-biggest natural-gas exporter, expects increased demand will reduce a glut of the fuel more quickly than forecast by the International Energy Agency, according to its Oil Minister. An excess of supply capacity will peak at more than 200 billion cubic meters next year, from 130 billion in 2009, before starting 'a hesitant decline' to at least 150 billion in 2020, the IEA said in a report this month. The Paris-based agency defines the glut as the capacity of inter-regional pipelines and LNG export plants minus the volume of gas actually traded. 'I’m a little bit surprised to hear that the IEA is projecting a glut of natural gas for the next ten years, this is contrary to the message I get from the industry and other market advisers who say that much of the gas surplus has already disappeared,' Terje Riis-Johansen said today in an Oslo interview. 'We see an imbalance in the market now, but we believe this will stabilize itself relatively soon.'.... 'The size of the gas glut will go down, but it may be with us for some time to come,' Fatih Birol, chief economist at the agency, said today at a conference in Oslo.... Producers and buyers have diverging forecasts for how long the glut will last. E.ON Ruhrgas AG’s chief executive officer said last week he expected the glut to peak in two or three years and last a decade. Total SA said the oversupply will be absorbed by surging demand for the fuel in China and India. 'We see a market that is in the process of normalizing itself,' Riis-Johansen said. 'The role of gas will be significant going forward and we’ll see a switch from coal to gas, which will ensure a stable delivery of Norwegian gas.' The country’s gas production doubled in the past decade and is forecast to stabilize at 105 billion to 112 billion cubic meters a year until 2014 because of a lack of any large discoveries. The country, the world’s seventh-biggest oil exporter, plans to boost gas output as oil production from its North Sea fields is forecast to decline for a 10th consecutive year, according to the Norwegian Petroleum Directorate."
Norway Says Natural-Gas Glut Will Shrink, Markets Stabilize Soon
Bloomberg, 15 November 2010
"High oil prices are hindering economic recovery and it would not be in the interest of the oil-producing OPEC states to see oil above $90 per barrel, the chief economist of the International Energy Agency (IEA) said. Asked if the current price of oil was starting to damage the economy, IEA chief economist Fatih Birol told Reuters on Monday: 'At these high level of prices, it would definitely be a problem for economic recovery. This may well strangle the economic recovery of many... countries.' Oil prices were above $85 a barrel on Monday. Asked if he though OPEC would change supply if oil prices topped $90, Birol said: 'I think if it goes above $90 it is not a good thing for OPEC countries as well'."
INTERVIEW - IEA says oil prices strangling recovery
Reuters, 15 November 2010

"Uranium buyers in the US 'have been a bit slow in realizing a major supply crunch is coming,' Uranium One CEO Jean Nortier said Monday during the company's third-quarter results conference call with analysts. Nortier said US utility buyers are 'more willing to buy at market prices, but we're not seeing a desperate scramble for supply', Nortier said, in contrast to the behavior on the part of Asian buyers who are locking in long-term supplies. The spot uranium price has risen by almost $17/lb U3O8 since June and ended last week at nearly $59/lb... Nortier said China is the 'locomotive' driving the future supply crunch and rising prices in the longer term. 'Nobody knows how much China will need to buy' to fuel its massive nuclear power construction program, he said. 'Our view is they will buy every single pound they can,' Nortier said."
Uranium miner says US slow to realize supply crunch ahead
Platts, 15 November 2010

"China’s natural gas supply may not meet demand next year, Caijing magazine reported on its website today, citing Yang Jianhong, a deputy director at PetroChina Co.’s planning and engineering institute. The country’s natural gas supply may reach 130 billion cubic meters, while demand may be as much as 140 billion square meters, the report said, citing Yang."
China 2011 Natural Gas Supply May Not Meet Demand, Caijing Says
Bloomberg, 15 November 2010

"Peak oil is not just here — it’s behind us already. That’s the conclusion of the International Energy Agency [World Energy Outlook, 2010], the Paris-based organization that provides energy analysis to 28 industrialized nations. According to a projection in the agency’s latest annual report, released last week, production of conventional crude oil — the black liquid stuff that rigs pump out of the ground — probably topped out for good in 2006, at about 70 million barrels a day. Production from currently producing oil fields will drop sharply in coming decades, the report suggests.... The I.E.A.’s stance that 2006 will be the year global supplies of conventional oil reached their ultimate peak is a more pessimistic take than its previous assessments. In 2008, the organization projected that conventional oil production would continue to slowly climb for several more decades. Its current estimate that enough new oil will be found to keep the oil supply roughly steady for the next 25 years is hardly ironclad, however, a point the report acknowledges in the executive summary. 'Will peak oil be a guest or the spectre at the feast?' its authors ask. 'The size of ultimately recoverable resources of both conventional and unconventional oil is a major source of uncertainty for the long-term outlook for world oil production,' it concludes."
Is ‘Peak Oil’ Behind Us?
New York Times (Environment and Energy Blog), 14 November 2010

"The European Union's energy commissioner has unveiled the main outlines of a proposed joint EU energy strategy for the next 10 years. Presenting his 'Energy 2020' strategy paper in Brussels today, Guenther Oettinger called for investment of up to a trillion euros ($1.4 trillion) to strengthen infrastructure across the bloc. He also pleaded for a common external energy policy, saying member states pursuing their own interests weaken the EU's collective negotiating position. Reforming the energy sector is one of the crucial challenges facing the EU as it attempts to modernize its economy and consolidate its foreign policy stance. Oettinger said the bloc needs to start factoring the impact of growing energy prices into its economic plans. 'We have rising energy prices, which are an increasing problem both for the competitiveness of the industry as well as the social well-being of EU citizens,' he said. To bring down costs, Oettinger said, the EU must decrease its dependence on expensive fossil fuels, such as oil, gas, and coal, and invest in renewable energy sources. Such a move would also help the bloc to counteract climate change....Oettinger said ensuring the further diversification of the EU's energy supplies is an important part of the 2020 energy strategy. However, he appeared to distance the European Commission from calls to cut Russia's share in EU energy provisions and transit, bracketing together the Nabucco and South Stream pipelines. 'We have a European interest in the southern corridor. We believe that we need a long-term strategy for Europe and our gas markets for the direct importation from [the Caspian region] of not only, but gas as well,' he said. 'Nabucco is a possibility. There are [also] other pipelines, like South Stream. It is decisive that we build direct connections to the sources in the Caspian basin over the next decade.' Oettinger highlighted the expected contribution of the North Stream pipeline between Russia and Germany currently under construction, which could amount to more than 50 billion cubic meters (bcm) a year. Nabucco, on the other hand, is expected to deliver a little more than 30 bcm annually in full flow."
EU Sketches Out Energy Strategy Through 2020
Radio Free Europe, 10 November 2010

"The Kazakh National company Kazatomprom and China Guangdong Nuclear Power Company (CGNPC) have today signed in Astana a long-term contract on the purchase and sale of concentrates of natural uranium. The document was signed following the talks of Kazakh Prime Minister Karim Masimov and Chairman of the National Committee of the People's Political Consultative Conference of China Jia Qinglin, ITAR-TASS reported. In April last year, Kazatomprom and CGNPC signed a memorandum of understanding establishing a joint venture to build nuclear power plants in China. The parties agreed that Kazatomprom will supply to China 24,200 tons of uranium until 2020. During President Hu Jintao's visit to Kazakhstan in June, the sides signed an intergovernmental agreement on cooperation in peaceful uses of atomic energy. The contract on the purchase and sale of concentrates of natural uranium was signed between Kazatomprom and CGNPC. Today, China is the largest buyer of Kazakh uranium."
Kazakhstan, China sign long-term contract on uranium supply
Trend (Azerbaijan), 11 November 2010

"It was a looming doomsday scenario: 'Peak oil' would someday hit, potentially sending food prices soaring, stock markets reeling, and countries to war to seize and protect remaining oil reserves. Instead, the International Energy Agency said Tuesday, peak crude oil already came and went unnoticed in 2006. 'The age of cheap oil is over,' Dr. Birol said in a telephone interview from Brussels. 'Governments and consumers should be prepared to pay higher oil prices.' According to the IEA's World Energy Outlook, released Nov. 9, oil demand will increase to 99 million barrels per day (mbd) by 2035, up from 84 mbd in 2009. This will drive oil prices over $200 a barrel by 2035, which is equivalent to $113 in 2009 real dollars. That scenario assumes governments will implement broad policy commitments and plans that they have already announced to reduce carbon emissions. But if governments continue at their current pace of oil use, then by 2035 the price of crude oil will near $240 per barrel ($135 in real dollars) as demand rises to 107 mbd, according to the report. The IEA said less developed nations will account for 93 percent of the projected increase in world energy demand. China, in particular, is projected to account for 39 percent of rising energy demand and 57 percent of rising global oil demand. Global crude oil production, though, has already peaked, according to the IEA. The difference between supply and demand will be made up from rising production of natural gas liquids and unconventional oil, notably Canadian oil sands. Crude oil output will plateau at about 69 mbd by 2015, according to the IEA, marginally below the all-time peak of 70 mbd reached in 2006. Total oil production, which includes the oil sands and liquid gas, will not peak before 2035."
International Energy Agency says 'peak oil' has hit. Crisis averted?
Christian Science Monitor, 11 November 2010

"A glut in global supplies of natural gas over the next decade threatens to blunt investment in alternative sources of energy including wind, nuclear and solar power, the International Energy Agency said yesterday. Speaking at the launch of the IEA’s annual World Energy Outlook report, Fatih Birol, its chief economist, said that the world was entering a 'golden age of gas' because of surging production of shale gas using new technology developed in the United States. He said that the IEA, the Paris-based agency that advises the Organisation for Economic Co-operation and Development on oil and energy issues, was now predicting a global surplus of the fuel of about 150 billion cubic metres annually in the years ahead. That is equivalent to nearly double Britain’s annual gas consumption of 86 billion cubic metres, or 5 per cent of world demand of 2,940 billion cubic metres. However, Dr Birol warned that depressed prices for the fuel were boosting investment in gas-fired power stations and having a knock-on impact on rival technologies considered critical for meeting international carbon-reduction targets, which are now less competitive. 'Modest gas prices will in turn have a negative impact on many alternative fuels, including renewables and nuclear energy,' he said. 'We can already see the first evidence of this in the United States.' He pointed out that several wind energy projects had been cancelled or postponed in the US in recent months. 'Nuclear is the same. The advantage of gas is that you have a very low capital cost compared with nuclear.'"
Global gas glut could threaten alternative power resources
London Times, 10 November 2010

"A glut in global supplies of natural gas over the next decade threatens to blunt investment in alternative sources of energy including wind, nuclear and solar power, the International Energy Agency said yesterday....In contrast, Dr Birol [IEA Chief Economist] said that the world’s production of conventional crude oil may have already peaked as long ago as 2006. He said that oil production from the world’s existing fields had hit a high of 70 million barrels per day in 2006 but now stood at about 69 million barrels. He said that it was set for a steady decline to 16 million bpd in 2035. This shortage of conventional supplies will help to drive oil prices above $200 a barrel by 2035."
Global gas glut could threaten alternative power resources
London Times, 10 November 2010

"The availability of oil worldwide has already peaked, the European Union's energy chief Guenther Oettinger said on Wednesday. 'My fear is that the global consumption of oil is going to increase, but European oil consumption has already reached its peak. The amount of oil available globally, I think, has already peaked,' Oettinger told a news briefing in Brussels. He was presenting a new EU energy strategy for investing 1 trillion euros over the next decade in a common EU energy network, to curb the bloc's dependence on fossil fuel imports."
Global oil availability has peaked -EU energy chief
Reuters, 10 November 2010

"Here’s a finding that will have any red-blooded American spluttering into his cornflakes. According to the Conference Board, a highly respected economic research association, China will overtake the US as the world’s biggest economy by 2012, or within two years. OK, so in dollar terms, that’s obviously not going to be the case. It will be a lot longer than two years before China overtakes the US on that measure. But in terms of purchasing power parity, according to the Conference Board’s latest world economic outlook, China is already nearly there, and by 2020 will have reached a size of output which is nearly half as big again as the US. Here’s the Wkipedia link explaining what PPP is, but broadly speaking the idea is to measure output according to the volume, not the price of goods and services produced. The assumption made is that identical goods will have the same price in different markets. In practice, this is obviously not the case. A taxi ride in Beijing, for instance, will cost you approximately a tenth of what it costs in London. But it is essentially the same service.....We all knew that the weight of economic growth had skewed dramatically since the crisis from advanced to emerging market economies, but many in the West don’t yet seem fully to appreciate the speed with which economic and geo-political power is shifting. This is a truly seismic change. How these once irrelevant economies choose to use their new found power is the overarching question of our times."
Jeremy Warner, Assistant Editor, Daily Telegraph
China may be bigger economy than US within two years
Daily Telegraph Blog, 10 November 2010

"Oil prices will rise beyond $200 a barrel as global supplies, strained by rising demand from China, India and other emerging economies, near their peak in 2035, the International Energy Agency (IEA) predicted yesterday.....The IEA expects natural gas and unconventional sources of oil such as the Canadian tar sands to play a bigger role as crude oil output eases, 'reaching an undulating plateau of around 68-69 million barrels a day by 2020'. The peak was in 2006, when output touched 70 million barrels a day. The outlook varies across regions, though all of the increase in the world oil demand between 2009 and 2035 comes from non-OECD countries. China is seen as the source of the biggest increase in demand in absolute terms. Under the 'New Policies' scenario, Chinese demand is projected to rise from just over 8 million barrels a day last year to more than 15 million by 2035. 'China accounts for 57 per cent of the global increase in demand,' the IEA said."
IEA predicts oil breaking $200 by 2035 as China keeps on trucking
Independent, 10 November 2010

"Canadian uranium producer Cameco Corp is ramping up spending on exploration for the nuclear fuel, especially at earlier stage prospects, in preparation for increased demand in the future, CEO Jerry Grandey said on Monday.... Grandey said that Chinese buyers remain active in the market, looking to build inventory, while some North American and European utilities are also seeking uranium for delivery around 2012 and 2013. Overall though, utilities are generally well covered for the next two or three years, he commented. 'But beyond that, into 2014 and 2015, there remains a lot of uncovered need,' Grandey said. 'We are now seeing utilities move back into the term market.' Uranium being mined actually already falls short of global demand, but the balance is made up by supply from inventories held by governments, mainly the US and Russia. However, these supplies are expected to decline over the next ten years, as Russia reaches the end of its programme to recycle highly-enriched uranium from nuclear warheads into low-enriched-uranium fuel for sale to US nuclear power plants. Grandey said that he is increasingly inclined to believe Russian statements that the so-called 'Megatons to Megawatts' programme will not be renewed when it ends in late 2013. Some industry players had speculated that the agreement could be extended at smaller volumes.... Cameco has said that it will grow production to at least 40-million pounds a year of uranium by 2018, including expected output from its delayed Cigar Lake project, in Canada's Saskatchewan province. Output this year is now forecast at 22-million pounds, the company indicated on Monday. The firm had said earlier this year it would produce 21,5-million pounds of uranium in 2010."
Uranium supply must respond to looming utility demand – Cameco CEO
Mining Weekly, 9 November 2010

"The year 2006 may be remembered for civil strife in Iraq, the nuclear weapon testing threat by North Korea, and the genocide in Darfur, but now it appears that another world event was occurring at the same time—without headlines, but with far-reaching consequence for all nations. That’s the year that the world’s conventional oil production likely reached its peak, the International Energy Agency (IEA) in Vienna, Austria, said Tuesday. According to the 25-year forecast in the IEA's latest annual World Energy Outlook, the most likely scenario is for crude oil production to stay on a plateau at about 68 to 69 million barrels per day. In this scenario, crude oil production 'never regains its all-time peak of 70 million barrels per day reached in 2006,' said IEA’s World Energy Outlook 2010. In previous years, the IEA had predicted that crude oil production would continue to rise for at least another couple of decades.... IEA actually projects that the total production of what it calls 'petroleum fuels' is most likely to continue steadily rising, reaching about 99 million barrels per day by 2035. This growth in liquid fuels would come entirely from unconventional sources, including 'natural gas liquids,' which are created as a by-product of tapping natural gas reservoirs. The consequences for the world’s energy consumers of this increased reliance on natural gas liquids and other unconventional fuels are stark. 'The age of cheap oil is over,' said Fatih Birol, IEA chief economist. 'If the consuming nations do not make major efforts to slow down the oil demand growth, we will see higher oil prices,' Birol said, 'which we think is not good news for the economies of the consuming nations....The closely watched most-likely scenario, which the IEA calls the 'New Policies Scenario,' assumes that countries stick to the commitments they have made in the past couple of years to cut greenhouse gas emissions....But even under IEA’s so-called 'business-as-usual' scenario, without the projected efforts to cut fossil fuel pollution, oil production would be significantly lower in 20 years' time than the IEA had forecast even just a few years ago. Oil production might rise marginally under the 'business-as-usual' scenario, the report said, but supplies would be short enough to send oil prices soaring to double today’s level.... A major reason for the rising prices and flatlining production is that for 'the currently producing fields of crude oil, the production will decline,' Birol said. Today's active oil fields produce about 70 million barrels per day, but by 2035, he said, 'they will produce less than 20 million barrels per day of oil.' Just to keep crude oil production flat would require much more production from new oil fields—including those discovered but not yet developed, and others still to be discovered. The IEA forecasts that Saudi Arabia—the largest producer—would boost its production by 50 percent, and that Iraq would nearly triple its production. Maintaining this plateau would require massive investment in the oil industry, the report estimated, about $8 trillion over the next 25 years. Also, in the IEA's main scenario, production from 'tar sands,' also known as 'oil sands,' found mainly in Canada and Venezuela, would triple in the next 25 years. However, these unconventional sources are generally more expensive and harder on the environment, the IEA said. Tar sands 'mining operations have a large impact on the landscape,' the report said, requiring forests to be cleared, and large 'tailing ponds' to collect the toxic runoff from tar sands processing. Tar sands have a bigger climate footprint than conventional oil, with larger greenhouse gas emissions for the whole life cycle, from 'well-to-wheels,' the new report said. Barrel for barrel, the IEA said, oil from tar sands would create 5 to 15 percent more emissions of carbon dioxide (CO2), the principal greenhouse gas causing global warming. Looking at the reasons for the plateau in crude oil production, 'it’s clear that it’s a mixture of above-ground and below-ground factors,' said Guy Caruso, former head of the U.S. Energy Information Agency, and now at the Center for Strategic and International Studies, a think tank in Washington, D.C. 'It’s partly geological resource limitations,' Caruso said. 'There’s decline that we’re fighting in the older fields,' in which production has fallen faster than had been expected. But there are also 'areas like Venezuela, Iraq, Kazakhstan, and Nigeria, where we know the oil is there,' but political turmoil and other issues have kept production far below the potential, he said. When all the factors are taken into account, the trend is toward rising oil prices, Caruso said."
Has the World Already Passed 'Peak Oil'?
National Geographic, 9 November 2010

"Global oil supplies will come close to a peak by 2035 when oil prices will exceed $200 a barrel, the International Energy Agency said on Tuesday, as China and other emerging economies drive demand higher. The IEA, in its 2010 World Energy Outlook, said crude oil output had already peaked and would flatten out in the next 10 years, boosting reliance on costlier and more polluting unconventional sources such as oil sands. 'Production in total does not peak before 2035, though it comes close to doing so,' the IEA said in the executive summary of the report. That projection was according to the report's central case, the New Policies scenario..... Oil prices would rise even further if governments did not act to curb consumption, the IEA's chief economist and lead author of the report, Fatih Birol, told Reuters in an interview. 'The message is clear, the price will go up, especially if consuming countries do not make changes in the way they consume oil, especially in the transport sector,' Birol said. Oil hit $87.63 a barrel on Tuesday, the highest since October 2008, after hovering around $70-80 most of the year. The world needed higher oil prices to change consuming habits substantially and spur investment as markets were becoming less sensitive to price changes, Birol said. 'All the net growth comes from non-OECD countries, almost half from China alone, mainly driven by rising use of transport fuels,' the IEA said in the report. While the IEA saw higher prices, it also cut its world oil demand estimate for the next 25 years by 6 million barrels per day (bpd) to 99 million bpd. That remained an increase of 15 million bpd, equal to one and a half times the output of top global producer Russia.... Unconventional oil -- including supplies from oil sands in Canada and Venezuelan heavy oil, and liquid fuels obtained from natural gas and coal -- is expected to play a bigger role as growth in crude oil tails off. 'Crude oil output reaches an undulating plateau of around 68-69 million barrels a day by 2020, but never regains its all time peak of 70 million barrels per day reached in 2006,' the IEA said. Last year's edition of the report said global oil production was not forecast to peak before 2030 and conventional oil production was 'projected to approach a plateau towards the end of the projection period.'"
IEA sees oil supply peak looming, raises price outlook
Reuters, 9 November 2010

"Some 20,000 tonnes of uranium will be supplied to China Guangdong Nuclear Power Corp (CGNPC) over a ten year period, while another deal promotes fuel manufacturing with China National Nuclear Corporation (CNNC). The uranium deal was finalised during the visit of Chinese President Hu Jintao to France, in which various contracts were announced. According to China Daily, France and China have agreed to double the current level of bilateral trade by 2015."
Areva into Chinese fuel supply
World Nuclear News, 5 November 2010

"From 2020, South African coal production will come off a peak, creating a potential power supply problem for the country, which generates the bulk of its electricity from coal-fired plants, according to a report in the South African Journal of Science. Dr Chris Hartnady , research and technical director at earth sciences consultancy Umvoto Africa, said in the report that coal reserves in southern Africa were closer to 15- billion tons than the 50-billion the government had estimated. Using an analytical methodology of M King Hubbert , a US geologist, Dr Hartnady said SA would reach peak coal production of 284-million tons in 2020, at which stage approximately half of the total 23-billion tons of economically recoverable resource would be exhausted. Production would then taper off to present-day levels of 250-million tons a year by 2037 and then halve to 125-million tons by 2063, at which stage the reserves would be 90% depleted, he said. 'Given SA ’s heavy dependence on coal for power generation and electricity supply, the economic situation appears to be heading rapidly towards a state of severe permanent crisis, which will be exacerbated by the anticipated low level of coal production at peak in 2020,' he said. A reassessment of the region’s reserves, using a “complete statistical history” of southern African coal production, showed them to be much lower than previously thought, he said. The South African government had already begun scaling back reserve estimates from the early 2000s, and, using South African Mineral Resource Committee (Samrec) definitions, lowered the figure to 28-billion tons from about 50-billion tons earlier this decade. 'The current analysis suggests that a further reduction to a value of less than 15-billion tons may be anticipated in a reassessment based on strict Samrec definitions.'"
Report says coal production will drop from 2020
Business Day, 4 November 2010

"Saudi Arabia's shift to a higher oil price comfort range reflects a desire to make up for a weaker dollar rather than strain on the kingdom's budget and government spending is seen staying strong in the coming year. The world's top crude exporter moved its preferred price up a notch this week, saying $70-$90 a barrel was an acceptable range for consumers, driving oil prices higher. Andrew Gilmour, senior economist at Samba Financial Group in London said: 'I do not think it has a budget connection. The dollar's weakness is the most significant factor.' Until this week, Saudi Oil Minister Ali al Naimi had said the ideal range for producers and consumers was $70-$80 a barrel, the line held for the past two years."
Budget strain not behind higher Saudi oil price view
Reuters, 3 November 2010

"The global energy watchdog will next week throw its weight behind calls for governments to implement pledges to fight climate change and cut fossil fuel subsidies, warning that a failure to do so would significantly inflate oil prices. The International Energy Agency forecasts that implementation of new environmental policies would see demand for oil almost 10 per cent lower by 2035 than under current policy commitments. That would result in prices roughly $20 a barrel lower."
IEA fears oil spike if climate pledges fail
Financial Times, 3 November 2010

"Iraq will miss its target of producing 12m barrels of oil a day by 2017 and could take another 20 years to achieve even half that level of output, says the International Energy Agency. In a draft of its annual World Energy Outlook report, the IEA gives a downbeat assessment of Iraq’s ambitions. However, it predicts its crude oil production will overtake that of neighbouring Iran 'by soon after 2015'."
IEA warns Iraq will miss 2017 oil target
Financial Times, 3 November 2010

"A new report from the Energy Biosciences Institute (EBI) in Berkeley projects that development of cost-competitive algae biofuel production will require much more long-term research, development and demonstration....Their conclusions stem from a detailed techno-economic analysis of algal biofuels production. The project is one of the over 70 studies on bioenergy now being pursued by the EBI and its scientists at the University of California at Berkeley, the University of Illinois in Urbana-Champaign, and Berkeley Lab. The algae biofuels industry is still in its early gestation stage, the new report notes. Although well over 100 companies in the U.S. and abroad are now working to produce algal biomass and oil for transportation fuels, most are small and none has yet operated a pilot plant with multiple acres of algae production systems....The report's analysis includes five conceptual facilities for algae pond biofuel production, four of them 250 acres in size and one of 1,000 acres. All used municipal wastewater as the source of both water and nutrients, with some emphasising production of oil, while others have wastewater treatment as their main priorities....The EBI scientists conclude that 'algal oil production will be neither quick nor plentiful - 10 years is a reasonable projection for the R, D and D (research, development and demonstration) to allow a conclusion about the ability to achieve, at least for specific locations, relatively low-cost algal biomass and oil production.'"
Algae for biofuels: Moving from promise to reality, but how fast?
Science Centric, 3 November 2010

"Brazilian state oil company Petrobras (PBR.N: Quote) on Wednesday questioned British gas producer BG Group's (BG.L: Quote) move to boost its oil reserve estimates for discoveries in Brazil, saying the company should await the completion of wells being drilled there. BG on Tuesday lifted estimates for total recoverable resources from the Tupi, Iracema and Guara areas in Brazil by 34 percent, raising BG's net resources from those areas to 2.8 billion barrels of oil equivalent (boe). 'Petrobras believes it is important to wait for the conclusion of the drilling in the Tupi (area) to provide additional information on recoverable volumes,' the company said in a statement. It added that BG's announcement "does not represent a statement by the consortium responsible for the operation of the blocks. The Brazilian firm is the operator of the BM-S-11 and BM-S-9 blocks, which are located in deep waters off Brazil's coast and include the areas in question. It reiterated its estimates of 5 billion to 8 billion barrels for Tupi and Iracema in BM-S-11 and 1.1 billion to 2 billion barrels in Guara in BM-S-9. Petrobras has a 65 percent stake in BS-M-11 with BG holding 25 percent and Portugal's GALP (GALP.LS: Quote) holding 10 percent."
Brazil Petrobras questions BG oil reserve estimate
Petrobras, 3 November 2010

"BG Group will spend $15bn (£9.3bn) on the world's first project to liquify and ship gas produced from coal deposits, the natural gas company's biggest ever investment, it was announced today. The 20-year Queensland Curtis scheme is the first of a clutch of 'coal seam methane' projects in eastern Australia to get the go-ahead, and will underline Australia's growing importance as a supplier of natural resources to South East Asia. It will involve building a 540km underground pipeline in Queensland which will link the gas producing coal deposits to a new terminal near Gladstone, on the east coast, which will liquify the gas for export by tanker.... The BG project is scheduled to begin operation in 2014, producing 8.5m tonnes of liquified natural gas (LNG) each year initially, equivalent to one 10th of the gas consumed in the UK. State-owned China National Offshore Oil Corporation (CNOOC) has signed the biggest supply contract with BG, and will buy 3.6m tonnes of LNG each year for 20 years. CNOOC will also take a 10% stake in the first phase of the project and invest with BG to build two new LNG cargo ships in China to be used in the project."
BG launches £9bn project to liquify gas from coal
Guardian, 31 October 2010

"A newly-tapped oil field off the coast of Brazil could contain up to 15 billion barrels of oil, officials say. Brazil's national petroleum agency said the Libra field most probably held around 8 billion barrels. That matches the size of the giant Tupi oil field, whose discovery in 2007 drew attention to Brazil's potential as a major oil producer. If the 15 billion barrel figure were confirmed it would double Brazil's known oil reserves. It would also be the biggest oil field discovered in the Americas since 1976, when Mexico found the giant Cantarell field in the Gulf of Mexico. The Libra exploratory well is located 183km (114 miles) offshore from Rio de Janeiro. 'The volume of recoverable oil belonging to the nation could vary from 3.7 billion to 15 billion barrels, with the most likely estimate being 7.9 billion barrels,' the national petroleum agency (ANP) said in a statement."
Brazil finds massive oil field
BBC Online, 30 October 2010

"Keeping up Russia’s oil output will cost 9 trillion roubles ($292 billion), according to Vladimir Putin. The prime minister called for that level of investment over the next decade to maintain crude oil production levels at 500 million tons a year. And he admitted that tax regimes needed to be reformed before new reserves can be exploited fully in the vital resource sector....An agreement on developing Russia’s oil sector was reached in Samara on Thursday and anticipates a small increase of 2.2 per cent in oil production until 2020, Vedomosti reported. The new figure of 505 million tons a year will largely be met by existing production regions, according to energy minister Sergei Shmatko. But come 2020 further growth will only be possible through new deposits and technologies, Putin warned, raising the spectre of peak oil production in the mid-term future. However, the investment necessary is the industry is to keep up with the current production levels is more than 8.6 trillion roubles, Putin said, admitting that the tax regime had to be changed. The target of 505 million tons based on current oil price predictions and a proposed drop in taxes from 73 per cent to 65, Shmatko said."
Trillions necessary to maintain Russia's oil production
Moscow News, 29 October 2010

"It's a secret just how much oil the US military uses, but estimates range from around 400,000 barrels a day in peacetime – almost as much as Greece – to 800,000 barrels a day at the height of the Iraq war.This puts a single nation's armed forces near Australia as an oil consumer and among the top 25 countries in the world today. Either way it is by far the world's largest single buyer of oil and the last thing any admiral, general or under secretary of defence has had to be been concerned about is whether there's gas in the tanks or that the navy's carbon emissions are a bit extravagant. But there are signs of change. Every $10 rise in the price of oil costs the gas-guzzling US air force around an extra $600m each year. Just keeping one US soldier in Afghanistan with the world price of oil at $80 a barrel now costs hundreds of dollars a day in fuel alone. And because the US as a country imports more than $300bn worth of oil a year, fiscal reality is dawning. The US military spent around $8bn in 2004 on fuel, and probably twice that last year. Surging world fuel prices are likely to put the brakes on the US oil war machine as much as political opposition. The military knows this. Earlier this year a Joint Operating Environment report from the US joint forces command predicted that global surplus oil production capacity could disappear within two years and there could be a shortfall of nearly 10m barrels a day by 2015. 'Peak oil', said the generals, would impact massively on the US and other economies, and the US military would be compromised. Meanwhile Wesley Clark, former supreme allied commander in Europe, has argued strongly that America's addiction to foreign oil is unsustainable and, by extension, the military's $20bn a year spend on oil and other energy must be reconsidered."
Surging price of oil forces US military to seek alternative energy sources
Guardian, 28 October 2010

"The term refers to 17 elements, most of which are fairly abundant in nature. Some are as common as copper or zinc, while even the rarest occur in greater quantities than gold or platinum. Mining and processing them, however, is a difficult and costly process, which requires large amounts of energy and produces a range of toxic emissions and residues, some of them radioactive. During the 1990s and for much of the past decade, China was able to produce rare earths more cheaply than other countries, leading to the closure of mines elsewhere, notably in Australia and the US. However, the Chinese government is now promoting the development of high-tech industries, which has pushed up domestic demand for rare earths. At the same time it is under pressure to rein in the environmental impact of rampant economic growth. 'They want to restrict the amount of environmental damage they do,' says John Meyer, head of resources at Fairfax investment bank. 'They want to restrict the amount of energy they put into the production of rare earths and they're saying 'we don't really want to export these things any more; we'll do it for ourselves but other countries need to take care of their own rare earth supply.'... In the US, moves are under way to reopen mines which were mothballed when Chinese production was at its height. They include the giant Mountain Pass mine in California, which was once the world's biggest source of rare earth elements. It was the cause of numerous leaks of hazardous waste, before it effectively shut down in 2002, amid mounting environmental concerns and increasing competition. Now, the mine's owner, Molycorp Minerals, is planning to resume full production at the site, allowing it to produce 20,000 tonnes of rare earth products by 2012. The company is keen to emphasise its social responsibility, pointing out that rare earths are widely used in the production of green technologies, as well as in other vital areas such as communications and healthcare.... But reopening mines, or establishing new ones, is a costly process. The modernisation of Mountain Pass, for example, is expected to cost more than half a billion dollars. It can also be time consuming, particularly in developed countries, because of the need to obtain environmental permits. So there is a real risk that if China does clamp down on exports, mines elsewhere may not be ready to meet demand. 'There are very real risks of a shortage,' says John Meyer. 'It's going to be very important and perhaps critical for governments to step in and help companies to push through the environmental processes, in order to get these mines up and running in time.' So rare earths may not be rare, but they could soon be in very short supply. If that happens, prices are certain to rise, manufactured goods are likely to become more expensive and consumers could be in for a big shock."
Concerns over shortage of rare metals
BBC Online, 28 October 2010

"China has said it will not use exports of so-called rare earth minerals as a diplomatic bargaining tool. The country produces more than 90% of these valuable commodities, which are used to produce electronic items such as mobile phones. A row has blown up surrounding their availability, with relations between China and Japan at its centre....The US and the EU asked Beijing to clarify its policy on mineral exports after China stopped shipping to Japan. The stoppage followed a spat between China and Japan last month over islands whose ownership is disputed. A spokesman for China's Ministry of Industry and Information Technology, Zhu Hongren, said: 'China will not use rare earths as a bargaining tool. We will have cooperation with other countries in the use of rare earths, because it is a non-renewable energy resource.' But Mr Zhu did not answer a reporter's question about when normal exports of rare earth minerals would resume. China has about 30% of rare earth mineral deposits, but accounts for about 97% of production. Meanwhile, US Secretary of State Hillary Clinton has called on China to clarify its policy on rare earth resources. She said recent Chinese restrictions served as a 'wake-up call' for the industrialised world which should drive it to look for other suppliers."
China pledges not to use rare earth minerals as weapon
BBC Online, 28 October 2010

"China is driving up world coal prices as clogged roads and railways from Beijing to Tibet restrict deliveries in the world’s fastest-growing major economy while the country tries to build stockpiles ahead of winter. A jam held up traffic for as many as 10 days along the country’s main east-west highway in August, underscoring a crisis that may buoy prices for the next two years, according to Daniel Brebner, an analyst at Deutsche Bank AG in London. The China Coal Transport and Distribution Association says it may take up to four years to ease the gridlock. Government incentives and lower wages away from coastal regions are boosting Chinese inland development, creating transport disruption that is hampering access to domestic supplies and prompting coal consumers to turn to foreign imports. Power-station coal at the Australian port of Newcastle and South Africa’s Richards Bay climbed to four-month highs last week, according to data compiled by IHS McCloskey, a Petersfield, U.K.-based researcher."
Gridlock on Chinese Highways Sends Coal to Four-Month High: Energy Markets
Bloomberg, 27 October 2010

"The U.S. Geological Survey says a revised estimate for the amount of conventional, undiscovered oil in the National Petroleum Reserve in Alaska is a fraction of a previous estimate. The group estimates about 896 million barrels of such oil are in the reserve, about 90 percent less than a 2002 estimate of 10.6 billion barrels. The new estimate is mainly due to the incorporation of new data from recent exploration drilling revealing gas occurrence rather than oil in much of the area, the geological survey said. 'These new findings underscore the challenge of predicting whether oil or gas will be found in frontier areas,' USGS Director Dr. Marcia McNutt said in a statement. 'It is important to re-evaluate the petroleum potential of an area as new data becomes available.' The organization also estimates 8 trillion cubic feet less gas than a 2002 estimate of 61 trillion cubic feet of undiscovered, conventional, non-associated gas -- meaning gas found in discrete accumulations with little to no crude oil in the reservoir."
Alaska's untapped oil reserves estimate lowered by about 90 percent
CNN, 27 October 2010

"Prices have moved to up from their traditional $10-20 a barrel range to roughly four times higher. Looking behind this number, it does not take long to learn that world oil production has been static for the last five years and that demand for oil in China, India, the oil-exporters, and a few other developing countries is moving up rapidly. Indeed, a few knowledgeable observers are beginning to say that it was the rapid increase in oil prices and the concomitant inflation and higher interest rates between 2002 and 2006 that started the ball rolling towards our current global recession. The great oil price spike to $147 a barrel in the summer of 2008 was the icing on the cake. The great financial/credit bubble that had been growing in the U.S. and Europe for several decades began to deflate. If one cares to look still further into the situation one would learn that a consensus of knowledgeable observers is saying that total world oil production will likely start to decline within the next three or four years causing another great oil price spike and incalculable damage to the world's economy in its present configuration. Within the next ten years, the American (and in most other countries) way of life as it developed in the last century of abundant and cheap energy will become unsustainable and far reaching changes will have to take place....When the Obama administration came into office nearly two years ago, they decided that in contrast to the Republican policies of tax cuts, a large dose of Keynesian deficit financing was all they could really do to help the economy recover. In reality, the massive dose of government spending seems to have only slowed the decline and did little to halt or reverse the steady rise in true unemployment that some unbiased observers now put in the vicinity of 22 percent. The unwillingness of both parties to deal with the real issue -- that the fossil fuel age is coming to an end and that we must rapidly restructure our economy and lifestyles -- means that sensible, proposals are completely absent from the political dialogue. Instead, the campaign of 2008 has degenerated into one of demonizing opponents and/or calling for a return to the values of the 18th century. No matter which party gains control of Congress next week, the inevitable outcome is still more gridlock, more economic decline, and rising unemployment."
The Peak Oil Crisis: The Midterms
Falls Church News-Press, 27 October 2010

"World uranium supply deficit, currently running at about 12 500 to 15 000 tons (2010 mine and supply forecasts relative to demand forecasts), or about 20 percent, is covered from sources especially including stocks held by mining companies, power plant operators and builders. This massive deficit is also partly covered, perhaps by 4 000 tons of uranium equivalent per year, with recycled and diluted highly radioactive wastes including plutonium that are converted to so-called MOX fuel (Mixed OXide), almost exclusively in France and the UK. There is one other 'supply side solution', which is given periodic headline treatment, and that is the US-Russian 'Megatons to Megawatts' programme, turning Russian arms, and an undisclosed number of US warheads into ploughshares by dismantling surplus atom bombs and recycling their atomic materials as reactor fuel. This programme was first mooted from just before the collapse of the USSR, in 1990-1991. The first physical operations, concerning 500 tons of Highly Enriched Uranium (HEU) from Russian bomb warheads started in July1993, but the first arrivals in the USA of 24 tons of Low Enriched Uranium (LEU) reactor grade fuel produced from 0.786 tons of Russian HEU only started in January 1995.... Megatons to Megawatts is basically a 'diluting' operation, stepping weapons-grade HEU down to the LEU fuels needed for most conventional civil power reactors. Plutonium is also separated, and can be 'cut' into utilisable fuel using the MOX route although the amounts treated this way are not published and may be very low. The amount of fresh mined uranium the programme displaces' , almost exclusively in the USA and not elsewhere, is however controversial. It is claimed by some sources like the WNA (World Nuclear Association) and the OECD's NEA (Nuclear Energy Agency) to have 'displaced' about 13 percent of world reactor fuel requirements, around 8 000 tons of uranium in 2009, covering about 45 percent of the USA's total reactor fuel that year....When we look at the actual declared amounts that are traded, by commercial private companies, we find quite large 'missing amounts' of finished fuel (or upstream scrapped weapons), suggesting that uranium stocks and reactor (but not bomb warhead) materials are increasingly entering the programme. The major authorized private company operating this market, the world's largest uranium mining and fuel supply company Cameco, is estimated by industry observers as buying and reselling around 7 million pounds (3182 tonnes) of Russian ex-military source uranium fuel each year, in the past 2 to 3 years. Other suppliers handle much less than this, and Cameco's agreement with the sole Russian supplier, the state firm Techsnabexport (Tenex) will terminate in 2013 unless president Obama and the Medvedev-Putin duo make a decision to continue scrapping warheads. For the select group of North American re-seller companies including Cameco, for which this supply represents about one-quarter of its total sales of uranium, termination will represent a major challenge. For the USA's 100-plus civil reactors in current operation, a claimed 45 percent or more of their present annual fuel generates a need for at least 8000 tons a year, perhaps more, to satisfy the 45 percent claim. The most important point is that any start of phasing down in operations of the Megatons to Megawatts programme from the most recent rate (since 2006) of an average 1200 warheads scrapped each year, which was already lower than the rate in the preceding 3 years 2002-2005), will automatically increase the quantities of 'fresh mined' uranium needed by US reactor operators. This will quickly add another twist to a world supply/demand context already heavily in deficit.... As already mentioned we have a basic and massive undersupply of world uranium fuel supply, but also have some 56 new reactors under construction and 439 in operation, with perhaps as many as 200 more reactors planned or proposed for the next 9 years (2011-2020). Results of this 'outright and announced crisis' will certainly include a radical increase of uranium prices, triggering more mine investment and development, and possibly a Russian decision to cash in on the coming uranium price boom through staying their decision to stop scrapping bomb warheads in 2013.   To be sure, fuel costs for nuclear reactors are a small slice of total costs, but over and above about a uranium price of US $ 80 to 100 per pound, fuel costs start to become very significant for power plant operators and builders, because of stockpiling needs and their costs, with first loading requirements of a typical industry standard 900 MW reactor being about 250 - 350 tons. Probably much more important for the industry, any long-term structural-type fuel shortage will cast a long and deep shadow on the highly mediatized 'Nuclear Renaissance'."
Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop
Will 'Megatons To Megawatts' Solve The Uranium Supply Pinch ?
The Market Oracle, 27 October 2010

"The Queen, one of the world’s longest-serving monarchs, and the Emir of Qatar, one of the world’s richest, are old friends. But when, amid lashing rain, the Emir and his glamorous wife were welcomed yesterday at the start of a three-day state visit, it was about more than just the renewal of old acquaintance — it was about money.... the Qataris have plenty of money and the Government, which decides state visits, rather than Buckingham Palace, would like British businesses to reap some of the benefit.... The invitation to 58-year-old Sheikh Hamad bin Khalifa al Thani — a powerful figure in the Gulf, and one of the region’s more progressive figures — to stay as the Queen’s guest at Windsor Castle is part of the Government’s strategy to 're-energise' Britain’s standing with the Gulf states. The Government hopes the visit will bring more of the huge oil and gas wealth of Qatar to British firms, and secure vital energy supplies."
Full pomp and pageantry as Qatari royals are welcomed
London Times, 27 October 2010

"Shares in Cairn Energy fell by more than 7% after the oil and gas group said that its controversial drilling programme off the coast of Greenland had come to an end without making a commercial discovery. It said it had managed to complete only two out of four planned wells by the 30 September, the end of the drilling season in Greenland. The company did not have time to finish drilling a third well where it announced last month oil had been 'observed intermittently'. The company said it would study data taken from the suspended well before deciding whether to resume drilling after the season begins again next June. Cairn confirmed that the two completed wells, which found traces of hydrocarbons, did not result in commercial discoveries. It said it would write off the $185m (£117m) spent on the drilling programme."
Cairn Energy fails to find enough oil off the coast of Greenland
Guardian, 26 October 2010

"Chinese demand could push crude to $100 a barrel soon, according to JP Morgan, with the weaker dollar and restocking of French oil inventories once strikes end also helping to drive up oil prices. China's economy was quick to recover from the global downturn and has been growing at a spectactular pace, resulting in rampant demand for oil. Growth has slowed slightly to an annual rate of 9.6% in the third quarter from 10.3% in the second. JP Morgan raised its forecast for US crude futures to an average of $81 a barrel in the fourth quarter, from $75 a barrel."
Oil could hit $100 a barrel soon, JP Morgan predicts
Guardian, 22 October 2010

"Supplies of North Sea gas are set to tumble a further 9 per cent this winter, forcing Britain to import more of the fuel from overseas than ever before, National Grid said yesterday. In its annual winter outlook report on the state of Britain’s energy supplies, National Grid said that 55 per cent of the gas used to heat homes and factories this winter would need to be imported from countries such as Norway, Qatar, Trinidad, Algeria and the Netherlands. That is the highest level on record and double the 27 per cent level of imports recorded in 2007. A spokesman for National Grid, which operates Britain’s wholesale gas supply network, said: 'As ageing North Sea fields continue to deplete, we are getting less and less of our gas from them every year.' The projected 9 per cent decline in UK gas production this winter marks a sharp acceleration of the trend. Production last year was down by only 6 per cent compared with 2008-09. It also marks a quick reversal for Britain, which was still a net exporter of gas in 2003. It was forced to import about 5 per cent of supplies in 2004 for the first time. If these trends continue, Britain will be forced to import three quarters of its gas supplies by 2015. National Grid said that the fall in production would force the UK to import far more by ship as liquefied natural gas (LNG) this winter than ever before. With wholesale prices relatively low because of a surplus of US shale gas production, Britain is expected to import more than 100 million cubic meters of LNG a day in the coming months — or more than one quarter of the country’s total average daily winter gas supply of 367 million cubic metres. Most of the LNG — gas that has been superchilled and shrunk to one 600th of its normal size — will arrive at two new terminals at Milford Haven in South Wales and another on the Isle of Grain in Kent. Further gas will be piped to the UK from Norway via the Langeled pipeline to Easington and another to St Fergus in Scotland. Britain’s growing dependency on imports comes as the nation is becoming increasingly reliant on gas-fired electricity generation. 'There are several new gas plants firing up,' said Nick Campbell, energy trader at Inenco, citing new plants at Staythorpe and West Burton in Nottinghamshire, Severn Power in Wales and Grain in Kent.Figures from the Department for Energy and Climate Change this month showed that the UK generated 41 terrawatt-hours, or 52 per cent of its electricity, from gas power stations in the three months to June 30 — up from an average of 30 per cent in 2006."
UK may be forced to import 75% of gas supplies by 2015
London Times, 21 October 2010

"The world faces decades of economic turmoil and a vicious cycle of recessions as oil supplies run low and prices spike, according to a Parliamentary research paper [in New Zealand]. The paper, The Next Oil Shock, says that known oil reserves would last for another 25 to 32 years, but an oil 'supply crunch' could occur in 2012 or shortly afterwards as demand rises and supplies fail to keep pace. It was likely to be followed by a pattern of supply and demand crises. ''While the world will not run out of oil reserves for decades to come, it cannot indefinitely continue to produce oil at an increasing rate from the remaining reserves. Forecasts indicate that world oil production capacity will not grow or fall in the next five years while demand will continue to rise. ''There is a risk that the world economy may be at the start of a cycle of supply crunches leading to price spikes and recessions, followed by recoveries leading to supply crunches.' The paper, by Parliamentary Library economics and industry research analyst Clint Smith, is based on international research, reports and data. It says the present world demand for oil of 86 million barrels a day was predicted to rise to more than 87 million barrels per day next year and continue to increase."
Dwindling oil supplies threaten economies
Stuff (New Zealand), 13 October 2010

"The chief executive of one of the largest oil and natural gas services companies in the world has said that shale gas could be much harder to recover in Europe than in the United States, because of concerns about environmental damage and other issues. 'We should not underestimate the challenge,' Andrew F. Gould, the chief executive of the company, Schlumberger, said Wednesday. 'The drilling and producing of shale gas wells in Central Europe will be very different from doing so in the southern United States for financial and logistical, social and regulatory reasons,' Mr. Gould said during Oil & Money, a conference convened by the International Herald Tribune.... So far, the growth of shale gas production has been most significant in the United States. According to the U.S. Energy Information Administration, U.S. shale gas production increased eightfold over the past decade. It now accounts for 10 percent of U.S. natural gas production and 20 percent of total remaining recoverable gas resources in the United States. The U.S. Energy Information Administration projects that shale gas will represent 7 percent of global natural gas supplies by 2030.... But the picture of total reserves of shale gas in Europe and the potential for extraction remain unclear. 'So far, to be frank, you can’t really get too excited yet about Europe,' said Walter van de Vijver, the chief executive of the exploration and production arm of Reliance Industries of India. For one thing, there is a strong possibility that parts of Europe might have the 'wrong rocks,' when compared with the United States, according to Paul Stevens, a senior research fellow at Chatham House, a research institute in London. Replicating the success of shale gas in the United States is likely to be difficult as 'the shale plays tend to be smaller, deeper, and less material' in Western Europe and 'tend to have a fairly high clay content, which is not necessarily good news for hydraulic fracturing,' Mr. Stevens said. The comparatively dense population density of Europe means that shale production could run into local opposition because of the way drilling could disrupt communities, and the way that pollution associated with drilling might face prohibitions, Mr. Stevens added."
Outlook for Shale Gas in Europe Is Uncertain
New York Times, 13 October 2010

"An energy watchdog lifted its forecast for world oil consumption today but played down fears that prices will top 100 US dollars a barrel. Global demand is expected to reach 86.9 million barrels a day this year and 88.2 million barrels a day next year, the International Energy Agency (IEA) said, revising up its previous forecast by 300,000 barrels for each year. Oil prices broke through the 80 US dollars a barrel mark earlier this month, and higher demand could prompt a further increase, which in turn could be passed on to the petrol pump or see business costs climb. David Fyfe, editor of the IEA oil market report, tried to calm concerns and said there would be 'comfortable levels of supply'. He said: 'Prices in early October broke through the psychological 80 US dollars a barrel barrier, with many foreseeing more strength to come. Choruses of '100 dollars a barrel by next year' are being heard once more. Our own view, however, is that markets could remain comfortably supplied until well into 2011.'... The agency said stronger-than-expected economic growth in developing countries, outside the OECD, and increased demand for crude oil in the third quarter of the year in countries within the OECD, led to the upward revision. The IEA expects oil demand to rise by 2.1 million barrels a day year-on-year in 2010, and the growth to slip back 1.2 million barrels a day in 2011."
World oil consumption forecast raised by watchdog
Press Association, 13 October 2010

"The US military's heavy dependence on fossil fuels is a dangerous vulnerability, officials said Wednesday as they made a fresh push to develop renewable energy solutions for the battlefield. In the wake of a spate of deadly attacks on tankers carrying fuel to foreign troops in Afghanistan, Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, spoke of a 'strategic imperative' for the US military to become more efficient and find new sources of energy. The Department of Defense is burning through 300,000 barrels of oil a day, using more energy per soldier every year and its top import to Afghanistan is fossil fuels, the highest ranking US military officer said as he kicked off a Pentagon discussion on energy security. Navy Secretary Ray Mabus, a former ambassador to Saudi Arabia, has set a goal of having renewable energy account for 50 percent of power for the Navy and Marines by 2020. 'We're not going green just for green's sake. Energy reform and the new energy future aren't about politics or slogans,' he said. 'It's about protecting the lives of our troops. It's about making our military better and more capable fighters. It's about making our country more secure and more independent. That's why we are doing this, that's why we have to change."
Pentagon going green, because it has to
Agence France Presse, 13 October 2010

"Iraq and Afghanistan were wars of choice, not necessity, and will be judged by history to have been strategic aberrations..... The strategic axis of the world has moved from the Atlantic to the Indian Ocean and the Pacific, thanks in part to the growth of China and India. The importance of the sea to our security and economic vitality is likely to increase sharply in the coming years. Our calculations of risks, interests and opportunities will all be fundamentally affected by climate change, the scramble for resources, territorial disputes and the exploitation of the polar regions and deep oceans.... History tells us repeatedly that maritime nations that turn their backs on the sea shrink in status and suffer economic decline."
Rear-Admiral Chris Parry, director- general of development, concepts and doctrine in the MoD until 2008
Helmand is the past. New risks lie ahead of us
London Times, 13 October 2010

"Kyrgyzstan came close to disintegrating in the summer after ethnic violence in the south between Kyrgyz and minority Uzbek communities. Fearful that further unrest could destabilise all of Central Asia, Russia’s Federal Security Service is deploying border guards in southern Kyrgyzstan for the first time since the Soviet collapse. The US base at Manas, critical for supplying Nato operations in Afghanistan, continues to irritate the Kremlin. It was furious when Mr Bakiyev reneged on a pledge to close the base after securing a $2 billion Russian loan and is determined to press the new Kyrgyz government to serve notice on the Americans in return for future aid. Russia has been turning the economic screw elsewhere in Central Asia to maintain its dominance in a new 'Great Game' against the West and resource-hungry China over the region’s energy reserves. Gazprom now monopolises Uzbekistan’s huge gas exports after a deal with President Karimov, its long-serving Soviet-era dictator. However, neighbouring Turkmenistan, which has the world’s fifth largest gas reserves, has opened a supply pipeline to China, the first in Central Asia to bypass Russia. The EU is also courting Turkmenistan to supply the proposed Nabucco pipeline that will skirt Russia, to reduce Europe’s energy dependence on Moscow.... Neighbouring Armenia confirmed itself as Moscow’s garrison in the Caucasus in August by signing a 24-year lease extension on a military base until 2044. Azerbaijan has grown rich from Caspian Sea oil pumped west along the Baku-Ceyhan pipeline through Georgia and Turkey, aided by US backing for investment by energy companies. This has allowed Baku greater independence from Russia but an unresolved conflict with Armenia over the territory of Nagorno-Karabakh means that it cannot stray too far from its former Soviet master. Russia has the power to tip the military balance against Azerbaijan if fighting resumes, making the pipeline vulnerable. Russian jets tried unsuccessfully to bomb the Georgian section during the 2008 war."
As Washington looks away Russia tightens grip on former Soviet states
London Times, 9 October 2010

"The Middle East is poised for a dramatic surge in nuclear power development over the next two decades. An investigation by The Times has revealed that by 2025, at least 15 new reactors will be built across the region, from Egypt and Turkey to the United Arab Emirates. With Iran’s centrifuges at Natanz still spinning uranium in defiance of international conventions, fears will mount that the plans now being announced by Middle East governments mark the first steps in a nuclear arms race across this volatile region. The UAE has begun preparing ground at its preferred site on the Gulf coast, with the first of four South Korean-built reactors scheduled to come online in 2017. Kuwait is expected formally to announce plans to build four reactors later this year, while Saudi Arabia, whose previous interest in nuclear power has been lukewarm at best, is now expected to follow suit.... If Iran’s nuclear programme goes unchecked there are genuine concerns of a surge in proliferation among its neighbours. 'There is the feeling that getting started on the nuclear ladder is prudent, given Iran’s assumed ambitions,' said Mark Fitzpatrick, senior fellow for non-proliferation at the International Institute for Strategic Studies in London. The UAE has ruled out the uranium enrichment or reprocessing required to develop weapons-grade material but other states might not be so scrupulous if their security and regional status are threatened. For Saudi Arabia in particular, a nuclear-armed Iran would present a clear threat. 'Saudi Arabia has made no bones about the fact that if Iran gets nuclear weapons they will want to as well. King Abdullah has said as much,' Mr Fitzpatrick said. Riyadh’s determination to match Tehran explains in part why the $60 billion defence deal the kingdom agreed with Washington in September caused so little stir in the United States or Israel. Besides sending a clear message to Iran, as well as benefiting business in the US, the deal is also an effort to reassure the kingdom that it can defend itself by conventional means. Similar agreements are in place across the region, with the east coast of the Arabian Peninsula now bristling with Patriot missiles. Washington hopes to bolster the region’s defences and rein in the urge to acquire more destructive weapons in the future. Despite the concerns, these developments are part of a new global surge in atomic energy development. Rising oil prices and concerns about the environmental impact of fossil fuels have made nuclear power politically and economically viable again. Some 60 reactors are under construction worldwide, more than a third of them in China. Even in the oil-rich nations of the Gulf, young, rapidly growing populations and a burgeoning middle class are putting increasing demands on energy resources. With oil and gas prices soaring over recent years, burning fossil fuels for energy is no longer viable."
Revealed: 15 nuclear reactors threatening Middle East arms race
London Times, 8 October 2010

"Britain is expected to import more liquefied natural gas (LNG) by ship to meet winter demand set to rise 3.8pc this year, according to National Grid. The power networks operator calmed fears that there would be a repeat of last year, when it was forced to issue a series of alerts forcing industrial customers to cut back their gas usage. Britain also came dangerously close to running low on gas the previous year, during a dispute between Ukraine and Russia that threatened European pipeline supplies. National Grid's annual winter outlook said that even in the event of a harsh winter there would be more than enough capacity, partly due to the LNG imports and also because of increase generating capacity. 'Gas and electricity demand is manageable and should be met even in a very cold winter,' it said yesterday. The network operator's forecast said power stations are likely to increase their gas generation, as more capacity comes on stream. It predicted that utilities will favour gas-fired plants for generation in October and November, but coal plants from December to March.... The regulator predicted more LNG will be imported from the US, where gas prices are cheaper than in Europe. This will be made possible by increased capacity at Britain's Isle of Grain LNG terminal and the British-Dutch BBL gas pipeline."
UK to need more shipped gas in winter
Daily Telegraph, 8 October 2010

"The United States and Israel are watching with concern the growing military cooperation among Turkey, China and Iran, especially following a joint Turkish-Chinese air-force exercise last week. Until two years ago Israel was Turkey's main partner for air combat training. In 2001 the Turkish air force inaugurated a tactical air warfare center in Konya with Israel and the United States. Until 2008 the Israel Air Force was a frequent guest in Turkey's sky and a regular participant in the country's big annual exercise, Anatolian Eagle. In the wake of Operation Cast Lead and the subsequent deterioration of bilateral relations Turkey last year revoked Israel's participation in the maneuvers. The United States decided not to take part in the exercise this year because of that decision. A number of other NATO members followed suit. Turkey replaced the Israel Air Force with its Chinese counterpart. China sent Sukhoi SU-27 fighter aircraft and pilots to train with Turkey's F-16 fighters. In the past these exercises were held in relatively openness, but last week they were held covertly, with only a brief report appearing in the Turkish media after the exercise. The West has been watching the changes in the Chinese army's structure, and especially the long-range naval and aerial exercises that indicate Beijing's intention to acquire the ability to conduct warfare far from China's borders.... China has also developed a surface-to-surface rocket-launching system together with Turkey. China's Prime Minister Wen Jiabao is due to visit Ankara this month and to sign several bilateral cooperation agreements. Turkey and China are also involved in projects to build oil pipelines from Iran."
Growing ties between Turkey, China, Iran worry Israel and U.S.
Haaretz, 7 October 2010

"Iraq has sharply increased its estimate of the country's proven oil reserves by 25%, making it the second only to Saudi Arabia in terms of conventional crude oil. Iraq's oil minister, Hussain al-Shahristani, puts the reserves at 143.1 billion barrels. He says the figures, revised for the first time since 2001, refer to reserves that can be extracted by available techniques in the country. He adds that there areas still to be explored could boost that figure even more. The new estimate moves Iraq into second place behind Saudi Arabia, and ahead of Iran. Canada and Venezuela both have far greater reserves than Iran and Iraq, the Associated Press notes, but says these include oil shale and the tar-like bitumen that are far harder to extract."
Iraq raises estimate of proven oil reserves by 25%
USA Today, 4 October 2010

"China is pouring another $7bn (£4.4bn) into Brazil's oil industry, reigniting fears of a global 'land grab' of natural resources. State-owned Sinopec clinched the deal with Spain's Repsol yesterday to buy 40 per cent of its Brazilian business, giving China's largest oil company access to Repsol Brasil's estimated reserves of 1.2 billion barrels of oil and gas. The whopping price tag for Repsol Brasil – which values the company at nearly twice previous estimates – is a sign of China's willingness to pay whatever it takes to lock in its future energy supplies and avoid social unrest. It will give the company enough cash to develop all its current oil projects, including two fields in the Santos Basin. The Repsol deal is not China's first in Brazil. In February last year, Sinopec stumped up a $10bn loan to Petrobras, the state-owned oil company, in return for guaranteed supplies of 10,000 barrels of oil every day for the next 10 years. It also follows a slew of similar deals across the world. While much of the developed world is baulking at its debts in the aftermath of the financial crisis, China has continued a global spending spree of unprecedented proportions, snapping up everything from oil and gas reserves to mining concessions to agricultural land, with vast reserves of US dollars. This year alone, Chinese companies have laid out billions of dollars buying up stakes in Canada's oil sands, a Guinean iron ore mine, oil fields in Angola and Uganda, an Argentinian oil company and a major Australian coal-bed methane gas company. 'China is rich in people but short of resources, and it wants to have stable supplies of its own rather than having to buy on the open market,' Jonathan Fenby, China expert and director of research group Trusted Resources, said. But it is a strategy causing anxiety elsewhere in the world. Rumours in recent weeks that China's Sinochem may make a bid for Canada's Potash Corporation raised fears that the Middle Kingdom would corner the global market for fertiliser. Similarly, when BP's share price plummeted after Barack Obama's criticisms in the wake of the Gulf of Mexico oil spill, there was concern that the company would be driven into the hands of the Chinese. More explicitly still, when the aluminium giant Chinalco was trying to buy Anglo-Australian Rio Tinto last year, television ads protesting against the scheme from no less than the Senate opposition leader bellowed 'Keep Australia Australian'. 'Chinese acquisitions are increasingly on the political radar,' said Robin Geffen, the chief executive of Neptune Investment Management, which runs a leading China investment fund. 'The pinch points come when people feel that supplies affecting national security could be threatened by China buying them all up.' Contrary to the conspiracy theories, China is not looking for world domination. It has seen economic growth averaging a massive 10 per cent for the best part of three decades, and although it is expected to drop into the high single-digits in the coming years – in response to a dip in export demand – the natural resources required to support even slightly moderated growth are an overwhelming priority. China is already the second-largest oil consumer in the world and far outstrips its domestic supplies. Neptune estimates that it will need to buy two companies the size of BP each year for the next 12 years to meet its growing domestic energy demand. Demand for electricity alone is growing each year equivalent to Britain's entire output. 'These are massive, massive numbers,' Mr Geffen said. 'The deal with Repsol today, and all the others we have seen in recent years, are wholly strategic, to nail down what they estimate future demand will be.'"
Fears of Chinese land grab as Beijing's billions buy up resources
Independent On Sudnay, 2 October 2010

"Japan may budget measures to secure supplies of rare earths after China curtailed exports of the minerals, said Japan’s Trade Minister Akihiro Ohata. The Ministry of Economy, Trade and Industry 'hopes' to ask for a supplementary budget to secure stable rare earth supplies, Ohata told Jiji Press today. The comments were confirmed by a ministry spokesman, who didn’t want to be identified....Japan’s trade ministry is investigating China’s effective ban on rare earths. The government will check with about 30 companies including users and trading houses to confirm whether China has banned the shipments, Tsutomu Murasaki, director of the non-ferrous metals division, said Sept. 28. The ministry plans to release the results of its investigation next week, the spokesman said."
Japan May Spend on Rare Earths After China’s Cut, Ohata Says
Bloomberg, 30 September 2010

"Is the world about to begin running out of coal? Two researchers say so. In a peer-reviewed article published in the journal Energy, they write that the world will hit 'peak coal' production next year or shortly thereafter, and then mining would begin a long, steep decline. Bottom line, say the paper's co-authors, Tadeusz Patzek, a University of Texas engineering professor, and Greg Croft, a St. Mary's College of California earth science professor, is that the 7 billion tons of coal the world is now mining and burning each year is about the best it can do. 'Our ability to produce this resource at 8 billion tons per year, in my mind, is a dream,' Patzek said. The pair's prediction is based on the 'Hubbert Cycle,' the resource-depletion theory that American geophysicist M. King Hubbert used in the 1950s to correctly forecast that U.S. oil production would peak two decades later. Patzek predicts coal will peak not because supplies are running out but because the remaining deposits are increasingly difficult to mine. Alaska's North Slope, for example, has coal reserves that rival those of the continental United States, but turning that coal into energy would be practically impossible, Patzek argues. 'It would take 10 or 11 of the largest coal terminals on the Earth operating 24-7, 365 to load ships above the Arctic Circle during the polar night,' he said. Russia, China and other energy consumers face similar logistical difficulties with coal, Patzek said. And while global supplies are set to trail off, the stage is set for demand to spike, Patzek said. U.S. consumers use slightly less than 1 billion tons of coal annually, the Chinese use an estimated 3.5 billion tons, and emerging energy giants like India and Indonesia are hungry for more. 'In the past, any time we demanded something, we got it. Well, this time around, it may be different,' Patzek said. 'The message of this paper is that we really have to be a little bit smarter and less energy-intensive.'"
Study: World's 'Peak Coal' Moment Has Arrived
New York Times, 29 September 2010

"The UN's environment chief on Wednesday called for a global drive to recycle rare metals that have hit the headlines in a spat between Japan and China, warning that they are crucial for green technologies. Achim Steiner, executive director of the UN Environment Programme, said that demand for 'rare earth metals' such as lithium and neodymium -- used in batteries for hybrid cars or components in wind and solar power -- was accelerating fast. Rare earths are available in only small quantities and mined in a few locations, raising fears that global supply for a clean, high-tech economy could be exhausted swiftly as well as hampered by geopolitical disputes. ... A UNEP-hosted panel of experts highlighted the concerns about rare earth or speciality metals in May, estimating that only one percent was recycled at the end of a product's life while the rest was discarded. By comparison, the International Panel for Sustainable Resource Management estimated that common metals such as steel, aluminium, copper and tin have 25 to 75 percent recycling rates, in some instances exceeding fresh raw material supplies from mining. Steiner said that, based on current knowledge, some rare earths 'may be exhausted, as with peak oil, on a time horizon of 30 to 40 years.'"
UN environment chief urges recycling of rare metals
Agence France Presse, 29 September 2010

"There are enough known uranium resources in the world that the supply of the metal will not be a constraint to the continued growth of the nuclear energy industry, Cameco Corporation CEO Jerry Grandey said in Toronto on Tuesday..... There are 438 plants operating today, consuming about 180-million pounds of uranium a year. Not all of this comes from new mine production, as a portion of the world's uranium is supplied from uranium inventories, which are being steadily depleted. The uranium mining industry is producing about 140-million pounds a year at the moment. Based on current projections, consumption could increase to around 250-million to 300-million pounds a year, Grandey said. 'So the industry itself, in response to uranium price signals, has got to work quite hard to ensure that we meet the demand of the 180-million pounds a year, and growth year-on-year going forward.' However, while some critics point to the production shortfall and say that the nuclear industry is just not sustainable, 'the reality is that uranium is quite an abundant element', he added. Exploration ground to a halt because of oversupply left over from the sixties and seventies, which means that no-one has been looking seriously for uranium until about five years ago. However, since exploration started up again, a number of additional deposits have been discovered, and studies show the world has at least 160 years' worth of uranium supply, Grandey said. 'In my view, uranium is not going to be a constraint, it's just a question of getting deposits that have been identified through the pipeline of permitting and licensing.' Cameco, which expects to produce 21,5-million pounds of uranium this year has plans to double the output from its existing operations to 40-million pounds a year by 2018, in anticipation of rising demand for the nuclear fuel."
Uranium supply won't be constraint to nuclear growth – Cameco chief
Mining Weekly, 29 September 2010

"The German government has signalled its ambition to wean one of the world’s largest economies off fossil fuels by pledging to generate enough renewable energy to meet 60 per cent of the country’s energy needs by 2050. Norbert Röttgen, environment minister, said it was 'the most ambitious energy programme ever seen, not only in Germany'."
Germany to wean itself off fossil fuels
Financial Times, 28 September 2010

"Climate change can be solved in a snap by making oil, gas and coal companies take responsibility for burying all the carbon dioxide emitted by the fossil fuel products they sell, one of Britain's leading young climate scientists said yesterday. Government attempts to try to get millions of people to change their behaviour through taxes and incentives were doomed to fail, said Dr Myles Allen, head of the Climate Dynamics Group at the University Oxford, and an increasingly influential voice in the climate debate.... Disposing of CO2 by burying it in the ground, known as carbon capture and storage (CCS), is now regarded as essential for tackling climate change, yet the technology is in its infancy. Britain is one of the countries leading its development, with four experimental CCS-fitted coal-fired power stations now being planned by the Government, but it may be a decade before it is implemented – and two of those trials could be the victim of cuts. Dr Allen's contention is that if the big oil companies and other fossil fuel producers were forced themselves to implement CCS – or go out of business – its adaptation would be much quicker and much more widespread, and far more efficient than the current government policy of trying to deal with emissions from millions of consumers. He told the conference: 'Carbon comes into Europe through a couple of dozen pipes, ports and holes in the ground. It goes out through hundreds of millions of flues and exhaust pipes. Yet European climate policy is all about controlling the flow at the point of emission. It's like blowing air into a sponge and trying to slow it down by blocking up the holes.' World temperatures have already risen to nearly one degree above the pre-industrial, and this rise has been produced, Dr Allen says, by all the fossil fuels which have been burned since then, which has been estimeated at about 500 billion tonnes. Therefore, he says, we can afford to burn another half-trillion tonnes of carbon before the extra degree of warming is reached – we need to stop using fossil fuels completely by the time we reach the trillionth tonne. As long as all CO2 is being 'sequestered' (buried or otherwise diposed of) by then, the climate problem will be controllable – and this is the time frame the fossil fuel industry has to take care of emissions. The key point is not to start using any of the remaining four trillion tones of fossil fuels which thought to constitute the world's reserves."
Climate change crisis 'can be solved by oil companies'
Independent, 27 September 2010

"Scientists have estimated that South Africa is soon to reach its peak coal production. Jeremy Wakeford, the chairman of the association for the Study of Peak Oil (Aspo) said : 'It is commonly believed that South Africa has abundant coal reserves which will last 200 years or more. But recent research [from] three scientific journals suggests that usable reserves are much smaller than previously thought, and that annual production could reach a peak and begin to decline within a decade -- or might even have peaked already'.  A study by geologist Chris Hartnady soon to be published in the SA Journal of Science, estimates that South Africa will reach peak coal production in 2020 when around 285 million tonnes will be produced. Last year 242 million tonnes were produced with over half being used by Eskom and the export market and Sasol sharing the rest. Eskom has already started complaining of the poor grade of coal it is receiving this year. It is in the middle of arbitration with a supplier over plans to cancel the contract to quality issues. The utility has warned that having to pay higher prices for better quality coal will lead to higher power costs for consumers."
SA Nearing Peak Coal, Say Scientists
NewsTime (South Africa), 27 September 2010

"The US is trying to resume production of raw materials vital for defence equipment and green technology in response to rising fears about Chinese dominance of the sector. The push follows moves by Beijing, which controls more than 90 per cent of production, to restrict exports of 'rare earths' – which have a range of sophisticated uses from precision-guided weapons, night vision and radar systems to green technologies such as hybrid cars and wind turbines."
‘Rare earths’ fears spur US review
Financial Times, 26 September 2010

"The Scottish government has raised its target for sourcing electricity from renewable energy by 30 percentage points. Three years ago, it set out to achieve 50% from green power within 10 years. But new industry research suggested that the country's renewable energy potential was bigger than thought. First Minister Alex Salmond has now announced that the government is setting a new target of 80% of electricity from renewables by 2020. He said: 'We are already on the path to a low carbon economy - Scotland gets nearly a quarter of its electricity from green sources. 'Scotland is ideally placed to help lead the renewables revolution and taking account of the levels of planned investment over the next decade. 'I believe it is now time to aim higher and to go further.' An independent analysis was commissioned by Scottish Renewables into the country's renewable energy potential, which includes power drawn from wind, tidal, wave and hydro turbines, and energy from waste and biomass. It said the 2007 target of sourcing 50% of power needs from green sources within 10 years could easily be reached. It said it should reach 31% by next year, and there are several large projects which have already won approval and will come on stream after that."
New target for Scottish renewable energy
BBC Online, 23 September 2010

"Moscow and Beijing have agreed on key supply terms for future Russian gas deliveries to China, which is seeking to secure energy resources to fuel its growing economy, Gazprom said on Wednesday. Russian gas giant Gazprom, keen to diversify its energy clients, has been in talks with China National Petroleum Corporation (CNPC) to start sending gas to China but the two countries have yet to agree on pricing. Gazprom, the world's largest gas producer, said in a statement on Wednesday that Russian and Chinese officials in Beijing had agreed on 'key targets and parameters of the future supplies of Russian natural gas,' adding that supplies were scheduled to start in 2015. The statement did not provide further details."
Russia, China agree gas supply terms: Gazprom
AFP, 22 September 2010

"Meeting the growing demand for energy in the U.S., even through sustainable means, could entail greater threats to the environment, new research shows. The study was carried out by Circle of Blue, a network of journalists and scientists dedicated to water sustainability, and could have implications not just for the relationship between energy demand and water scarcity in the U.S. but elsewhere in the world, as well. 'It is not just that energy production could not occur without using vast amounts of water. It's also that it's occurring in the era of climate change, population growth and steadily increasing demand for energy,' explained Circle of Blue's Keith Schneider, who presented the findings in Washington Wednesday. 'The result is that the competition for water at every stage of the mining, processing, production, shipping and use of energy is growing more fierce, more complex and much more difficult to resolve,' he said. About half the 410 billion gallons of water the U.S. withdraws daily goes to cooling thermoelectric power plants, and most of that to cooling coal-burning plants, according to the U.S. Geological Survey. Meanwhile, climate change is leading to decreased snowmelt, rains and freshwater supplies, says Circle of Blue. One of the things missing from the discussion, then, is the recognition that saving energy also saves water, the group contends.... 'We are about to see water wars in the future,' said U.S. General Anthony Zinni. 'We have seen fuel wars; we're about to see water wars.'"
Rising Energy Demand Hits Water Scarcity 'Choke Point'
Inter Press Service, 22 September 2010

"The BP oil spill in the Gulf of Mexico will have little or no effect on the medium-term outlook for offshore drilling and supplies, the International Energy Agency told Reuters on Tuesday. Fatih Birol, the chief economist of the group that advises 28 industrialized economies, said while some projects may be delayed in the short-term, the need to increase future oil supplies meant governments will not impose draconian regulations in the wake of the BP (BP.L) spill that caused the United States' worst ever oil spill. 'From what I'm hearing from most OECD governments is that they are considering increasing regulation and those that are put in place will be monitored more closely than they perhaps were in the past,' Birol told Reuters in a telephone interview. 'But they are sensitive to the fact these regulations should not be designed to slow the growth of offshore drilling or making these upstream investments unprofitable. There may be some delays to some project, but I do not think the BP oil spill will represent the end of offshore drilling'."
IEA's Birol says little supply impact from BP spill
Reuters, 22 September 2010

"There is nothing intrinsically wrong with President Obama’s earmarking $50-billion (U.S.) for new transport infrastructure, or extending the Bush tax cuts to low- and middle-income American households—provided the country can afford them. But already burdened with a record budget deficit of over $1-trillion, most Americans probably think Washington’s already done far too much for the economy as it is.... implicit in this strategy is the belief that today’s economy can be force-fed more government spending and tax cuts to achieve yesterday’s rate of growth. What’s being overlooked is that last cycle’s rate of growth was fueled for the most part with cheap oil—oil was below $30 a barrel for the first half of the period. Even today’s oil prices weren’t encountered until the last year of growth. That’s not incidental to the performance of the U.S. economy, which relies on imports for over half of its 19-million-barrel-a-day requirement. Feed the U.S. economy cheap oil, and you’ll see robust growth rates and a drop in the jobless rate to four-decade lows—no matter who’s in the White House. But throw in $147-per-barrel oil, and the U.S. economy stops dead in its tracks. Unfortunately, President Obama can’t bring back the cheap oil prices that fueled most of last cycle’s growth. The age of cheap oil is over, and that means recalibrating the speed limit for the world’s largest oil-consuming economy. In a world of $75–per-barrel to triple-digit oil prices, the U.S. economy is not likely to grow more than by 1 to 2 per cent per year until it can curb its oil appetite significantly. Trying to substitute fiscal stimulus for cheap oil won’t make the American economy grow any faster. It will just make an already record-sized deficit that much bigger."
Obama’s fiscal stimulus no substitute for cheap oil
Globe and Mail, 22 September 2010

"Reuters reported that remedial work to restore Cameco Corporation's flooded Cigar Lake uranium mine is on track for completion next month with first production expected in mid 2013. As per report, Canada's unfinished Cigar Lake mine which is expected to produce 18 million pounds of uranium a year or about 15% of global mined supply was flooded in 2006 and again while repairs were still ongoing in 2008."
Cigar Lake uranium mine to open 2013 - Cameco
Steel Guru, 21 September 2010

"Energy secretary Chris Huhne has ordered his officials to look at the impact of a 1970s-style oil price spike on the British economy. Mr Huhne said the UK was having to prepare itself for 'lots of shocks', forcing the price of a barrel of oil to double, mirroring the volatility last seen in the 1970s. Mr Huhne said he was concerned about the future fluctuations in the price of a barrel of oil, which would send the price of petrol soaring. A 1970s-style doubling in the price of oil would drain £45billion from the UK economy in two years, hitting investment and jobs. He told a meeting on the fringe of the party’s conference in Liverpool: 'We will have a world where there may be lots of shocks, we may well have oil price rises which are similar to the ones that we had in the 1970s, a doubling. I have asked for some work to be done in the department about what the impact of that might be in terms of British business, businesses that have nothing to do with energy, with green growth, entirely outside. The corner shop is affected if we have an oil price shock because the economy is hit very seriously.' In his keynote speech to delegates in the main conference hall he said his fears about the price of oil offered further justification for the Government’s push towards creating a greener economy. He added: 'So the low-carbon economy is also a premium which we pay to ensure ourselves against those sorts of oil price, fossil fuel price, shocks.'
Liberal Democrat Conference: 'Oil price could double in return to 1970s style shocks'
Daily Telegraph, 21 September 2010

"Emissions from Canada's oil sands, from crude production to end use, are 6 percent higher than from other oil imported into the United States, a study said on Tuesday. While that is well below the levels cited by some environmental groups, meeting new rules on carbon emissions would still mean an unlikely halving of greenhouse gases from oil sands crude over the next 10 years, according to the study by energy think tank IHS CERA. Those hefty emission cuts, borne by oil sands producers as more North American governments adopt tougher environmental standards, would be impractical without other carbon offsets, the study said. California and other jurisdictions have set fuel policies calling for a 10 percent drop in life-cycle greenhouse gas emissions within a decade. Canada's oil industry is concerned about the impact on costs and access to markets as more governments follow suit with low-carbon standards. 'It will be difficult to meet those,' said IHS CERA director Jackie Forrest, an author of the report, called 'Oil Sands, Greenhouse Gases, and U.S. Oil Supply: Getting the Numbers Right.' IHS CERA got its life-cycle average from the results of 13 government, academic and industry studies that put oil sands emissions at 5 percent to 15 percent above other crudes."
Oil sands emissions 6 pct above other oil -study
Reuters, 21 September 2010

"It is a question that could provoke a new Cold War as global warming opens up the possibility of exploiting vast new energy reserves: Who owns the Arctic? Vladimir Putin opens an international conference on the future of the region on Wednesday, the latest sign of the Kremlin’s determination to establish itself as the dominant northern power. The two-day meeting in Moscow is the first big international project of the Russian Geographical Society (RGS) since Mr Putin, the Prime Minister, installed himself as head of the organisation’s board of trustees last year. His close ally, Sergei Shoigu, the Emergency Situations Minister, became president of the RGS at the same time. The conference, entitled The Arctic: Territory of Dialogue, will gather members of the intergovernmental Arctic Council — comprising Russia, the United States, Canada, Norway, Denmark, Finland, Iceland and Sweden — as well as scores of scientists and international polar experts to discuss the region’s future....What is at stake? American geologists estimate that the Arctic may contain at least 90 billion barrels of oil and as much as 1.55 quadrillion cubic metres of gas, or a third of global reserves. Untapped deposits of nickel, gold, coal, diamonds, platinum, titanium and other vital raw materials are also predicted to lie beneath the rapidly receding ice caps....Russia’s latest national security strategy, approved last year by President Medvedev, makes clear that the Kremlin already regards the Arctic as an arena of potential military confrontation. It stated: '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.' Sergei Lavrov, the Russian Foreign Minister, has warned Nato against boosting its presence in the region. Nikolai Patrushev, secretary of Russia’s Security Council, once flew to the North Pole to plant a Russian flag on the ice. Mr Putin has previously accused the West of coveting Russia’s energy reserves, warning that 'many conflicts, foreign policy actions and diplomatic moves smell of oil and gas'."
Who owns the Arctic? Putin to open talks and stake Russia’s claim
London Times, 20 September 2010

"Toro Energy managing director, Greg Hall, addressed the World Nuclear Association in London last week, discussing Australia’s uranium mining potential. He was cautiously optimistic that Australia can help meet a predicted global shortfall over the next 10 years. Mr Hall said that around US$3 billion had been spent globally on uranium exploration since late in 2003. While this had resulted in substantial increases in uranium through existing known resource expansions, it had not yet generated a wealth of new discoveries. 'There have been some new, globally significant discoveries and there will be a few more,' said Mr Hall. Indeed, he predicted five globally significant uranium discoveries in the period between 2003 and 2020. The catch is that it will be on average between eight and 15 years before any opportunities move to stable production. The last such major discoveries were Four Mile in South Australia in 2004-2005 and the HUSAB project in Namibia. The problem seems to be that a market already constrained by time needs to satisfy long-term contract demand by energy utilities, new power stations and a rush by Asian utilities to lock in future uranium production sources. According to Toro, some of these projects will need to commence production shortly to support adequate global supply. However, as not all these projects will be economical the supply risk is not being addressed as the time and cost associated with historically defined deposits continues to be underestimated....At the high price end, Australia could produce 7000t of additional uranium oxide by 2015, rising to 14,000t by 2022. A median price range would see this output ease back to between 3000 additional tonnes in 2015 and just under 12,000 additional tonnes in 2022. A low price environment going forward would see only a low increase in Australian uranium oxide output to barely above 2,000 additional tonnes in 2015 and up to 4,000 additional tonnes between 2018 and 2022."
Australia can meet shortfall in uranium supply: Toro
Australian Journal of Mining, 20 September 2010

"The exploitation of shale gas in emerging countries will help offset energy poverty by offering an affordable energy source, the chairman of the Quebec Oil and Gas Association told the World Energy Congress Thursday morning. Shale formations that contain the trapped fuel can be found worldwide and there are now technologies that make the fuel recovery economic, Andre Caillé, chairman of the Quebec Oil and Gas Association, said. 'Access to these technologies is essential to break the vicious circle' of energy poverty, which has negative impacts on education and health levels, he told a session on energy for a sustainable future. Breakthrough shale drilling technologies are changing the energy landscape in North America and they could spread rapidly to rest of the world if, as the Obama administration promises, those technologies are transferred to the developing world. And those technologies can be applied to shale oil, which would put downward pressure on oil prices, according to Caillé, former head of Hydro-Québec and former chairman of the World Energy Council, Canada. Although shale gas exploitation is running into stiff opposition in Quebec, where it is still in the exploration stage, and in the U.S., where more than 20,000 wells have been drilled, Caillé described shale gas in positive terms. Asked about widespread concerns about the industry's effect on water supplies, Caillé noted that risks are associated with any energy source."
Shale gas will offset energy poverty, World Energy Congress hears
Montreal Gazette, 16 September 2010

"Plenty of uranium exists for nuclear power plants for decades, but more research is needed to develop a better way to dispose of the spent fuel, says a report today by the Massachusetts Institute of Technology. 'At any reasonable expected growth of nuclear power over this century, the availability of uranium will not be a constraint,' says study co-chair Mujid Kazimi, an MIT professor of nuclear engineering. The researchers say the idea of a limited uranium supply has long prompted efforts to develop reactors that breed plutonium, which they argue are not economically viable. The report supports President Obama's loan guarantees, controversial among environmental groups, to help build the first new nuclear power plants in three decades. It suggests nuclear power has significant potential to reduce greenhouse-gas emissions, arguing current U.S. nuclear plants generate 70% of all zero-carbon electricity.... Some of the report's funding came from the nuclear power industry."
MIT finds plentiful uranium for nuclear power plants
USA Today, 16 September 2010

"Speaking at the World Energy Congress in Montreal on Sept. 13, Shell CEO Peter Voser spoke positively about the impact of natural gas and oil shale plays in North America and South Africa. However, he was less optimistic about the development of European shale assets. While acknowledging that the 'shale revolution' has the potential to change the energy landscape, Voser said that the public and even energy experts haven’t fully grasped the extent of coming production from shale resource plays. He noted that shale players must 'confront the risks' in developing shale assets, which he did not elaborate upon. In a media briefing following his speech, the Shell CEO mentioned that his company is exploiting shale gas plays in South Africa, which he described as an area where the environment for the heavy land-use demand is acceptable to the public. In contrast, he said that Europeans would not agree to the type of land use prevalent in North America and South Africa because of the population density and cultural differences."
Shell CEO likes North American shale but doesn't see similar development in Europe
Oil & Gas Financial Journal, 15 September 2010

"China will need to source over 8 500 t/y of uranium from other countries by 2020, and is looking to buy shares in uranium producers, China National Nuclear Corp vice-president Lu Huaxiang said on Tuesday. China's current uranium demand was 1 700 t/y, and this would increase tenfold over the next decade, he told Mining Weekly Online through an interpreter. 'There is 9 GW of installed nuclear generating capacity. That will grow to 70 GW in the next ten years, so there will be a ten times increase in uranium to about 17 000 t/y in China,' Huaxiang said. The country was able to meet the uranium requirements of its current nuclear fleet from domestic supplies, but would need to look abroad to meet future demand. 'If you look to the future, we will surely need to purchase uranium from sources outside China. We will likely source over 50% of our requirements from outside China,' Huaxiang said on the sidelines of the World Energy Congress being held in Montreal. China had increased the number of reactors it would build over the next ten years, Huaxiang said earlier in a speech. Previous estimates had pegged nuclear generation at 60 000 GW by 2020. The country was cooperating with a number of exploration companies, as well as producers, and was eyeing the acquisition of stakes in such firms. 'We are considering acquiring shares of companies outside China. It is an option we are looking at,' noted Huaxiang. Asked where China was most likely to pursue uranium acquisitions, he said: 'The number-one choice is countries that have large uranium resources, such as Kazakhstan, Australia, Canada and African countries such as Niger. 'We have some very good relationships with companies in those countries.' China had already acquired stakes in Australian uranium companies, as well as those operating in Kazakhstan."
China to import 8 500 t/y of uranium by 2020, eyeing acquisitions
Mining Weekly, 15 September 2010

"Having built up a spare crude production capacity of over 4 million b/d, Saudi Aramco's priorities will now be gas development—where an increasing focus on unconventional gas is needed—to meet spiralling domestic demand, while its oil position will be sustained through, over the long term, raising recovery levels to 70% at its main onshore oilfields. Saudi Aramco expects to continue growing its oil reserves mainly through improvements to its recovery levels, hoping to raise those to 70% and add 40% to crude reserves 'over time', while its domestic gas shortage is to be met over the long term by the company moving into the exploitation of unconventional gas reserves in the kingdom. Saudi Aramco is also hoping to escape its gas shortage dilemma by targeting unconventional gas reserves, which it believes could more than double its current gas reserves of 'about 280 tcf'. Moving the company into an unconventional-focused gas exploration and production sphere will, however, require not only large investments, but also the attainment of a new technological skillset, a huge undertaking in a completely nationalised sector. While the strategic direction laid out by Saudi Aramco is bold and well funded, it also confirms what the industry has known for some time: that the era of new conventional oil and gas discoveries in the kingdom is more or less over and that future production capacity will come at a very different production cost for Saudi Arabia than has hitherto been the case.... Having invested heavily over the past decade, first to catch up with runaway global demand (after a long period of low crude prices and, consequentially, investment) and then to rebuild its spare crude production capacity cushion, the kingdom's national energy champion is now in a comfortable position to meet resurgent economical and crude demand growth across the globe. Domestically, however, its gas position has become anything but comfortable, with failure to discover new gas reserves or bring them onstream sufficiently swiftly leading to repeated power shortages during peak electricity demand seasons during much of the past decade. To alleviate the gas shortages, increasing volumes of crude and refined products have had to be burned in power plants throughout the kingdom, at lower efficiency rates than if gas had been used and to a considerable future revenue loss in the shape of those crude and product volumes lost for export.... This year Saudi Arabia is burning almost 880,000 b/d of crude and crude derivatives for power generation, while growing oilfield maturity over the long term is also raising the kingdom's need for either increased gas or water injections—the latter demanding large-scale power-consuming water desalination operations.... Saudi Aramco's strategic focus on technology to raise recoverability is of course nothing new. Its efforts to explore and develop unconventional gas—perhaps mainly shale gas—are the real new item of interest, although both together point to Saudi Aramco adjusting to—and confirming—a new era for Saudi Arabia's hydrocarbon industry. Future capacity will not come from additional discoveries of conventional oil or gas reserves, but from reserves being added through technical improvements by the company. On the oil side this has been a notion in the industry for some time, with few new oilfields having been identified over the past two decades while recoverability rates have increased, making it possible for the kingdom to not only replace production, but even grow its reserve figures. Nevertheless, the situation has a few heavy long-term implications, as the higher recovery numbers—should they come anywhere close to such a huge uplift as 40% growth in reserves—are likely to require costly investments in enhanced oil recovery ( EOR) at its major oilfields, which has the potential to dramatically change the Saudi bottom-line production cost per barrel. The kingdom is, like most of its Gulf neighbours still, producing from low-cost oilfields, giving it very healthy per-barrel margins. With massive future investments in costly advanced technology and EOR solutions the basic calculations might change significantly, bringing Saudi Arabia closer to other mature producers over time with regard to production costs, in itself significantly limiting its opportunities and economic freedom of manoeuvre. A similar issue applies to future unconventional gas developments, which will come at a production cost radically different from what the kingdom and its population has been accustomed to, and in the long term this inevitably has to result in reforms of already costly energy subsidy regimes."
IHS Senior Middle East Energy analyst Samuel Ciszuk's note on Saudi Arabia
Unconventional Gas and Raised Oil Recovery Are Focus for Saudi Aramco's
Commodities Now, 14 September 2010

"Last week, USEC Inc. (NYSE: USU) announced that a government and industry partnership to downblend Russian weapons-grade uranium to low enriched uranium for supply to USEC`s customers as commercial reactor fuel has presently eliminated the equivalent of 16,000 nuclear warheads by recycling 400 tonnes of uranium.   The Megatons to Megawatts program has been in operation since 1995 and is on track to complete the downblending of the equivalent of 20,000 nuclear warheads into commercial nuclear fuel by the end of 2013. The U.S. Department of Energy’s National Nuclear Security Administration (NNSA) is the U.S. lead agency on the program and is working to reduce nuclear risks by monitoring the conversion of Russian highly enriched uranium at several sites in Russia. The fuel generated to date could produce enough electricity to meet the demand for a city the size of Boston or Seattle for approximately 610 years and is the energy equivalent of more than 9.8 billion barrels of oil or nearly three years of U.S. crude oil imports."
Downblending Uranium from Russian Nuclear Warheads
Uranium Investing News, 14 September 2010

"Biofuels made from plant waste and municipal trash rather than food crops could replace more than half of gasoline used in the European Union by 2020, industry analyst Bloomberg New Energy Finance said today. The 27-nation bloc could make 90 billion liters (24 billion gallons) of so-called next-generation ethanol in 2020, about 65 percent of predicted fossil gasoline use, the London-based group said in a study. At least 100 refineries a year could be built in the bloc from 2013, it said. The EU currently has no commercial factories that refine biofuels from plant waste. European agriculture 'can benefit from a new bioenergy industry as farmers will have an extra revenue source, increasing the euros-per-hectare ratio for every piece of land,' said Roberto Rodriguez Labastida, a co-author of the study....Today’s report was commissioned by Novozymes A/S and Royal DSM NV, both of which produce enzymes used to catalyze reactions during the production of second-generation biofuels. Novozymes Chief Executive Officer Steen Riisgaard said in a July interview that Europe is lagging behind the U.S., China and Brazil in developing fuels from plant matter.... Under the business-as-usual scenario, there will be 15 refineries making biofuels from plant waste by 2020, compared with 946 in a 'bullish' case, according to the study. Rodriguez said the more optimistic scenario could be achieved by using municipal waste and just 25 percent of crop and forestry waste, allowing the rest to stay in the soil, providing nutrients. The push for the fuels is clouded by a debate over whether it unfairly competes with farmland used for food production. Nestle SA, the world’s largest food company, is opposed to using food crops for biofuels."
Biofuels From Trash Could Replace Half of EU Gasoline by 2020, Study Says
Bloomberg, 14 September 2010

"Charles Maxwell is senior energy analyst at Weeden & Co. Maxwell discusses where oil's production peak is and how that affects investments. 'The use of petroleum in the world is now up to about 30 billion barrels per year. The rate at which we have found new supplies of petroleum over the last 10 years has fallen to an average, of only about 10 billion barrels per year..... The peak of production usually comes sometime between 30 and 50 years after the peak of finding oil. 'The peak of discovery,' as they call it. For instance, in the North Sea, the peak of discovery was in the late 1960s, and the peak of production was in the late 1990s. So it was around 30 years between the peak of finding oil and the peak production of that oil.... In the United States, the actual peak of discovery was 1931, quite a bit earlier. We were the first country to actually peak in the world of oil production. Our peak of production came in late in 1970. So that was a 39-year transition from the peak of finding the oil to the peak of producing it.... Now the question remains in front of us, has the world peaked in its level of discovery and if so, how long will it take the world, if it has peaked, to reach the peak of oil output? I believe that the peak of discovery fell in the five-year interval between 1965 and 1970. So if you took it at, say, 1968, and then you added 50 years, you would get to 2018....Technology is trying to give us the ability to produce more out of a giant field. In the early days we only produced about 25%. Today we're producing about 40% of the oil in place when a field is found. These numbers are gaining rather slowly now. What's happening is that the increase in the world's population and greater use of oil in transportation, particularly in the emerging countries, is working to lift oil demand, and that spurs us to drain a field more quickly, but not necessarily to get a higher proportion of oil out of it. So we have technology improving production capability, but actually taking the oil out faster rather than getting much more out.... We think that the peak in production will actually occur in the period 2015 to 2020. And if I had to pick a particular year, I might use 2017 or 2018. That would suggest that around 2015, we will hit a near-plateau of production around the world, and we will hold it for maybe four or five years. On the other side of that plateau, production will begin slowly moving down. By 2020, we should be headed in a downward direction for oil output in the world each year instead of an upward direction, as we are today..... at around 2015, we will be unable to produce the incremental barrel in the global system. So a tightness of supply will begin to be felt. Let's say in 2013, we may produce 1% more oil than we did the year before and then if we have a demand growth of 1¼% in 2013, we'll be very slightly tightening the system. The difference between supply and demand is not going to be very much at first. It would not normally cause a big rise in price. On the other hand, in 2014, that tightness begins to grow and it is now a trend. By 2015 perhaps we're only able to produce 0.50% more with about 1.25% higher demand, so that we're 0.75% short. And now we have to raise prices enough to stop some people from using that oil because it is actually not available. We call that 'the destruction of oil demand.' It is important because it forces the price of oil up on an accelerated basis.... Supply and demand are now in rough equilibrium and that means that prices are in a range between about $69 on the bottom and about $86 on the top. And that $16, $17, $18 range seems like it will be with us through 2010 and probably most of 2011. We'll be living in a dream world. Things in the oil world are going to be just fine for the immediate future. We can buy gasoline at $3.00 per gallon or perhaps $2.75. That is fine for now. The problems come around 2013 or 2014, when we begin to find that this higher growth that you spoke about is nowhere matched by higher production of petroleum products and, obviously, we begin to run tight.....That begins to scare people, since they can look ahead and see that the issue is not going to be resolved quickly, since you have to find the oil many years in advance of being able to produce it. We just haven't found enough oil for a number of years, so this problem is now beyond the reach of some big, major discovery that suddenly would provide us with a sufficiency. And so far, we have no technological breakthrough to assist us. So we're going to have to make a switch from using oil to using more coal or more natural gas or more nuclear or other alternatives. But most alternative supplies (such as hydropower) can't be expanded quickly. Solar power is too small to be meaningful. Wind power, again, is too small, and most of the good places for wind have already been taken. So it looks like alternative energies will plug only a very small part of the hole. And we'll have to rely more on coal. But we can't rely on coal because the emissions people will not allow us to burn coal and the various government agencies are not allowing the establishment of coal-burning plants.... In the same way, the American public has not yet really given the go-ahead for the nuclear power developments of the future. So, it doesn't look like nuclear can get revved up in the time frame of the next 10 years. Even if we decide to seize the nuclear alternative, it's still a decade before we can get the plants built and operating..... The average oil company, producing conventional oil in the way that we normally do, by drilling and pumping it out, will peak around the mid-to-late teens, along with the rest of the world, But the oil sands companies average about 2035 to 2045 for their ability to continue producing incremental barrels. So, they keep going for many, many years after the peak has been reached here in the teens by all the other conventional producing companies.'"
Bracing For Peak Oil Production By Decade's End
Forbes, 13 September 2010

"There will be a need for liquid fuels, especially in transport, for many decades, and in a world of finite oil reserves and pressure to curb carbon dioxide emissions, a growing proportion of those are likely to be biofuels. To play a central role in the energy system of the future, however, biofuels will need to be different from the varieties that are generally available today. First generation biofuels, such as ethanol from corn and sugar, and biodiesel from vegetable oils, are now well established in many developed countries, often encouraged by generous subsidies and supportive regulations, but their drawbacks have become increasingly evident. In spite of a recent study published by the World Bank that suggested that biofuels played only a small part in the surge in food prices of 2006-08, there have been persistent concerns about diverting agricultural resources towards fuel production. As a result, there has been an increasingly intensive search for new feedstocks and processes, and in the past couple of years large international oil groups including ExxonMobil, Royal Dutch Shell and BP have stepped up their commitment to research and development of advanced biofuels. Several of the companies developing second-generation biofuels, those not produced from food crops, claim to be close to commercial deployment, yet delivery of large volumes of their products is still many years away. Confident-sounding predictions of commercial production have frequently turned out to be over-optimistic, and in a sign of how realism has set in, the US government has cut sharply its targets for the use of advanced biofuels. Legislation in 2007 set a goal for consumption of cellulosic ethanol, made from plants such as switchgrass, straw or wood chips, of 100m gallons for 2010, and 250m gallons for 2011. This year those goals have been scaled back to just 6.5m gallons for 2010, and up to 17.1m gallons for 2011. If reached, next year’s upper limit would still represent only about 0.1 per cent of total US biofuel consumption, which is expected to be just under 8 per cent of total transport fuel usage. Only a handful of companies are expected to be delivering cellulosic ethanol in the US next year, of which the largest is set to be Maryland-based Fiberight, which started production in May at its Blairstown, Iowa, plant, initially using pulp wastes from a local paper factory. The second-largest could be Indiana-based Agresti Biofuels, again producing ethanol from waste, and the next could be California-based AE Biofuels, which has a plant producing conventional corn ethanol, butt plans to use it to create a rising proportion of cellulosic ethanol from straw. The preliminary and tentative nature of even these plans – the tattered remnants of the high hopes of three years ago – are a warning of how difficult the large-scale production of advanced biofuels is likely to be."
Biofuels: Alternative fuels fail to live up to the hype
Financial Times, 12 September 2010

"The UK’s gas storage capacity is set to rise by 15% after the government today gave the go ahead to WINGAS Storage to convert its Saltfleetby onshore gas field into an underground gas storage facility. Saltfleetby in Lincolnshire is the UK’s largest onshore gas field and will provide between 700 million to 800 million cubic metres of new gas storage capacity. 'This new project will provide the UK with new and much-needed as storage, said Energy Minister Charles Hendry. 'As the UK becomes increasingly dependent on imported gas, this government has made it a priority to ensure secure gas supplies,' he added in a statement released today."
UK to boost gas stash
Upstream Online, 9 September 2010

"Government plans to subsidise green heating are challenged today by the largest ever field study of 'heat pump' devices in the UK, which reveals 80% perform so badly they would not qualify as renewable energy under proposed European standards. The report, from the Energy Saving Trust, reveals the prevalence of badly installed heat pumps that are consequently under-performing. The controversial report could affect the government's plans to launch its Renewable Heat Incentive (RHI) next April to pay householders for generating heat from such 'green' ground and air source heat pumps. There are already fears the RHI could be a victim of spending cuts announced next month.... the Trust's peer-reviewed study, the largest of its kind in the UK, found the 83 devices it monitored for a year were underperforming. About 87% didn't achieve a system efficiency of 3 which the Trust considers the level of a 'well-performing' system (higher is better). And 80% failed to meet 2.6, the level being considered under the EU Renewable Energy Directive for classification as a renewable source of energy."
UK 'heat pumps' fail as green devices, finds study
Guardian, 8 September 2010

"Smart meters to boost energy efficiency in homes do not automatically achieve a significant reduction in energy demand, research showed on Wednesday. Smart meters record energy or water consumption and send the readings back to the utility for monitoring and billing. It is hoped that consumers will save energy through increased awareness of how much they use and that estimated bills will be eliminated. Previous studies have shown that smart meters encourage homeowners to cut their energy use by 3 to 15 percent, but researchers said consumers also need educating about energy use....At the end of the trial, participants were given the option to keep the meter and were surveyed again 11 months later. The academics found that initial savings in electricity consumption of 7.8 percent after four months could not be sustained in the medium to long term. 'Participants who kept the monitor (...) did not manage to sustain their electricity savings any better than those without a monitor,' they said."
Smart meters alone may not save much energy - study
Reuters, 8 September 2010

"Unsurprisingly, he is appalled by the idea. Russia has been planning floating reactors for quite some time, but reached a recent milestone when the hull of the Akademik Lomonosov was launched into the Baltic Sea. The reactor is not complete, but the barge that will house the plant was launched on June 30 at the Baltyskiy shipyard in St Petersburg – and China has been watching developments very closely indeed. Sergei Kiriyenko, head of Russia's nuclear agency Rosatom said the plant would be 'absolutely safe' and predicted 'big interest from foreign customers – especially in developing nations'. Floating reactors can be used in inaccessible places where there is no electricity grid – including exploring for oil in the Arctic or Antarctic."
'Floating Chernobyls' to hit the high seas
Daily Telegraph, 6 September 2010

"When the United States went to war in Iraq, the price of oil was less than $25 a barrel, and futures markets expected it to remain around that level. With the war, prices started to soar, reaching $140 a barrel by 2008. We believe that the war and its impact on the Middle East, the largest supplier of oil in the world, were major factors. Not only was Iraqi production interrupted, but the instability the war brought to the Middle East dampened investment in the region. In calculating our $3 trillion estimate [of the cost of the war] two years ago, we blamed the war for a $5-per-barrel oil price increase. We now believe that a more realistic (if still conservative) estimate of the war's impact on prices works out to at least $10 per barrel. That would add at least $250 billion in direct costs to our original assessment of the war's price tag. But the cost of this increase doesn't stop there: Higher oil prices had a devastating effect on the economy. There is no question that the Iraq war added substantially to the federal debt. This was the first time in American history that the government cut taxes as it went to war. The result: a war completely funded by borrowing. U.S. debt soared from $6.4 trillion in March 2003 to $10 trillion in 2008 (before the financial crisis); at least a quarter of that increase is directly attributable to the war. And that doesn't include future health care and disability payments for veterans, which will add another half-trillion dollars to the debt. The global financial crisis was due, at least in part, to the war. Higher oil prices meant that money spent buying oil abroad was money not being spent at home."
Joseph E. Stiglitz, a professor at Columbia University, was chairman of President Bill Clinton's Council of Economic Advisers and winner of the Nobel Prize in economics in 2001. Linda J. Bilmes is the Daniel Patrick Moynihan senior lecturer in public policy at Harvard University. They are co-authors of  'The Three Trillion Dollar War: The True Cost of the Iraq Conflict.'
The true cost of the Iraq war: $3 trillion and beyond
Washington Post, 5 September 2010

"Energy experts warn that an acute shortage of uranium is going to hit the nuclear energy industry. Dr Yogi Goswami, co-director of the Clean Energy Research Centre at the University of Florida warns that 'the proven reserves of uranium will last less than 30 years.' Current nuclear plants consume around 67,000 tonnes of high-grade uranium per year. With present uranium deposits in the planet having been estimated at 4-5 million tones, this means the present resources would last 42 years. But if there is going to be a stepping up of nuclear energy plants, as seems to be the case, then the likelihood is that that the time span is going to be considerably reduced. Dr Goswami who is the inventor of the a new thermodynamic cycle for solar thermal power now called the Goswami Thermodynamic cycle, says, 'by 2050, all proven and undiscovered reserves of uranium will be over.' 'Other options for producing uranium will be available. For example, three parts per billion of sea water is uranium but the costs of recovering this uranium are so high that it is unlikely to prove an unviable option,' he said. Dr Goswami agreed that atomic fuel was limitless if a government went in for breeder reactors. But from the 400 nuclear reactors being used in the world, 'I do not know of a single government using them at present.' Dr Goswami also expressed his scepticism at the thermal breeder reactor technology based on thorium. At present, India is the only country currently pursuing this because of its substantial thorium reserves. His views were seconded by Dr Lee Stefankos, a professor of electrical engineering and director of the Clean Energy Research Centre at the University of South Florida. Dr Stefanakos, who has been carrying out research in the areas of solar thermal energy conversion, photovoltaic systems and hydrogen. Dr Stefankos also feels that nuclear energy is not one of the major producers of energy. With the shrinking uranium reserves, Dr Stefankos believes solar energy provides a safer and in the long run, a much cheaper alternative."
Uranium Reservers To Be Over By 2050
Deccan Chronicle, 4 September 2010

"Sinochem could struggle to make a move on Potash Corp of Saskatchewan. Intervening in the battle for control of the Canadian fertiliser group would fit with the state-owned firm's aim to be a mainstay for China's agricultural safety. But Sinochem, which has reportedly hired advisers to consider its options, will face other hurdles if it wants to block BHP Billiton's $39 billion hostile bid. China has strategic reasons to covet Potash Corp. The Middle Kingdom is already the world's second-largest potash importer. BHP's plan to run Potash Corp's operations at full capacity would squeeze out marginal producers, driving up long-term prices."
Sinochem could struggle to frustrate Potash
Reuters, 2 September 2010

"Based on economic and policy considerations that appear to be unconstrained by geophysics, the Intergovernmental Panel on Climate Change (IPCC) generated forty carbon production and emissions scenarios. In this paper, we develop a base-case scenario for global coal production based on the physical multi-cycle Hubbert analysis of historical production data. Areas with large resources but little production history, such as Alaska and the Russian Far East, are treated as sensitivities on top of this base-case, producing an additional 125 Gt of coal. The value of this approach is that it provides a reality check on the magnitude of carbon emissions in a business-as-usual (BAU) scenario. The resulting base-case is significantly below 36 of the 40 carbon emission scenarios from the IPCC. The global peak of coal production from existing coalfields is predicted to occur close to the year 2011. The peak coal production rate is 160 EJ/y, and the peak carbon emissions from coal burning are 4.0 Gt C (15 Gt CO2) per year. After 2011, the production rates of coal and CO2 decline, reaching 1990 levels by the year 2037, and reaching 50% of the peak value in the year 2047. It is unlikely that future mines will reverse the trend predicted in this BAU scenario."
A global coal production forecast with multi-Hubbert cycle analysis
Tadeusz W. Patzek and Gregory D. Croft -  Energy Volume 35, Issue 8, August 2010, Pages 3109-3122

"Vladimir Putin, the Russian prime minister, on Sunday opened a new pipeline to export east Siberian oil to China that will help Russia reorientate its oil trade towards the east. The pipeline, running 67km from Skovorodino in east Siberia to China’s north-eastern frontier, is an offshoot of a new oil export route Russia is building to the Pacific Ocean, providing a strategic window on the fast-growing energy markets of Asia. 'This is a vital project for us as we begin to diversify our sales of strategic raw materials,' Mr Putin said. 'So far we have delivered most oil to Europe ... The Asia-Pacific region has received insubstantial volumes.' Russia began exporting oil this year from a new export terminal on the Pacific Ocean built to serve fields in east Siberia, one of the world’s last untapped oil provinces. Some Kremlin-friendly oil companies have been granted tax breaks to speed development of east Siberian reserves and offset a decline in production in other regions. Transneft, the Russian oil pipeline monopoly, completed the construction of a pipeline from Taishet in the Irkutsk region to Skovorodino last year, the first stretch of a planned 2,757km pipeline to the Pacific. On completion in 2012, the pipeline will be capable of carrying up to 1.6m barrels of oil a day, about one-third of Russia’s current exports. Julia Nanay, senior director at PFC Energy, the Washington-based oil consultancy, said the pipeline would give Russia flexibility to focus oil trade on premium markets. 'There is more money to be made by exporting to Asia than to Europe. By building the spur to China, Russia is acknowledging commercial realities,' she said..... Transneft said last year that Russia would boost its daily oil production by 1m barrels to 11m b/d after 2012, providing enough oil for exports both ways. But analysts have warned that Russian oil production, after rising to an all-time record of 10.2m b/d this month, will begin to fall next year as a decline accelerates at mature fields."
Russia opens China pipeline for Siberian oil
Financial Times, 29 August 2010

"China’s ambitious targets for the commercial production of coal-bed methane need 'a reality check', according to a consultant’s report into the country’s efforts to extract the high-energy gas trapped in coal deposits. This autumn marks the fifth anniversary of China’s first commercial CBM production. Beijing announced an aggressive target of 5bn cubic metres a year by 2010. However, production of the gas is currently just a quarter of that. China will soon announce ambitious targets of 10bn cubic metres a year by 2015, and double that for 2020, according to a report from Wood Mackenzie. 'A reality check is needed,' the report warns. 'CBM is still far from providing another major source of gas supply.' China has massive reserves of unconventional gas — forms of natural gas such as shale gas and coal bed methane – which could supply as much as 12bn cubic feet per day by 2030, playing a crucial role in meeting China’s huge gas needs. Coal bed methane alone could account for 14 per cent of domestic gas supply by 2030, according to the consultancy. But key questions remain over how the unconventionals sector will develop, and whether government policies will move fast enough to open up the sector. China’s total gas demand last year was about 9bn cubic feet per day. By 2015, gas demand is expected to reach 20bn cubic feet per day and import dependency will increase to about 30 per cent, according to Wood Mackenzie."
Doubts over Chinese coal-bed methane
Financial Times, 29 August 2010

"China's draconian export curbs on rare earth minerals needed by the rest of the world for frontier technologies is escalating into a serious diplomatic and trade clash with the United States and other leading powers. Japan's foreign minister Katsuya Okada issued what amounted to a formal protest at top-level meeting with Chinese officials in Beijing over the weekend, saying the sudden cut-off was 'affecting the global production chain'. It is the latest sign of rising pressure after angry complaints by companies outside China that rely on this family of 17 metals for hybrid cars, mobile phones, superconductors, navigation, and a host of high-tech industries."
Backlash over China curb on metal exports
Daily Telegraph, 29 August 2010

"China will build a multi-million-dollar research base on its east coast as it steps up its efforts to search for energy sources and rare earths on the ocean floor, state media said Friday. Engineers have started to design the base, which will cost an estimated 495 million yuan (72.8 million dollars) for the initial construction, the Xinhua news agency reported. The base in the coastal city of Qingdao in Shandong province will cover 26 hectares (64.2 acres) and serve as a support station for the deep-diving manned submersible vessel 'Jiaolong', the report said. China's ambitious ocean exploration programme began in 2002 as the country's appetite for energy resources expanded rapidly with its fast economic growth."
China builds base to tap deep-sea energy: state media
Agence France Presse, 27 August 2010

"A study by a German military think tank has analyzed how 'peak oil' might change the global economy. The internal draft document -- leaked on the Internet -- shows for the first time how carefully the German government has considered a potential energy crisis. The term 'peak oil' is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis -- and fear of it can trigger turbulence in commodity markets and on stock exchanges. The issue is so politically explosive that it's remarkable when an institution like the Bundeswehr, the German military, uses the term 'peak oil' at all. But a military study currently circulating on the German blogosphere goes further. The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the 'total collapse of the markets' and of serious political and economic crises. The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication. The document is said to be in draft stage and to consist solely of scientific opinion, which has not yet been edited by the Defense Ministry and other government bodies. The lead author, Will, has declined to comment on the study. It remains doubtful that either the Bundeswehr or the German government would have consented to publish the document in its current form. But the study does show how intensively the German government has engaged with the question of peak oil. The leak has parallels with recent reports from the UK. Only last week the Guardian newspaper reported that the British Department of Energy and Climate Change (DECC) is keeping documents secret which show the UK government is far more concerned about a supply crisis than it cares to admit. According to the Guardian, the DECC, the Bank of England and the British Ministry of Defence are working alongside industry representatives to develop a crisis plan to deal with possible shortfalls in energy supply. Inquiries made by Britain's so-called peak oil workshops to energy experts have been seen by SPIEGEL ONLINE. A DECC spokeswoman sought to play down the process, telling the Guardian the enquiries were 'routine' and had no political implications. The Bundeswehr study may not have immediate political consequences, either, but it shows that the German government fears shortages could quickly arise. According to the German report, there was 'some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later.' The Bundeswehr prediction is consistent with those of well-known scientists who assume global oil production has either already passed its peak or will do so this year.The political and economic impacts of peak oil on Germany have now been studied for the first time in depth. The crude oil expert Steffen Bukold has evaluated and summarized the findings of the Bundeswehr study. Here is an overview of the central points...When contacted by SPIEGEL ONLINE, the Defense Ministry declined to comment on the study."
Military Study Warns of a Potentially Drastic Oil Crisis
Der Spiegel Online, 1 September 2010

"In the last decade America has rapidly developed a new source of gas found naturally in rocks. It now provides a fifth of national needs. Such gas is present in Europe too, and whether or not it is practical to extract it, it is already having an effect on future supplies.... there is great hype in western Europe, where unconventional gas exploration is just beginning, notably in Poland. If a shale revolution did happen, it would be a serious game changer.Western Europe, which is two-thirds dependent on gas imports - a figure expected to rise - could become self-sufficient. Russia's gas exports would face serious competition, undermining efforts to use energy to promote state power. Global gas prices, already falling following the shale revolution in the US, could drop even further. This might encourage the major gas exporters to create an Organization of Gas Exporting Countries (OGEC) to defend their revenues. All these possible consequences are conditional on whether the US shale experience can be replicated. A number of favourable circumstances exist in America but are not present in Europe. There was a huge amount of geological data from old cores kept from previous drilling. Shale plays - shale reserves are called plays rather than fields reflecting the large geographic areas involved - overlay conventional oil and gas fields which had been extensively explored. Onshore oil and gas operations in Europe have been limited. US shale plays are large and relatively shallow, whereas in Europe they are small and deep, with high clay content. Clay is not conducive to hydraulic fracturing, a key technological ingredient to release the gas....In 1980, the US Crude Oil Windfall Profit Tax Act introduced a nonconventional fuel production tax credit of $3 per oil barrel equivalent. Before 2000, this accounted for around a quarter of domestic gas prices and was a significant incentive. No such tax breaks exist in Europe, except in Hungary. Indeed, European petroleum legislation completely ignores unconventional gas and would therefore require significant redrafting. In the US very large areas were licensed for shale exploration, in Europe, traditionally oil and gas operations are only allowed in small areas.... Because of much faster field depletion, shale needs far more wells than conventional fields and is therefore much more disruptive locally. The US has a low population density - 27 people per square kilometre compared to England with 383 - which is used to oil and gas operations in the neighbourhood; not so in Europe. In the US landowners directly benefit from oil and gas produced from their land. Again, not so in Europe, where the state owns sub-soil hydrocarbons. Thus there is likely to be considerable local opposition in Europe to the very intrusive operations required. There is also concern over local environmental issues, given the potential damage to ground water from the hydraulic fracturing chemicals. Until recently, ground water damage was not an issue in the US, although it is becoming so. In Europe the story is likely to be more serious and local opposition to such methods could be strong. A crucial part of the US story, also missing in Europe, was the existence of a vibrant service sector, given unconventional gas depends heavily on new technology such as horizontal drilling and hydraulic fracturing....Overall, the prospects for a shale revolution in Europe look thin. However, the hype has created huge investor uncertainty in gas. Already US investors in liquefied natural gas regasification plants have been badly hurt as the demand failed to materialise. Faced with such uncertainty, it is likely that current potential investors in gas transport options - pipelines and liquefied natural gas - will wait to see what may or may not emerge on unconventional gas. If the shale revolution happens, then Europe can happily float on a cloud of cheap gas for a long time to come. But if Europe fails to replicate the US experience, there will be serious problems as future gas supplies suffer from insufficient investment today resulting from the uncertainty created by a possible shale gas revolution."
Unconventional Gas: Cheap Gas Coming?
The World Today, Volume 66, Number 8/9

"I feel the peak/plateau period is much delayed because of the recession. Currently I am looking at around 2020 - perhaps as late as 2025. But of course it is dependent on what happens to the global economy (and the environment) between now and then. When I first started forecasting in the late 1990s, I had a production plateau beginning around 2016. Over time, supplies got tighter and tighter and oil prices started to rise, and the plateau moved nearer to around 2012. Now it has moved out to 2020, showing how uncertain this modeling can be because so many technological, financial, political and social variables are at work. The fluctuation points to volatility of course which is a signal of tight energy supply. If there is a new surge in economic growth and China and India continue to grow and mop up oil supplies, then it will move back to 2016 very quickly. In the old days, people who used to argue against the reality of peak oil pointed out that the so-called peak is always shifting into the future. And they were right as the subject was not fully understood, especially the impact of political and economic circumstances. That's generally not the case now, with the peak moving both forwards and backwards. The world has hit a volatile period in history where new energy supplies are all difficult to find and expensive to produce. The hope is for a magical new energy source to replace hydrocarbon liquid fuels.... [Peak oil]has become mainstream, supported by empirical observations, greater understanding of both above- and below-ground factors and more detailed modeling. Defining a date of peak is not regarded as so valuable. However the deniers are becoming more vocal just as they are in the environmental movement. The original people who denied peak oil were focused on supply but the angle today is demand. We won't reach a supply peak but a demand peak. Of course supply and demand are really the same thing with demand, through pricing mechanisms, controlled by supply....When I ran Energyfiles, which was a commercial concern, I was concerned about being linked too closely with the peak oil movement. For years it was not mainstream and, although developed by excellent scientists and promoted by good organizations such as ASPO and the Oil Drum, it had many weird hangers-on, just like in the environmentalist movement. It was not treated seriously by most of my potential clients. Conversely now it is generally accepted - albeit with new names such as 'peak demand' and 'bumpy plateau' - it has become less of an issue because of the recession. However in just a few years I suspect we will go through the argument all over again."
Interview with Michael Smith
ASPO-USA, 30 August 2010

"At the centre of the New Great Game for control of industrial mineral supply is China. While the world dozed under the illusion that everything could be bought for a price China has fought to give itself virtual monopolies over materials that its competitors now realise to be indispensable.The rare earth metals are the clearest example but China’s control over world supplies of antimony, fluorspar, gallium, germanium and magnesia is unsettling. The restrictions on exports of vital materials are part of a strategic shift: Beijing wants to use the minerals under its soil to fuel its growth. 'Outside China, the rules are that everything is available for a price. China is a black hole — there is a master plan, but it is hard to see,' said Simon Moores, an analyst at the research company Industrial Minerals. Some analysts view the panic by the governments of consumer nations as healthy. They are having to seek alternative sources and break years of complacency. Nicholas Curtis, executive chairman of one of the few viable non-Chinese rare earth mining companies, Lynas, falls, unsurprisingly,into that camp. 'For a long time rare earths users were unconcerned about supply issues, believing China had an endless supply of rare earths. They benefited from the low prices China was offering. As a consequence, for ten years there was no new exploration in rare earths. This is why you are now seeing supply shortages creating price rises and the structural shortage creating a much greater global strategic concern,' he told The Times. Some choose to be coy about the role of the Middle Kingdom, deliberately veiling its identity as they describe ever-more distorted global supply-demand balances. In its report on Europe’s vulnerability to mineral supply risks, the EU noted that 'geological scarcity' was not the issue. 'Of greater relevance are changes in geopolitical framework...many emerging economies are pursuing industrial development strategies ... aimed at reserving their resource base for their exclusive use,' concluded the report. Others have little choice but to be blunt. A US report noted that the M1A2 Abrams battle tank and the Aegis Spy-1 radar worked only because of minerals over which China has a 95 per cent market share. Jack Lifton, a rare earth specialist, said: 'Everyone is going to have to get used to the idea that, unlike other markets, it doesn’t matter how much money they offer, China isn’t going to sell.'
Why money no longer talks
London Times, 27 August 2010

"For 45 years, South Korea has ignored dirt-poor Bolivia, and certainly not entertained its leader at lavish expense. Mr Morales’s nation, however, has lots of lithium — and Seoul wants Samsung, Hyundai, LG and its other industrial giants to remain in business. Not an ounce of the stuff has yet left Bolivia’s Salar de Uyuni, but the great salt lake holds enough lithium, according to some projections, to give whoever gains access to it future dominion over batteries for electric cars, laptops and mobile phones. Mr Morales has also spotted sooner than most that the world has fundamentally changed: resource geopolitics has lurched far beyond oil. The impending clashes will concern almost-unknown minerals and the world’s consumer nations are realising this with some alarm... The South Korean Government declared last week that it would draw cash from the national pension and sovereign funds to secure rare metals. It was coupled with a proposal that future aid should be focused on countries with rare metals. The courting of Mr Morales is not an isolated incident: China, Japan, Russia and France have all tried similar ruses to win his heart. This is, however, just the start. Other land grabs in the 'New Great Game', warned a recent EU report, could erupt over the molybdenum used for cardiograms, cobalt for mobile phones, palladium for desalination plants, fluorspar, which is essential to chemical production, or the magnesium oxide vital to every oil refinery, cement factory and steel mill on Earth. The EU lists 14 raw materials as 'critical'. The US Department of Defence will next month publish a report on how much its military relies on materials that, currently, can only be obtained from China. In May, Britain’s Department for Transport and Department for Business received a report on rare earth resources which said it was likely that China would, by 2015, ban all exports of the metals — substances that underpin the digital revolution and without which most 'green' technology cannot function. Gal Luft, a director of the Washington-based Institute for the Analysis of Global Security, pointed to China’s 95 per cent control of global production of rare earth metals, predicting that foreign policies around the world would be shaped by the need for dysprosium, cobalt and platinum in the same way that oil defined geopolitics in the 20th century. China’s ever-tightening restrictions on rare earth exports – quotas will be slashed by 72 per cent by the end of this year — reflect a pattern that may soon be seen in other commodities. 'When it comes to resources, there is no free market,' he said. 'The lesson for governments that want to stay in business is that you can’t source things you want from one place.' Jaakko Kooroshy, a policy analyst at The Hague Centre for Strategic Studies, told The Times that the situation had exposed spectacular complacency among Western governments. 'The West has woken up late to the idea that these metals have a strategic importance. In the supposed boom of the 1990s ... mining was a non-issue and everyone wanted to diversify away from something seen as dirty and old. Suddenly it matters again.' The mineral issues do not end with technology, with attention focused also on fundamental minerals. Control of world potash supply for crop fertiliser may become increasingly tormented by trade restrictions and politicised resource control. Academics in the US and Australia have warned that phosphorus, the other mineral behind the 1960s 'green revolution' in food, may be approaching physical limits, ushering in 'the gravest natural resource shortage you’ve never heard of.' Just as this resource vulnerability has not been lost on President Lee of South Korea, Japan’s leadership is at least unified on the need for panic. Supplies of lithium, tantalum, germanium, indium and the 17 rare earth metals are fundamental to things that Japan does best — consumer electronics, hybrid vehicles and precision technology. The dominance of China in the supply of many of these has become a source of concern. Katsuya Okada, the Japanese Foreign Minister, has spent this year in a typhoon of trips. London, Paris, Berlin and even Beijing have not featured — instead it is South Africa, Vietnam, Tanzania, Mongolia, Kazakhstan and Australia that have featured. The country is urgently talking to mineral-producing heads of state — before China and South Korea get their feet in the door."
Digging for victory: how rising powers hold the key to the future
London Times, 27 August 2010

"Our modern lives are made possible by metals and minerals that most people have never heard of. Coltan is used to make capacitors in mobile phones and DVD players; cassiterite is found in electronic devices like laptops; wolframite is used to make tungsten, the filament in lightbulbs, and so the list goes on. Most of these rare natural resources come from only a handful of sources on Earth, which was not much of a problem when demand was limited to the West. However, the growing affluence and demand from developing countries such as China, in combination with limited supply, has resulted in a dramatic spike in prices for nearly all metals and minerals during the past decade. An added complication is that the industrial countries most in need of access to these minerals have limited or non-existent supplies of their own. Geopolitics is, therefore, increasingly driven by consumer countries trying to guarantee supplies of limited resources. This struggle for raw materials may manifest itself as economic warfare in the future as countries vie to protect domestic industries. It is unlikely to spill over into physical conflict because most metals and minerals are quite common and, as the price increases, more areas become commercially viable to mine. Deposits that were regarded as marginal suddenly become attractive and, if the price becomes too crazy, companies can try to find an alternative. Where full-scale conflict over resources is more likely is in the case of those commodities that are either consumed in bulk or have no substitute. Billions of tonnes of iron ore, copper, corn and wheat are needed every year and shortages of any of these would have an immediate impact. A doubling in the price of corn, for example, would lead to a dramatic rise in the price of nearly every product in our supermarkets and cause starvation and food riots in many parts of the world. Agricultural land, water and oil have no realistic substitutes and control of them will be increasingly important as the population grows. Access to these may determine the wars that we fight in the 21st century."
Wars will be fought over this
London Times, 27 August 2010

"The Nabucco pipeline project has taken another step forward by ordering engineering work for two feeder lines from Turkey to Iraq and Georgia. However, a third planned feeder line from Turkey to Iran has been put on the back-burner due to political considerations, the consortium announced. At a recent Steering Committee meeting in Ankara, Nabucco shareholders agreed to modify the feeder line concept, a press release says. Due to the current political situation, they decided to put on hold  the third feeder line to the Turkish-Iran border. There will be feeder lines to the Turkish-Georgian and Turkish-Iraqi borders. The planned route offers a wide range of supply sources for the Nabucco gas pipeline, which will receive gas from Azerbaijan, Turkmenistan and Iraq, the Nabucco consortium announced."
Nabucco pipeline confirms feeder lines to Iraq, Georgia
EurActiv, 26 August 2010

"An American-backed plan to extract oil shale from rocks beneath the Holy Land has triggered fierce opposition in Israel. The Union for Environmental Defence is seeking an injunction from the country’s Supreme Court to block the project, which intends to produce a type of crude from a vast deposit in the Adullam valley, west of Jerusalem..... The country, which imports all its oil, is thought to have 15 billion tonnes of the material — a type of rock rich in hydrocarbons — enough to supply Israel with fuel for about 50 years. But extracting oil shale and processing it into a useable fuel is an energy-intensive and environmentally fraught process. It has aroused vigorous opposition for its potential impact on the water table, local environment and high greenhouse gas emissions associated with production....Israel’s rich oil shale deposits are being targeted as oil companies focus increasingly on 'unconventional' sources of oil as traditional fields are depleted in the face of robust global demand....Israel’s conventional oil supplies are negligible. Overall, about 410 oil wells have been drilled in the country with little success. Three quarters of Israel’s oil comes from Russia and elsewhere in the former Soviet Union, the remainder being imported from West Africa, Egypt and Mexico."
Holy Land rocked by search for oil
London Times, 23 August 2010

"European energy companies have shelved a plan to source gas from Iran to Europe via the European Union-backed Nabucco gas pipeline given Iran's political situation, the Nabucco consortium said Monday.  In line with previous statements on Iran, the consortium said it has decided to go ahead with the construction of two smaller supply pipes from Georgia and Iraq to the Turkish Nabucco pipeline starting point, but that the plan for a third from Iran has been cancelled for the time being."
Nabucco Group Scraps Plan For Iranian Gas Supply
Dow Jones, 23 August 2010

"Speculation that government ministers are far more concerned about a future supply crunch than they have admitted has been fuelled by the revelation that they are canvassing views from industry and the scientific community about 'peak oil'.The Department of Energy and Climate Change (DECC) is also refusing to hand over policy documents about 'peak oil' – the point at which oil production reaches its maximum and then declines – under the Freedom of Information (FoI) Act, despite releasing others in which it admits 'secrecy around the topic is probably not good'.... But documents obtained under the FoI Act seen by the Observer show that a 'peak oil workshop' brought together staff from the DECC, the Bank of England and Ministry of Defence among others to discuss the issue. A ministry note of that summit warned that '[Government] public lines on peak oil are 'not quite right'. They need to take account of climate change and put more emphasis on reducing demand and also the fact that peak oil may increase volatility in the market.... a letter in response to the FoI request written by DECC officials and dated 31 July 2010 says it can only release some information on what is currently under policy discussion because they are 'ongoing' and 'high profile' in nature. The letter adds: 'We recognise the public interest arguments in favour of disclosing this information. In particular we recognise that greater transparency makes government more open and accountable and could help provide an insight into peak oil. However any public interest in the disclosure of such information must be balanced with the need to ensure that ministers and advisers can discuss policy in a manner which allows for frank exchanges of views and opinions about important and sensitive issues.'"
Peak oil alarm revealed by secret official talks
Observer, 22 August 2010

"One of Britain’s biggest oil companies is ready to pull out of Libya, as new tensions emerged with the North African country over the release one year ago today of Abdel Baset Ali al-Megrahi. BG Group, Britain’s third largest oil company after BP and Royal Dutch Shell, told The Times that it was seeking to leave Libya after a botched five-year drilling campaign failed to discover a single barrel of oil. BG, which is thought to have spent well over $100 million (£64 million) on the project, said: 'We have drilled three wells there and the results have been disappointing. They have all been plugged and abandoned.' BG’s announcement will serve to undermine hopes that al-Megrahi’s release would provide an economic boost by smoothing the way for British companies to develop lucrative oil concessions in Libya.....As well as BG, Anglo-Dutch group Royal Dutch Shell has also had a disappointing run, spending at least $187 million on an as-yet unsuccessful project to find gas in extremely deep rock formations in the country’s north. BP remains committed to a $900 million exploration programme in the Sirte basin and the onshore Ghadames basin, but has not yet found any oil either. It plans to drill its first well this year. It is not just oil companies that have struggled in Libya since Tony Blair’s 'Big Tent' diplomatic mission there in 2004. Figures from UK Trade & Investment reveal that the value of exported goods to Libya in 2004 was £216 million and decreased in the two years after the landmark meeting between Mr Blair and Colonel Gaddafi."
Oil company gives up hope of a lucrative drilling deal in Libya
London Times, 20 August 2010

"Rising demand for meat in emerging markets has prompted BHP Billiton to bid $39 billion for the world’s largest fertiliser producer. The Potash Corporation of Saskatchewan rejected the $130-a-share offer, but BHP is expected to return. PotashCorp’s shares rose by 24 per cent to $144.67 in New York in anticipation of a higher offer, valuing the company at $42.9 billion. BHP has more than $9 billion in cash and City financiers said that it would have little difficulty raising the debt required to finance what would be the biggest deal in the world this year. The overture signals a shift in direction for BHP. It is already a leader in coal, copper, iron ore and petroleum, but it announced plans this year to develop a $12 billion potash mine in Canada. Its interest stems from the belief that increased affluence and population growth will lead to greater demand for food, particularly meat. People in Asia eat only 27.8kg of meat per head each year, compared with 123.2kg in North America and 74.3kg in Europe. As Asians become richer, their consumption of meat is expected to rise, and so more wheat and grain will be needed to raise cattle. It has been estimated that it takes 7kg of grain to produce every 1kg of beef. The population of the world is also expected to increase by half to more than nine billion by 2050, putting further pressure on food production. Fruit and vegetable consumption is forecast to rise by a quarter to two billion tonnes a year in the next decade, while demand for grains and oilseed is expected to rise by a fifth. With the supply of agricultural land declining in some areas as a result of rapid urbanisation, existing land will have to become more productive. Countries such as India and China are therefore expected to use much more fertiliser, increasing demand for potash, nitrogen and phosphates."
BHP bets $39bn on feeding a world hungry for meat
London Times, 18 August 2010

"British oil explorer Rockhopper has confirmed that the latest well to be drilled in the Falkland Islands under a controversial exploration programme is a dry hole. The drilling of Rockhopper's Ernest prospect had been widely anticipated since the company's Sea Lion well - drilled in the same basin in May - made a significant oil discovery, sending Rockhopper's shares soaring by over 500pc. The company will now carry out further tests on the Sea Lion discovery to help it plan a potential appraisal campaign, Sam Moody, Rockhopper's managing director, said."
Rockhopper admits Falklands well is dry
Daily Telegraph, 19 August 2010

"The US commodities regulator has imposed a $12m (£7.7m) fine on oil traders responsible for speculatively pushing the price of oil above the $100-a-barrel mark for the first time in January 2008. The Commodities and Futures Trading Commission (CFTC) fined a former division of ConAgra Foods for its involvement in the so-called 'vanity trade' which was responsible for purposefully pushing up the price on the New York Mercantile Exchange (NYMEX). The levy is intended to send a clear message that the regulator is intent on finding and fining those individuals and companies which were responsible for pushing oil to $147-a-barrel by July 2008. The surge in oil prices was blamed on speculators by regulators on both sides of the Atlantic, and has led to increased scrutiny in the crude oil market. The increase in fuel prices hurt road and air travel, and exacerbated the onset of the global recession on large parts of the economy. The 'vanity trade' occurred on January 2, 2008, when a oil trader bought 1,000 barrels for $100 each when the prevailing price was 40 cents lower."
US oil speculators fined for $100-a-barrel 'vanity trade'
Daily Telegraph, 18 August 2010

"A sharp slowdown in the pace of Japan's economic recovery has enabled China to overtake it as the world's second-largest economy, leaving only the United States in front of it. Data released yesterday revealed that the Japanese economy grew at an annualised rate of 0.4 per cent over the three months to the end of June, a substantial reverse following the 4.4 per cent growth seen in the first quarter. The slowdown meant that China officially overhauled Japan as the second biggest economy in the world this spring, at least in terms of total output. Its gross domestic product for the second quarter was $1.335 trillion, compared to Japan's $1.286 trillion, though the country's huge population means that China remains well down the global league in terms of GDP per capita."
China overtakes Japan as world's second-largest economic power
Independent, 17 August 2010

"Roughly 16% of total energy needs (up to 25% in the highly industrialised countries) are now met by electric energy. Nuclear fission's contribution to total electric energy has decreased from about 18% more than 10 years ago to about 14% in 2008. On a worldwide scale, nuclear energy is thus only a small component of the global energy mix, and its share, contrary to widespread belief, is not on the rise. During 2009, for example, nuclear power plants provided 2,560 terawatt hours (TWh)– equivalent to 2,560bn kilowatt hours of electric energy, about 1.6% lower than during 2008 and almost 4% lower than during the record year of 2006. Early results for the first four months of 2010 for the OECD countries indicate that so far the 2010 results are as low or lower than last year. During the next five years, on average, roughly 10 new nuclear reactors are expected to become operational every year. But this assumes that all are constructed according to schedule, and the nuclear industry has rarely met its promised construction deadlines. According to the World Nuclear Association (WNA), 17 new reactors should have become operational between 2007 and 2009. But only five came onstream during this period – three in 2007 and two in 2009. Moreover, four reactors were de-commissioned during 2009, and a larger number of reactors in Japan and Germany are not in use, owing to various technical stoppages. At least 100 older and smaller reactors will most likely be closed over the next 10-15 years. Furthermore, during the past 10 years, only about two-thirds of worldwide demand for nuclear fuel was met from resources obtained from mining. The remaining 20,000 tonnes came from so-called secondary uranium sources – mainly inventories held by utilities and governments, reprocessed nuclear fuel, and stockpiles of depleted uranium. The supply from these sources will drop by roughly 10,000 tonnes at the end of 2013, when the Megatons to Megawatt programme between Russia and the United States – which recycles highly enriched uranium from Russian nuclear warheads into low-enriched uranium for nuclear power plants – comes to an end. Current projections indicate that uranium shortages in the coming years can be avoided only if existing and new uranium mines operate according to plan. Indeed, extrapolations of global supply that foresee an increase in uranium mining are based on claims about the ability to expand output in Kazakhstan. So far, uranium mining in Kazakhstan has increased roughly as expected, from 4,357 tonnes in 2005 to 14,000 tonnes in 2009. But it remains to be seen if the uranium mining in this country can indeed increase further. According to the WNA's latest estimates, from July 2010, the expected uranium extraction figure for 2010 has actually been decreased to 15,000 tonnes. The view that the amount of energy derived from nuclear power worldwide will continue its slow decrease during the coming years is further supported by the 2008 annual report of the Euratom Supply Agency, which coordinates the long-term uranium needs of nuclear power plants within the European Union. According to the agency's forecast, uranium demand in Europe will fall from 21,747 tonnes in 2010 to roughly 16,000 tonnes by 2024. These numbers indicate that the EU, currently producing about one-third of the world's nuclear electric energy, is heading for a reduction in nuclear-energy production of up to 20% over the coming 10 years. One can also expect that the current worldwide economic crisis will not help to accelerate the construction of nuclear power plants and new uranium mines. In summary, the hard facts about nuclear energy are inconsistent with the possibility of a worldwide renaissance of nuclear energy. Indeed, they point toward a continuing slow phase-out of nuclear energy in most of the large OECD countries. It seems unavoidable that energy consumers, especially in many rich countries, will have to learn to exchange their current worries about the distant future consequences of global warming for the reality of energy shortages during periods of peak demand."
The reality of nuclear energy is inconsistent with dreams of a renaissance
Guardian, 16 August 2010

"Roughly 16% of total energy needs (up to 25% in the highly industrialised countries) are now met by electric energy. Nuclear fission's contribution to total electric energy has decreased from about 18% more than 10 years ago to about 14% in 2008. On a worldwide scale, nuclear energy is thus only a small component of the global energy mix, and its share, contrary to widespread belief, is not on the rise. During 2009, for example, nuclear power plants provided 2,560 terawatt hours (TWh)– equivalent to 2,560bn kilowatt hours of electric energy, about 1.6% lower than during 2008 and almost 4% lower than during the record year of 2006. Early results for the first four months of 2010 for the OECD countries indicate that so far the 2010 results are as low or lower than last year. During the next five years, on average, roughly 10 new nuclear reactors are expected to become operational every year. But this assumes that all are constructed according to schedule, and the nuclear industry has rarely met its promised construction deadlines. According to the World Nuclear Association (WNA), 17 new reactors should have become operational between 2007 and 2009. But only five came onstream during this period – three in 2007 and two in 2009. Moreover, four reactors were de-commissioned during 2009, and a larger number of reactors in Japan and Germany are not in use, owing to various technical stoppages. At least 100 older and smaller reactors will most likely be closed over the next 10-15 years. Furthermore, during the past 10 years, only about two-thirds of worldwide demand for nuclear fuel was met from resources obtained from mining. The remaining 20,000 tonnes came from so-called secondary uranium sources – mainly inventories held by utilities and governments, reprocessed nuclear fuel, and stockpiles of depleted uranium. The supply from these sources will drop by roughly 10,000 tonnes at the end of 2013, when the Megatons to Megawatt programme between Russia and the United States – which recycles highly enriched uranium from Russian nuclear warheads into low-enriched uranium for nuclear power plants – comes to an end. Current projections indicate that uranium shortages in the coming years can be avoided only if existing and new uranium mines operate according to plan. Indeed, extrapolations of global supply that foresee an increase in uranium mining are based on claims about the ability to expand output in Kazakhstan. So far, uranium mining in Kazakhstan has increased roughly as expected, from 4,357 tonnes in 2005 to 14,000 tonnes in 2009. But it remains to be seen if the uranium mining in this country can indeed increase further. According to the WNA's latest estimates, from July 2010, the expected uranium extraction figure for 2010 has actually been decreased to 15,000 tonnes. The view that the amount of energy derived from nuclear power worldwide will continue its slow decrease during the coming years is further supported by the 2008 annual report of the Euratom Supply Agency, which coordinates the long-term uranium needs of nuclear power plants within the European Union. According to the agency's forecast, uranium demand in Europe will fall from 21,747 tonnes in 2010 to roughly 16,000 tonnes by 2024. These numbers indicate that the EU, currently producing about one-third of the world's nuclear electric energy, is heading for a reduction in nuclear-energy production of up to 20% over the coming 10 years. One can also expect that the current worldwide economic crisis will not help to accelerate the construction of nuclear power plants and new uranium mines. In summary, the hard facts about nuclear energy are inconsistent with the possibility of a worldwide renaissance of nuclear energy. Indeed, they point toward a continuing slow phase-out of nuclear energy in most of the large OECD countries. It seems unavoidable that energy consumers, especially in many rich countries, will have to learn to exchange their current worries about the distant future consequences of global warming for the reality of energy shortages during periods of peak demand."
The reality of nuclear energy is inconsistent with dreams of a renaissance
Guardian, 16 August 2010

"The share of global uranium demand that will be met by currently operating mines over the next 10 years has risen as new production centers have opened, Canadian uranium miner Cameco said Friday. The company said it expects fully 75% of uranium demand over the next 10 years will be met by currently operating mines, up from the 67% it estimated at the end of 2009, according to a management discussion and analysis released as part of the company's second quarter financial results. George Assie, Cameco senior vice president for marketing and business development, said all but one of the new production centers -- Paladin Energy's Kayelekera mine in Malawi -- are in Kazakhstan. The same analysis foresees the proportion of global uranium demand being met by secondary supplies, such as surplus military supplies, as falling to 20% from 21% in the end-2009 estimate. About 5% is now expected to come from new sources of primary production, compared to the previous estimate of 12%, Cameco said."
Operating mines to supply 75% of uranium in next decade: Cameco
Platts, 16 August 2010

"France has traditionally dominated expertise in atomic power with state-sponsored giants Areva and EDF Energy. However, China is fast catching up. The superpower wants to build 153 new plants using existing technology and believes it can cut the costs of French and Japanese-based reactor designs by one third by rolling out the parts in bulk.... Among the countries thinking of building their first plants are Vietnam, Bangladesh, Indonesia, Saudi Arabia, UAE, Egypt, Jordan, Algeria, Nigeria, Ghana, Kazakhstan and the Philippines. However, China's priority is likely to be its own energy-hungry domestic market, where it aims to build enough nuclear power to provide 8pc of its population's electricity. The energy planners are also moving to ensure it has enough fuel stockpiled for its burgeoning programme. In June, China agreed to buy more than 10,000 tons of uranium concentrate, known as yellowcake, over the next decade from Cameco, guarding against the possibility of a nuclear fuel squeeze as the technology's popularity spreads."
Will China leapfrog France as a nuclear superpower?
Daily Telegraph, 14 August 2010

"About 40km south of Beijing, some of the world's most exciting science is splitting atoms in pursuit of the nuclear physicist's Holy Grail – the tiny, cheap reactor. China started generating electricity from the first fourth generation nuclear station without fanfare last month, using largely home-grown technology that reduces waste, increases efficiency and vastly brings down costs compared with existing plants. It's only a trial project, with the first commercial-scale model planned for 2020, but nevertheless is a step towards production-line nuclear plants that it aims to produce for the world. If it can bring down costs, China is likely to have customers galore rushing to reduce their carbon emissions by providing the equivalent of Ikea flat-pack parts for countries from Belarus to Ghana. But as China throws money at pioneering technology and plans to build 153 stations using basic versions of existing designs, Western nations are struggling to make the old economics of nuclear power add up. Delays and cost over-runs are already plaguing the construction of new nuclear plants in France and Finland. But Chris Huhne, the Lib Dem energy secretary, last week pledged that the UK's £50bn programme is on track. This is despite an incomplete planning system, industry concerns about funding and no firm plans for disposing of radioactive waste."
Britain is struggling to power the nuclear revolution
Daily Telegraph, 14 August 2010

"The Organization of Petroleum Exporting Countries boosted its global oil demand forecast for this year and next as emerging economies in Asia, the Middle East and Latin America push consumption higher. OPEC bolstered its outlook for 2010 and 2011 by 140,000 barrels a day each in its monthly report today. Worldwide crude oil use will increase by 1.05 million barrels a day, or 1.2 percent, next year to average 86.56 million a day, the organization’s Vienna-based secretariat said....OPEC expects that next year’s additional demand will increase the world’s need for its crude. The amount of OPEC oil needed to balance global supply and demand, known as the call- on-OPEC, will be about 28.9 million barrels a day in 2011. That’s about 200,000 barrels a day, or 0.7 percent, higher than this year’s requirement, and 93,000 a day more than the forecast made in last month’s report.... OPEC’s estimate for oil consumption for next year is about 1 million barrels a day lower than that of the International Energy Agency, which released its monthly report on Aug. 11. The IEA, the Paris-based adviser to oil-consuming nations, forecasts global demand of 87.9 million barrels a day. OPEC raised its estimate for supplies from outside the organization by 60,000 barrels a day each for this year and next. Non-OPEC producers will bolster output by 790,000 barrels a day this year to average 51.92 million a day, and next year by 350,000 barrels a day to 52.27 million a day, according to the report. Non-OPEC supply growth in 2011 will be driven by projects in Brazil, Canada, Azerbaijan, Colombia and Kazakhstan, according to the report. OPEC’s implementation of record supply cuts announced in late 2008 has dropped as rebounding oil prices encourage members to exceed their production limits. The 11 OPEC nations bound by quotas raised production by 120,000 barrels a day last month compared with June, according to the report. Those members, which exclude Iraq, pumped 26.86 million barrels a day in July. That puts compliance with agreed output cuts at 52 percent, down from a revised 55 percent in June."
OPEC Raises Its Forecasts for Worldwide Oil Demand for This Year and Next
Bloomberg, 13 August 2010

"Global demand for oil will exceed the International Energy Agency’s earlier estimates, even as the adviser predicts the economic recovery will slow next year. Crude demand worldwide will average 87.9 million barrels a day in 2011, the IEA said today in its monthly oil market report. While that is 50,000 barrels a day more than the Paris- based adviser forecast last month, it lags behind the upward revision of 80,000 barrels for this year’s estimate. There are 'significant downside risks' that demand will slow on an uncertain global economic outlook, the IEA said.  'Global economic activity is seen expanding by 4.5 percent this year but remains capped at 4.3 percent next year,' according to the report. 'Concerns that the global economic recovery may falter from the second half of 2010 pose a significant downward risk to the forecast.'.The IEA is projecting that China and other developing nations will offset shrinking demand for oil next year in richer countries such as the U.S., where the Federal Reserve said yesterday it won’t unwind stimulus measures because the economy is weaker than previously anticipated. Even China is showing signs of slowing growth, with industrial output increasing the least in 11 months, according to a report today....World demand will climb 1.3 million barrels a day, or 1.5 percent in 2011, down from this year’s growth of 1.8 million barrels a day, or 2.2 percent, the IEA said. Last month, it forecast 2010 growth of 2.1 percent and 1.6 percent in 2011. Rising consumption will be more than offset by greater production from countries outside the Organization of Petroleum Exporting Countries, reducing the world’s need for OPEC oil, according to the IEA estimates. Non-OPEC supply will average 52.9 million barrels a day in 2011, 100,000 barrels a day more than the IEA estimated last month. The revision was driven by higher U.S. production figures and greater-than-expected Chinese oil supply in the second half of this year, according to the agency. It also raised its supply forecast for 2010 by 200,000 barrels a day to 52.6 million barrels a day."
IEA Raises Forecast for Global Crude-Oil Demand Even as 2011 Growth Slows
Bloomberg, 11 August 2010

"Extract Resources Ltd., the uranium explorer partly owned by Rio Tinto Group, said an increase in resources at its Rossing South project in Namibia makes the deposit the sixth biggest in the world. Extract upgraded the size of the resource to 257 million pounds, a tenfold increase from July 2009, it said in a statement today to the Australian stock exchange. The deposit was previously rated the world’s eighth largest, Chief Executive Officer Jonathan Leslie said in a webcast. 'We fully expect to continue to move up the ranking' as Extract has a large area yet to explore at Rossing South, Leslie said. 'We think there’s significant scope to expand the resource beyond what we’ve announced today.'”
Extract Says Uranium Deposit in Namibia Could Be the World's Sixth Largest
Bloomberg, 11 August 2010

"Matt Simmons, a prominent oil investor who argued the world was rapidly approaching peak oil production capacity, died suddenly on Sunday of an apparent heart attack at his home in North Haven, Maine. Simmons, 67 years old, founded Simmons & Co. International, an investment bank that caters to energy companies, in 1974. More recently, Simmons had retired to devote his time to the Ocean Energy Institute, a group he founded to research and develop energy from wind and tidal sources. In his 2005 book 'Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,' Simmons drew attention to the unreliability of Middle East oil reserves, arguing that the nation's oil reserves were nearing their highest levels of production.  Simmons' views on 'peak oil' have long be considered controversial as have his recent statements regarding the oil spill in the Gulf of Mexico. Simmons, who served as an energy advisor to President George W. Bush, asserted earlier this summer, that he expected BP would need to file for bankruptcy protection in the wake of the Deepwater Horizon accident. He also claimed there were two leaks in the Gulf of Mexico, not just the one on which BP had fixed its underwater cameras."
'Peak Oil' Theory Advocate Matt Simmons Dies
CNBC, 9 August 2010

"Based on economic and policy considerations that appear to be unconstrained by geophysics, the Intergovernmental Panel on Climate Change (IPCC) generated forty carbon production and emissions scenarios. In this paper, we develop a base-case scenario for global coal production based on the physical multi-cycle Hubbert analysis of historical production data. Areas with large resources but little production history, such as Alaska and the Russian Far East, are treated as sensitivities on top of this base-case, producing an additional 125 Gt of coal. The value of this approach is that it provides a reality check on the magnitude of carbon emissions in a business-as-usual (BAU) scenario. The resulting base-case is significantly below 36 of the 40 carbon emission scenarios from the IPCC. The global peak of coal production from existing coalfields is predicted to occur close to the year 2011. The peak coal production rate is 160 EJ/y, and the peak carbon emissions from coal burning are 4.0 Gt C (15 Gt CO2) per year. After 2011, the production rates of coal and CO2 decline, reaching 1990 levels by the year 2037, and reaching 50% of the peak value in the year 2047. It is unlikely that future mines will reverse the trend predicted in this BAU scenario."
A global coal production forecast with multi-Hubbert cycle analysis
Energy Volume 35, Issue 8, August 2010, Pages 3109-3122

"Shortly after the Marines rolled into Baghdad and tore down a statue of Saddam Hussein, I visited the Ministry of Oil. American troops surrounded the sand-colored building, protecting it like a strategic jewel. But not far away, looters were relieving the National Museum of its actual jewels. Baghdad had become a carnival of looting. A few dozen Iraqis who worked at the Oil Ministry were gathered outside the American cordon, and one of them, noting the protection afforded his workplace and the lack of protection everywhere else, remarked to me, 'It is all about oil.'...Donald Rumsfeld, the former defense secretary, insisted the invasion of Iraq had 'nothing to do with oil.' But even Alan Greenspan, the former Federal Reserve chairman, rejected that line. 'It is politically inconvenient to acknowledge what everyone knows,' Greenspan wrote in his memoir. 'The Iraq war is largely about oil.' If it is even partly true that we invade for oil and maintain a navy and army for oil, how much is that costing? This is one of the tricky things about oil, the hidden costs, and one of the reasons we are addicted to the substance -- we don't acknowledge its full price. If we wish to know, we can. An innovative approach comes from Roger Stern, an economic geographer at Princeton University who in April published a peer-reviewed study on the cost of keeping aircraft carriers in the Persian Gulf from 1976 to 2007. Because carriers patrol the gulf for the explicit mission of securing oil shipments, Stern was on solid ground in attributing that cost to oil. He had found an excellent metric. He combed through the Defense Department's data -- which is not easy to do because the Pentagon does not disaggregate its expenditures by region or mission -- and came up with a total, over three decades, of $7.3 trillion. Yes, trillion."
The Ministry of Oil Defense
Foreign Policy, 5 August 2010

"The U.K., known for rain and gray skies, enjoyed record installations of solar panels in July after the government guaranteed prices for electricity from renewable energy up to 10 times market rates. Photovoltaic panels with the capacity to generate 4.6 megawatts were fitted last month, energy regulator Ofgem said on its website. That’s more than in the whole of 2009, according to Bloomberg New Energy Finance, which forecasts the nation’s solar market will increase 12-fold this year. The government on April 1 introduced feed-in tariffs that fix above-normal prices for electricity from small installations of wind, solar and hydro power. Companies from the German utility E.ON AG to Tesco Plc, the biggest U.K. supermarket, have entered the market. Sharp Corp. is doubling production at its solar cell factory in Wales, which is the biggest in Britain. 'The solar revolution is coming,' said Serge Younes of the industry consultant WSP Environment & Energy. 'There are a lot of roofs in the south of the U.K. and a lot of land.' According to Ofgem, 11.3 megawatts of PV were fitted in the first four months of the tariffs’ existence, enough to supply 26,000 homes. That tops the 4 megawatts installed in 2009 and 4.4 megawatts in 2008. It isn’t just homeowners who are taking advantage of the incentives. As well as selling panels, J Sainsbury Plc, another supermarket chain, may fit panels to its stores. Farmers including Glastonbury music festival founder Michael Eavis are seeking income from placing solar power in fields and on barns.... Farmers see solar power as a new source of revenue. Worthy Farm, which hosts the Glastonbury Festival, plans to mount 1,200 panels on barns, according to its website. The National Farmers Union has had a “significant number” of inquiries from financiers and its members about using farmland and barn roofs to host panels, said Jonathan Scurlock, the union’s chief renewable adviser. Farmers are being offered rent of 1,000 pounds to 2,000 pounds per hectare for their fields, more than they can make from livestock or crops, he said. 'We don’t want a food-versus-fuel backlash,' Scurlock said. 'We’re looking at things like solar panels mounted to a 2-meter (6-feet) height with free range poultry running around underneath.'”
British Subsidies Trigger `Solar Revolution' Under Rainy Skies
Bloomberg, 5 August 2010

"The European Union is seeking an agreement on a natural-gas pipeline between Turkmenistan and Azerbaijan as the 27-nation bloc aims to import Caspian fuel and reduce its dependence on Russia. The EU regulator’s energy unit drafted a document that the parties could use as the basis for a deal on building at least one pipeline across the Caspian Sea, according to a copy of the non-binding paper obtained by Bloomberg. The EU, seeking less reliance on Russia, wants Turkmen gas for the proposed Nabucco pipeline. Turkmenistan, where foreign investment was held back until the 2006 death of isolationist President-for-Life Saparmurat Niyazov, ships gas to Russia and Iran, and opened a pipeline to China last year. Plans to build a link across the Caspian Sea have been frustrated by unresolved marine borders and opposition from Russia and Iran. 'Without Turkmen gas, Nabucco wouldn’t make sense,' said Alexander Rahr, a Russia and Eurasia expert at the German Council on Foreign Relations in Berlin. 'The EU is trying to get this pipeline through, but they’re running out of time as the Turkmen are sending more gas to China.' .... After Niyazov’s death, governments from the EU to Asia jostled for access to Turkmenistan’s gas reserves, estimated at 8.1 trillion cubic meters by BP Plc. That’s enough to meet current German demand for more than a century. Russia wants Turkmenistan and Kazakhstan to build a new gas pipeline along the Caspian coast to keep control over the former Soviet republics’ energy exports. Iran has presented an alternative plan envisioning a network of shipping routes and pipelines that would turn the country into a regional hub for Caspian energy exports....Turkmenistan is building a $2 billion East-West pipeline that will carry about 30 billion cubic meters of gas from the country’s biggest fields toward the Caspian coast when opened in June 2015 as it seeks to increase fuel exports.  Nabucco is planned to stretch more than 3,300 kilometers (2,050 miles) from Turkey to Austria to send gas to Europe and reduce the region’s dependence on Russia. Nabucco is also seeking to source gas from Azerbaijan and Iraq. The Nabucco partners, which also include Essen, Germany- based RWE AG, Budapest-based Mol Nyrt., Bulgargaz EAD, Romania’s Transgaz SA and Ankara-based Botas, have said they’ll decide on the investment by the end of this year. Construction is set to begin in 2011 and shipments may start at the end of 2014, according to the venture’s website. While Nabucco welcomes increased support from the EU for a southern gas corridor, the venture doesn’t have any formal knowledge of efforts to push for an Azeri-Turkmen deal on a pipe between the countries, spokeswoman Gabriele Egartner said in an e-mailed response to questions."
EU Seeks Caspian Gas Accord to Cut Russian Dependence
Bloomberg, 4 August 2010

"Despite repeated pledges to phase out fossil fuel subsidies and criticism from some quarters that government support for renewable energy technologies is too generous, global subsidies provided to renewable energy and biofuels are dwarfed by those enjoyed by the fossil fuel industry. That is the conclusion of a major report released late last week by analyst Bloomberg New Energy Finance, which analyses subsidies and incentive schemes offered globally to developers of renewable energy and biofuel technologies and projects. The report concludes that in 2009 governments provided subsidies worth between $43bn (£27bn) and $46bn to renewable energy and biofuel industries, including support provided through feed-in tariffs, renewable energy credits, tax credits, cash grants and other direct subsidies. In contrast, estimates from the International Energy Agency (IEA) released in June showed that $557bn was spent by governments during 2008 to subsidise the fossil fuel industry. Michael Liebreich, chief executive of Bloomberg New Energy Finance, said the study revealed that investors reluctant to finance renewable energy industries because they believe them to be heavily subsidised were operating under a misapprehension. 'One of the reasons the clean energy sector is starved of funding is because mainstream investors worry that renewable energy only works with direct government support,' he said. 'Setting aside the fact that in many cases clean energy competes on its own merits – for instance in the case of well-situated wind farms and Brazilian sugarcane ethanol – this analysis shows that the global direct subsidy for fossil fuels is around 10 times the subsidy for renewables.' However, the report predicted that the gap between fossil fuel and renewable energy subsidies should 'narrow considerably' this year as support for renewable and biofuels increases as a result of green government stimulus packages worth an estimated $188bn, and fossil fuel subsidies operated by countries such as China are cut in line with falling oil prices."
Fossil fuel subsidies are 10 times those of renewables, figures show
Guardian, 3 August 2010

"Energy Resources of Australia Ltd., the uranium producer controlled by Rio Tinto Group, declined the most in almost three months after reporting a 37 percent drop in first-half sales of the fuel for nuclear power stations....Uranium supply may outpace demand during the next 18 months to two years due to increased production, especially in Kazakhstan, and more of the material being released by the U.S. Department of Energy, Chief Executive Officer Rob Atkinson said in telephone interview today from Darwin. 'I think the uranium market is fairly well-serviced' over that period, Atkinson said. After that, 'there is going to be a realization that Kazakhstan is supplying an enormous proportion of the world market, and I don’t think countries or buyers are going to be comfortable having as many eggs in one basket.'"
Energy Resources Falls After First-Half Uranium Sales Drop 37%
Bloomberg, 30 July 2010

"Energy Secretary Chris Huhne today outlined a series of measures to improve energy efficiency, boost renewables and allow new nuclear projects to go ahead as he laid out the Government's energy policy. In the first annual energy statement to the Commons, Mr Huhne set out plans to secure the UK energy supplies and cut carbon emissions while 'keeping the lights on'. The Department of Energy and Climate Change also published a series of 'pathways' for how the energy system might look in 2050, outlining the scale of the challenge of meeting the legally-binding target to cut emissions by 80% by mid century... The 32 measures outlined today include efforts to speed up the roll-out of smart meters, provide incentives for heat produced from renewable sources, and bring in emissions performance standards for power plants to make them cut their greenhouse gases. Other steps aim to speed up connection of offshore wind farms to the grid, remove obstacles to private investment in new nuclear power and prop up the carbon price polluters have to pay for their emissions to encourage the development of low-carbon alternatives..... Laying out a series of policies which had already been pledged in the coalition agreement, Mr Huhne said the 'Green Deal' to install insulation and other green measures in homes would transform finance for improving energy efficiency in buildings. And in an effort to provide transparency to people on the costs of taking action on climate change, he said the Government would be publishing analysis of the impact of energy and climate change policies on household and business bills up to 2020.  According to the analysis published today, the extra cost of energy and climate change policies is set to add just £13 to the average household energy bill by 2020.  While efforts to cut carbon could lead to an 18% increase in gas prices and a 33% jump in electricity prices by the end of the decade, efforts to increase small-scale renewables on people's homes and make them more energy-efficient will lead to an overall 1% increase in bills. Mr Huhne said the cheapest way to close the gap between energy supply and demand was to cut energy use, pointing to the green deal and to the publication of plans to roll out smart meters, which will provide consumers with information to help them save power. The Government energy strategy also includes changes to the law to allow local councils to sell green energy to boost community-scale renewable schemes, putting forward proposals to create a green investment bank and carrying out a comprehensive review of the electricity market, including the role of regulator Ofgem, he said."
Government energy plans unveiled by Chris Huhne
Daily Telegraph, 27 July 2010

"The price boom in the early 2000s resulted in a significant amount of new exploration and mine development. In 2000, uranium prices were below $10 a pound as nuclear power had become very unfashionable, but within seven years prices had hit $136. Uranium became a profitable business once again. This has lead to a number of new mines coming on stream and supply increasing. One of the world's largest mines – BHP Billiton's Olympic Dam in Australia – has just been brought back to full capacity after months of repairs. Cameco's massive Cigar Lake mine in Canada will be back on stream in about 18 months after a flood three years ago. All of this means that uranium supplies are likely to exceed demand over the next few years, according to mining consultants CRU. It predicts that demand will increase by 46pc over the next decade, but there will not be a lack of supply for many years to come. By 2030, however, CRU expects the supply from mines may lag behind demand by as much as 30,000 tonnes."
Is uranium's three-year bear market over?
Telegraph, 25 July 2010

"The world's largest cargo ships are travelling at lower speeds today than sailing clippers such as the Cutty Sark did more than 130 years ago. A combination of the recession and growing awareness in the shipping industry about climate change emissions encouraged many ship owners to adopt 'slow steaming' to save fuel two years ago. This lowered speeds from the standard 25 knots to 20 knots, but many major companies have now taken this a stage further by adopting 'super-slow steaming' at speeds of 12 knots (about 14mph). Travel times between the US and China, or between Australia and Europe, are now comparable to those of the great age of sail in the 19th century. American clippers reached 14 to 17 knots in the 1850s, with the fastest recording speeds of 22 knots or more. Maersk, the world's largest shipping line, with more than 600 ships, has adapted its giant marine diesel engines to travel at super-slow speeds without suffering damage. This reduces fuel consumption and greenhouse gas emissions by 30%. It is believed that the company has saved more than £65m on fuel since it began its go-slow."
Modern cargo ships slow to the speed of the sailing clippers
Observer, 25 July 2010

"Since the turn of the century, China’s energy consumption has doubled. The country has scrambled across the globe in search of oil to supply its needs, and in 2009 became the biggest coal importer....Renewable energy sources have their limitations, which means nuclear will provide a large portion of China’s new power generation capacity. Already, over half of the new nuclear plants under construction around the world are in China or India. This means China’s going to be needing a lot of uranium to feed these plants, and the country doesn’t have all that much of the nuclear fuel within its borders. If the uranium market tightens up over the next decade, as analysts predict, the country is going to need to make its got enough uranium to keep the power flowing. Last month, China agreed to buy more than 10 000 kg of uranium through the current decade from Canada’s Cameco. But diversity of supply is always an imperative when it comes to sourcing uranium."
Uranium supply key for top energy user China
Mining Weekly, 23 July 2010

"Economic growth here [in Ireland] could fall by as much as 7.5pc if there is a sudden rise in oil and gas prices, according to a report published yesterday. Ireland -- which imports more fossil fuels than almost anywhere else in Europe and which generates less energy from renewable sources -- would suffer more than neighbouring countries if energy prices were to spike, according to the report by the environmental consultants AP EnvEcon.  It was commissioned by engineering giant Siemens. Oil prices are likely to rise as supplies dwindle and emerging economies consume more, while prices could spike suddenly following natural disasters, political tension or wars, the report notes."
Siemens warns growth could fall 7.5pc if energy prices rise
Irish Independent, 22 July 2010

"Reports that France will see a power shortfall by as soon as 2013 will put greater pressure on the UK’s dwindling supply and force up prices – that’s according to the UK’s largest energy consultancy, M&C Energy Group. France is facing a growing dependency on electricity imports as demand outpaces supply, particularly at peak times. David Hunter, Energy Analyst from M&C Energy Group, believes that energy will become a scarce commodity resulting in increased prices and real risks of blackouts."
M&C Energy Group: French power shortages will impact UK
Industrial Fuels and Power, 22 July 2010

"Earlier this week, the International Energy Agency announced that China was now the world's largest consumer of energy (oil, coal, natural gas, nuclear power and renewables), surpassing the U.S. for the first time. With 1.3 billion people, China is unlikely to reach current U.S. energy consumption per capita for some time, if ever, but to double energy consumption in the last ten years is still an impressive achievement. But keep in mind that the average American is still consuming five times as much energy each year as the average Chinese. China had not been expected to overtake the US for another five years, but the global recession reduced U.S. consumption and China's strong economic rebound in the last sent Beijing's consumption soaring."
The Peak Oil Crisis: Thinking About China
Falls Church News-Press, 21 July 2010

"China overtook the U.S. as the world’s biggest energy user last year, emphasizing that developing nations are driving global growth, according to the International Energy Agency. China consumed 2,252 million metric tons of oil equivalent in 2009 in the form of crude, coal, natural gas, nuclear power and renewable sources, IEA Chief Economist Fatih Birol said yesterday. That exceeded the 2,170 million tons used by the U.S. 'It’s one of those major turning points,' Tilak Doshi, the chief economist at the Energy Studies Institute at the National University of Singapore, said in a phone interview. 'China is growing by leaps and bounds. You’ve got OECD countries where you’re talking about oil demand peaking, meanwhile the emerging countries like China and India will keep growing their energy demand.' China’s gross domestic product expanded 10.3 percent in the second quarter even as the government took measures to cool growth. China, with Hong Kong included, was the biggest energy user in 2009, consuming 2.2 billion tons of oil equivalent, BP Plc said in its annual Statistical Review of World Energy in June. The U.S. was second and Russia ranked third, BP said.”
China Passes U.S. as World's Biggest Energy Consumer, IEA Says
Bloomberg, 20 July 2010

"An energy demand surge in the Gulf will be largely met by oil fired generation, removing an estimated 1.5 million barrels of oil equivalent per day (boepd) otherwise available for export, Wood Mackenzie said in a report. Energy demand in the Arabian Peninsula has more than doubled in the past 10 years and is forecast to increase by 85 percent by 2030, compared with 2008 levels, Wood Mackenzie's Energy Markets Service Insight division said in a report released to the press on Monday. Demand for oil will increase by about 114 percent during that time, largely because of the commissioning of 39 GW of new oil fired generation in the region. By around 2030, however, fuel diversification though nuclear energy and coal could help to free up 1.5 mmboepd of oil for world markets. In the shorter term, oil producing Gulf nations are being forced to burn oil for power because they do not have enough gas to cope with rising regional demand. The report said: 'Sustained rapid energy demand growth could mean that oil exports will become a casualty of the Arabian gas supply crunch.' Ironically, the huge increase in consumption stems from plans by the countries of the Arabian Peninsula - Saudi Arabia, Kuwait, the UAE, Qatar and Oman - to curb their over dependence on oil revenues by investing in refining, petrochemicals and aluminium mining and smelting. The report said: 'The downside of this diversification is that these new industries are energy intensive.' Qatar holds the world's third largest gas reserves behind Russia and Iran, but its production is constrained by the moratorium on new gas developments in the giant North Field until 2014. The amount of gas available for the Gulf is also limited by the region's gas export commitments to Asia and Europe. Overall gas production growth in Qatar is expected to average 15 percent a year to 2014, before slowing to 1 percent per year to 2030, assuming the moratorium is lifted after 2014, the report said. The development of shale gas in the US will release liquefied natural gas (LNG) previously destined for other markets, with the Arabian Peninsula a prime candidate for that gas, the report said."
Gulf energy demand surge to sap oil exports
Reuters, 20 July 2010

"In the 1970s the UK invested about 0.15% of GDP each year in research and development (R&D) into providing cheaper and cleaner energy. Britain was putting more public money into nuclear power and other new sources of electricity than almost any other economy. From the mid-1980s the amount invested each year has fallen almost continuously. The figure today is about 0.01%, one 15th of what it was a generation ago. We now sit at the bottom of the international league. The US, for example, spends three times as much as a percentage of its GDP, Japan nine times as much. The UK government announced last week that it was cutting yet more money from of the energy R&D budget. Some £34m is to be axed, affecting low-carbon technology programmes including offshore wind, wood fuels, building insulation and geothermal energy. This represents a reduction of just under 20% of total public expenditure on low-carbon technologies. This figure is on top of the cancellation of the £80m loan to Sheffield Forgemasters that would have paid for much of the installation of a new press to make the huge parts necessary for new nuclear power stations. As the Department of Energy and Climate Change (DECC) swung its axe, the government's own Committee on Climate Change was busy today stressing the need for continued public support for nascent energy technologies."
Funding cuts will finish Britain's clean energy race
Guardian, 19 July 2010

"Britain's new generation of nuclear power stations will not be built if the Government refuses them any more support, a KPMG report will say this week. The study, commissioned by RWE npower, says it is still uneconomic for utility companies to invest billions of pounds in nuclear power. The Government has offered to impose a minimum price on carbon permits – which would raise the cost of fossil fuel generation and make low-carbon nuclear more attractive. It has made a promise not to offer any direct subsidies. KPMG's report will say a carbon 'floor price' is not enough for the big utilities to commit large capital investments to the nuclear sector. It will suggest that the Government ought to introduce a variable premium tariff for all low-carbon technologies – from nuclear to renewables – to make sure enough new power generation is built before Britain starts to run short on capacity in the second half of this decade."
KPMG says nuclear power 'won't happen'
Daily Telegraph, 17 July 2010

"While, the U.S. and OECD economies may not be doing so well, the global demand for oil has recovered nicely. After taking a two-year 3 percent dip in obeisance to the economic downturn, global oil consumption is now reported to be back in the vicinity of its 2008 high of 86.6 million barrels a day (b/d) for 2010. While U.S. demand is down a million barrels a day or so, demand from China and India are up more than enough to offset what is called 'weak' US and European consumption. The International Energy Agency (IEA) tells us that it currently expects world demand to increase by 1.3 million b/d next year to a new annual high of 87.8 million b/d. As nobody who carefully watches global oil production expects it to increase in coming years, we are left with 'total productive capacity' which is currently estimated by the IEA to be 89.7 million b/d. This is about 3 million b/d above what we are currently using - maybe. Most of this spare capacity is supposed to be in Saudi Arabia; a land of eternal optimism where oil reserves never go down no matter how much is pumped up and sold. Many are skeptical that all of this 'spare capacity' is really ready-to-go, reasonable quality, sustainable, production capacity. If not we are in worse shape than we believe. It does not take much arithmetic ability to figure out that if we are currently using some 86 million b/d, and that we can go to 89 million at best, and that we are supposed to be increasing demand at around 1.5 million b/d each year, then something has got to give in the next 24 months. That something is called price - of barrels of oil or gallons of gasoline if that is what is the most meaningful to you."
The Peak Oil Crisis: A Mid-Year Review
Falls Church News-Press, 14 July 2010

"Global oil demand growth will slow next year, leaving the market with comfortable supplies until at least the middle of next year, the International Energy Agency said in its monthly Oil Market Report on Tuesday. Global oil demand will grow by 1.35 million barrels per day (bpd) next year to 87.84 million bpd, the IEA said in its first 2011 demand projection in a monthly report."
IEA forecasts slower oil demand growth in 2011
ArabianBusiness.com, 13 July 2010

"With the oil continuing to flow into the Gulf of Mexico, BP is facing ever greater challenges. Already, the company has lost half its market value. Should it be unable to cap the leaking well soon, the British oil giant may be forced to sell of assets. That could spell disaster for Great Britain. Such a crash has never before been seen. Fewer than 12 weeks ago, the multinational oil giant BP still held an uncontested fourth place on the list of the world's largest companies. Its impressive balance sheet boasted annual sales of roughly $246 billion (€195 billion), a market value of more than $190 billion and after-tax profits of almost $17 billion.... Already, the accident is one of the largest environmental catastrophes in US history -- one that will have immeasurable effects on wildlife, eco-systems and the economy. Experts have estimated that it will cost more than €60 billion to repair the damages. With every extra day that goes by without a solution to the gushing oil, the threat facing the environment, and BP itself, increases. Bankruptcy is no longer seen as an impossibility..... For Great Britain, the crash of its largest company has been a disaster, particularly given the timing -- concurrent with Prime Minister David Cameron's deep spending cuts in an effort to bring down the country's substantial budget deficit and sovereign debt. Cameron has taken a keen interest in the BP debacle; a team of government experts is feverishly drafting an emergency plan. The effects of a breakup, a bankruptcy and even a partial nationalization are all reportedly being evaluated. The 10,000 British jobs BP provides isn't the only issue. BP pays out nearly €7 billion each year in taxes and fees to the British state. Likewise, the company owns large segments of the country's energy infrastructure. Even more ominous, however, is the fact that a significant chunk of British pensions depend on BP's well-being. Whether directly or via large private-equity funds, many Britons own a piece of the company. Their pension funds have taken a serious hit from the company's precipitous drop in value and missed dividend payments. London Mayor Boris Johnson has warned that the oil giant's financial problems have become an issue of 'national concern.'"
BP's Crisis Could Soon Become Great Britain's
Der Speigel, 13 July 2010

"Revisions to a U.S. ban on deep- water drilling will do little to restart Gulf of Mexico operations brought to a standstill by the worst oil spill in the country’s history, industry groups and analysts said. The policy announced yesterday may let some deep-water work resume earlier than the six-month pause ordered by the Obama administration May 27, according to the Interior Department. A federal judge rejected the initial moratorium, imposed in response to the BP Plc oil spill in April. Regulations and congressional opposition after the accident will prevent most new drilling, said Kevin Book, a managing director at ClearView Energy Partners LLC, a Washington-based policy analysis firm. Companies have canceled drilling contracts and shut down rigs since the original ban took effect. 'The de-facto moratorium is the part that the administration is very clear about,' Book said in an interview. 'Even if there were no moratorium, there would still be regulations, there would still be Congress. Practically speaking, we expect nothing to change.' President Barack Obama had halted drilling in waters deeper than 500 feet (152.4 meters) to give a presidential commission time to study improvements in the safety of offshore operations."
Offshore Drillers See Little Gain in Amended U.S. Ban
Bloomberg, 13 July 2010

"The UK is in the 'last chance saloon' to secure investment in its creaking energy infrastructure, ministers are being warned by a leading business group. The EEF manufacturers’ federation is urging the new government to 'show leadership' by setting out a timetable for action, or risk undermining energy security within five years. There is only a limited window of opportunity to implement new policies and market reforms to generate the estimated £200bn of investment the UK needs in the next decade, the EEF argues in a report published on Monday. It says the energy industry must make far-reaching investment decisions as early as 2012 to secure finance and mobilise supply chains."
Business warns on need for investment in energy
Financial Times, 12 July 2010

"French energy company Total is looking to expand its holdings in oil sands through a $1 billion deal to tap into Alberta, Canada, recent transactions show. Total is expanding its portfolio in Alberta's tar sands through a $1 billion bid for UTS Energy of Calgary, the Financial Times reports. Alberta assets held by UTS Energy are estimated at more than 3 billion barrels of oil, the report adds. The French energy company has invested in oil sands projects and plans to expand its work in unconventional resources as conventional reserves run dry. The report said the planned bid for UTS Energy is a sign international energy companies are interested in oil sand projects despite pressure from lawmakers in the region. Commercial deliveries of crude oil to the U.S. Midwest from the Keystone pipeline from Canadian tar sands started during the last week of June. U.S. Rep. Henry Waxman, D-Calif., the chairman of the House Energy and Commerce Committee, in a letter to U.S. Secretary of State Hillary Clinton said that while tar sand pipelines could increase oil deliveries to U.S. markets substantially, the risk was too great. Waxman complains that extraction methods from tar sands requires more energy and releases more harmful emissions than conventional deposits."
Total expands oil sand holdings
United Press International, 12 July 2010

"The pebble bed modular reactor (PBMR) technology is unlikely to solve SA’s energy shortage in a cost- effective way, according to an Institute of Security Studies paper on the project. The paper pours cold water on the benefits of the PBMR technology at a time when the future of the PBMR company lies in tatters, following the government’s decision to drastically cut its funding. Trade unions last month said the majority of the company’s employees had opted to take voluntary retrenchment packages. In a paper for the Institute of Security Studies, environmental policy researcher David Fig said the PBMR technology would provide 'a small amount of expensive' electricity. The commercial reactors were designed to produce 165MW each. Since the establishment of the PBMR company in 1999, the government has spent more than R8,5bn on the project. 'Given the immense cost, the minimal power dividend and the opportunity cost of foregoing smart development of clean energy resources, why did SA continue to sink huge resources into the PBMR project until recently?' said Mr Fig. He said nuclear was an expensive source of electricity which 'crowds public investment out of less environmentally harmful options. 'It is overly costly in terms of harnessing the energies of human and other resources.'”
Pebble bed technology is ‘a costly source of energy’
Businessday (South Africa), 7 July 2010

"America must be prepared to re-equip its warships to venture into the Arctic Ocean as climate change gradually makes the entire region ice-free for a few weeks a year, the US Navy’s Oceanographer has told The Times. The effect of retreating ice in the Arctic is going to be so significant, according to Rear-Admiral David Titley, that the Pentagon will have to make a decision within the next two or three years on whether to invest billions of dollars to 'ice-harden' ships and submarines to cope with the changing conditions. Those changes will mean vital new shipping routes opening up, such as the Northwest Passage and the Bering Strait, which have serious defence and commercial implications. Admiral Titley said: 'The Bering Strait right now is a strategic backwater. But if what we have been talking about comes true, with significant trade in the Arctic region in 30 to 40 years, and if the world is still one in which hydrocarbons play a significant role for power, heating and lighting, energy extraction may be coming southbound through the Bering Strait.'"
New frontier: how retreating ice is putting navy on climate watch
London Times, 6 July 2010

"The British Government is drawing up contingency plans for a possible collapse of BP amid mounting fears that the oil giant could be broken up or taken over in the wake of the Gulf of Mexico oil disaster, The Times has learnt.... BP controls vital strategic assets overseas, including the Baku-Tbilisi-Ceyhan pipeline that bypasses Russia and Iran to connect Europe with the rich oil and gas resources of Azerbaijan and the Caspian region."
Cameron prepares for the worst as fears grow over BP
London Times, 6 July 2010

"Norway's oil production is expected to decline 'rapidly' over the next 10 to 20 years, so the country needs to save its revenue through some form of wealth fund, the country's central bank governor said today. Norges Bank Governor Svein Gjedrem gave no details of the expected production decline in comments during a talk in Singapore, which he is visiting to open an office of the central bank unit that manages Norway's $425-billion government pension fund."
'Norway crude will see rapid decline'
Upstreamonline, 1 July 2010

"Britain will need up to £1 trillion of investment to replace and decarbonise infrastructure over the next 20 years, according to a report by the Green Investment Bank (GIB) Commission on behalf of the Government. The report, commissioned by Labour in 2009, sets out how a GIB might be set up to tackle the low carbon investment needs of Britain. With an estimated £50bn of investment required every year, the commission, chaired by Yell Group chairman Bob Wigley, said the work needed was 'on a scale not seen since reconstruction after the Second World War.'"
Britain needs £1 trillion to turn the country's infrastructure green
Daily Telegraph, 30 June 2010

"A recently released BP document shows that before the Deepwater Horizon explosion, the company was basing its whole future on production from deepwater wells. There is little doubt that there is a whole lot of oil deep below the Gulf of Mexico, off the coast of Brazil and the east coast of Africa. The industry hype says there is at least 100 billion barrels or even more. Keep in mind that this is only three years of global oil consumption and even in the best of circumstances; it would take decades to extract. Right now there are two issues regarding deepwater oil. First is how much can be extracted. If it turns out that 10 or 20 percent of initial estimates is all that can really be recovered, then the cost of this oil will be prohibitive. Deepwater wells were running $100 to in some cases $200 million per well drilled. Platforms that drill and support multiple wells can easily get into the billions of dollars before they are producing. If these wells unlimitedly yield only a fraction of what their planners were hoping for, there are going to be some very broke oil companies, or some very expensive gasoline in our future. The next question is what the fallout from the Deepwater Horizon disaster will be for deepwater oil. The U.S. has already imposed a moratorium on further drilling until the causes of the blowout are fully understood. This moratorium alone is almost certain to add substantially to the costs of drilling in deepwater. Add to this the new and most likely tougher drilling regulations and the development and deployment of a new generation of blowout preventers that work reliably and we are going to see some very high cost oil coming from offshore wells. All this says that we may not be getting half of our oil from deepwater wells 10 or 15 years from now. Unless there are some major advances in vehicle mileage, the oil that we get from offshore just may be too expensive to put in our gas tanks."
The Peak Oil Crisis: The Real Gulf Crisis
Falls Church News-Press, 30 June 2010

"A North Sea oil find believed to be as big as the largest discoveries of the seventies has sent shares in the project’s stakeholders soaring. Two wells off the east coast of Scotland are thought to have struck a single reservoir that could hold up to 300 million barrels of oil. The discovery in an area of seabed known as Catcher is likely to boost interest in North Sea exploration at a time when oil operators are turning their attention to high-impact wells in areas such as West Africa, Brazil and Australia. The discovery is in almost 300 feet of water, far shallower than the dangerous deep-water drilling that many oil explorers have been undertaking. EnCore Oil, the operator of the project, which owns a 15 per cent stake, said that further investigations could add 'very significantly' to the 300 million barrels estimate...The find may encourage renewed investment in the North Sea, which has been regarded as depleted after large fields began to run dry in the 1990s."
North Sea oil strike holds out the prospect of Seventies-style riches
London Times, 29 June 2010

"The first of two relief wells is close to puncturing BP’s ruptured Macondo well, raising hopes that the oil giant is on the way to ending the Deepwater Horizon crisis in the Gulf of Mexico. Steven Chu, the US Energy Secretary, is expected to fly to Houston today to help to oversee the final stages of the operation, The Times has learnt....Mr Chu yesterday emphasised the critical importance of deepwater drilling in the Gulf of Mexico to future US energy supplies and warned that prices would inevitably rise higher. He told The Times/Smith School World Forum on Enterprise and the Environment in Oxford that of the 50.4 billion barrels of oil available for development off the US coast, 34.4 billion were in the waters more than 200 metres deep in the Gulf of Mexico. “As demand for oil increases we are being driven into more and more unconventional sources,” he said, citing the critical role of oil sands, deepwater and ultra-deepwater drilling. The three-day forum was founded by Sir David King, former chief scientific adviser to Tony Blair and the founding director of the Smith School of Enterprise and the Environment. Mikhail Gorbachev, who also spoke at the event, said that the Deepwater Horizon oil disaster was a tragedy on a global scale that bore parallels to the Chernobyl accident in 1986, when a nuclear reactor exploded in Ukraine scattering a cloud of radioactive debris across Northern Europe. Mr Gorbachev, now president of the Green Cross International environmental group, said the accident would act as a wake-up call for policymakers and the oil industry in the same way that Chernobyl was a watershed for the nuclear industry. 'The consequences have to be studied very carefully,' he said. 'It underlines the need to learn lessons at the earliest stages of construction and paying particular attention to the issue of security.' Mr Gorbachev also criticised the rich subsidies enjoyed by the world’s oil industry, which he claimed stood at $300 billion a year. The communiqué issued after the G20 summit in Toronto was expected to call for government subsidies for 'inefficient' fossil fuels such as oil to be phased out. His remarks came as Fatih Birol, chief economist of the International Energy Agency, said that tighter regulations and higher costs for deepwater drilling were likely to raise the West’s dependency on Opec. 'Over three quarters of non-Opec oil supplies are expected to come from offshore drilling, so if there are increased costs and delays this will accelerate the dominance [of Opec],' he said. Mr Birol added that 900,000 barrels of new daily oil production could be deferred if deepwater drilling becomes more costly."
BP’s relief well could be ready to stem the flow of oil by next month
London Times, 28 June 2010

"BP staked its future on expanding offshore drilling a month before the catastrophic explosion on the Deepwater Horizon triggered the United States' worst environmental disaster, according to company documents revealed yesterday. The investigative web site ProPublica published a March 2010 strategy document in which BP named 'expanding deepwater' as its number one area for long-term growth. But even as the document was drawn up, engineers were struggling to control the Macondo well in the Gulf of Mexico, which had already gained a reputation as a risky operation, according to industry sources. The strategy paper claimed BP now held a global lead over its competitors in deepwater production – even though its costs were considerably lower. Earlier this month the executives of BP's rivals, including Exxon and Chevron, told a congressional hearing they would have taken more safeguards on the doomed Deepwater Horizon rig. The battle over the future of offshore drilling continued yesterday as the country's biggest business lobby said it would step up its campaign to force the Obama administration to lift its six-month ban on drilling new wells in the Gulf of Mexico."
BP 'staked future on expanding offshore drilling'
Guardian, 28 June 2010

"I argued in the book that what really sparked the financial crisis was the fact that the Federal Reserve had to move the Fed funds rate from 1 to 5.5 percent following in a similar rise in US inflation that came from the energy component. We’re already beyond the minus signs in inflation, we’re in the two percent inflation range. If we’re going to see triple-digit oil prices by 2011, then we’re probably going to see inflation close to double where it is today. While people are worried about deflation, history has shown that these huge massive deficits that have arisen have as their dancing partner inflation and not deflation. The US government has always monetized those deficits, meaning that they’ve always printed money to pay for them in the past and I see no reason why they won’t do that in the future, particularly when so much of the debt is owned abroad."
Interview with Jeff Rubin, former chief economist at CIBC World Markets
ASPO-USA, 28 June 2010

"Global oil output could slide by up to 900,000 barrels a day from projected levels for 2015 if oil producing countries follow the US lead and impose moratoriums on development of new offshore oil reserves, International Energy Agency executive director Nobuo Tanaka said Friday. The Paris-based organisation is conducting research on the possible impact of the US moratorium and its implications worldwide, Tanaka said, Dow Jones Newswires reported. 'If other countries like Angola, Brazil and the North Sea (countries) put on hold new offshore development and there is also one or two years of delay, the impact on global oil output might be 800,000 barrels a day to 900,000 barrels a day by 2015,' Tanaka told Dow Jones.... Although the decline would represent about one percent of global oil output, 'given that spare oil production capacity is about six million barrels a day, (a drop of) roughly one million barrels a day can't be ignored,' he said. Oil and gas companies began shutting down 33 deepwater exploration rigs last month after US President Barack Obama imposed a six-month moratorium on developing new deepwater wells in the Gulf of Mexico. 'There is little near-term impact. But for the medium term, if new offshore oil development in the US is delayed by one or two years, the impact (on production) would be 100,000 barrels a day to 300,000 barrels a day by 2015,' Tanaka said. 'The ultimate impact is unclear. But it would take time to investigate the causes of the spill and develop appropriate safety requirements and procedures,' he said."
IEA chief sees possible slide in global oil output
Petroleumworld.com, June 21, 2010

"Dimock [Pennsylvania] is now known as the place where, over the past two years, people’s water started turning brown and making them sick, one woman’s water well spontaneously combusted, and horses and pets mysteriously began to lose their hair. Craig and Julie Sautner moved to Dimock from a nearby town in March 2008..... By October 2009, the D.E.P. had taken all the water wells in the Sautners’ neighborhood offline. It acknowledged that a major contamination of the aquifer had occurred. In addition to methane, dangerously high levels of iron and aluminum were found in the Sautners’ water. The Sautners now rely on water delivered to them every week by Cabot. The value of their land has been decimated. Their children no longer take showers at home. They desperately want to move but cannot afford to buy a new house on top of their current mortgage. 'Our land is worthless,' says Craig. 'Who is going to buy this house?'. As drillers seek to commence fracking operations in the Delaware River basin watershed and in other key watersheds in New York State—all of which sit atop large repositories of natural gas trapped in shale rock deep underground—concerned residents, activists, and government officials are pointing to Dimock as an example of what can go wrong when this form of drilling is allowed to take place without proper regulation. Some are pointing to a wave of groundwater-contamination incidents and mysterious health problems out West, in Colorado, New Mexico, and Wyoming, where hydraulic fracturing has been going on for years as part of a massive oil-and-gas boom, and saying that fracking should not be allowed at all in delicate ecosystems like the Delaware River basin. Damascus and Dimock are both located above a vast rock formation rich in natural gas known as the Marcellus Shale, which stretches along the Appalachians from West Virginia up to the western half of the state of New York. The gas in the Marcellus Shale has been known about for more than 100 years, but it has become accessible and attractive as a resource only in the past two decades, thanks to technological innovation, the depletion of easier-to-reach, 'conventional' gas deposits, and increases in the price of natural gas. Shale-gas deposits are dispersed throughout a thin horizontal layer of loose rock (the shale), generally more than a mile below ground. Conventional vertical drilling cannot retrieve shale gas in an economical way, but when combined with hydraulic fracturing, horizontal drilling—whereby a deeply drilled well is bent at an angle to run parallel to the surface of the Earth—changes the equation.... Fracking is an energy- and resource-intensive process. Every shale-gas well that is fracked requires between three and eight million gallons of water. Fleets of trucks have to make hundreds of trips to carry the fracking fluid to and from each well site. Due in part to spotty state laws and an absence of federal regulation, the safety record that hydraulic fracturing has amassed to date is deeply disturbing. As use of the technique has spread, it has been followed by incidents of water contamination and environmental degradation, and even devastating health problems. Thousands of complaints have been lodged with state and federal agencies by people all over the country whose lives and communities have been transformed by fracking operations..... Shale gas has become a significant part of our energy mix over the past decade. From 1996 to 2006, shale-gas production went from less than 2 percent to 6 percent of all domestic natural-gas production. Some industry analysts predict shale gas will represent a full half of total domestic gas production within 10 years.... Although fracking was never regulated by the federal government when it was a less prevalently used technique, it was granted explicit exemptions—despite dissent within the E.P.A.—from the Safe Drinking Water Act, the Clean Air Act, and the Clean Water Act by the Energy Policy Act of 2005, the wide-ranging energy bill crafted by Dick Cheney in closed-door meetings with oil-and-gas executives. While the average citizen can receive harsh punishment under federal law for dumping a car battery into a pond, gas companies, thanks to what has become known as the Halliburton Loophole, are allowed to pump millions of gallons of fluid containing toxic chemicals into the ground, right next to our aquifers, without even having to identify them. Claiming that the information is proprietary, drilling companies have still not come out and fully disclosed what fracking fluid is made of.... According to Theo Colborn, a noted expert on water issues and endocrine disruptors, at least half of the chemicals known to be present in fracking fluid are toxic; many of them are carcinogens, neurotoxins, endocrine disruptors, and mutagens. But Colborn estimates that a third of the chemicals in fracking fluid remain unknown to the public. ...  Yet the shale-gas boom, driven by fracking, continues on a global scale. Shale land is already being leased in Western and Central Europe while foreign companies buy up land in the Marcellus Shale. A May 25 memorandum of economic and strategic dialogue between the U.S. and China prominently lists an initiative to help China assess and extract its own shale gas as an item of agreement. In Australia, where fracking has been sweeping the Queensland countryside and where landowners have little or no control over their mineral rights, a furor has been growing over the water contamination happening around drilling locations."
A Colossal Fracking Mess
Vanity Fair, 21 June 2010

"Members of Congress yesterday implored the State Department to scrutinize the 'significant' environmental impacts of a proposed massive pipeline that would carry Canadian tar sands oil 2,000 miles — from northern Alberta, across U.S. states to refineries in Texas and tankers off the Gulf coast. In a letter to Secretary of State Hillary Clinton, nearly 50 members of the House of Representatives said the agency 'must determine whether the project is in the national interest' in terms of 'clean energy and climate change priorities' before rubberstamping it."
US politicians oppose 2,000-mile oil sands pipeline
Guardian, 24 June 2010

"Chris Huhne, the energy and climate change secretary, warned last night that the threat to gas supplies from the political row between Russia and Belarus highlighted once again the desperate need for Britain to build up a low-carbon energy policy and domestic energy security through new wind farms – and possibly nuclear reactors. Huhne said it was also vital that Britain was better protected from any 'big shocks' arising from huge increases in the price of oil, as companies such as BP were forced into increasingly environmentally sensitive areas. The European gas market has been repeatedly disrupted by rows between Moscow and its former Soviet neighbours, which have led to cuts in Siberian supplies reaching the continent, triggering a sudden cut in imports to Britain. Yesterday the latest dispute escalated after Moscow cut more supplies and Belarus threatened to siphon off Russian gas supplies crossing its territory. Huhne said these stand-offs underlined the importance of Britain having its own sources of power as UK North Sea gas runs down. 'Energy has always had big geopolitical issues around it and that is why, both in terms of physical assurance of supply and in terms of guarantees against price volatility, we have a really strong incentive to develop our renewable sector,' he said."
Chris Huhne: Belarus gas dispute underlines Britain's desperate need for renewables and nuclear
Guardian, 24 June 2010

"The BP oil spill in the Gulf of Mexico has been an important political event as well as an economic and environmental disaster. It has almost certainly brought to an end Tony Hayward’s career as chief executive officer of BP. That is no great public issue in itself. However, it has also provided a check to President Obama’s drive for re-election in 2012.... The President needs to have the oil if he is to win re-election. He is like the driver of some large limousine. He can set off down the road, waving cheerfully to the crowds, but, if he has no petrol in the tank, he will not get far. Since the first oil shock in 1973, I have been writing about the economic consequences of the depletion of oil resources, the concept that is now called 'Peak Oil'. In June 1990 I wrote that 'by the end of the century the gradual depletion of the world’s oil resources will again have raised the real price of oil'. It did. The oil price has previously risen to well above $100 (£67) a barrel, and is now apparently stable at about $80 a barrel. Low-cost oil has been depleted and high-cost oil has had to be found to replace it. High-cost oil is risky and environmentally damaging. The Gulf spill may prove to have been the result of some specific act of negligence by BP. Looked at another way, this spillage was a natural consequence of US policy, which in turn was dictated by consumer demand. The President can, if he likes, blame BP, but he should also blame himself. In any case, he will share the blame as well as the responsibility.The policy of the US Administration as well as that of the oil companies has been to search for the last barrel of oil, wherever it may be, whatever it does to the environment and whatever it costs. The BP blowout is a natural consequence of this 'last barrel' policy. It is also an indicator that the peak of oil has probably been reached."
Lord Rees-Mogg - Blame BP, but blame ‘last barrel’ policy, too
London Times, 21 June 2010

"Afghanistan is Hell on Earth, a place of ragged rocks and parched hills in which warlords and drug dealers duck and dive from helicopter gunships. Nothing good there, you might think, but according to the US government, Afghanistan is not a wasteland but a treasure trove. A king's ransom of valuable minerals lies beneath the rubble of war, say people in Washington, copper and iron ore worth hundreds of billions of dollars, gold, silver and exotic materials: cobalt used as a catalyst in refineries, niobium and molybdenum used to strengthen steel. Even as President Barack Obama rages against the US's dependence on crude oil, strategists in Washington are fashioning geopolitical models of a precarious new world of dependency on strange metals. Afghanistan is now part of a global jigsaw puzzle of critical resources. A study by the Pentagon and the US Geological Survey reveals the scale of Afghanistan's mineral wealth, a resource far greater than believed. There are big reserves of lithium, a metal used in rechargeable batteries. So large are the deposits that a Pentagon memo concludes that Afghanistan could become 'the Saudi Arabia of lithium'. Out goes oil, in comes lithium. It could be the critical mineral in an electric world. But not just yet. Whatever Obama says or the green lobby believes, the US will be sucking at the teat of OPEC for the next half century, and probably much longer.....The Pentagon papers suggest that Afghanistan is a trillion-dollar mineral play, a bet on the resources that will power the new economy, right in the middle of a war zone. A Chinese consortium has already secured a contract to mine copper south of Kabul, and the Afghan Ministry of Mines is holding an investor roadshow next week in London, touting its wares to mining prospectors.....Unfortunately, this is not really about markets; it's about carving up the world into client states and securing supply routes, with gunboats if necessary. Oil has always been like this. It is no accident that Shell was originally a shipping company. Ever since the Rothschild and Nobel families began to buy lamp oil in Baku on the Caspian Sea, oil has been less about marketplaces than about the control of supply routes. The battle for access to oil has afflicted so many nations with conflict and corruption that we pray for oil's demise. We need to wake up, get down and dirty and feel the grimy ore under our fingernails. These are the minerals of mass destruction: coal, oil, uranium that stokes nuclear power stations, lithium for batteries and countless minerals that make the guts of communications technology."
If you would be king, drill not for oil but ore
London Times, 21 June 2010

"Overwhelmingly, Americans think the nation needs a fundamental overhaul of its energy policies, and most expect alternative forms to replace oil as a major source within 25 years. Yet a majority are unwilling to pay higher gasoline prices to help develop new fuel sources. Those are among the findings of the latest nationwide New York Times/CBS News poll. The poll, which examines the public’s reaction to the oil leak in the Gulf of Mexico, highlights some of the complex political challenges the Obama administration faces. For instance, despite intense news coverage and widespread public concern about the economic and ecological damage from the gulf disaster, most Americans remain far more concerned about jobs and the nation’s overall economy."
Poll Finds Deep Concern About Energy and Economy
New York Times, 21 June 2010

"The oil that's flooded into the Gulf of Mexico has created big concerns about the environmental and economic damage. Another serious outcome has gotten far less attention: peak oil. By prompting President Obama to suspend deep-water drilling in US offshore waters, the Gulf oil spill is pushing up the date at which the world's conventional oil production peaks. By itself, the United States suspension would bring forward that date only a little. But if other nations with offshore oil output or potential also stop risky offshore exploration and drilling, it could speed the arrival of peak oil at a more alarming rate. Without alternative supplies of energy to offset it, a decline in oil production would send shock waves through the world, rattling economies and politics alike. Competition for resources could be fierce. In a geological sense, the world is still awash in oil. The US Geological Survey estimates 3,000 billion barrels of conventional crude are buried in the world, about a 46-year supply if no more oil is found, according to the National Center for Policy Analysis, a public-policy research firm in Dallas. The problem is getting oil out of the ground. Much oil is inaccessible – or so expensive to drill that it's not feasible even if oil prices surged. Sometimes the environmental risks (think BP's Deepwater Horizon fiasco) may be too high....Typically, production losses are offset by new finds. The International Energy Agency has calculated that it would take the discovery of six new fields the size of those in Saudi Arabia to maintain current world oil output through 2030..."
After BP oil spill, 'peak' oil seems nearer than ever
Christian Science Monitor, 21 June 2010

"The US special envoy to Pakistan said Sunday he had warned Islamabad against signing a deal with Iran on a gas pipeline, saying the US was preparing laws that could affect the project. 'We cautioned the Pakistanis not to over-commit themselves until we know the legislation,' Richard Holbrooke, US President Barack Obama's special envoy to Afghanistan as well as Pakistan, told reporters. 'Pakistan has an obvious major energy problem. We are very sympathetic to it. In regard to the specific project, legislation is now being prepared which may apply to this project,' said Holbrooke. He declined to give details, saying he was not involved in drawing up the legislation, but cautioned that it could be 'comprehensive.' 'This can range from legislation which could be so comprehensive that something like this could create a major problem for any company or country,' Holbrooke said. Iran and Pakistan last week formally signed an export deal which commits Iran to selling natural gas to its eastern neighbour from 2014. Iran has already constructed 907 kilometres (564 miles) of the pipeline between Asalooyeh, in southern Iran, and Iranshahr, which will carry natural gas from Iran's giant South Pars field. The pipeline was originally planned to connect Iran, Pakistan and India, but the latter pulled out of the project last year. Pakistan plans to use the gas purchased from Iran for its power sector. The Obama administration on Wednesday added Iranian individuals and firms to a blacklist as part of US and European efforts to tighten the screws on Iran a week after UN approved sanctions against its nuclear programme. The new US sanctions target insurance companies, oil firms and shipping lines linked to Iran's nuclear or missile programmes as well as the Islamic Revolutionary Guards Corps (IRGC) and Iran's defence minister Ahmad Vahidi. Pakistani Foreign Minister Shah Mehmood Qureshi told journalists in his hometown Multan that he hoped the pipeline project would not come under sanctions, the Associated Press of Pakistan reported."
US cautions Pakistan over gas pipeline deal with Iran
Agence France Presse, 20 June 2010

"Serious scientific opinion argues it could stop the Gulf of Mexico oil spill. But the public wouldn’t stand for it. It is, literally, the nuclear option. As tens of thousands of barrels of oil continue to spill into the Gulf of Mexico, as Barack Obama plays the hard man and BP’s Tony Hayward plays the contrite villain, as the greatest environmental disaster the US has ever known worsens, there is one solution buzzing round the American scientific community. Nuke the well.... President Obama has never been shy of comparisons with John F. Kennedy. The oil spill is not far from the stage of his predecessor’s greatest triumph, the Cuban missile crisis of 1962. It was here that Soviet ships met the US naval blockade of Cuba and the world teetered on the edge of nuclear annihilation. For the heir of Kennedy to expose the gulf to even the tiniest doses of radiation is unthinkable...Added to the ghost of Kennedy is the very real issue of Mr Obama’s own anti-nuclear rhetoric. Detonating a device in the gulf would run contrary to the terms of the Nuclear Non-Proliferation Treaty, and be treacherous ground for a President who has been vocal about disarmament."
Wait. Is using a nuclear bomb so ridiculous?
London Times, 17 June 2010

"With up to 60,000 barrels of oil a day gushing out of BP’s ruptured well in the Gulf of Mexico, it looks as though the company is finished in its current form. And so should it be. BP has started every day of this crisis hoping for the best. Its claim that it was losing 5,000 barrels of oil a day has turned out to be a woeful underestimate. Its statement that this was not the world’s worst oil spill was foolhardy. The internal e-mails between BP executives, released by Congress, imply a possible complacency about safety that is a chilling echo of some BP management attitudes in the run-up to the 2005 Texas City refinery tragedy.But this disaster has revealed something even more serious than BP’s ineptitude. It has shown the world just how risky it is to drill under the sea to depths that no human being can withstand. Whatever the failures by the regulator in this case — and the US Minerals Management Service was clearly at fault — the realisation that Big Oil has been operating at the very edge of mankind’s technological capability will lower the value of oil drilling companies as insurance costs boom, at least in developed countries. The success of Big Oil in the past half century has been based on a simple bargain: delivering exorbitant profits to shareholders by drilling holes in the ground. In the next half century the economics may look very different. Even before this disaster the industry was having to look in ever more expensive places to find oil. The Gulf spill should serve as a wake-up call to investors that the bargain is changing. The financial and environmental risks associated with oil are becoming harder to ignore. BP’s failure to manage the risks of oil drilling raises profound questions about its ability to handle other risks. Under the leadership of John Browne, BP tried to move 'Beyond Petroleum' towards cleaner, more secure energy supplies. Under Tony Hayward, BP returned to hydrocarbons, divesting many of its small investments in solar energy, and tramping on to tar sands. Sadly, the current management is not capable of resurrecting BP as an energy company of the future.... Desperation to appear in control of a leak that is out of control has wrong-footed everyone. In declaring war on BP and encouraging the states to demand that the company create a compensation fund of $20 billion, more than three times its cash reserves, Barack Obama risks rendering the company unable to afford to pay all the damages."
R.I.P. BP?
London Times, 17 June 2010

"....despite all the fuss about global warming, the US Government... halved its energy research spending in the past decade to just $5 billion a year — one fourteenth of military research and one sixth of government spending on medical R&D. The private sector’s research efforts were even more pathetic — and still are. The entire global research effort on all forms of non-carbon energy, including nuclear power, in the past decade was only about double Microsoft’s spending on repeatedly upgrading Windows and Office. By contrast to the $10 billion spent globally on alternative energy and nuclear research, $250 billion was spent annually, according to the Stern report, on subsidising the extraction and burning of fossil fuels. BP’s much -touted $45 million investment in Solarex, the world’s biggest solar-energy company, was minuscule compared with the $70 billion the company paid at around the same time to buy the US oil giants Amoco and Arco, making BP the biggest US oil producer.....It is impossible to say whether President Obama will prove right in the prediction he made last night that the global energy outlook will be changed for ever by the Deepwater Horizon oil spill. What he can definitely do is see to it that no oil company will ever again claim that prospecting for oil is a less financially risky proposition than installing wind turbines or investing in nuclear power. The Obama Administration’s strategic objective, beyond sealing the gusher and cleaning up the mess, should be ensure that drilling for oil becomes prohibitively expensive. The oilmen and investors must be forced to recognise that the true costs and risks to society of oil exploration are far greater than the costs and risks of investing in alternative energy or nuclear power. Whether or not BP is found by the courts to have been negligently culpable, the company now faces catastrophic financial losses. If these losses threaten BP’s survival as an independent company, then oil drilling in technically challenging or environmentally sensitive locations may be recognised as too expensive by oil company managements..... A panic among shareholders after the Gulf of Mexico blowout could put an end to the world’s dependence on fossil fuels much faster than any amount of regulation or protest, just as the Three Mile Island and Chernobyl accidents almost immediately halted worldwide activity in nuclear power."
Oil addiction is suicidal. It’s also pointless
London Times, 16 June 2010

"Over the past three years, geology has become a hot topic of conversation in Brazilian homes. Most people have learnt, through the news, that buried deep under the sea bed, hundreds of kilometres off the Brazilian coast, is a thick layer of salt. And beneath the salt - in an area that has become known as the 'pre-salt'- lies a gigantic oil reservoir that President Luiz Inacio Lula da Silva has referred to as 'a gift of God' and 'the second independence of Brazil'.   The actual wealth remains 7km (4.3 miles) beneath the ocean and a long way off from being exploited, but the federal government has already made grandiose plans for Brazilian education based on these resources. And local governments are involved in bitter disputes over the sharing of the expected profits and royalties. There is no shortage of pride and enthusiasm in Brazil over the potential of the pre-salt reservoir, and apparently no intention of slowing down deepwater exploration - as other countries like the United States and Norway have done - because of the oil spill in the Gulf of Mexico. 'With the development of the pre-salt reservoir, we believe Brazil will gain its place among the top 10 oil producers in the world. We have already even been formally invited to join Opec [Organization of Petroleum-Exporting Countries],' says the director general of the federal National Oil Agency (ANP in Portuguese), Haroldo Lima..... if Brazil wants to produce more oil, its only option is to go deeper and deeper. More than 90% of the country's reservoirs are located in deep (over 400m; 1,300ft) or ultradeep (over 1,000m; 3,300ft) waters, and about 80% of the oil currently produced in Brazil already comes from these types of fields. Petrobras is the largest producer of oil in deepwater provinces in the world and is highly respected in the industry. But drilling in the pre-salt fields will pose challenges greater than Petrobras - or indeed any other oil company - has ever faced before. 'We are talking about a complex and aggressive environment: there's salt, there's corrosion, extreme pressures, weather can change, waves of 10m (33ft) can appear from nowhere... There's no engineering solution that could be 100% safe,' says Claudio Sampaio, architect for the naval engineering department at the University of Sao Paulo."
Brazil set to face deepwater oil challenge
BBC Online, 15 June 2010

"For decades, we have known the days of cheap and easily accessible oil were numbered.  For decades, we have talked and talked about the need to end America’s century-long addiction to fossil fuels. And for decades, we have failed to act with the sense of urgency that this challenge requires. Time and again, the path forward has been blocked – not only by oil industry lobbyists, but also by a lack of political courage and candor. The consequences of our inaction are now in plain sight.   Countries like China are investing in clean energy jobs and industries that should be here in America. Each day, we send nearly $1 billion of our wealth to foreign countries for their oil. And today, as we look to the Gulf, we see an entire way of life being threatened by a menacing cloud of black crude. We cannot consign our children to this future.  The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now.  Now is the moment for this generation to embark on a national mission to unleash American innovation and seize control of our own destiny. This is not some distant vision for America.  The transition away from fossil fuels will take some time, but over the last year and a half, we have already taken unprecedented action to jumpstart the clean energy industry. As we speak, old factories are reopening to produce wind turbines, people are going back to work installing energy-efficient windows, and small businesses are making solar panels. Consumers are buying more efficient cars and trucks, and families are making their homes more energy-efficient.  Scientists and researchers are discovering clean energy technologies that will someday lead to entire new industries. ... Now, there are costs associated with this transition.  And some believe we can’t afford those costs right now.  I say we can’t afford not to change how we produce and use energy – because the long-term costs to our economy, our national security, and our environment are far greater..... The one answer I will not settle for is the idea that this challenge is too big and too difficult to meet.  You see, the same thing was said about our ability to produce enough planes and tanks in World War II.  The same thing was said about our ability to harness the science and technology to land a man safely on the surface of the moon. And yet, time and again, we have refused to settle for the paltry limits of conventional wisdom. "
Remarks of President Barack Obama-As Prepared for Delivery - Address to the Nation on the BP Oil Spill
Tuesday, June 15, 2010 - Oval Office

"President Obama likened the impact of the oil spill disaster on the nation’s psyche to the September 11 terrorist attacks as he made his first multi-state tour yesterday of the Gulf of Mexico. Facing questions about his leadership amid rising public anger 56 days after the Deepwater Horizon drilling rig exploded, he sought to reassert his authority by visiting Mississippi, Alabama and Florida, the states left out of three previous trips to the region....'One of the biggest leadership challenges for me going forward is going to be to make sure that we draw the right lessons from this disaster,' Mr Obama said in an interview with The Politico news website before he set off. Vowing to move forward 'in a bold way' with a clean energy policy that would help America to reduce its oil dependency, he added: 'In the same way that our view of our vulnerabilities and our foreign policy was shaped profoundly by 9/11, I think this disaster is going to shape how we think about the environment and energy for many years to come.' Mr Obama will address the nation from the Oval Office tonight, when he will announce new measures to help to restore the Gulf’s ecosystem. Tomorrow he meets BP executives for what the White House was keen to portray as showdown talks."
Obama pledges clean energy policy to cut America’s dependency on oil
London Times, 14 June 2010

"When I interviewed Mr Hayward two weeks into the crisis he said that the Macondo well, a mile below the surface, was not pushing any envelopes in engineering terms. He has since admitted BP lacks the tools to cope with this 40,000 barrel-a-day spill, let alone the 250,000 barrel-a-day spill that it promised it could handle as a condition of its permit. The engineering envelope is shot. The industry is in over its head. This week’s spectacle in Washington is BP paying for it."
Giles Whittel - Yes, Obama is angry with BP, but not Britain
London Times, 14 June 2010

"Plans are under way to extend the life of the UK's oldest nuclear reactors, which would ease the government's need to find an extra £4bn for clean-up funding, the Guardian has learned. The Wylfa reactor on Anglesey, due to close at the end of the year, would remain open until at least 2012 if safety regulators agree. The extra electricity generated by the reactor, which began operations in 1971, would earn its parent, the Nuclear Decommissioning Authority (NDA), up to an extra £500m in revenue. EnergySolutions, the US company which operates the old Magnox reactor sites for the NDA, is also looking for a further life extension of the Oldbury reactor. It is the UK's oldest operating nuclear plant, opened in 1968, and recently regulators gave it approval to remain open until mid 2011. EnergySolutions is preparing to begin work on another extension soon."
Nuclear reactors could see closure deferred to help bridge funding gap
Guardian, 14 June 2010

"The disaster caused by the Gulf of Mexico oil spill has cast doubts over the future of deep water exploration and is likely to have the long-term effect of raising oil prices, analysts say. British oil giant BP has struggled to stem the crude gushing from a ruptured underwater pipe after the Deepwater Horizon rig it leased exploded before sinking into the sea on April 22, causing a major environmental disaster. 'The benefits of being able to drill and produce in deep and ultra-deep waters are brought into question now it has become clear that basic remediation of problems is extremely difficult in deep water,' said analysts at Barclays Capital. BP chief executive Tony Hayward concurred, saying: 'What is taking place is an issue which will impact the global oil and gas industry and will necessarily have a very broad impact not only in the United States but around the world.' The first direct consequence for the industry was the US administration's declaration of a six-month moratorium on new deep-water drilling and delays on planned exploration off the Alaska coast. According to a study by Wood Mackenzie energy consultants, these restrictions would cut global production by 80,000 barrels a day in 2011 -- just under one percent of the total. The moratorium also raises questions about equipment already in the Gulf of Mexico. 'If rigs leave the region, restoration in drilling activity will take time as equipment needs to be brought back in,' Barclays Capital said. The oil spill fall-out could also have the more far-reaching effect of deterring oil companies from going ahead with similar deep water projects. 'There is now considerable uncertainty over the future of deep water exploration, both in the US and elsewhere,' said Helen Henton, an analyst at Standard Chartered Bank. In the United States, this could have a serious impact. The Gulf of Mexico represents 19 percent of US oil reserves, of which 80 percent are found in deep water, and 29 percent of national production, she said. Washington believes the region is crucial to future global energy supplies -- between 2008 and 2014, production is expected to increase by half a million barrels a day compared to current levels. The crisis could also deter those firms hoping to take advantage of Brazil's vast offshore reserves -- as many as 50 billion barrels of crude are thought to lie under a vast salt layer deep in the ocean. And in the North Sea, where the big oil fields are exhausted, the future of exploration also lies deep under the sea, east of Britain's Shetland Islands. Despite the risks, oil firms have little choice. Locked out of the 'easy' oil fields in the Middle East -- with the exception of Iraq -- they are forced to turn to increasingly difficult areas. 'In the future, it is inevitable that technology and risk will increase, not diminish, as 'easy' sources of oil are depleted and as the exploration effort moves into new and ever more challenging frontiers,' said Tim Morgan, global head of research at Tullett Prebon. Delayed projects, tighter legislation and more and more expensive technology all point towards the same conclusion -- the price of oil will go up. 'We think the long end of the market will gradually price in more of the oil spill effect,' said Torbjorn Kjus, oil market analyst at DNB Nor."
Oil spill casts doubts on deep water exploration: analysts
Agence France Presse, 13 June 2010

"Oil futures for delivery in 2018 at less than $100 are 'undervalued' as BP Plc’s spill in the Gulf of Mexico will raise the costs of exploration and lead to drilling restrictions, Barclays Capital said. 'Oil will be slower onstream, more expensive to produce, it will be more politicized and there will be less of it,' Barclays analysts including Paul Horsnell said in a report today. 'All of those are factors that make us look at the current back of the oil curve and see it as undervalued at current levels of a shade below $100.'.... President Barack Obama has extended a ban on new deepwater permits and exploration in the Alaskan Arctic for six months following the accident. Stricter regulation may add $5 a barrel to long-term oil contracts, according to Deutsche Bank AG, while a one-year worldwide delay in deepwater drilling may cut as much as 500,000 barrels a day from 2013 supply, according to Sanford C. Bernstein analysts. The number of rigs drilling in the Gulf of Mexico plunged 50 percent last week to the lowest level in 16 years, Baker Hughes Inc. reported June 4. U.S. output may be cut by 150,000 to 200,000 barrels a day next year because of new limits, Deutsche Bank said. 'We see the consequences as being more severe than the postponement of Gulf Coast volumes,' Barclays said in the report today. 'It looks likely to become an iconic event, a touchstone and rallying flag for opposition to the oil industry across a wide series of fronts and issues for years to come.'"
Barclays Says BP Spill Makes $100 Future Oil Cheap
Bloomberg, 11 June 2010

"GLOBAL oil demand will peak within six years, says an influential energy analyst. Forecasts of relentless consumption growth in China are wrong, claims Peter Tertzakian, head of Arc Financial, an energy-focused private-equity firm and an authority on global energy markets. And oil's dominance of the transportation market will be eroded by the growth of alternative energy sources. It is a combination that should shock companies and countries that assume GDP growth will always equate to rising oil demand. As oil consumption has tapered off in the rich West, producers have increasingly focused on the expanding economies of Asia and the Middle East, where consumption continues to surge. But even Chinese demand will reach a plateau within three to five years, Tertzakian says."
A fundamental threat to oil
Petroleum Economist, 10 June 2010

"BP has revealed that more new oil was produced in the Gulf of Mexico last year than any other region in the world, as the company seeks to persuade the US government that its giant spill should not halt deepwater drilling. At its annual economic review, the energy major made the case for pushing ahead with exploration of 'difficult' – harder to extract – oil, saying global demand will now rise after last year's sharp reduction in consumption. Oil fields in the Gulf of Mexico, where BP is currently fighting to plug a leaking well, are some of the most productive and profitable in the world..... Oil consumption in developed countries has fallen back to 1995 levels, as heavy industry suffered during the downturn and governments turn away from fossil fuels blamed for causing climate change. The report found that world demand dropped by 1.2m barrels per day, causing Opec to rein back production to sustain prices. However, demand for oil rose in China, India and Saudi Arabia, where usage even outstripped the growth of their economies. Dr Ruhl believes consumption will rise again this year on demand from developing economies, which will push companies towards increasingly difficult oil exploration, such as deepwater drilling. 'Global oil demand is no longer declining and appears to be on the rising path in 2010,' he added."
BP oil spill: Most new oil 'coming from Gulf of Mexico'
Daily Telegraph, 10 June 2010

"World oil consumption fell by 1.2m barrels per day (bpd) in 2009, the second consecutive annual decline and the largest volume since 1982, BP said in its annual Statistical Review of World Energy today. The world's oil production dropped by 2m bpd, or 2.6%, which was also the largest decline since 1982, the review said. It said global oil refining capacity additions totalled 2m bpd, with the Asia-Pacific region accounting for 80% of the increase. The world's proven oil reserves stood at 1.33 trillion barrels last year, an increase of 700,000m barrels from 2008. The world's gas reserves grew by 2.21tn cubic metres last year, while production fell by 2.1%, marking the first decline on record, BP said."
Decline in oil consumption largest since 1982
Guardian, 9 June 2010

"In Pipelineistan, Russia and Turkey are now brothers in arms. Russia will build a crucial Samsun-Ceyhan pipeline to bring Russian oil from the Black Sea to the Mediterranean. Moreover, Turkey is about to join the Russian South Stream gas pipeline - and that means a direct blow to the troubled US/EU-supported Nabucco."
The method in Israel's madness
Asia Times, 9 June 2010

"Britain's former chief scientist has attacked politicians and industry experts who have their 'heads in the sand' over dwindling oil supplies. Sir David King said governments, including the UK's, were too eager to believe the optimistic predictions of economists who tell them that 'oil will be squeezed out of the ground pretty much forever'. King, the government's chief scientific adviser from 2000 to 2007, is now director of the Smith School of Enterprise and the Environment in Oxford. He said: 'That's what governments want to hear and that's what they do hear, and I think the British government as much as many others.' He added that those with a 'vested interest' repeatedly overstated how much accessible oil remains in the ground. Conventional oil reserves are about 30% lower than widely reported, he said. Established oil sources were becoming harder to exploit, he said, leading to wider use of unconventional sources such as deepwater drilling, with environmental impacts including those seen with the Deepwater Horizon spill in the Gulf of Mexico. He said oil demand would overtake production capacity as soon as 2015, which would drive up the price further."
Top scientist says politicians have 'heads in the sand' over oil
Guardian, 9 June 2010

"Azerbaijan and Turkey yesterday (7 June) signed a deal to ship 11 billion cubic metres of Azeri gas per year to Turkey. Shipments would start in 2017 and some of the gas may be pumped into the EU's planned Nabucco pipeline. Meanwhile, Northern Iraq declared in Turkey that it stands ready to provide gas supplies 'to make Nabucco work'. The agreement was signed in Istanbul by Azerbaijan's minister of industry and energy, Natig Aliyev, and Turkey's minister of energy and natural resources, Taner Yildiz, EurActiv Turkey reported. The ceremony took place in the framework of a visit to Turkey by Azeri President Ilham Aliyev. The agreement covers gas supplies from Azerbaijan's Shah Deniz 1 and Shah Deniz 2 developments in the south-west Caspian Sea. Turkey currently buys about 6.6 billion cubic metres of Azeri gas per year but does not always use it in full. Aliyev said in mid-May that if it were to receive attractive offers, Azerbaijan might join new gas projects, including Nabucco, according to news channel CNN Turk....Meanwhile, Russia signed a deal in Athens on 7 June to found a joint company for building a section of Gazprom's planned South Stream gas pipeline on Greek territory. South Stream is the Gazprom-favoured rival of Nabucco. The new company, called South Stream Greece S.A., will be headquartered in Athens, with each side holding an equal 50% stake in the joint venture. Russia had already secured intergovernmental agreements to build South Stream with Hungary, Austria, Bulgaria, Greece and Croatia."
Turkey brokers key gas supply deals for Nabucco
EurActiv, 8 June 2010

"Shale gas cannot be seen yet as a game changer in Europe as it is in the United States, where roughly 50% of the country's needs are met by developing unconventional gas. The conclusion was reached by international experts at a public event held in Brussels yesterday (7 June). To illustrate the possible impact of developing shale gas in Europe, Don Gauthier of the US Geological Survey said that in an area the size of the Benelux countries, there would have to be up to 6,000 wells, an impact that would probably attract environmental opposition. Speaking at a conference organised by IFRI, the French Institute for Foreign Relations, Gauthier explained that the reason for such concentration was that unlike natural gas, unconventional gas needs a high density of wells, including horizontal wells. Conventional gas costs less, as it is extracted at much higher volumes from only a few vertical wells. Citing the US experience, Gauthier further explained that operators need to reach agreements with land owners. This, he said, was an easy task in Texas, but much more difficult in the New York area, where in his words 'a lot of debate' on water issues had been taking place.... The development of shale gas, which sees chemicals added to the water to facilitate the underground fracturing process that releases natural gas, is a concern to environmentalists. Fracturing fluids, designed to free gas trapped between layers of shale, are developed by companies to suit the geologic characteristics of each individual site. The wide variety of rock types, experts explained, means that a chemical developed for a site in the US would have little if any application elsewhere. They were answering a question from EurActiv. The countries where shale gas is presumed to exist in the EU are Germany, Poland, Sweden, France, Austria, Hungary and the UK.... According to estimates, Poland's shale gas reserves stand at 1.4 to three trillion cubic metres, enough to satisfy the country's needs for the next 100-200 years, Zalevska said. However, she was quick to add that there was not yet enough evidence to prove this. Indeed, no shale gas fields have been documented in Poland yet, she revealed. The first estimation, she said, was due in 4-5 years and the first potential production in 10-15 years. Hans Van Der Loo of Royal Dutch Schell concurred that unconventional gas reserves in Europe had yet to be proven and warned that it was not certain to prove commercially successful. Some firms might end up losing money, he cautioned."
Shale gas not yet game-changer for Europe
EurActive, 8 June 2010

"Estonia’s greenhouse gas emissions have been halved since 1990, which surpasses by many times the goals set in the international Convention on Climate Change. But this is not enough. Estonia’s period of transition agreed with the European Union with regard to the Narva power plants comes to an end in 2016.  By then the production units dating back to the Soviet era will have been partly modernised and partly replaced with new equipment. The Narva power plants utilise oil shale, which is a fossil fuel, to produce electricity for the use of Estonia, the Baltic States, and the Nordic Countries. 'This EUR 100 million investment is one of the largest in recent years. It enables the significant reduction of the environmental impact of the old units while the present electricity production capacity is ensured in the future as well', says Tõnu Aas, CEO of the Narva Power Plants."
Estonia to give up use of oil shale in energy production
HELSINGIN SANOMAT, 8 June 2010 

"Gains in oil sands production is expected to outstrip increases in Alberta's processing capacity over the next decade as oil companies go slow on building new facilities to protect profit margins and guard against the return of surging construction costs. The province's energy regulator said on Monday that this trend will prevail despite government efforts to foster construction of upgrading plants to bolster economic activity and job creation from the vast oil sands resources of northern Alberta, the largest crude source outside the Middle East. In its annual report, the Energy Resources Conservation Board (ERCB) predicted production of raw bitumen from the oil sands would more than double to 3.2 million barrels a day by 2019 from 1.49 million in 2009. The figure for last year was up 14 percent from 2008. Output of upgraded synthetic oil, meanwhile, is expected to hit 1.3 million barrels a day, a 77 percent increase in 10 years, the ERCB said."
Alberta upgrading capacity to lag oil sands output
Reuters, 7 June 2010

"We have recently been discovering some of the limits of Man's power over Nature, first in terms of volcanic ash, and now oil. The Gulf of Mexico spillage reflects the risk of pushing oil exploration to the limit of technology 5,000ft below the sea's surface....Nobody would be looking for oil at 5,000ft if there were new supplies in shallower waters. The oil market registers the scarcity of oil. Last week oil was $74 a barrel for Brent Crude. The progressive rise in the price over the past 30 years has been a measure of the growth in demand and the failure of supply to meet that demand. If the oil companies are to satisfy their markets, they have no choice but to develop high-cost sources which in earlier decades would have been regarded as hopelessly uneconomic. Indeed, President Barack Obama's administration started with a pledge to make the United States nearer self-sufficient in oil by encouraging development projects offshore. The BP spillage in the Gulf of Mexico has done considerable damage to that policy. There are three facts which have to be recognised. The first - and most important - is that the age of readily available petroleum is over. For some time there has been a theory that the world had already reached 'peak oil': the point at which the growth of demand for oil exceeds the growth in supply. The BP disaster goes beyond the doctrine of peak oil. We are now at the point of 'peak technology', where the risks of drilling technology have become greater than society is willing to support. In the United States, the oil risk has become a political risk....After the setbacks for President Obama and America's energy policy, the greatest damage, of course, has been done to the environment of the Gulf and to BP itself. It is the largest British company, and the most important in terms of British pension funds and their investments. Britain has therefore suffered-hard financial damage as well as damage to its reputation in the United States. Not surprisingly, there is a widespread American anger against BP."
Lord Rees-Mogg: A slippery business: It's the end of easy oil - and maybe BP too
Daily Mail, 5 June 2010

"Canada's Cameco Corp. (CCJ) and Kazakhstan's Kazatomprom aim to launch a uranium-conversion plant in the Central Asian state in 2016-2017, Cameco's Chief Operating Officer Bob Steane said Friday.  'We absolutely believe...there will be a need for new conversion in 2016-2017,' Steane told Dow Jones Newswires on the sidelines of an international investment conference in Almaty. 'We are targeting to be in a position to capture that demand when it is coming in." Cameco and Kazatomprom plan to have a feasibility study done for the facility 'in the next couple of years,' Steane said, adding 'conversion only makes sense when you get 12,000 or more [metric] tons capacity,' referring to the size of the proposed plant. He also said there was an oversupply of uranium currently in the market but he didn't think 'oversupply is going to stay for a long time.' Part of the oversupply is 'because people allowed their inventories to go down. 'In terms of oversupply at the reactors, pretty quickly they are going to have to start buying and restoring their inventories and that supply will disappear,' Steane said."
Cameco, Kazakhstan Eye Uranium Conversion Plant In 2016-2017
Dow Jones, 4 June 2010

"The oil spill in the Gulf of Mexico has already been described as the biggest environmental crisis in US history. The efforts to stop the leak, repair the damage to the ecosystem and compensate those whose livelihoods depend on clean waters will come at a tremendous cost to BP. We still don’t know what the final bill will be — or how BP and its reputation will manage. Tough questions are rightly being asked of the oil industry, but the disaster raises wider issues than the culpability of a few companies. It poses a fundamental question about whether our dependency on oil and other fossil fuels is sustainable. Oil, coal, gas and uranium make up 90 per cent of the world’s traded energy. As these supplies deplete and demand increases, energy companies are taking greater risks to find new reserves. I fear, as we are pushed into more difficult terrain, that this means more danger and risk. We have already encountered kidnap attempts on gas workers in Africa, piracy attacks on oil tankers, coalmines collapsing at extreme depths and now we have an oil spill 5,000ft under the sea. And energy companies are considering exploring the even riskier and remote territory of the Arctic. Insurance companies, such as Lloyd’s, have the dual role of paying claims when these risks become real and advising business on how to manage those risks so that their enterprises don’t become uninsurable. For example, in the 1870s it was an insurance company that promoted the development of fire sprinklers in factories. Energy risks now account for just over 6 per cent of Lloyd’s business at £1.4 billion. We have already paid out on claims for the loss of the Deepwater Horizon rig and our total claims from this tragic incident could amount to $600 million. We need to ask: what can be done to reduce the chances of this happening again? And are the environmental and economic costs of continuing our quest to meet the demand for finite and hard-to-reach fossil fuels proving too much? If the slick in the Gulf is the first indicator of the potential economic chaos we face as demand pushes us into ever riskier places, then securing our energy supply means investing in clean and renewable energy technology.... Just as the Gulf of Mexico disaster hit thousands of businesses, these energy shocks could reverberate across company balance sheets everywhere in the coming years. But there is a worrying lack of awareness among all businesses of how inextricably linked their futures are to stable access to energy. A transition to a more resilient energy system could transform the economy, just as coal did two centuries ago. We have already taken the first steps: renewable energy made up two-thirds of new energy installations in Europe last year and China became the world’s largest manufacturer of wind-power generators and the second largest installer. And several insurers, including Lloyd’s syndicates, now have units dedicated to insuring the renewable energy market. Nations are recognising that green energy is no longer just a friendly optional extra; it’s an increasingly essential aspect of protecting energy security and an economic opportunity. The Obama Administration’s response to the oil leak leaves little doubt that environmental regulations will be strengthened. This regulation by political force, sweeping across several industries, will only add to the pressures that the energy sector faces."
Business can’t rely on oil after Deep Horizon
London Times, 4 June 2010

"A year ago, the Kremlin issued a stark warning: that growing competition for control of global energy resources could spark wars on Russia's borders, including those in Central Asia. 'Problems that involve the use of military force cannot be excluded, that would destroy the balance of forces close to the borders of the Russian Federation and her allies,' said a key Kremlin strategy document assessing the main security threats of the coming decade. Just 20 years ago, Russia and the energy-rich countries of Central Asia, such as Kazakhstan and Turkmenistan, and Azerbaijan in the South Caucasus, were all united, as parts of the Soviet Union. Moscow would have had unfettered access to their oil and gas reserves. But the Central Asian states realise one of their greatest strategic strengths as independent countries is playing off the big global powers now scrambling to buy their precious energy supplies. So, Moscow now finds itself in fierce competition with the big players: China, the US and Europe. 'Russia's overall position in Central Asia is shrinking,' says Mikhail Kroutikhin, editor-in-chief of the Russian Energy Weekly. 'Russia is in retreat and the Chinese are jumping on the big opportunities.' Rivalry in the region is often compared with the 19th Century British-Russian imperial rivalry nicknamed the 'Great Game'. The past year has seen some key moments in the new energy 'Great Game' in Central Asia, with the first pipelines being commissioned that take oil and gas east to China, instead of north and west. From Kazakhstan, 200,000 barrels of oil are now being pumped every day across the border into the western Chinese province of Xinjiang, and there are plans to double this pipeline's capacity. From Turkmenistan, a pipeline carrying gas to China via Uzbekistan and Kazakhstan was opened last December by the Chinese President Hu Jintao. It could satisfy around half of China's current demand by the time it reaches full capacity in 2013. Turkmenistan's President Kurbanguly Berdymukhamedov called the deal 'political' as well as commercial and heaped praise on China's 'wise policy', saying it had become 'one of the key guarantors of global security'. With this agreement, Russia's stranglehold on supplies from Turkmenistan, which has the fourth-largest reserves of gas in the world, was broken. And while China and its new Central Asian energy partners were locking themselves in an ever-warmer embrace, Moscow found itself at loggerheads with its erstwhile client state. Having agreed two years ago to pay a much higher price for Turkmen gas, to ensure it remained a loyal supplier, the Russians suddenly shut the taps 12 months ago, causing the pipeline to explode. Analysts believe Moscow had decided it did not need the gas because of the downturn in global demand and prices during the economic crisis. Even now it is only taking a third of what it was expected to buy, angering the Turkmen government and pushing it further into the arms of the Chinese. 'As regards Russia's role in the region, it has taken a step back in energy,' says Chris Weafer, chief strategist at Uralsib Bank in Moscow. He believes it was not just the global economic crisis that prompted this. It was also, he says, because Europeans searching for gas supplies for their planned Nabucco pipeline were offering much higher prices for Central Asian gas. 'The game changed because of Nabucco. Up to 2006, Russia could buy cheap gas from Turkmenistan, Uzbekistan and Kazakhstan - $50 for 1,000 cubic metres and then sell it to Europe for $250. 'But from the start of 2008, Russia had to agree to pay European prices - $300 per 1,000 cubic metres.' 'Gazprom was not making any money out of it. So the political will to be involved has abated. Russia has let the Chinese into Central Asia.' And that is something Moscow may ultimately come to regret, because it also wants to be a major supplier of oil and gas to China. With China already heavily investing in the two most important Central Asian energy suppliers, Turkmenistan and Kazakhstan, Russia may struggle to compete. Moscow has had agreements with Beijing to build a gas pipeline into China since 2002, but the two sides have been haggling ever since over the price of the gas supplies. Analysts say a deal may finally have been done - on the condition that the gas comes from a field and pipeline that are exclusively for Chinese use. Officials also hope the first oil pipeline between the two countries will be completed by the end of this year. But some analysts question whether Russia will have sufficient reserves to supply the gas pipeline, given the expected decline in its production over the next 20 years and the lack of investment in new fields since the collapse of the Soviet Union in 1991. 'It [the pipeline to China] will have to tap reserves already going to Europe,' says Mikhail Kroutikhin. 'It is not economic, but Prime Minister Putin wants it to be built.' Another project which Mr Putin is determined should go ahead is Russia's South Stream gas pipeline, across the Black Sea and into the heart of the European Union. The rivalry between this and Europe's alternative plan - the Nabucco pipeline - is one of the most intense in the Caspian Sea region. The Europeans, who want to break free from their growing dependence on Russian energy supplies, desperately need supplies from the region to make the Nabucco pipeline viable. And the Russians are trying to thwart this. One key battleground is Azerbaijan, which has yet to declare whether it will feed Nabucco with its gas. Its decision is critical."
Struggle for Central Asian energy riches
BBC Online, 2 June 2010

"The financial crisis and the global recession had limited effect on efforts to lower production costs for Canadian oil sands, companies including Statoil ASA and Canadian Oil Sands Trust said. 'Both operating expenditures and maintenance capital have been on a rising trend and when oil prices accelerate, that trend accelerates along with it and we got a very good taste of that in the last five years,' Marcel Coutu, chief executive officer of Canadian Oil Sands said today at an Oslo conference. 'When oil prices crash, those operating costs unfortunately lag and it takes some time for them to come down.' Labor costs have led an across-the-board increase, Coutu said in an interview. Weekly earnings in Alberta’s oil and gas industry have climbed 50 percent from 2002 to about C$1,800 ($1,700), according to the Canadian Association of Petroleum Products. For new projects, the capital costs per daily barrel of oil have climbed to $35,000 from $12,000 to $15,000 at the start of the decade, Robert Skinner, senior vice president at Statoil said in an interview. The Norwegian company estimates break-even prices for projects using steam assisted gravity drainage technology at $65 to $75 a barrel, Skinner said. Cost for new supply is at $60 to $80 a barrel, depending on whether it’s from drilling or mining, Greg Stringham, vice president for oil sands at the petroleum association, said at the conference."
Production Costs Climb for Canadian Oil-Sands Producers, Companies Say
Bloomberg, 2 June 2010

"Controversial plans for the first coal-fired power station to be built since the 1970s have been formally lodged. The plant, at Hunterston in Ayrshire, would use experimental carbon capture storage (CCS) technology, which removes carbon dioxide emissions and stores them underground. The £3 billion proposal is the first of its kind in the UK but faces strong opposition from local people and environmental groups, who argue that it will damage local wildlife."
Plans for first coal power plant since 1970s
Daily Telegraph, 2 June 2010

"Inch by inch, Iraq is crawling out from beneath the rubble of a warzone and building an energy colossus. Increasingly, too, there is help at hand to turn its oil and gas resources into gold. A clutch of big oil multinationals has entered into service contracts with the country to develop several huge oilfields, including Rumaila, a monster that already delivers 1.1 million barrels per day, almost half of Iraq’s current output. BP is charged with raising the bar at Rumaila and by 2016 it expects output to reach a plateau of 2.8 million bpd, a level greater than the present output of every Opec state except Iran and Saudi Arabia. Others have joined the drilling frenzy. Shell, ExxonMobil, Italy’s Eni and Statoil of Norway are working alongside Russia’s Lukoil and Petronas, the Malaysian company, and this month CNOOC, the Chinese state oil company, put its shoulders behind Iraq’s oil reconstruction. The total potential is about 12 million bpd by 2016, equal to existing estimates of Saudi Arabia at maximum throttle. But Iraq is a huge headache for Opec, the oil cartel of which it is a passive member. Iraq has not had an oil output quota since 1998 because of the sanctions against Saddam Hussein’s regime. Its quota was almost equal to Iran, at 3.9 million bpd, reflecting the rivalry of the two countries, but war and neglect took their toll on Iraq’s oil industry and output is now 2.4 million bpd. The question is how Opec will bring Iraq back into the fold. Unless global demand for crude soars over the next five years, big cuts in the output of Saudi Arabia and the other Gulf states will be needed to accommodate it."
Iraqi oil: There’s plenty of it, but can Opec cope?
London Times, 1 June 2010

"Britain is facing a £4bn black hole in unavoidable nuclear decommissioning and waste costs, Chris Huhne, the energy and climate change secretary disclosed tonight. The decommissioning costs over the next four years revealed by officials to Huhne are so serious that he has already flagged the crisis up to the cabinet.' The revelation places an unexpected burden on his department's £3bn annual budget ahead of difficult spending negotiations this summer. 'As you can imagine, this is a fairly existential problem. The costs are such that my department is not so much the department of energy and climate change, as the department of nuclear legacy and bits of other things,' Huhne told the Guardian. The additional costs derive from slowly rising expenditure on nuclear decommissioning, and falling income due to the closure of ageing power plants, Huhne said. Huhne disclosed that in current financial year the Nuclear Decommissioning Authority's budget is expected to be in balance.From 2011-12, the deficit suddenly rises to £850m, in 2012-13 the gap increases further to £950m and then to £1.1bn in the two subsequent years. The black hole is equivalent to wiping out one-sixth of the overall cuts in public spending identified by the Treasury with such fanfare last week. But Huhne insisted: 'I do not think it is possible for anyone responsibly to stand aside and say we are not going to deal with it. We just have to, but what we are effectively paying for here is decades of cheap nuclear electricity for which we have suddenly got a massive postdated bill.' The revelation will also hand further ammunition to those who say a new generation of nuclear power stations in Britain will end up being more expensive than the industry claims."
Chris Huhne warns of £4bn black hole in nuclear power budget
Guardian, 1 June 2010

"Some of the world’s biggest energy companies are stockpiling the nuclear fuel used to power reactors as they try to capitalise on rock-bottom uranium prices. An oversupply of nuclear fuel on international commodity markets has followed five successive years of rapid growth in uranium ore production in Kazakhstan, which has nearly quadrupled its output since 2004. Raw uranium prices have tumbled to around $40 per pound — almost one quarter of the levels of $140 in 2007. Ed Sterck, uranium analyst at Bank of Montreal, said that the low price was encouraging nuclear power station operators such as Exelon, of the United States, Germany’s E.ON and EDF, of France, to boost their stocks of nuclear fuel.... Nik Stanojevic, mining analyst at Brewin Dolphin, said that prices had fallen sharply after output from Kazakhstan increased. It has risen to 13,665 tonnes in 2009, up from 3,719 tonnes in 2004, and the country now supplies about 27 per cent of the world’s total mined uranium production — 50,338 tonnes in 2009. About one third of the world’s total supply of nuclear fuel comes from Russian nuclear weapons that have been decommissioned as part of a disarmament agreement struck with the United States at the end of the Cold War. These supplies are being gradually depleted and are expected to fall away steadily in the next few years."
Nuclear giants stockpile fuel while price is cheap
London Times, 1 June 2010

"The fact that BP was drilling for Macondo – a tiny field under a mile of water containing less than 12 hours' global consumption – tells us all we need to know about the state of oil depletion. Deepwater production – anything under more than 500 metres of sea water, far too deep for divers to work should anything go wrong – has quadrupled from less than 2 million barrels per day (mb/d) in 2000 to 8 mb/d today, precisely because onshore and shallow offshore supplies are running down. The industry only drills at such extreme depths because there are very few alternatives – the Canadian tar sands and Iraq are equally unpalatable – and it is a clear sign of impending peak oil. Ironically one impact of the BP spill, the US moratorium on deepwater drilling, is likely to hasten and worsen the effects of the global production peak. One analyst forecasts the ban could deprive the world of an additional one million barrels per day from 2016."
David Strahan: Americans should be thanking BP
Independent, 1 June 2010

"Ministers have ordered a review of looming global shortages of resources, from fish and timber to water and precious metals, amid mounting concern that the problem could hit every sector of the economy. The study has been commissioned following sharp rises in many commodity prices on the world markets and recent riots in some countries over food shortages. There is also evidence that some nations are stockpiling important materials, buying up key producers and land and restricting exports in an attempt to protect their own businesses from increasingly fierce global competition. Several research projects have also warned of a pending crisis in natural resources, such as water and wildlife, which have suffered dramatic losses due to over-use, pollution, habitat loss, and, increasingly, changes caused by global warming. Professor Bob Watson, the chief scientist for the Department for Food, Environment and Rural Affairs, the leading department in the initiative, said every sector of the British economy was directly or indirectly vulnerable to future shortages. These could be caused either by resources running out or becoming harder to access because of geopolitical factors from war to tighter environmental regulation on resources such as timber and palm oil – the latter being found in an estimated one in 10 products, from chocolate to cosmetics, sold in Britain."
Government review to examine threat of world resources shortage
Guardian, 31 May 2010

"Turkmenistan has launched work on a new gas pipeline that will connect the hydrocarbon-rich Central Asian country with western markets and decrease its reliance on Russia's delivery network.The pipeline -- dubbed East-West -- will stretch 620 miles (1,000 kilometers) from the Southern Yolotan-Osman field near Afghanistan and carry up to 30 billion cubic meters of natural gas annually to the Caspian Sea. President Gurbanguli Berdymukhamedov said Monday that the $2 billion pipeline will give both economic and political clout to the country and help secure global energy security after its scheduled completion in 2015. The new Turkmen pipeline could become a crucial move in Europe's drive to reduce its dependence on Russian gas."
Turkmenistan starts new gas pipeline to West
Associated Press, 31 May 2010

"... according to Nigerian academics, writers and environment groups, oil companies have acted with such impunity and recklessness that much of the region has been devastated by leaks. In fact, more oil is spilled from the delta's network of terminals, pipes, pumping stations and oil platforms every year than has been lost in the Gulf of Mexico, the site of a major ecological catastrophe caused by oil that has poured from a leak triggered by the explosion that wrecked BP's Deepwater Horizon rig last month. That disaster, which claimed the lives of 11 rig workers, has made headlines round the world. By contrast, little information has emerged about the damage inflicted on the Niger delta. Yet the destruction there provides us with a far more accurate picture of the price we have to pay for drilling oil today."
Nigeria's agony dwarfs the Gulf oil spill. The US and Europe ignore it
Guardian, 30 May 2010

"A major oil pipeline between Canada and the U.S. seemed like a pretty good idea five years ago. Crude oil prices were rising as global demand increased dramatically. The entire oil market was stretched to near capacity. A proposal by Calgary-based TransCanada to build a pipeline linking Canada's vast oil fields to the Midwest seemed like the right play. Then Hurricane Katrina hit the Gulf Coast, crippling more than 25 percent of America's crude oil production and roughly 15 percent of its refining capacity. Suddenly, that pipeline idea skyrocketed to celebrity status among oil producers. Within months of Katrina's wrath, TransCanada had locked up contracts for 83 percent of the pipeline's capacity for an average of 18 years. Today, the Keystone pipeline stretches 2,151 miles at a cost of $5.2 billion, proving to be one of the longest and most expensive pipelines ever built in North America. It starts at Alberta's Athabasca tar sands and passes through the St. Louis area at the ConocoPhillips' Wood River refinery in Roxana. And the oil is expected to begin flowing next month — moving about a half-million barrels a day, enough to supply about 2 percent of the country's daily demand. 'We're trying to link the free world's largest source of crude oil with the largest refining market in the world — and that's the U.S. market,' said TransCanada Vice President Robert Jones, who heads the Keystone project. 'It's just a natural marriage.' Just not exactly the best timing. Much has changed since the project broke ground and oil approached $150 a barrel. The global economic slump slashed demand, and oil prices plummeted. Energy firms focused more on renewable energy. And, most recently, the BP spill has raised serious concerns over U.S. oil dependency and the environmental risks involved in extracting and delivering it. 'The tar sands and the gulf spill are symptoms of the same thing: We're running out of easy oil, and the oil industry is forced to go to extreme measures to meet the need,' said Simon Dyer, oil sands program director with the Pembina Institute, a Calgary-based sustainable energy think tank. 'There's a lot of recognition that we need to move to a clean energy future. The oil sands is leading us in the opposite direction. There's a real disconnect there.'"
TransCanada oil pipeline nearly ready for crude to flow to U.S.
ST. LOUIS POST-DISPATCH, 30 May 2010

"Royal Dutch Shell, the energy major, has almost doubled its reserves of shale gas with the $4.7bn (£3.2bn) acquisition of East Resources. Shell is now the owner of three of the most attractive shale gas prospects in North America – in Texas, Canada and now the Marcellus shales in the northeast US. US gas reserves have increased 10-fold since the discovery of shale gas over the last few years. Now oil majors are rushing to buy shale fields, where gas can be extracted from rock by fracturing the ground."
Shell expands US shale gas reserves with $4.7bn purchase of East Resources
Daily Telegraph, 28 May 2010

"The amount of oil consumed in the world is unbelievable—85 million barrels a day. And we are not making more of it. People throw around the term 'peak oil,' but that doesn't mean the system will run out of oil. It means the amount of oil you're gaining by finding new oil fields—and bringing them onstream—is equal to the losses you're taking as other fields run down. The U.S. was the first country to peak in 1970, but that was a seamless transition since the oil companies just brought in more oil on tankers. Now the U.S. is importing about 67 percent of its oil. The business of peaking is now usual: There are 30 non-OPEC countries with significant production. Thirteen of these have peaked or are about to peak, and they contribute some 52 percent of the oil volume outside OPEC. World oil production will peak sometime between 2015 and 2020. The plateau should last for three to five years. The price will go up, since the supply isn't rising and demand will be strong. That will scare people. Wall Street hasn't accepted yet that the oil reserves are so limited."
Barreling Toward Peak Oil
BusinessWeek, 27 May 2010

"Thanks to a drilling boom in new fields extending from Texas to New York, natural gas has become as an environmentally friendly competitor to wind. Big new discoveries in shale deposits have brought down the price of natural gas by 60 percent from two years ago. Michael O'Sullivan of NextEra Energy, Iowa's second-largest producer of wind power, told the American Wind Energy Association meeting in Dallas this week: 'Our product is too expensive relative to other options. Our competitive advantage has largely evaporated.' The sudden rise of natural gas is credited with throwing wind energy into another of its periodic slowdowns. Iowa, with 3,670 megawatts of wind electricity generation, trails only Texas among the 50 states in wind capacity. Iowa is seeing the herky-jerky path of wind. The state has gained about 2,300 jobs making towers, turbines, blades and gearboxes at plants in Cedar Rapids, Fort Madison, Newton and West Branch."
Natural gas takes breeze from wind energy's sails
Des Moines Register, 27 May 2010

"The planned ITER fusion reactor in France is supposed to replicate conditions inside the Sun to produce limitless clean energy. But skyrocketing costs are putting the international project at risk. Now Germany's research minister has said Berlin will not write a blank check for the technology.....Originally, the futuristic reactor was supposed to cost around €5 billion ($6.15 billion). That was the figure given in 2006 when the participating partners -- the European Union member states, China, India, Japan, Russia, South Korea and the United States -- agreed to fund the project. The Europeans were supposed to shoulder 40 percent of the costs, with the remaining partners taking on 9 percent each. But a recent estimate by the European Commission has revealed that the total costs have already tripled to €15 billion, as a result of higher raw material prices and new safety requirements, among other expenses."
Spiraling Costs Threaten International Fusion Reactor Project
Spiegel Online, 26 May 2010

"The rising costs of extracting oil are propping up New York futures for the years ahead, even as prices sink for crude that will be delivered over the rest of this year. The futures contract closest to delivery on the New York Mercantile Exchange tumbled 13 percent in the past three months to below $70 a barrel as investors fled riskier assets and the December 2015 contract lost 5 percent. At the same time December 2018 futures remain above $90 a barrel, suggesting analysts are less pessimistic about the long term. The U.S. Labor Department’s index for oil- and gas-field machinery costs rose in April for the first time in six months. 'The price is holding at decent levels' for delivery in later years, said Paul Tossetti, an analyst in Dallas with consultants PFC Energy. 'You need a certain level for all these high-priced resources that are coming on-stream, deepwater Gulf of Mexico, deepwater Brazil and the Canadian oil sands. That’s the dynamic part of the non-OPEC oil supply.'
Rising Drilling Costs Point to $90 Crude in 2018
Bloomberg, 25 May 2010

"Europe’s sovereign debt crisis is likely to translate into a slowdown in global demand for oil this year – and lower prices, says Francisco Blanch, head of commodities research at Bank of America-Merrill Lynch."
Debt crisis will cut global oil demand
Financial Times, 25 May 2010

"The Royal Academy of Engineering said that to convert the countries fleet of 30 million vehicles would increase current demand by 16 per cent or an extra 10 gigawatts of power. With the 70 GW grid currently running at near full capacity that would mean building the equivalent of six large nuclear power stations or 2,000 wind turbines to meet demand. It would also mean that it will have to be controlled by a 'smart grid' of millions of charging points in order to deal with increase and wild fluctuations in demand. The findings came from the academy's latest report titled Electric Vehicles: charged with potential which outlines what needs to be done if our cars are to go green. The organisation said that in order to reduce our carbon footprint then the sources for the National Grid will have to change to sustainable supplies. Professor Phil Blythe, professor of intelligent transport systems at Newcastle University, said: 'It is do-able but if we want to have electric transport you have to ensure that you have the overall supply strategy in place.' Professor Roger Kemp of Lancaster University, chair of the Electric Vehicles working group, said that unless we moved away from coal and gas fired power stations then there would be no point. 'Swapping gas guzzlers for electric vehicles will not solve our carbon emissions problem on its own,' said the professor of engineering at Lancaster University.  'When most electricity in Britain is still generated by burning gas and coal, the difference between an electric car and a small low emission petrol or diesel car is negligible.' However the report concluded that by converting to low emission power generation such as nuclear, wind and water then it could be a great contributor to targets of reducing the country's carbon footprint by 80 per cent by 2050. The report believes that conversion to green cars will be gradual with many people preferring hybrid cars at first until the electric infrastructure is in place."
Turning all cars electric in Britain needs boost in power supply
Daily Telegraph, 25 May 2010

"Uranium supply will supposedly grow by an average of 5% annually until 2015, but dropping thereafter as reserves are exhausted. Uranium demand is projected to be growing by an average of 4.4% per year during the next 20 years. The increase in demand is caused mostly by China – over the next two decades it will be the world leader in new reactors building."
Uranium Market Review 2010 Now Available at MarketPublishers.com
MarketPublishers.com, 25 May 2010

"Cameco Corporation, the world's largest producer of uranium, plans to double its production from the current 20 million pounds to 40 million pounds by 2018. In addition to a plan to start operation of the Cigar Lake uranium mine in Saskatchewan, Canada in mid-2013, the company aims to expand the production capacity of mines in the United States and Kazakhstan in which it owns interests. Cameco will also consider purchasing interests in other new mines. Tim Gitzel, who took office as the new president of Cameco on May 13, explained, 'Nuclear energy will generate a great demand for uranium in the future. We will prepare ourselves to ensure a sufficient supply to meet the demand.' He described the Cigar Lake mine development project, in which the company holds a 50% stake, as 'the most important project in our production expansion plans.' Spelling out the company's prospects for the Millennium uranium deposit situated also in the province of Saskatchewan, Gitzel said, 'We will complete the feasibility study by the end of next year, and the result is expected to be positive. We are hopeful of being able to start the first production between 2017 and 2018.' Cameco is also planning to increase output from existing mines it owns in the U.S. and Kazakhstan, and is considering acquiring interests in other new mines, he said."
World's leading uranium producer Cameco set to double production
The Denki Shimbun, 25 May 2010

"UK offshore wind, wave and tidal power could generate an amount of electricity equivalent to a billion barrels of oil per year, according to the first comprehensive valuation of the country's offshore energy resource, published today. ‘The Offshore Valuation' report by the Offshore Valuation Group, an informal collaboration of government and industry organisations, found that in order for the UK to become a net exporter of offshore renewable electricity it would need to exploit just under a third of its total offshore wind, wave and tidal resource by 2050. In doing so it would create 145,000 new jobs, provide the Treasury with £28 billion in tax receipts and reduce carbon emissions relative to 1990 levels by 30%, according to the group, which includes the UK, Scottish and Welsh Governments, The Crown Estate and eight companies across the energy sector. The net value of Scotland's seas alone, calculated as reaching 68GW by 2050, is estimated at £14 billion in terms of electricity sales. The group, which also received funding from the Committee on Climate Change, said that if offshore resources were developed still further to tap their full practical potential, offshore renewables would allow the UK to power itself six times over at current levels of demand....Tim Helweg-Larsen, director of researchers Public Interest Research Centre (PIRC), a member of the group, said: 'To discover that we own a resource with the potential to return the UK to being a net power exporter, and on a sustainable basis, is genuinely exciting, and a wake-up call to those in a position to foster the further development of this industry.'"
Landmark study highlights depth of UK offshore resource
NewEnergyFocus, 19 May 2010

"China has extended an $8 billion lunge into to Canada's oilsands - the rich, hugely controversial tar deposits that are second only to Saudi Arabia in proven oil reserves and lie at the centre of a bitter legal dispute over 1,600 dead ducks. The rights acquisition deal, led by China's sovereign wealth fund, comes as rising resource prices, BP's catastrophic oil spill in the Gulf of Mexico and a new Beijing-led era of 'great game' oil diplomacy has brought Canada's bitumen deposits into global focus. Analysts believe that BP's accident may be actively pushing up the notional value of the oilsands. The resource once universally known as 'bad oil', analysts say, suddenly seems less threatening than offshore drilling. But as the world follows China's lead and turns its attention to the oilsands of Alberta, it will find the industry battling an old demon. The extraction process is dirty and the big players involved stand accused of environmental high-handedness. Syncrude, the world's largest producer of fuel from oilsands, is defending itself against accusations that toxic waste from its plants killed a large number of ducks that alighted on a tailings pond. The company's lawyers - melodramatically, say environmentalists - have said that they face the choice of 'breaking the law every hour of every day' or shutting down....Market interest in exploiting oilsands - massive bitumen deposits from which oil products may be extracted - blows hot and cold. Extracting fuels from the tar produces huge quantities of greenhouse gasses and the process is viable only when the prevailing price of crude oil climbs above a relatively high value. At present, post-crisis prices of about $75 per barrel, some projects only barely make financial sense. BP, which is struggling to limit the environmental and reputational damage of its vast spill in the Gulf of Mexico, is among a number of oil majors that have begun to re-assess oil sands projects as crude prices have risen. It is in talks to secure the product of a $2.5 billion oilsand project in Alberta and has opened talks on two other deals this year. The Chinese sovereign wealth fund is also understood to be planning a pipeline that would carry refined oilsand petroleum product to Canada's west coast, from where it could easily be shipped to China. Environmental groups, which have long been opposed to the exploitation of Canadian oilsands, have redoubled their protests since recent BP's rig accident."
China moves into Canada's oilsands
London Times, 19 May 2010

"Massachusettsbased Cambridge Energy Research Associates finds 2010 will mark the first time oilsands production will account for the lion's share of U.S. imports of petroleum and refined products....Canada has long been a top oil supplier to its southern neighbour, but 2010 will mark the first time oilsands production will account for the lion's share of U.S. imports of petroleum and refined products, according to the report prepared by Massachusettsbased Cambridge Energy Research Associates. Oilsands could eventually account for 20 to 36 per cent of U.S. supply by 2030, the report notes....Oil demand in the U.S. peaked in 2005, but it will remain the world's largest consumer over the next two decades, the report notes. That in turn will allow oilsands to assume a larger portion of the country's energy mix. The oilsands would offset reduced supplies from traditional suppliers like Venezuela, Mexico and Saudi Arabia....The CERA report suggested the total 'wells-to-wheels' emissions from oilsands-derived crude are about five to 15 per cent higher than the average of oils produced in the U.S., but said comparisons can be misleading. In addition to greenhouse emissions, the report noted concerns with land reclamation and water use as potential stumbling blocks to further development."
Alberta oilsands become largest U.S. supplier of crude in 2010: Report
Vancouver Sun, 19 May 2010

"It has been nearly a month since the tragic events aboard BP's drilling rig, Deepwater Horizon, which suffered a blowout, caught fire, and sank in the Gulf of Mexico releasing prodigious amounts of oil into the sea. So far there has been little damage to the coastline; however, this could change quickly as oil is still pouring from the damaged well pipe and it could be months before the blowout is brought under control. The possible damage to the environment ranges anywhere from minor, which is doubtful, to wiping out the seafood and tourist industries along the Gulf coast for many years....Yet another serious problem for the prospects of future oil production is starting to emerge. The deepwater wells, on which we are basing much of our energy future, may not be as productive as previously thought. Until recently the poster child for deepwater oil production was BP's Thunderhorse platform that, after years of delay, started producing in 2008 and was supposed to produce a billion barrels of oil at the rate of 250,000 barrels a day (b/d). At first all seemingly went well with production reaching 172,000 b/d in January of 2009, but then production started falling rapidly to a low of 61,000 b/d last December. BP refuses to comment publicly on what is happening at Thunderhorse, but outside observers are growing increasingly skeptical that the platform will ever produce the planned billion barrels. At least 25 other deepwater projects are said to be facing problems of falling production, raising the question of just how much oil these very expensive deepwater projects will ever produce. Pressure for regulatory reforms is likely to be based on just how much environmental and economic damage the Deepwater Horizon blowout ultimately causes."
The Peak Oil Crisis: The Deepwater Horizon
Falls Church News-Press, 19 May 20010

“The Barnett remains important as the only shale play that has been developed to maturity. We believe that the Barnett largely dispels the belief that modern shale production is a 'manufacturing process,' or that shales constitute 'gas factories.' That belief is premised on the idea that shales have large cores that are uniform, that each well is similar, and that over time wells get better. Our data from the Barnett shows that all three of these premises are wrong. The core areas are small, wells vary considerably even in close proximity, and over times wells have gotten worse, not better.
Ben P. Dell and Noam Lockshin, for Bernstein Research
ASPO USA , 17 May 2010

"...there is a much more imminent and worrying tide affecting the oil price: the overwhelming ocean of public debt becoming evident in Europe’s over-leveraged economies. According to the International Energy Agency 'downside risks remain a clear and present danger' for the oil price, despite a raft of analyst forecasts that it will hit $100 per barrel this year. Warning of a growing supply amid the threat of European economic troubles, the Paris-based body cut its projections for this year. Worldwide oil demand is projected at 86.4m barrels a day this year, up 2pc from last year, but this is still 220,000 barrels a day below the previous IEA estimate. Over the past two weeks, oil prices have been dropping on general worries about the global economy, tracking the depression in the equity markets..... It seems that the tumbling oil price is another sign that investors believe it is possible that a contagious debt crisis is enveloping European nations in a spreading slick. Any return to lower oil prices will signal even worse news from the energy industry, compounding political pressure following the Gulf of Mexico spill. Even if the oil price slumps, the US administration is likely to remain nervous about cosying up to the agents of an environmental disaster. But the IEA warned world leaders this week not to over-react to the BP crisis by restricting drilling at a time when prices are dropping. 'A knee-jerk reaction by regulators, banning new offshore licensing altogether, as some are proposing, risks pushing companies to ever-more precarious locations in search of hydrocarbons,' it said. 'The law of unintended consequences may apply.' In other words, this could create the very same conditions of asset neglect, under- investment in exploration and depressed production that leads to oil price spikes and further volatility."
Oil is sinking amid 'oceans of public debt'
Telegraph, 16 May 2010

"Price pressures in Britain are intensifying with annual inflation expected to rise further above the 2pc target when the latest figures are published on Tuesday. Economists predict that higher petrol prices helped to drive the consumer prices index (CPI) – the official measure of inflation – up to 3.5pc in April, from 3.4pc in March. The Office for National Statistics data would prompt the first letter of explanation from Mervyn King, Bank of England governor, to George Osborne, the new Chancellor, outlining why CPI was more than one percentage point above target. The retail prices index, which includes housing costs, is expected to have risen even more sharply to 4.9pc from 4.4pc. Consumer price inflation was above 3pc throughout the first quarter, and the Bank was forced to concede last week that it had underestimated the short-term threat of inflation in previous forecasts. It has updated its forecasts to reflect above-target inflation throughout 2010."
Petrol expected to fuel inflation
Telegraph, 16 May 2010

"The oil leak in the Gulf of Mexico and resulting uncertainty about future offshore supply won't likely send oil prices soaring anytime soon, finds a new report from CIBC World Markets Inc. CIBC's latest Global Positioning Strategy report also notes that even a successful containment of Europe's debt crisis is unlikely to lift oil prices much higher. Instead, several countering forces are 'at play' in the oil market that should see prices stay below triple-digit territory over the next 18 months, averaging US$80 a barrel this year and US$85 in 2011. The forecast [is] by Peter Buchanan, senior economist.... Mr. Buchanan ... notes that oil prices are cyclical and that there has historically been four to five years on average between price peaks. 'That would suggest 2012 or 2013 as the next high water mark for prices, although the exact timing obviously depends on the pace of demand and capacity growth,' he says. 'Surging demand historically has amplified price shocks, leading to recession or slower growth, which in turn has begat lower prices. Those have helped to grease the wheels of economic recovery,' adds Mr. Buchanan."
Oil prices likely to hold steady through 2011 despite supply worries: CIBC World Markets Inc.
Canada News Wire, 12 May 2010

"Over the past decade, a wave of drilling around the world has uncovered giant supplies of natural gas in shale rock. By some estimates, there's 1,000 trillion cubic feet recoverable in North America alone—enough to supply the nation's natural-gas needs for the next 45 years. Europe may have nearly 200 trillion cubic feet of its own. We've always known the potential of shale; we just didn't have the technology to get to it at a low enough cost. Now new techniques have driven down the price tag—and set the stage for shale gas to become what will be the game-changing resource of the decade. I have been studying the energy markets for 30 years, and I am convinced that shale gas will revolutionize the industry—and change the world—in the coming decades. It will prevent the rise of any new cartels. It will alter geopolitics. And it will slow the transition to renewable energy. To understand why, you have to consider that even before the shale discoveries, natural gas was destined to play a big role in our future. As environmental concerns have grown, nations have leaned more heavily on the fuel, which gives off just half the carbon dioxide of coal. But the rise of gas power seemed likely to doom the world's consumers to a repeat of OPEC, with gas producers like Russia, Iran and Venezuela coming together in a cartel and dictating terms to the rest of the world. The shale boom also is likely to upend the economics of renewable energy. It may be a lot harder to persuade people to adopt green power that needs heavy subsidies when there's a cheap, plentiful fuel out there that's a lot cleaner than coal, even if gas isn't as politically popular as wind or solar. But that's not the end of the story: I also believe this offers a tremendous new longer-term opportunity for alternative fuels. Since there's no longer an urgent need to make them competitive immediately through subsidies, since we can use natural gas now, we can pour that money into R&D—so renewables will be ready to compete without lots of help when shale supplies run low, decades from now.... When it comes to environmental risks, critics do have a point: They say drilling for shale gas runs a risk to ground water, even though shale is generally found thousands of feet below the water table. If a well casing fails, they argue, drilling fluids can seep into aquifers. They're overplaying the danger of such a failure. For drilling on land, where most shale-gas deposits are, the casings have been around for decades with a good track record. But water pollution can occur if drilling fluids are disposed of improperly. So, regulations and enforcement must be tightened to ensure safety. More rules will raise costs—but, given the abundance of supply, producers can likely absorb the hit. Already, some are moving to nontoxic drilling fluids, even without imposed bans..... One of the biggest effects of the shale boom will be to give Western and Chinese consumers fuel supplies close to home—thus scuttling a potential natural-gas cartel. Remember: Prior to the discovery of shale gas, huge declines were expected in domestic production in U.S., Canada and the North Sea. That meant an increasing reliance on foreign supplies—at a time when natural gas was becoming more important as a source of energy.... Before the shale discoveries, experts expected liquefied natural gas, or LNG, to account for half of the international gas trade by 2025, up from 5% in the 1990s. With the shale boom, that share will be more like one-third.... In the U.S., the impact of shale gas and deep-water drilling is already apparent. Import terminals for LNG sit virtually empty, and the prospects that the U.S. will become even more dependent on foreign imports are receding. Also, soaring shale-gas production in the U.S. has meant that cargoes of LNG from Qatar and elsewhere are going to European buyers, easing their dependence on Russia. So, Russia has had to accept far lower prices from formerly captive customers, slashing prices to Ukraine by 30%, for instance. But the political fallout from shale gas will do a lot more than stifle natural-gas cartels. It will throw world politics for a loop—putting some longtime troublemakers in their place and possibly bringing some rivals into the Western fold.... Shale-gas resources are believed to extend into countries such as Poland, Romania, Sweden, Austria, Germany—and Ukraine. Once European shale gas comes, the Kremlin will be hard-pressed to use its energy exports as a political lever. I would also argue that greater shale-gas production in Europe will make it harder for Iran to profit from exporting natural gas. Iran is currently hampered by Western sanctions against investment in its energy sector, so by the time it can get its natural gas ready for export, the marketing window to Europe will likely be closed by the availability of inexpensive shale gas.... Shale-gas development could also mean big changes for China. The need for energy imports has taken China to problematic nations such as Iran, Sudan and Burma, making it harder for the West to forge global policies to address the problems those countries create. But with newly accessible natural gas available at home, China could well turn away from imports—and the hot spots that produce them. The less vulnerable China is to imported oil and gas, the more likely it would be to support sanctions or other measures against petro-states with human-rights problems or aggressive agendas. Moreover, the less Beijing worries about U.S. control of sea lanes, the easier it will be for the U.S. and China to build trust. So, domestic shale gas for China may help integrate Beijing into a Pax Americana global system. With natural gas cheap and abundant, the prospects for renewable energy will change just as drastically. I have been a big believer that renewable energy was about to see its time. Prior to the shale-gas revolution, I thought rising hydrocarbon prices would propel renewables and nuclear power into the marketplace easily—albeit with a little shove from a carbon tax or a cap-and-trade system. But the shale discoveries complicate the issue, making it harder for wind, solar and biomass energy, as well as nuclear, to compete on economic grounds. Subsidies that made renewables competitive with shale gas would get more expensive, as would loan guarantees and incentives for new nuclear plants. Shale gas also hurts the energy-independence argument for renewables: Shale gas is domestic, just like wind and solar, so we won't be shipping those dollars to the Middle East."
Any Myers Jaffe - Shale Gas Will Rock the World
Wall St Journal, 10 May 2010

"The Obama White House is taking a tough line on big oil. At least, that is how it appeared as pictures of the first oil-soaked birds in the Gulf of Mexico filled TV screens. Ken Salazar, the US Interior Secretary, said he would 'keep the boot on the neck of BP' over the Deepwater Horizon oil spill. But he needs to be careful. If he treads too hard, his other boot will land on the neck of Joe Plumber and every American who objects to $3 gasoline. Until the market mayhem over Greece took the shine off the oil price, American petrol prices were hovering at that critical $3 a gallon number, which causes blue-collar rage. Oil analysts are seeing demand destruction, the point at which the price begins to alter motorist behaviour. Between January and March, consumption of road fuel began to decline much as it did in 2008 when American eyeballs were popping at $4 gallons. When prices are too high, Americans drive fewer miles, not helpful when the world is on a cliff-edge of debt, insolvency and possibly a new recession....America imports about 12 million barrels a day, 57 per cent of US demand for liquid fuels, according to the US Energy Information Administration. There was a time in the mid-1980s when American oil companies were pumping nine million daily barrels but the output is in decline, reaching a nadir of 4.2 million a day in 2005. BP’s big discoveries in Alaska helped to rescue American necks from Opec boots in the 1980s. At one stage, the Prudhoe Bay oilfields on Alaska’s north shore were producing close to two million daily barrels but this has dwindled to 600,000. Meanwhile, the old prospects onshore in Texas and Oklahoma are waning rapidly. There is an alternative to explosions and oil-soaked birds. Canada provides a fifth of America’s oil imports, but Canadian crude is controversial — oil sands bitumen, a poisoned environmental soup of blighted landscapes, tainted rivers and carbon emissions. Who else might supply? One option is the other Gulf: there is President Bush’s Iraqi battleground, where American multinationals are trying to develop oilfields. Beyond that is the oily carrot of political settlement with Iran....Who cares to guess the price in dollars per gallon if the Deepwater Horizon and its sister ships had not drilled the Gulf into a pin cushion? It’s all horribly dangerous and America’s safety record is poor. Every year lives are lost offshore in the Gulf, since 2001 more than 50 deaths, perhaps a reflection of the gung-ho mentality of American oil workers or just sloppy enforcement of rules. Still, the big issue for Mr Obama is not safety but energy."
Tread carefully, Mr Obama. You need big oil
London Times, 10 May 2010

"Energy companies in the UK, as the latest ENDS report shows, are now beginning to deploy a technology that will greatly increase available reserves. Government figures suggest that underground coal gasification – injecting oxygen into coal seams and extracting the hydrogen and methane they release – can boost the UK's land-based coal reserves 70-fold; and it opens up even more under the seabed. There are vast untapped reserves of other fossil fuels – bitumen, oil shale, methane clathrates – that energy companies will turn to if the price is right."
I share their despair, but I'm not quite ready to climb the Dark Mountain
Guardian, 10 May 2010

"Even as the first oil from BP's stricken Macondo well in the US Gulf of Mexico washed ashore this weekend, and as the clamour mounts, experts claim the slick will be nothing like as catastrophic as forecast – for either the environment or the oil industry. However, some analysts warn the accident could still seriously hurt global oil supply later this decade....The rising backlash against deepwater drilling – anything over 500 meters, far too deep for divers to work should anything go wrong – is unlikely to damage the industry as much as the noise on Capitol Hill would suggest, because it is too vital to the oil supply. According to analysts Douglas Westwood, deepwater oil production has soared from under two million barrels per day in 2000 to eight mb/d in 2010, almost 10 per cent of global consumption, and must rise further as onshore and shallow offshore production declines. 'They can't ban deepwater because the industry has nowhere else to go', says chairman John Westwood. Last year, 500 deepwater wells were drilled, costing up to $100m each, and Douglas Westwood predicts $167bn will be spent on deepwater development to 2014. Deepwater drilling has provided substantial discoveries recently, such as BP's Tiber field off Brazil, thought to contain some three billion barrels of oil. But such is the industry's desperation it will also chase tiny fields at depths unheard of a decade ago. The Macondo field probably contains less than 50 million barrels – an oilfield minnow. A BP spokesman admitted "the easy stuff is done first. We're now on to the stuff that is technically, politically or economically difficult.' If a ban is unlikely, deepwater drilling will be far more tightly regulated, as happened after the Piper Alpha disaster in 1988. Then British North Sea production slumped for several years as safety equipment and procedures were upgraded, before recovering. The difference is that many forecasters now predict a global oil supply crunch by the middle of this decade, so any pause in US deepwater drilling could have magnified consequences. The analysts Newedge USA say if the moratorium on new drilling, announced by President Barack Obama after the accident drags on, oil supply could suffer a shortfall of up to one mb/d by 2016 to 2018. Another analyst said: 'They wouldn't be able to offset depletion with new drilling'. With forecasters predicting peak oil in 2015, this could only make matters worse."
Oil production hit for decades after BP spill
Independent On Sunday, 9 May 2010

"Oil fell $2 a barrel on Friday and posted its biggest weekly loss in almost a year and a half following the sharp sell-off on Wall Street and on worries that the euro zone's debt crisis will derail the global economic recovery. Better-than-expected U.S. jobs data for April failed to calm fears in oil markets that the Greek's debt crisis could spread to other euro-zone countries. U.S. crude oil futures fell for a fourth day in a row and settled down $2, or 2.6 percent, at $75.11 a barrel, after falling further to $74.51, its lowest since February 16."
Oil falls $2, posts worst week since Dec 2008
Reuters, 7 May 2010

"For Tony Hayward, it was a moment to savour. Two years after his appointment as chief executive, his decision to push BP to the outer limits of deepwater oil exploration had borne fruit — in spectacular style. The discovery last September of the giant Tiber field in the Gulf of Mexico was the kind of achievement that makes oilmen quiver. Containing in excess of 4 billion barrels of oil — more than all the proven reserves left in the North Sea — it was found after months of drilling beneath a mile of water and five miles of rock, salt and sand under the seabed, smashing industry records as the deepest well drilled. At the time, Tiber seemed the ultimate symbol of BP’s prowess, and Mr Hayward seemed to have reversed the woes that had plagued his predecessor, Lord Browne of Madingley. But just eight months later, the state-of-the-art rig that made the discovery, Deepwater Horizon, lay wrecked on the seabed — a watery tomb for 11 workers and the source of a torrent of raw crude that threatens an environmental catastrophe. It is an accident that has left Mr Hayward’s reputation in the balance and raised questions about the wisdom of his aggressive push into deep water....As supplies of easy oil — the kind that gushes from vast fields in the Middle East — have become scarce, so the industry has pressed further into more challenging environments. It has developed new technology to produce oil in the Arctic, from fields rich in poison gas in Central Asia and from the bitumen-rich sands of northern Canada. Few motorists consider where the hydrocarbon molecules that power their cars actually come from — but it is a journey that every year becomes longer and more tortuous. For BP, which led the way in the North Sea in the 1960s and 1970s, the push to produce oil from ever deeper and more treacherous ocean depths had become a driving obsession. It was in the Gulf of Mexico and off Angola and Egypt, that Mr Hayward felt BP could excel and trump its rivals."
BP’s name is stained by its barrels of hubris

London Times, 7 May 2010

"Iraq on Thursday invited international energy firms to submit bids in a September 1 auction of three gas fields, in a third major tender aimed at developing the war-torn state's oil and gas sectors. Oil Minister Hussein al-Shahristani also announced that a long-running row between Iraq and the autonomous northern region of Kurdistan over oil revenues had been resolved, in a further boost to the government's energy sector. The planned gas field auction follows the signing of contracts last year with foreign firms to develop 10 oil fields across Iraq, aimed at raising crude output, currently 2.4 million barrels per day, to between 10 to 12 million bpd.... Iraq produces a negligible quantity of gas compared with the size of its reserves, and currently flares off most of what it produces as it lacks the capture technology needed to use the gas for electricity production. 'The reason behind offering these fields is Iraq's increasing need to feed the electricity stations, because Iraq is suffering from a chronic lack of electricity,' Shahristani added. The three gas fields on offer contain total estimated reserves of 11.2 trillion cubic feet (317 billion cubic metres). The biggest field, Akkaz, which is 50 kilometres (30 miles) long and 18 kilometres wide, is west of Baghdad in Anbar province and contains 5.6 tcf. The second field, Mansuriyah, is located in Diyala province northeast of Baghdad, and has reserves of 4.5 tcf."
Iraq announces date for gas fields auction
Agence France Presse, 6 May 2010

"The U.S. needs energy — lots and lots of energy — and 37.1% of it is currently supplied by oil. As the population expands and the policy decisions and technological innovations needed to make the switch to green, renewable energy sources lag, thirst for the stuff is only going to grow. Critics have long lamented that when it comes to energy policy, 9/11 was an opportunity for the country to have an honest debate about the choices it needs to make if it's ever going to break its addiction to oil. 'We need to address the underlying issue,' says Lisa Margonelli, director of the New America Foundation's Energy Policy Initiative, 'and that's our dependence on oil.' Having a national conversation now — an adult one — is the only way forward."
The Far-Ranging Costs of the Mess in the Gulf
TIME, 6 May 2010

"China vowed to use an 'iron hand' – and an extra $12 billion – to reach efficiency targets after revealing energy intensity rose 3.2% in the first quarter compared to last year, reversing a steady decline in the amount of energy used to produce each dollar of gross domestic product. The increase in the amount of power China’s economy is using relative to how much it’s producing is a major setback in the push to cut energy intensity by 20% by the end of 2010 from 2006. Up until last year, China was doing pretty well, lowering the relative use of energy by 14.38%, according to a statement by Premier Wen Jiabao."
China’s Energy Use Gets More Intense
Wall St Journal (Blog), 6 May 2010

"Britain's most polluting power stations due for closure in 2014 are likely to be granted a reprieve by the European Union, giving the UK another four years to tackle its looming energy shortage. Experts had warned that taking this back-up generation off the system before nuclear power plants are built would risk an 'energy gap' and potential black-outs. But furious lobbying by UK energy companies forced the EU to back down on its directive on Tuesday, with MEPs on the body's environmental committee voting to recommend that the power stations another four years of life. The EU parliament will take a final decision in July, but is likely to follow the committee's guidance. One regulatory source said British lobbyists had put by far the most pressure on the EU to re-think its rules, warning that the UK would simply have to flout the law if no changes were made. Ian Parrett, an energy consultant at Inenco, welcomed the decision, saying that the previous timescale 'simply wasn't realistic and threatened the UK's energy security. But he warned against complacency about the UK's energy needs, with around £200bn of investment in new generation and networks needed by 2020. 'A postponement will at least provide breathing time,' he said. 'But even with the delay, any new Government will face energy as one of its top priorities to avoid a looming energy gap casting a shadow over any economic recovery'."
UK power plants win four-year stay of execution from EU
Daily Telegraph, 5 May 2010

"Will the unfolding environmental catastrophe from the ruptured Deepwater Horizon well in the Gulf of Mexico become deep-water oil’s equivalent to the Three Mile Island [nuclear] accident? ....President Barack Obama has suspended his recent decision to open new offshore areas for oil development and has declared a moratorium on new drilling. You can imagine what the regulatory environment will be like after three months of the spill, just as you can imagine what those satellite photos of the Gulf of Mexico will look like. But what you might not imagine are the implications for world oil supply. Conventional oil supply has not grown since 2005. Without a steady stream of oil from fields below the ocean floor, not only can’t world oil production grow, it can’t even stand still, since we rely on oil from new deep-water fields to replace the bulk of the four million barrels per day of global production we lose every year to depletion (out of a total of roughly 86 million barrels per day). If the Deepwater Horizon disaster is the offshore energy industry’s Three Mile Island, then not only has world oil production already peaked, but it will also very soon start to shrink."
Oil disaster may prove tipping point for world oil production
Jeff Rubin's Blog - Globe and Mail, 5 May 2010

"China has been self-sufficient in coal until recently (importing some coal but exporting just as much or more), but supply problems over the last couple of years have led to burgeoning imports and shrinking exports. If Chinese coal mines can no longer cover the nation's demand, why not just expand imports still further to make up the difference? China will import 150 million tons (Mt) of coal this year, twice what it imported last year. That's not much, if we think of it as a percentage of the nation's total coal consumption. But that 150 Mt represents over 60 percent of the total exports of Australia, the world's top coal exporter. This means if Chinese imports double again next year—not an unrealistic scenario—China will need to import more coal than Australia can currently provide. One more doubling of import demand and China will be wanting to import 600 million tons per year, about the total amount of coal exported by all exporting nations last year. Can Australia expand its coal production? Yes, it can and no doubt will. Likewise Indonesia and South Africa. But will any or all of these countries be able to grow exports fast enough to keep up with Chinese demand? Again, expansion will be limited by infrastructure requirements—ships, ports, trains, and rails. It takes time to build all of these."
China's Coal Bubble...and how it will deflate U.S. efforts to develop 'clean coal'
Post Carbon Institute, 4 May 2010

"It is as if the Orange Revolution never happened. In a breathless few weeks since he came to power, President Yanukovych has undone almost all of the pro-Western policies of his predecessor, Viktor Yushchenko. The pro-Russian leader has been love-bombed by President Medvedev and Vladimir Putin, the Prime Minister, as the Kremlin has taken advantage of American indifference and European Union ineptitude to restore its dominance in Kiev. Mr Yanukovych had ditched aspirations to join Nato before handing Russia’s Black Sea Fleet a 30-year extension on its lease that leaves it secure in Sevastopol until 2047. As opposition wrath filled Ukraine’s parliament with smoke and smashed eggs, he was at the Council of Europe in Strasbourg renouncing another key Yushchenko policy. He declared that the famine that killed millions of Ukrainians in the 1930s was not genocide perpetrated by the Soviet Union but a 'shared tragedy' with Russia, Belarus and Kazakhstan at the hands of Joseph Stalin. Ukraine depends entirely on Russia for its gas, which it will now get at a discount, and Mr Putin has proposed a merger of their nuclear industries into a shared company as well as joint ventures in shipbuilding and aircraft construction. This is music to the ears of supporters of Mr Yanukovych’s Party of Regions in his Russian-speaking strongholds in the east and south of Ukraine. But it confirms the worst fears of nationalists in western Ukraine, who voted overwhelmingly against him in February’s presidential election. Opposition moves against Mr Yanukovych’s policies threaten to deepen a geographical divide that could mean that western Ukraine rejects him as its president. The EU’s vaunted new foreign policy 'reach' is proving illusory in the rush by individual member states to cut energy deals with Mr Putin. He told a press conference with the Italian Prime Minister Silvio Berlusconi on Monday that Italian companies had received $2 billion in contracts to build the Nord Stream gas pipeline from Russia to Germany, while France’s EDF would have a 20 per cent stake in the South Stream project that will carry energy to Europe under the Black Sea. Both bypass Ukraine’s pipelines, crushing earnings from transit fees and making the country even more dependent on Moscow."
Kremlin fills the void left by an indifferent America and inept EU
London Times, 28 April 2010

"For Big Oil the timing could not have been worse. Less than a month ago President Obama announced a significant expansion of offshore oil drilling in the US. His decision to open up new parts of the Gulf of Mexico, the East Coast and Alaska’s Beaufort and Chukchi seas was met with delight by the supermajors — companies such as BP, Chevron, ExxonMobil, Total and Shell that had been arguing that new technology and safer processes had mainly done away with the threat of major oil spills such as the 1989 Exxon Valdez disaster. At a stroke, however, last week’s deadly accident on board the Deepwater Horizon rig has reopened questions about safety while galvanising opposition from environmentalists. Although Mr Obama is unlikely to reverse the decision on offshore drilling much hinges on how quickly BP, which had leased the rig, and Transocean, its owner, can contain the spill."
Deepwater Horizon disaster comes at bad time for oil industry
London Times, 27 April 2010

"One of the Federal Government's top infrastructure advisers is warning of an oil crunch that could send the global economy spiralling back toward recession. Curtin University Professor Peter Newman sits on the Government's Infrastructure Australia Council and says peak oil - when demand outstrips dwindling supply - has already hit but that the global downturn has kept prices low. Professor Newman even blames oil for causing the global recession in the first place, and he is not alone.... Professor Newman says the world reached peak oil in 2008 when it spiked at about $140 a barrel and sent petrol prices soaring. 'Peak oil did happen I believe in 2008 and it didn't happen because some oil exporting country had a revolution or something. It just happened because we couldn't produce enough to meet the demand,' he said. Professor Newman largely blames the global financial crisis on oil prices. 'Subprime mortgages were mostly out on the urban fringes miles away from work. People had to drive and when the price of fuel tripled in American cities they couldn't pay their mortgages,' he said. As the global economy has strengthened in recent months so has the oil price, and Professor Newman says it does not bode well for recovery. 'As the demand increases again the supply crunch will happen and the price will go up,' he said."
Global downturn cushioned peak oil impact
ABC News (Australia), 27 April 2010

"Saudi Arabia’s long-standing status as a swing producer of crude oil could be drawing to a close according to the head of national oil company Saudi Aramco. Global oil exports from Saudi Arabia, the world's largest oil producer alongside Russia, will start to wane in the coming years as domestic demand surges and spare capacity drops, warned Khalid al-Falih, chief executive officer of Saudi Aramco in a speech published on the company's website. Domestic energy demand is expected to increase by almost 250%, from about 3.4 million barrels per day (b/d) in 2009 to about 8.3 million b/d by 2028, which will eventually affect the country's ability to export oil, he said. 'Along with China and India, we do expect Saudi Arabia to be one of the largest sources of global oil demand,' says Amrita Sen, oil analyst at Barclays Capital.'"And given Saudi's importance in the oil market as the swing producer, in the longer term, this can impact their ability to control the market at the margin. However, this is unlikely to have a significant impact this year, given the substantial spare capacity it is sitting on, though that buffer could get eroded sooner rather than later in the coming few years.'"
Saudi Arabia global oil exports to wane post-2010
Energy Risk, 27 April 2010

"John Watson, chief executive of Chevron, is refusing to join rival international oil majors in the rush for US shale gas, warning that the 'price tag is too high' to justify the investments required. Mr Watson, who has only been in the top job at the US’s second-biggest oil company for three months, is confident his decision not to follow the pack into US shale gas is the right one. 'We haven’t seen the returns,' he told the Financial Times. The Chevron chief’s comments come against a backdrop of US gas producers struggling with low prices brought on by oversupply. Many in the industry believe governments worldwide, under pressure to lower their dependence on carbon fuels, will increasingly turn to natural gas until the technology is available to enable renewables to produce a substantial portion of electricity demand. Shale gas is about 30 per cent less carbon intensive than oil and 50 per cent less than coal."
Chevron chief shuns shale gas rush
Financial Times, 26 April 2010

"Global demand for gas is set to rise constantly over the next 20 years amid plentiful reserves and its increasing use to produce power, a senior executive at Royal Dutch Shell (RDSa.L) said on Thursday. 'We see global gas demand growing by at least 2 percent a year over some decades, so by 2030 we look at gas demand hitting 4.5 trillion cubic meters of gas per year,' Malcom Brinded told an oil conference. 'That's 50 percent up from today's level.' Brinded was equally bullish on prospects for liquefied natural gas, which he saw growing 'a lot faster' than overall gas demand, driven by China's economic growth and higher demand in Europe and countries such as Malaysia, Thailand, Singapore, Pakistan, Kuwait, the United Arab Emirates and Bahrain. 'Despite the difficult market we've had in the last year in the recession, we... expect global LNG demand to double this decade,' said Brinded, who expects China's gas demand to 'double or treble' by 2020 from around 100 billion cubic meters today. This boom in LNG demand will need to be matched by a similarly rapid increase in supply, which is currently growing by at least 6 to 8 percent a year, he said. Brinded said he was confident this was possible. 'There is enough gas around, this is increasingly clear' he said, citing data from the International Energy Agency showing recoverable gas reserves worth 250 years of current production. Some $5 trillion (3.24 trillion pounds) would be needed over the next 20 years -- or $20 billion per year -- to extract this gas. 'These figures are staggering,' he said. 'The gas is there, it is going to take investments and it needs a lot of new technology... This is truly an energy revolution.' 'People are looking for certainty around three key issues: availability, affordability and environmental acceptability of gas. I think gas wins on all points.'"
Shell sees global gas demand up
Reuters, 22 April 2010

"The world's second-largest oilfield contains more oil than previously estimated, Kuwait's state news agency reported a top official as saying on Thursday. OPEC-member Kuwait is the world's fourth-largest oil exporter, and sits on around 8 percent of global reserves. The Greater Burgan area is second only to Saudi Arabia's Ghawar oilfield in size, according to U.S. government data. 'Oil reserves in the Burgan field are much greater than what had been circulated,' agency KUNA said, citing Sheikh Ahmad al-Fahad al-Sabah, the Gulf Arab state's deputy prime minister for economic affairs. Sheikh Ahmad gave no details on how much oil the field could hold."
Kuwait sees bigger reserves at top oilfield
ArabianBusiness, 22 April 2010

"Oil use will probably peak in emerging markets by early next decade, a senior adviser to Saudi Arabia's oil minister said on Thursday in a further sign the concept of peak demand has crept into the industry mainstream. Interest in the view oil demand may soon reach a high point and then fall back has grown following a drop in global oil use last year caused by the economic crisis, as well as efforts to combat climate change and use fuel more efficiently. 'I think that peak demand will come before peak of supply,' said Ibrahim Al-Muhanna, advisor to Saudi Oil Minister Ali al-Naimi, in answer to questions at a conference in Paris.... Muhammed al-Sabban, head of the Saudi delegation to U.N. talks on climate change, said in January the possibility oil demand might peak this decade was a 'serious problem' for Saudi Arabia. The kingdom depends on oil income for nearly 90 percent of state revenue and exports make up 60 percent of its gross domestic product....The IEA has, however, not put a timeframe on when oil demand might peak in emerging markets and forecasts economies such as China and India will drive global increases in demand for the foreseeable future. A six-year oil price rally that ended in 2008 had led to increased interest in the theory world oil supply may be nearing its peak as easily accessible reserves dwindle. That issue faded as economic slowdown eroded demand, resulting in abundant supply. One leading proponent of the peak supply theory stands by his view conventional oil supply has peaked, but has also turned his attention to peak prices and peak demand. 'We're sort of at peak demand right now,' retired petroleum geologist Colin Campbell, who has long been associated with the belief the world's oil supplies are dwindling, told Reuters earlier this month."
Saudi official sees looming oil demand peak
Reuters, 22 April 2010

"The European Union, including the UK, has set a goal of obtaining 10 per cent of its road fuels from renewable sources by 2020. But a new report commissioned in Brussels found some biofuels can lead to four times more carbon dioxide polluting the atmosphere than equivalent fossil fuels. Biofuels have already been criticised for causing food shortages in countries where land for rice or wheat has been displaced by fields of soy beans or sugarcane for fuel. Environmental campaigners say the latest report proves the renewable energy source is also bad for climate change, since carbon dioxide is a greenhouse gas that causes global warming. The report for the European Commission, released under Freedom of Information rules, looked into the 'indirect emissions' from biofuels caused by land use change. The worse example is soy beans in America. Because the land that used to grow soy beans for animal feed is now being used for biofuels, it means that more soy beans must be grown in the rainforests of Brazil to make up for the loss in the domestic market. Soybeans grown in America therefore have an indirect carbon footprint of 340kg of CO2 per gigajoule, compared to just 85kg for conventional diesel or gasoline. Biodiesel from European rapeseed has an indirect carbon footprint of 150kg of CO2 per gigajoule, while bioethanol from European sugar beet is calculated at 100kg – both much higher than conventional diesel because of indirect use of land in other countries to replace the food crops that are no longer grown in Europe. By contrast, imports of bioethanol from Latin American sugar cane and palm oil from southeast Asia have relatively low indirect emissions at 82kg and 73kg per gigajoule respectively. But these biofuels have high direct emissions because although no land for food is being displaced, rainforest it being cut down to grow the crops in the first place."
Biofuels cause four times more carbon emissions
Daily Telegraph, 22 April 2010

"For most people the waste they eject from their bodies is something they don't bother thinking about once they've shut the toilet door behind them. But there are some who think human waste could be a major part of a stable gas supply.... The UK produces 1.73 million tonnes of sewage sludge every year, which the Department for Environment, Food and Rural Affairs says could potentially be used to produce biogas.... And, this summer British Gas, in partnership with Thames Water and Scotia Gas Networks, plan to be the first to start piping biomethane, derived from faecal matter, into the national network and straight back to the homes of 130 customers in Didcot in Oxfordshire. Anaerobic digesters - carefully managed bacteria - are already used to turn faeces into a means of generating electricity, but the additional plant that British Gas will install will clean up the spare biogas and turn it into biomethane which can be used on household hobs and in gas central heating....A 2009 paper by the National Grid said with the 'right government policies in place, renewable gas could meet up to 50% of the UK's residential demand for gas' but admitted this would not be easy. It said that by 2020, a more feasible projection could see sewage and waste water providing up to 270 million cubic metres (0.28%) of the estimated 97,000 million cubic metres total demand for gas. In an ideal scenario, by that same date, it could provide 629 million cubic metres (0.65%) of the total UK gas demand."
Will we switch to gas made from human waste?
BBC Online, 19 April 2010

"Henry Groppe was a lonely voice when he forecast the right oil price. He’s now going against the grain on another fuel.... When it comes to predicting the price of oil, Henry Groppe has made a long career out of zigging when others were zagging. So why should he be any different when talking about natural gas? Mr. Groppe – the octogenarian patriarch of Texas petroleum industry analysts Groppe Long & Littell – doesn't buy the prevailing wisdom that New York Mercantile Exchange natural gas prices are dead in the water, stuck around $4 to $5 (U.S.) per million British thermal units even as demand recovers, awash in supplies and with much more on the way. No, his analysis (and more than 50 years of experience) tells him that gas inventories are about to get a lot tighter, that new supplies are overstated, and that prices are headed north of $8 by the end of summer. Why is he so sure he's got it right and most everyone else has it wrong? Because, he contends, shale gas – the previously unattainable source of vast gas supplies that has been unlocked by new high-tech horizontal drilling advancements – is not the holy grail it's been cracked up to be. Not even close."
A contrarian makes another call – this time, natural gas
Globe And Mail, 18 April 2010

"...the U.S. Joint Forces command recently issued a Joint Operating Environment report warning that surplus oil production capacity could vanish as soon as 2012, leading to serious oil shortages by 2015. Dire consequences, they predict, could follow quickly. What they are essentially predicting is the onset of 'peak oil'—the point at which the demand for oil will always be higher than the actual supply. While it will be hard to predict exactly what will happen in the face of such a drastic sea change in the world’s energy supply, the report says 'it surely would reduce the prospects for growth in both the developing and developed worlds.' It may cause fragile states to become failing states and failing states to collapse, while also causing major problems for overpopulated oil-guzzling states such as China and India. Here in the U.S., the possibility of at least a difficult recession is very strong. The report notes, 'One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest.' If this were one study, it would be scary enough, but the report’s conclusion aligns with a peak oil study from Kuwait as well as an estimate done by billionaire Richard Branson’s energy taskforce."
U.S. Military Warns of Serious Oil Shortfall by 2015
Miami Herald, 16 April 2010

"Rising oil prices pose a grave threat to global economic recovery, according to some economists. Thus it was sobering this week to read that the US military has warned the world faces a 'severe energy crunch' and looming oil shortages. According to a Joint Operating Environment report from the US Joint Forces Command, 'a severe energy crunch is inevitable without a massive expansion of production and refining capacity'. .... More ominously, the military predicts a 'Peak Oil' scenario - where demand outstrips the world's supply capacity - as soon as 2012. 'By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels a day.' Current oil demand is about 86 million barrels a day. The repercussions of Peak Oil have potentially grave consequences both economically and militarily. On the military front the USFC notes that already Chinese 'civilians' are in the Sudan guarding oil pipelines to protect supply, and that this 'could portend a future in which other states intervene in Africa to protect scarce resources. The implications for future conflict are ominous, if energy supplies cannot keep up with demand and should states see the need to militarily secure dwindling energy resources,' the report says. 'While it is difficult to predict precisely what economic, political and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in the developing and developed worlds. 'Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment."
Oil crunch by 2012, say military experts
The Courier-Mail (Australia), 16 April 2010

"Demand for oil will hit an all-time high this year, the International Energy Agency has forecast. The agency also warned that increased global consumption, fuelled by a near-20 per cent leap in demand in China, could choke off economic recovery in the UK and continental Europe. The energy adviser estimated that oil demand worldwide would hit 86.6 million barrels of oil per day this year — 2 per cent higher than last year and an increase of 1.67 million barrels a day. Demand is expected to just exceed the 86.5 million barrels a day consumed in 2007, the last full year before the onset of the global economic crisis. The forecast is an upward revision by 100,000 barrels a day compared with the agency’s estimates last month. The agency said that resurgent demand showed the two-speed nature of the global economic recovery from recession and highlighted the effect on the oil price, which hit an 18-month high of more than $87 a barrel last week. The agency said in its report: 'Ultimately things might turn messy for producers if $80-$100 per barrel is merely seen as the new $60-$80, stunting economic recovery while prompting resurgent non-oil and non-Opec supply investment. A recovery in oil demand is moving apace. The return of economic growth and hence oil demand growth is fuelling the increase.' Higher prices allied with still-tight credit conditions 'could stall OECD economic recovery' the agency said, adding that recent higher prices could be 'sustained, raising anew concerns about the impact on the global economy'. It continued: 'Underlying concerns in some quarters that oil markets are overheated remain, setting the stage for a sudden reversal of fortune.'”
Demand for oil will hit record levels and threaten recovery, says energy agency
London Times, 14 April 2010

"Oil major BP Plc (BP.L) on Thursday easily beat off challenges to a Canadian oil sands project and to its executive pay policy. Europe's largest oil company by market value said 94 percent of shareholders who voted in advance of the annual meeting rejected a call to review its Sunrise project to squeeze crude from Alberta's bitumen-drenched soil. A group of shareholders including California Public Employees' Retirement System (CalPERS), ethical investor Co-operative Investments and a raft of environmental groups tabled the resolution."
BP brushes off investor revolts on tar sands, pay
Reuters, 15 April 2010

"The International Energy Agency bolstered its 2010 supply outlook for countries outside the Organization of Petroleum Exporting Countries as production rose in Canada, the U.K. and Russia. Non-OPEC producers, accounting for about 60 percent of the world’s supplies, will raise output by 600,000 barrels per day this year to average 52 million barrels a day, the IEA said in its monthly market report today. That’s 220,000 barrels a day more than estimated last month. The agency left its forecast for global oil demand in 2010 little changed, 30,000 barrels a day higher than in last month’s report. 'Non-OPEC prospects are looking brighter,' the Paris- based adviser to 28 countries said in the report. 'Upstream investment decisions made before both 2008’s price surge and slump are starting to bear fruit. New upstream projects are coming online and ramping-up production.'”
IEA Increases 2010 Non-OPEC Supply Outlook on Russia, Canada
Bloomberg, 13 April 2010

"Saudi Arabia has emerged as the second-biggest source of global oil demand growth after China. Higher oil consumption in the Arab world’s biggest economy is forecast to account for 11.7 per cent of global expansion this year, the International Energy Agency (IEA) said. While that is still well behind China’s projected 26 per cent share of worldwide growth in oil consumption this year, the rising demand for crude and oil products in Saudi Arabia is outstripping increases in the major developing economies of Russia, Brazil and India.... Riyadh had publicly acknowledged for the first time that direct crude burning allowed the kingdom to increase light crude production while sticking to its OPEC commitment to curb exports, meet stricter environmental standards and reduce or eliminate fuel oil imports during summer, when demand for electricity peaks in the Gulf. Previously, Saudi Arabia had been importing significant volumes of heavy fuel oil to burn in power plants. That led to more carbon emissions and air pollution than if it had burnt Arabian light crude..... Globally, the IEA said oil demand might set a record this year, wiping out the big contraction of the previous two years thanks to economies in Asia, the Middle East and North America recovering faster than expected. It projects oil demand this year of 86.6 million barrels per day (bpd), up 30,000 bpd from last month’s forecast. The previous annual peak was in 2007, when the world consumed 86.51 million bpd of oil. Oil demand shrank to 86.21 million bpd in 2008 and 84.93 million bpd last year, for a total 1.8 per cent decline, according to IEA data. That was the first contraction over two successive years since the 1980s."
Saudi oil use to grow steeply
The National (United Arab Emirates), 13 April 2010

"The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact. The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel. 'By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day,' says the report, which has a foreword by a senior commander, General James N Mattis. It adds: 'While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.' The US military says its views cannot be taken as US government policy but admits they are meant to provide the Joint Forces with 'an intellectual foundation upon which we will construct the concept to guide out future force developments.' The warning is the latest in a series from around the world that has turned peak oil – the moment when demand exceeds supply – from a distant threat to a more immediate risk....But there are signs that the US Department of Energy might also be changing its stance on peak oil. In a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the Obama administration, admitted that 'a chance exists that we may experience a decline' of world liquid fuels production between 2011 and 2015 if the investment was not forthcoming. Lionel Badal, a post-graduate student at Kings College, London, who has been researching peak oil theories, said the review by the American military moves the debate on. 'It's surprising to see that the US Army, unlike the US Department of Energy, publicly warns of major oil shortages in the near-term. Now it could be interesting to know on which study the information is based on,' he said....The Joint Operating Environment report paints a bleak picture of what can happen on occasions when there is serious economic upheaval. "One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest,' it points out."
US military warns oil output may dip causing massive shortages by 2015
Guardian, 11 April 20010

"The Gas Exporting Countries Forum (GECF), made up of nations controlling 70 per cent of the world’s gas reserves, has dropped an Algerian proposal to cut gas exports, thereby proving it is no 'Gas OPEC'. Instead, ministers from its 11-member states resolved yesterday to push for gas prices to be linked to market prices for crude. 'All ministers agreed and supported that we continue our efforts to achieve indexing gas to oil,' the Russian energy minister, Sergei Schmatko, said on Monday after the group’s latest meeting in Oran, Algeria. The Algerian energy minister, Chakib Khelil, who headed the meeting, said he hoped the decision would 'mark a new era' for the organisation. Hopes are one thing, results are another; and Mr Khelil, who may already be frustrated by the group’s lack of enthusiasm for his proposal to limit gas supplies, is likely to be disappointed. Gas producers worldwide have been dismayed by a roughly 50 per cent drop in the past two years in gas prices on spot markets that are becoming increasingly international as improved technology for liquefying gas, as well as larger tankers, has made it economical to transport the fuel across oceans. The price decline has been blamed on the recession, which lowered global gas demand, combined with an unexpected surge in US gas output just as other gas producers were ramping up export capacity. The US emerged last year as the world’s biggest gas producer, narrowly eclipsing Russia, although – unlike Russia – it still consumes more gas than it pumps. The increased output was due to a parallel round of technological improvements in a field so esoteric that it went unnoticed by most market watchers. Little by little, the drilling engineers and fluid mechanics who dabble in the down-and-dirty details of drilling-mud composition achieved breakthroughs in 'hydraulic fracturing'. Through their efforts, it became possible to use specifically formulated mixtures of pressurised fluids containing suspended solids to crack open gas-bearing open rock formations that were reluctant to give up their payloads, and keep the fissures propped open so that the gas could flow. In 2008, an enterprising analyst at the US Energy Information Administration noticed that gas production in the country, which had been trending downwards for a decade, was suddenly on the rise. Producers were tapping previously uneconomic onshore shale gas deposits. Fortuitously, several of those not only held abundant quantities of gas but were also close to the surface and to major US cities. The genie of abundant, affordable gas supplies was out of the bottle, at least in North America. That ruined most gas exporters’ expectations that the US would become a significant market for liquefied natural gas (LNG), and put the economics of capital intensive gas liquefaction projects in jeopardy."
Gas exporters push for prices to be linked to crude
The National (United Arab Emirates), 10 April 2010

"Construction of the controversial Nord Stream pipeline from Russia to western Europe under the Baltic Sea has been officially launched. Gazprom holds 51% of Nord Stream, which will run from the Russian port of Vyborg to Germany's Greifswald. Russian President Dmitry Medvedev and German Chancellor Angela Merkel attended the ceremony near Vyborg. The project was given the go-ahead only in February amid fears that the pipeline could damage the Baltic Sea. President Medvedev said at the ceremony that the pipeline 'for the first time - which may be one of its main achievements - will ensure direct supplies of Russian gas to western Europe, bypassing transit territories'. The existing pipelines run from Russia to EU countries via Ukraine, Belarus and Moldova. Russia provides up to 30% of the gas consumed in Europe, and many European countries have been keen to secure alternative energy supplies....Apart from the Nord Stream, Russia has been planning another pipeline, the South Stream, which will run from southern Russia to Bulgaria under the Black Sea. Meanwhile, Turkey, Romania, Bulgaria, Hungary and Austria last July signed an agreement to construct the long-planned 3,300km Nabucco natural gas pipeline. It is expected to pump up to 31bn cubic metres of gas annually from the Caspian and the Middle East across Turkey and into Europe."
Nord Stream gas pipeline underwater construction starts
BBC Online, 9 April 2010

"A collection of influential international investors have added their support to a shareholder rebellion over BP's plans to invest in the controversial Canadian oil sands. Pension funds from the US and Australia say they will back a resolution at BP's annual general meeting next week that calls for the oil group to publish a report on the financial and environmental risks involved in developing oil sands. Jack Ehnes, chief executive of CalStrs, said: 'The environmental risks associated with oil sands development comes with long-term financial risk for the CalStrs portfolio.' The investors that have committed to the resolution hold stakes of less than 0.5pc in BP, but CalStrs and CalPers are among the top ten largest pension funds in the world and their support is a blow to BP. Oil sands, or tar sands as they are also know, are controversial because extracting the oil requires significant amounts of energy – giving off more carbon dioxide and costing more than conventional methods, as well as potentially scarring the landscape. BP does not have any oil sands production at present but expects to approve the development of its Sunrise site in Canada later this year. The $10bn (£6.6bn) venture is shared with US group Husky and covers an area in Alberta roughly the size of England."
US and Australian funds join BP rebellion on oil sands
Daily Telegraph, 9 April 2010

"Cameco’s McArthur River mine, in Canada, was, in 2008, the biggest single uranium mine in the world, with an output of 6 383 t of uranium, or 15% of world mine production. The Ranger mine, in Australia, owned 68% by Rio Tinto, came second at 4 527 t, or 10%, with Namibia’s Rössing (69%-owned by Rio Tinto) third at 3 449 t, or 8%, followed closely by BHP Billiton’s Olympic Dam mine, in Australia, at 3 344 t, or also about 8%. The WNA forecasts world uranium demand at 74 000 t by 2015, and states that most of this will have to come directly from mines. In 2007, the world’s known recoverable (‘reasonably assured and inferred’) resources of uranium (assuming a uranium price of $130/kg) amounted to 5 469 000 t. Of this total, 1 243 000 t was in Australia (23% of the total), 817 000 t in Kazakhstan (15%), 546 000 t in Russia (10%), 435 000 t in South Africa (8%), 423 000 t in Canada (8%), 342 000 t in the US (6%), 278 000 t in Brazil (5%), 275 000 t in Namibia (also 5%) and 274 000 t in Niger (5% as well). It should be noted that the current long-term contract price for uranium is about $132/kg ($60/lb), while the spot price is in the $88/kg ($40/lb) to $99/kg ($45/lb) range. However, there was relatively little exploration for uranium, worldwide, between 1985 and 2003. (The Chernobyl disaster was in 1986). The restarting of exploration soon brought results: in just the two years, 2005 and 2006, global uranium resources were increased by 15%. Moreover, large parts of the world have not yet been explored for uranium. The Brazilian Ministry of Mines and Energy points out that only 25% of that country has so far been prospected for the energy metal. Yet, that limited exploration is still enough to rank Brazil seventh in the world in terms of uranium resources. New uranium exploration and mining projects are reportedly currently taking place, or planned, in 90 countries."
Nuclear energy revival ensuring future of uranium mining
Mining Weekly, 9 April 2010

"Are we heading for another oil price shock? I ask the question because the price of a litre of unleaded petrol at the UK pumps has today reached a new all time high, marginally surpassing the previous record set in July 2008. Back then, the price of crude had reached a bubble inspired record of $147 a barrel. Then came the crash, and the price collapsed, but never did it fall back to the sort of level that traditionally would have been associated with such a severe recession, and it has been rising steadily now for the last year. Today it stands at around $86 a barrel. What makes the position in Britain feel much worse is the weakness of the pound. Oil is priced in dollars, so when converted into sterling, the price of a barrel is not so far off what it was back at the 2008 peak. The Bank of England may have to adjust its inflation forecasts, and therefore its approach to monetary policy, accordingly. That’s just what the policymakers don’t want to do right now. They want to keep policy loose for as long as possible to underpin the recovery. Yet even in the US, prices at the pumps have been rising steeply....everyone thinks it was the shock of the Lehman collapse that really did the mischief and no doubt this is partly true. But if you look at the charts tracking consumer and business confidence, they were falling off a cliff from about a month before Lehman’s went down, and one of the prime reasons for it was high gasolene prices. Gas prices are a much bigger driver of consumer behaviour in the US than almost anywhere else, for the obvious reason that people drive everywhere. American consumers took one look at rocketing gas prices and decided to stop spending en masse. Tim Geithner, the US Treasury Secretary, expressed confidence earlier this week that the US recovery was moving into self-sustaining territory. If petrol prices continue to rise like this, he may have to eat his words."
Jeremy Warner, assistant editor of The Daily Telegraph
Telegraph Blog, 8 April 2010

"One of the factoids trotted out from time to time by proponents of nuclear power is that conventional coal-burning power stations release more radioactivity into the environment than nuclear stations do. The reason is that the ash left over when coal is burned contains radioactive elements, notably uranium and thorium. Turn that logic on its head and it suggests that such ash is worth investigating as a source of nuclear fuel. And that is exactly what Sparton Resources, a firm based in Toronto, is doing. It has signed a deal with the China National Nuclear Corporation (CNNC), the authority that runs the country’s nuclear-power stations, to recover uranium from coal ash at a site in Lincang, in Yunnan province. Uranium is usually extracted from ore that contains 1,000 or more parts per million (ppm) of the element. The Lincang coal ash holds much less, about 300ppm. That said, it does not need to be mined—which brings costs down. Sparton says it can extract a kilogram of uranium for $77 or less. Uranium’s spot price is now near $90 a kilo. That is not a huge margin, but it is a profit nonetheless. To extract the uranium, Sparton adds sulphuric and hydrochloric acids to the ash, along with water, to make a slurry. With some sorts of ash, nitric acid is also used. The acids dissolve the uranium, and various other things, leaching them from the ash. The trick is to get the dissolved uranium out of the resulting solution....China is developing ash-mining for reasons of energy security more than economics, according to Wang Hongfang, a marketing manager at CNNC. The country wants to get uranium from 'every possible channel', Mr Wang says. These include stripping it out of the tailings from gold and copper mines, and also from phosphoric acid produced during the manufacture of fertiliser. Nor is CNNC alone in this aspiration. NUKEM, a German-American company that enriches and sells nuclear fuel, hopes soon to begin 'mining' fertiliser in Florida. Some people are even turning to seawater as a source of uranium, in an eerie recapitulation of Fritz Haber’s attempt to pay off Germany’s first-world-war debts by extracting gold from the ocean. Though seawater contains only three parts per billion of uranium, mostly in the form of uranyl tricarbonate, the element can be sucked out of it by ion exchange....Several organisations, including Japan’s Atomic Energy Agency and the Bhabha Atomic Research Centre in India, are attempting to do so. Their methods include the use of strips of ion-exchanging plastic, braided with polystyrene to toughen them up. These are placed in wire cages and anchored in a current of seawater. After a month or two, the plastic is removed and soaked in acid to dissolve the uranyl tricarbonate. The solution is then treated to precipitate uranium oxide.  At the moment, this process costs more than ten times as much as conventional mining, but some countries might regard that as a small price to pay for security of supply. Perish the thought that the supply is for anything other than providing fuel for civilian nuclear-power stations."
Rising from the ashes
Economist, 8 April 2010

"The economic shock of global recession has led a prime exponent of the theory conventional oil output has peaked to shift his view of the consequences, but he still thinks the world has to go green. Retired petroleum geologist Colin Campbell, who worked for major oil companies as well as smaller firms, has long been associated with the belief the world's oil supplies are dwindling. He does not waver from that and dismisses the argument of the so-called optimists that technology will manage to keep eking out more and more oil to keep pace with rising demand. What has changed is his opinion of the price impact and implications for fuel consumption after the spike of July 2008 to nearly $150 a barrel was followed by world economic recession, a deep drop in fuel use and a crash in oil futures to just above $30 in December 2008. 'I have changed my point of view about future prices,' said Campbell, who used to think the peak in conventional oil production, which he believes happened in 2005, would lead to a relentless price surge. Instead, the record rally led to a peak in demand in the developed world. 'Peak oil drives prices up in the first place. It has its own mechanism. We're sort of at peak demand right now,' Campbell told Reuters from his home in the village of Ballydehob, West Cork. 'I think presently the price limit is about $100.' For those who have painted alarming pictures of civil unrest as the world economy is forced to move away from conventional fuel and pay high prices for it in the interim, an inbuilt price mechanism to limit demand and move the world to other forms of energy should be a good thing. 'We have no alternative but to go green,' Campbell said. But he does not think reduced demand is enough to offset the gravity of peaking supply. He still sees a possibility of social anger as millions are forced to change their lifestyles in a too-sudden structural shift from economic growth driven by cheap conventional fuel."
Peak oil man shifts focus to peak price, demand
Reuters, 6 April 2010

"Oil hit an 18-month high of $86.70 a barrel in New York yesterday, adding to expectations that petrol prices will today pass the record levels of the summer of 2008. Fadel Gheil, an energy analyst at Oppenheimer & Co, thought prices could hit $100 in the second quarter on the back of positive economic data such as car sales figures. However, he said that such levels were not sustainable. He thought the 'real' price for crude should be about $60 per barrel. 'Demand will never return to 2007 levels,' he said, not least because of restrictions on carbon emissions. 'The market is being driven by financial players. The same speculators that pushed prices up to $150 [in mid-2008] will keep pushing the envelope until they reach a point at which they all jump.' Yesterday’s increase was driven by better-than-expected US unemployment figures that were released on Friday, when markets were closed. The momentum continued with the release of statistics indicating an unexpected rise in home sales and a surge in activity in US service industries, suggesting that the recovery was no longer confined to the manufacturing sector."
Petrol prices head for record as oil reaches 18-month high
London Times, 6 April 2010

"American technology to produce shale gas is unleashing a scramble for drilling rights in Poland, where experts believe vast reserves of unconventional gas exist that could help to weaken Russia’s grip on Europe’s energy supplies. ConocoPhillips is poised to launch Poland’s first shale gas drilling programme next month near Gdansk on the Baltic coast. Two other American oil groups — Exxon-Mobil and Marathon — and Talisman Energy, of Canada, are set to follow. The technology has transformed America’s energy industry and driven gas prices to their lowest level in years. Wood Mackenzie, the oil and gas research group, estimates that there could be as much as 48 trillion cubic feet (1,36 trillion cubic metres) of unconventional gas stretching across northern and central Poland. The gas, which does not lie in conventional reservoirs but inside tight rock formations, has become accessible only recently through the use of new hydraulic fracturing technology developed in the United States. If confirmed, Wood Mackenzie’s estimate would boost the European Union’s proven reserves of natural gas, which stand at 101 trillion cubic feet, by 47 per cent and be enough to make Poland, which imports 72 per cent of its gas, self-sufficient for the foreseeable future.... Poland consumes about 14 billion cubic metres of gas per year and has been heavily dependent on Russian imports. Mr Fanning said that the shale gas in Poland was of high quality and relatively shallow. It is similar to gas found in the Montney shale deposits in British Columbia and Alberta, Canada. He said that the licence areas were also thinly populated — an advantage, because shale gas production involves the drilling of dozens of wells across a relatively small area. Water and sand are pumped in at high pressure to fracture rocks and create reservoirs from which the gas can be extracted.... Some have been sceptical that unconventional gas production will take off as quickly in Europe as it has in America, where output has grown fourfold since 1990 to more than 50 per cent of total production. One reason is a shortage of land-based drilling rigs in Europe. The number of rigs in the US stands at 949, according to figures from Baker Hughes, an oil services company based in Houston. In Europe it is thought there are about 100 rigs. European Union gas demand is expected to rise by 2 per cent this year to 554.1 billion cubic metres, with domestic output meeting about half of that total, according to Wood Mackenzie. Russia supplies about 25 per cent of the EU’s gas needs."
Dash for Poland’s gas could end Russian stranglehold
London Times, 5 April 2010

"BP is lobbying on Capitol Hill against a federal US environmental agency being given jurisdiction over the use of a controversial method of extracting gas from shale deposits, ahead of an important meeting this week. The London-based oil company wants decisions on drilling techniques such as hydraulic fracturing – which uses high-pressure liquids to force fissures – to be taken at state level, rather than being left to the Environmental Protection Agency (EPA), whose specialist committee meets on Wednesday to discuss its concerns. BP is also opposed to the public disclosure of the chemicals used in fracturing, on the basis that the information is commercially sensitive – something that will anger environmentalists, who are highly suspicious of the process."
BP fights to limit controls on shale gas drilling
Guardian, 4 April 2010

"Large shareholders will be pitted against each other this week in a row over oil giant BP's involvement with tar sands in a battle that is set to dominate this year's round of company annual meetings. A special resolution has been filed by 143 shareholders for BP's annual meeting on 15 April, demanding the company provide a full report by next year about the risks of its planned tar sands development in Canada. The Local Authority Pension Fund Forum (LAPFF) has sparked conflict in the normally torpid world of institutional investors by calling on the 52 schemes it advises to vote with BP's management, saying talks with the company suggested its approach to oil sands was 'well-grounded'. But the Merseyside Pension Fund, which holds the deputy chair position of the LAPFF and is one of the largest in the UK, has decided to abstain, as has the London Borough of Camden Fund. The Environment Agency Pension Fund, also a member of the LAPFF, has said it supports the campaigners. International investors including some large Australian pension funds, the Swiss Ethos Foundation and dozens of large pension funds and ethical fund managers in the US are expected to come out in support. Mercer Investment Consulting, one of the world's leading pension fund advisers, has taken the unusual step of writing to 120 big investors asking how they intend to vote at the BP and Shell AGMs."
Shareholders at loggerheads over vote on BP's tar sands development
Observer, 4 April 2010

"In a coup that achieves something President Clinton promised but never delivered, President Obama has forced the big three US carmakers, and their unions, to accept tough mileage rules for cars and SUVs. The rules will cut emissions from vehicles by more than a third over the next four years. Whether the new rules end America’s love affair with huge cars remains to be seen. But they are being introduced at a time when SUV sales are at a fraction of their peak level five years ago. Their demise coincides with the country’s first mass-produced 'plug-in' electric car, which finally rolled off a Michigan production line this week. From 2016, new cars and SUVs will have to deliver an average of 35.5 miles per gallon (42.6 miles per British gallon), comparable for the first time with European and Japanese requirements. SUV mileage under the new regime is expected to average 28.8mpg (34.5mpg in Britain), or nearly three times that of the Hummer H1 that Arnold Schwarzenegger once drove into Times Square in New York to begin the vehicle’s transition from armoured personnel carrier into celebrity runabout. The new rules end a notorious loophole in US law by which SUVs were exempt from emissions standards that applied to cars. This made them so much more profitable that at the peak of the sport utility boom, a single Ford plant was generating up to $15 million (£9.8 million) a day in pre-tax profits.....General Motors’ new management has famously 'bet the company' on the Chevy Volt, an electric super-mini with a small petrol engine designed only to recharge its batteries on long journeys. Its 40-mile range on batteries alone means that commuters living less than 20 miles from work would almost never have to fill their tank. GM has high hopes, despite its price tag of $40,000 before federal tax rebates. Its main competitor at the New York International Auto Show is the allbattery Nissan Leaf, which will cost $32,000 with a range of 100 miles and no petrol-powered back-up. US motorists have shown repeatedly that their affection for big cars rebounds as petrol prices fall, but the new regulations reflect a long-term trend. On average, Ford sold 412,000 Explorer SUVs each year from 1995 to 2003. By 2008 sales had slumped to 78,000. GM has sold the Hummer brand to a Chinese rival and SUV sales fell overall by 52 per cent last year alone. The new standards are based on a 2007 Supreme Court Ruling that reclassified carbon dioxide as a pollutant. They will be enforced by the Environmental Protection Agency, whether Congress approves or not."
Barack Obama aims to drive gas guzzlers off the road with greener laws
London Times, 3 April 2010

"Only hours after President Obama opened up vast tracts of America’s coastline to exploration, Royal Dutch Shell said yesterday that it plans to start drilling for oil in the Arctic Sea, north of Alaska, within weeks. However, Shell said it had received a government permit yesterday allowing it to drill in Chukchi, the sea between northwest Alaska and northeastern Siberia. It is believed to hold 15 billion barrels of oil and 76 trillion cu ft of gas, according to US government figures. Shell cautioned that an appeal could still be made against the permit within 30 days. The group said it was waiting for a final permit for the Beaufort Sea, which is also thought to be rich in oil. Mr Odum said that Shell was 'absolutely' interested in bidding for new exploration licences in the eastern Gulf of Mexico, which had previously been off-limits. He said: 'We have made discoveries right up to the area where leasing had been stopped. We know a lot about that trend and think those discoveries will continue. It’s a very good fit for us.' He said that the opening of large parts of the American East Coast to oil exploration presented big opportunities but that the impact would be long-term. Years of seismic investigations would be necessary before drilling or production would begin. Mr Odum was speaking as Shell announced the start-up of its Perdido floating production facility in the Gulf of Mexico, producing 100,000 barrels a day. It is the world’s deepest offshore production platform and stands in water as deep as five Empire State Buildings. The decision to open up new areas of the American coastline to oil and gas development is part of a calculated political move by the Obama Administration to win Republican support for proposed climate change legislation. The decision has upset environmental groups, but was welcomed yesterday by other oil companies....Under Mr Obama’s proposals, oil companies will not be able to drill on the West Coast or New England, but will be able to explore off the Atlantic Coast from Delaware to Florida and 125 miles beyond Florida’s shore in the eastern Gulf of Mexico. The plans also permit development in Alaska, but not in the sensitive Bristol Bay area, which includes Alaska’s richest fishing grounds. The Gulf of Mexico is thought to contain up to 40 billion barrels of oil and up to 200 trillion cu ft of natural gas, according to the Minerals Management Service. As much as 63 billion barrels of oil and 294 trillion cu ft of natural gas could lie within eight leases in the Arctic and Atlantic oceans set to be awarded between 2012 and 2017."
Shell gets ready to start Arctic drilling within weeks after Obama go-ahead
London Times, 2 April 2010

"President Obama took a gamble with the environment and his political base yesterday, opening up 167 million acres (67 million hectares) of coastal waters to oil drilling, in an attempt to limit America’s dependence on foreign energy and to win Republican backing for a stalled climate change Bill. In a reversal of policies that have protected American shorelines since the Exxon Valdez disaster in 1989, Mr Obama paved the way for a new energy rush off the US Atlantic and Gulf coasts by allowing exploratory drilling for trillions of cubic feet of natural gas and oil reserves that could exceed eight billion barrels. Speaking at Andrews Air Force Base in front of an F16 fighter modified to fly on biomass jet fuel, Mr Obama presented his plan as part of a broad shift to clean energy by an economy that consumes a fifth of the world’s oil. He concluded: 'The bottom line is this: given our energy needs, in order to sustain economic growth, produce jobs and keep our businesses competitive, we’re going to need to harness traditional sources of fuel.' The spectacle of a Democratic President conceding a long-running battle to the oil and gas industry was condemned by some environmentalists as an echo of Sarah Palin’s 'drill, baby, drill' slogan from the 2008 campaign trail — but welcomed as brilliant politics by others who see a deal with the energy lobby as vital for progress towards climate change legislation. 'This is the best-timed policy announcement this President has yet accomplished,' Paul Bledsoe, of the National Commission on Energy Policy, said. 'At a time of rising oil prices and on the heels of healthcare, he has triangulated the Republicans on energy security. It’s very difficult for them now to say with a straight face that his energy policies lack balance.' Under the proposals vast areas of ocean off the coasts of Alabama, Florida and eastern states from Delaware to Georgia will be opened to exploration by the sale of drilling leases starting next year. The Pacific Coast from Canada to Mexico will remain off-limits, but 130 million acres of Alaskan waters will be studied to see if the potential economic benefit of drilling outweighs the ecological risk.... Known oil reserves in the newly opened areas are modest: fields under the East Coast’s outer continental shelf and the single largest new parcel of the Gulf of Mexico would provide barely four years’ supply — proof that yesterday’s announcement was more about politics than long-term energy supply."
Drill baby, drill: Obama opens up America’s coasts to oil companies
London Times, 1 April 2010

"Experts attribute much of the recent rise in prices to flows of speculative money into oil markets. These bets are fueled by investor expectations that the U.S. and global economies are poised to return to growth and thus spark increased use of oil. Strong growth in China supports the narrative of rising oil consumption and tightening supplies....While there are signs of U.S. economic recovery, such as a slight uptick in consumption and strong manufacturing data, there are plenty of ho-hum signs too, including dismal construction spending and continued high unemployment....On the last day of July, oil traded at $67.50 a barrel and gasoline sold at a nationwide average of $2.52 a gallon for regular unleaded. On Thursday, oil prices settled at $84.87 on the New York Mercantile Exchange, and regular unleaded gasoline averaged $2.80 a gallon and more than $3 on the West Coast, according to the AAA.... What's different about today's price run-up from two or three years ago is that oil is now in ample supply.... Perhaps the only argument that would justify rising prices is that global consumption is expected to grow by 1.6 million bpd to 86.6 million bpd this year, according to the Paris-based International Energy Agency. Even so, there's 6 million bpd of oil that's shut-in, a technical way of saying that recoverable oil is being left in the ground by the world's oil producers.... The Organization of Petroleum Exporting Countries signaled this week its concerns about rising prices by not calling for hard enforcement of production quotas by its members. That suggested the cartel will tolerate an open-spigot policy by its 12 members as needed to stabilize prices."
What's driving up oil prices again? Wall Street, of course
McClatchy Newspapers, 1 April 2010

"Iraq's current 'highly ambitious plans' to expand oil production are unlikely to be fully realized given political, security, operational and infrastructure challenges, according to a new report, Fields of Dreams: The Great Iraqi Oil Rush -- Its Potential, Challenges, and Limits by IHS Cambridge Energy Research Associates (IHS CERA). Iraq currently plans to expand production to as much as 12 million barrels per day (bpd) in the next six to seven years. Achieving levels around half that in the next decade would be more likely and would still constitute 'a significant expansion,' the report emphasizes. IHS CERA's current outlook for Iraq is 4.3 mbd in 2015 and 6.5 mbd in 2020 -- still big growth numbers. The report points out that Iraq starts out with rich oil resources that have suffered from 'underinvestment and underdevelopment for decades.' 'But Iraq's new expansion timetable would dwarf the most rapid buildups that we have recently seen in places such as Russia and Saudi Arabia,' said IHS CERA Senior Middle East Director, Bhushan Bahree. 'The political, security, operational and infrastructure challenges in the country, along with a likely shortage of skilled personnel, are likely to hamper progress towards such an unprecedented achievement.'...The report identifies infrastructure and logistics as 'major challenges.' Iraq is responsible for providing the infrastructure needed to receive the extra oil but its plans for providing a 'complex network of capital-intensive infrastructure' -- from ports and roads to power and water crucial for operations -- in synchronization with the development oil fields are not known, representing a major potential bottleneck. 'Iraq's expansion timetable appears extraordinarily ambitious in comparison to the recently completed capacity increase in Saudi Arabia,' said Bahree. 'Saudi Arabia has significant security and infrastructure advantages yet it took Saudi Arabia between four and five years to expand its net output capacity by some 2 million barrels per day. Iraq will certainly be challenged to match this pace, much less exceed it.' Though Iraq is unlikely to meet its 'very stretch target' of elevating its capacity to 12mbd in six to seven years, the expansion of its production capacity still represents a significant increase with strong implications for OPEC and the regional balance, the report finds. Iraq is not currently a party to OPEC's production quota system. A significant ramp-up in Iraqi production would put the issue of bringing Iraq back into the quota system back on the agenda. Any issue within OPEC is likely years away, however, as it is widely assumed that the major producers will wait until Iraqi output begins to approach its OPEC share negotiated in 1988, which is at parity with Iran."
IHS CERA: Big, But Potentially Limited, Output Growth in Iraq
Rigzone, 31 March 2010

"The head of the International Energy Agency, the developed world’s energy watchdog, has called for China to join the agency and warned that the institution risked losing relevance as energy demand shifted eastward away from its current members. Nobuo Tanaka, executive director of the IEA, told the Financial Times: 'Our relevance is under question because half of the energy consumption already is in non-Organisation of Economic Cooperation and Development countries. And for oil it is soon coming that the majority of consumption is happening in non-OECD countries.' He added: 'In many ways they [the Chinese] are already working closely with us. But eventually we wish they would join us.' Beijing has been wary of joining multilateral organisations it sees as being controlled by rich developed countries, particularly the US.  IEA officials do not expect Chinese membership overnight, but do believe it could be possible within the next five years."
China invited to join IEA as oil demand shifts
Financial Times, 30 March 2010

"Hopes that the Falkland Islands would emerge as a significant oil producer were dealt a significant blow yesterday when it emerged that the first well to be drilled in the region for more than 12 years had yielded only small traces of oil and gas. The announcement from Desire Petroleum sent its shares plunging 48 per cent to 50½p, wiping about £160 million off the company’s market value to £163 million. Two other companies exploring for oil in the same region — Rockhopper Exploration and Falkland Oil & Gas — were also struck sharply lower. Rockhopper closed at 45p, down 8½p, and Falkland was off 15¼p at 121p.However, the news may help to deflate a simmering territorial dispute with Argentina over the legal rights to oil production in the Falklands....Richard Rose, oil and gas analyst at Oriel Securities, said the announcement had “diminished the prospectivity” of all the other wells due to be drilled in the North Falkland Basin that he described as 'very high risk'. No drilling has been carried out in the Falklands since 1998, when Shell and Lasmo drilled six wells in a nearby area. Oil was discovered in all but one of them — where gas was found instead — but the following year the global price of crude collapsed, undermining the commercial logic of developing oilfields in such a remote area. If any commercial finds were made, it would cost billions of pounds to build pipelines and other infrastructure needed to develop them. While diplomats may be quietly relieved that the failure of the Liz well to find oil has taken some of the heat out of the dispute with Argentina, yesterday the South American nation appeared to be in no mood to abandon its claims....It was the oil well that triggered a war of words — and a flurry of South Atlantic sabre-rattling not seen since the 1980s. But in the end Desire Petroleum’s decision to drill for oil at its Liz prospect turned up little more than mud and oily sand. This should come as no great surprise. Even at the best of times, wildcat oil exploration is a high-stakes business. With the hire of a drilling rig costing upwards of $200,000 per day, success depends on a shrewd understanding of geology, technical excellence with the drillbit — and more than bit of luck. But in a remote corner of the South Atlantic, where only a handful of wells have ever been drilled, the risks are about as high as they get. Of course, this failure is not the end of the story. With five more still left to drill by Desire and three other companies, yesterday's news does not rule out the possibility that commercial quantities of oil may yet be found in the Falklands. However, if a discovery is made, it will have to be very large to justify the cost of development. The Falklands are so remote that it would cost billions of dollars to build the necessary pipelines and infrastructure to allow for export. And, with big uncertainties hanging over the political future of the islands, many big oil companies might be reluctant to get stuck in."
Falklands delivers poor results for Desire Petroleum
London Times, 30 March 2010

"Britain will this week rule out stockpiling national reserves of gas, despite concerns about the country's lack of storage and over-reliance on foreign imports, according to industry sources. It is understood that the Government has decided against keeping national stocks of gas, which is the practice in some European countries such as Holland. The decision will be contained in a paper examining Britain's security of gas supply. The decision flies in the face of a recommendation from its own adviser, Malcolm Wicks MP, who published a paper last August urging the Government to consider reserving 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 shortfall – which happened during the dispute between Russia and the Ukraine just over a year ago. Greg Clark, the Tory shadow Energy Secretary has repeatedly warned that the UK's gas storage facilities are inadequate, calling for the Government to 'ensure that we always have a prudent security margin of gas supply'. However, energy companies that own gas storage plants insisted that the market can provide all the necessary facilities, if tax incentives and lower land rental fees are provided by the government. A spokesman for the Department of Energy and Climate Change declined to comment, but added that it had been reluctant to sanction national storage in the past for fear of discouraging commercial investment. The news comes as a group of influential MPs condemned the Crown Estate, the state-owned body responsible for Britain's seabed, for taking advantage of its monopoly position to charge too much rent for gas storage sites projects."
UK to rule out national gas storage to secure supply
Daily Telegraph, 30 March 2010

"Saudi Arabian Oil Minister Ali al- Naimi said he 'hopes' prices remain in the $70-a-barrel to $80-a-barrel range, signaling the world’s largest producer may be willing to boost output if crude accelerates further. The country could boost production by as much as 4.5 million barrels a day and is 'waiting' for demand to rise after increasing capacity to 12.5 million barrels, Al-Naimi told reporters yesterday in Cancun, Mexico. Prices in the $70-to $80- range are 'as close to perfect as possible,' he said, adding today that he 'hopes' prices remain in that range. Oil surged 78 percent last year as the Organization of Petroleum Exporting Countries implemented cuts to output quotas of 4.2 million barrels a day and the global economy emerged from its worst slump since World War II. Saudi Arabia, the group’s largest producer, made the biggest cut. Oil has remained within a $68- to $84-a-barrel range since October and prices gained about 3.8 percent this quarter. The kingdom pumped 8.25 million barrels a day in February, according to Bloomberg estimates. Its output target is 8.051 million barrels a day. Crude for May delivery rose 20 cents to settle at $82.37 a barrel on the New York Mercantile Exchange. OPEC kept its production ceiling unchanged at 24.845 million barrels a day at a meeting March 17 in Vienna. It also didn’t change individual allocations. OPEC set the quotas at the end of 2008, amid the onset of the global economic recession. The group’s next scheduled meeting is Oct. 14. OPEC plans to add 12 million barrels to its daily production capacity by 2015, equal to Saudi Arabia’s capacity. The gains would exceed the expected growth in demand, according to the International Energy Agency. 'The need for additional supply has nothing to do with price,' al-Naimi said. 'When we see an imbalance in fundamentals, we try to restore it'....Global oil demand is expected to advance 1 percent a year to 105 million barrels a day by 2030 from 85 million barrels a day in 2008, the IEA said in November in its annual World Energy Outlook. The group is the adviser to 28 nations. 'Most of the increase in output would need to come from OPEC countries, which hold the bulk of remaining recoverable conventional oil resources,' the IEA said.”
Saudi’s Al-Naimi ’Hopes’ Oil Stays in $70-$80 Per Barrel Range
Bloomberg, 30 March 2010

"Britain faces the worst energy crisis in Europe, according to the boss of one of the biggest power companies. 'The country has to build two large plants or more every single year,' said Volker Beckers in his first interview since becoming chief executive of RWE Npower two months ago. 'This has never happened in Britain’s history, so there’s no time to lose.' Homeowners will end up footing much of the estimated £200 billion bill for the new plants through higher energy prices. 'The government faces the biggest challenge in Europe,' said Beckers, whose company supplies power to 6.4m British homes. 'In a world where capital is scarce and the economic case is unclear, it’s not an easy sell to my board. Right now, I can’t do it.' Within the next decade. a quarter of Britain’s fossil-fuel plants will be retired, to be replaced by more costly low-carbon alternatives. Offshore wind and nuclear are the government’s favoured options. The £200 billion bill for pipes, plants and turbines predicted by Ofgem, the regulator, translates to a cost of £8,000 for each of Britain’s 25m households. Both Labour and the Conservatives have said the state needs to take a more active role in guiding the makeover. They expect the industry to bear virtually all the upfront costs. However, the uncertainty over future energy prices and how much of the additional cost, such as for waste clean-up, will have to be shouldered makes it hard to proceed with big investments such as nuclear reactors, said Beckers. 'At the moment nobody really knows the rules of the game. If the uncertainty prevails, investors will simply do what they understand best in this market and that is gas generation. That is exactly what we as a company have done in the past few years, but as a country it’s not what gets the UK to the [carbon reduction] targets we have for 2020.'"
Power crunch looms for Britain
Sunday Times, 28 March 2010

"Gazprom, Russia’s state-owned gas giant, is preparing an audacious bid to become one of the biggest fuel suppliers in Britain. The company is expected to lodge an offer this week for a network of 800 petrol stations and the Lindsey oil refinery at Killingholme, Lincolnshire. The assets have been put up for sale by Total, the French oil group. It has hired JP Morgan, the investment bank, to sell its UK business, which employs 5,000 people. The business is expected to fetch more than £1 billion. The prospect of the Kremlincontrolled giant owning key parts of the UK oil infrastructure could worry the government. When Gazprom was rumoured to be looking at a bid for Centrica, owner of British Gas, in 2006, ministers met to examine the 'possible consequences resulting from any takeover of a major UK energy supplier'. The auction is part of a remarkable shake-up of Britain’s oil refining and distribution industry. Half of the refining capacity, built up in the 1960s and 1970s to take production from a booming North Sea, is up for sale as energy giants look to sever ties with the low-margin, low-growth British market."
Russians prepare £1bn grab for UK fuel supplies
Sunday Times, 28 March 2010

"Tesco will start selling solar panels this week, leading a stampede of retailers aiming to cash in on a controversial new subsidy scheme. The rush has been triggered by the launch of the government’s new feed-in tariff (Fit) programme. Taking effect on Thursday, this pays homeowners and small firms for generating electricity from photovoltaic solar panels and wind turbines, either for their own use or to be sold back to the grid. The payments are guaranteed for up to 25 years to ensure payback on the costly technologies. The government claims the scheme can generate up to £950 in cash payments and energy savings annually. Philip Wolfe, a director at the Renewable Energy Association, the trade body, said: 'All sorts of new companies will be coming up with offers. Tesco is just one of them.' Some campaigners are less enamoured with the idea of low-carbon power for the masses, labelling the Fit scheme the “great green rip-off”. They warn it will hurt the poor by pushing up household bills artificially and the billions the government will pay out over the life of the programme would be better spent on proven measures like insulation."
Tesco joins the stampede to supply DIY electricity
Sunday Times, 28 March 2010

"The UK government’s tax take from oil and gas production in the North Sea fell to its lowest ever level, under the current fiscal regime, in the year ended March 31, 2010, according to government data published on Wednesday 24th March 2010. The UK treasury expects to take £6.4 billion (GBP) in corporation tax and petroleum revenue tax from companies producing oil and gas in the UK over the year. This is less than half the tax take in the previous year, during which oil prices hit their record high. It is the lowest level since then Chancellor of the Exchequer Gordon Brown doubled the supplemental tax on oil companies in late 2005. The fall in revenue is due to both a lower average oil price in 2009 and the rapid decline in output from aging UK oil fields. Total oil and gas output in 2009 fell 5.2% on the year. The average price of North Sea benchmark Brent crude oil futures was 37% down on the year. The UK government expects North Sea revenues to rise in the 2010 and 2011 tax years to £8.5 billion (GBP), but the outlook for UK oil industry is weak."
Peak oil tax? UK oil & gas tax take at all time low
Liveoilprices, 25 March 2010

"Jim Mulva, the 63-year-old chairman and chief executive, spent a decade building the Houston-based company into a global energy giant, buying assets and companies around the world, often at steep prices. But on Wednesday, Mr. Mulva said Conoco, the third-largest U.S. oil company by revenue and market capitalization, must now make do with what it has. Finding it increasingly difficult to win access to new sources of oil and facing stiff competition for the oil that is available, the company will pull back from its strategy of rapid growth and instead focus on producing the oil and gas it already controls."
ConocoPhillips to Rein In Its Growth
Wall St Journal, 25 March 2010

"The fact that corn-ethanol production has continued to grow, despite the failure of a number of firms in late 2008 and early 2009, points to the efficacy of the various protections and subsidies it enjoys (falling maize prices helped too), though it says nothing about their efficiency or wisdom. Ethanol, which is used mainly as an additive to petrol, is not a particularly good fuel: it offers only about two-thirds as much energy as petrol and can corrode pipelines and car engines. By 2014 or earlier, ethanol production is expected to reach 10% of America’s total fuel demand, and thus to hit a 'blend wall', since the EPA does not at present allow blends of more than 10% for mainstream use. Even as producers have urged the EPA to lift this bar, it has challenged them to move beyond corn and make ethanol from cellulose, the abundant, inedible portion of most crops. Using inedible inputs avoids fights about diverting food crops for fuel, and frees the industry from reliance on a single commodity. Despite ample investment, however, production costs remain high and commercialisation elusive. Since 2007 one company, Range Fuels, has received more than $150m in federal grants and guarantees for a large cellulosic-ethanol plant, but has yet to produce any. Still, it and others are gamely pushing ahead. A boost came last month, when Novozymes and Danisco, two Danish firms, unveiled new, cheaper enzymes which are needed to break down cellulose. Even if cellulosic ethanol were to get cheaper, though, it would still be ethanol, a poor fuel. The alternative is to produce something better, such as an advanced biodiesel. According to Lux Research, based in Boston, venture capitalists invested $208m in algae technologies with this sort of thing in mind during 2008, six times as much as they spent in 2007. But building vast pools for algae and turning them into fuel remains tremendously expensive. Solazyme, a Californian firm, is a promising anomaly, using algae to make fuel from sugars in dark industrial vats rather than pools. Such strategies may work, but have yet to be scaled up. Solazyme, tellingly, has developed other sources of revenue."
Coming up empty
Economist, 25 March 2010

"The first detailed study of onshore wind farms has found that 20 of the sites produce less than 20 per cent of their maximum output with some producing less than 10 per cent. Blyth Harbour in Northumberland is thought to be the least efficient wind farm producing just 7.9 per cent of its maximum capacity while Chelker reservoir in North Yorkshire operates at 8.7 per cent of its capacity. The figures were compiled by lobby group Clowd using data collected by energy regulators Ofgem. The best wind farms operate at about 50 per cent of their predicted maximum capacity while the majority produce around 25 per cent to 30 per cent."
Wind farms produce 'fifth of expected electricity'
Daily Telegraph, 22 March 2010

"The world's oil reserves have been exaggerated by up to a third, according to Sir David King, the Government's former chief scientist, who has warned of shortages and price spikes within years. The scientist and researchers from Oxford University argue that official figures are inflated because member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when competing for global market share.  Their new research argues that estimates of conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that demand may outstrip supply as early as 2014. The researchers claim it is an open secret that OPEC is likely to have inflated its reserves, but that the International Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take this into account in their statistics. 'It is necessary to investigate ambiguities and sources of error that are broadly acknowledged but not taken into account in public data due to political sensitivities,' the researchers said. The paper also raises concerns that public statistics have started to incorporate non-conventional reserves such as the Canadian tar sands, where oil and gas are much more difficult to extract and may never be economically attractive to develop. Sir David said that although the IEA was doing a good job of warning that more investment in oil and gas exploration is needed, governments need to pay more attention to independent research. 'The IEA functions through fees that are paid into it by member companies and has to keep its clients happy,' he said. 'We're not operating under that basis. This is objective analysis. We're not sitting on any oil fields. It's critically important that reserves have been overstated, and if you take this into account, we're talking supply not meeting demand in 2014-2015.' The concept of 'peak oil' has gained traction in recent years, although energy companies such as BP and Shell insist that production will be able to keep pace with growing Asian energy needs. Sir David said he was 'very concerned' that Western governments were not taking the concept of 'peak oil' – where demand outstrips production – seriously enough, while China is throwing all its efforts into grabbing as many energy resources as possible....Dr Oliver Inderwildi, who co-wrote the paper with Sir David and Nick Owen for Oxford University's Smith School, believes radical measures such as switching freight transport to airships could become common in future. 'The belief that alternative fuels such as biofuels could mitigate oil supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of relying on those silver bullet solutions, we have to make better use of the remaining resources by improving efficiency.'"
Oil reserves 'exaggerated by one third'
Daily Telegraph, 22 March 2010

"The status of world oil reserves is a contentious issue, polarised between advocates of peak oil who believe production will soon decline, and major oil companies that say there is enough oil to last for decades. In reality, much of the disagreement can be resolved through clear defnition of the grade, type, and reporting framework used to estimate oil reserve volumes. While there is certainly vast amounts of fossil fuel resources left in the ground, the volume of oil that can be commercially exploited at prices the global economy has become accustomed to is limited and will soon decline. The result is that oil may soon shift from a demand-led market to a supply constrained market. The capacity to meet the services provided by future liquid fuel demand is contingent upon the rapid and immediate diversifcation of the liquid fuel mix, the transition to alternative energy carriers where appropriate, and demand side measures such as behavioural change and adaptation. The successful transition to a poly-fuel economy will also be judged on the adequate mitigation of environmental and social costs....This paper supports the contention held by many independent institutions that conventional oil production may soon go into decline (Alekkett, 2007; Campbell and Laherrere, 1998; IEA, 2008; Laherrere, 2009a; Robelius, 2007; Sperling and Gordon, 2007; USGAO, 2007) and it is likely that the ‘era of plentiful, low cost petroleum is coming to an end’ (Hirsch, 2005). Significant supply challenges in the near future are compounded against a backdrop of rising demand and strengthening environmental policy. Key conclusions include: • The age of cheap liquid fuels is over. A condition of meeting additional demand is to develop unconventional resources, which translates to an increase in the price of petroleum products. • Oil reserve data that is available in the public domain is often contradictory in nature and should be interpreted with caution. • World oil reserve estimates are best described by 2P reporting. This means public reserve figures should be revised down-wards from 1150–1350 Gb to 850–900 Gb. • Supply and demand is likely to diverge between 2010 and 2015, unless demand falls in parallel with supply constrained induced recession. • Reserves that provide liquid fuels today will only have the capacity to service just over half of BAU demand by 2023. • The capacity to meet liquid fuel demand is contingent upon the rapid and immediate diversi?cation of the liquid fuel mix, the transition to alternative energy carriers where appropriate, and demand side measures such as behavioural change and adaptation. • The negative effect of oil price on the macro-economy is signi?cant, and should be used to build the business case to invest in alternative energy carriers. Many alternative fuel carriers also present the double dividend of improving energy security (i.e. utilize local resources) and reducing emissions (i.e. electricity, hydrogen)."
The status of conventional world oil reserves—Hype or cause for concern?
Energy Policy, March 2010

"Buried deep underground in Merseyside could be a solution to Britain’s energy woes. Canary-killing methane gas – one of the biggest dangers coal miners faced – offers great potential as our North sea output shrinks. But the technology needs to catch up. Management at Royal Dutch Shell and PetroChina are not chumps – they understand what’s going on in the global energy business very well. The two companies have teamed up to launch a A$3.3bn (£2bn) bid for Australia’s Arrow Energy, one of the largest coal-bed methane (CBM) groups in the country. They understand the future potential of this game-changing source of energy. The long-abandoned coal seams that stretch from the Pennines to the Irish Sea are also rich in methane gas and this could be tapped to produce electricity for the national grid. CBM is rapidly being developed all over the world as countries attempt to cut reliance on Middle Eastern oil and Russian gas. The UK needs to catch up – and all eyes are on Liverpool as it leads the way in the UK’s newest source of energy. A number of companies are developing CBM sites across the country. Two acres of land in Ellesmere Port – adjacent to the Vauxhall plant now owned by General Motors – could be the UK’s first site producing electricity generated by CBM.... CBM technology in the US is much further ahead and UK players could learn much from their more experienced counterparts. With UK production falling at a rate of 7pc a year and with the country having minimal gas storage facilities, security of future supply will be a major problem until new nuclear kicks in. Developing CBM appears essential."
Scousers could save us from the Russians
Daily Telegraph, 21 March 2010

"Lord Hunt, the energy minister, is to meet industrialists in London tomorrow in a bid to calm mounting fears about the disruption that could follow a sudden shortage of oil supplies. In a significant policy shift, the government has agreed to undertake more work on whether the UK needs to take action to avoid the massive dislocation that could be caused by the early onset of 'peak oil' – the point that marks the start of terminal decline in global oil production. Jeremy Leggett, the executive chairman of the renewable power company Solar Century and a leading figure in the UK industry taskforce on peak oil and energy security, said the meeting, to be held at the Energy Institute, showed a welcome new sense of urgency. 'Government has gone from the BP position – '40 years of supply left, the price mechanism works, no need to worry' – to 'crikey',' he said. 'BP and others are telling us that, but you lot, Virgin, Scottish and Southern, and others are telling us something completely different. We do not know who to believe. Let's do a proper risk assessment with industry,' he said. The meeting is expected to include executives from the taskforce members including Virgin, Arap, Stagecoach, Scottish and Southern Energy, and Solar Century as well as other industrialists. The decision to hold the talks came after the UK industry taskforce on peak oil and energy security last month issued a provocative report, The Oil Crunch: a Wake-up Call for the UK Economy, in which it warned of the dangers of complacency.... A spokeswoman for the Department of Energy and Climate Change confirmed last night that Hunt and a range of energy-policy civil servants would be holding 'private and behind-doors' talks at the Energy Institute. But she played down the significance of the session, saying the government had always taken supply issues seriously and met different parts of industry on a regular basis. 'We do this all the time; it is just a normal stakeholder meeting,' she insisted, adding that there was no 'marked' change in ministerial policy. The issue of peak oil arose last November when whistleblowers inside the International Energy Agency alleged the problem had been deliberately downplayed over a long period. BP and other oil companies insist that there is little danger of the world running out of oil because new areas such as Brazil, and more recently Uganda, are always opening up to development. BP chief executive, Tony Hayward, believes demand will fall as prices move up., pushing back any major peak-oil dislocation. But booming demand in China, India and the Middle East has pushed up the price of crude to more than $80 a barrel and UK petrol prices are close to record levels. Amrita Sen, an oil analyst at Barclays Capital, believes the price of crude could pass $100 this year and reach nearly $140 by 2015. Francisco Blanch, of Bank of America Merrill Lynch, has speculated it could hit $150 within four years."
Energy minister will hold summit to calm rising fears over peak oil
Guardian, 21 March 2010

"A Conservative government would allow a new nuclear power station to be opened every 18 months to address the threat of a power shortage according to Greg Clark, the shadow energy spokesman. Mr Clark said the Tories would allow energy companies to open at least one new nuclear facility every year and a half to boost the country's power supply. Mr Clark added there would be 'no limit' on the growth of nuclear power in Britain under a Conservative administration. He told the Daily Mail: 'In the past we haven't been entirely clear - this is a very clear statement that we are in favour of nuclear power.' Under Tory proposals, a national energy plan would be submitted to Parliament to restrict the possibility of legal objections by environmental campaigners. In a bid to promote renewable energy, communities which allowed wind farms to be built would be rewarded with a reduction on electricity bills and would be allowed to retain business rates of around £70,000 a year for local projects. Mr Clark, who was due on Friday to announce the Conservatives' policy on energy alongside David Cameron, accused Labour of not ensuring that Britain had a secure and varied energy supply. The government has previously accepted that the first power cuts since the 1970s are likely to take place at peak times due to a shortage of energy. Nuclear power stations currently produce 13 per cent of the country's electricity - half the level when Labour won the general election in 1997. All but one - Sizewell, in Suffolk - are scheduled to be obsolete by 2023, by which time new green regulations will in effect make a third of Britain's coal and gas facilities illegal. Mr Clark also promised the Conservatives would increase Britain's gas storage capacity, which is currently just 15 days, compared with 99 days in Germany and 122 days in France. He said Britain would become more reliant on gas reserves for the three years before new nuclear power stations begin to be opened in 2018."
Tories plan new nuclear power plant every 18 months
Daily Telegraph, 19 March 2010

"Huge offshore wind parks and new nuclear reactors to be financed by a state-backed Green Investment Bank would be built under plans to reform energy policy and meet tough emission reduction targets to be announced by the Conservatives today. In a package of measures with far-reaching implications for industry and consumers, David Cameron is also expected to call for a floor price for carbon to be set as a way of stimulating investment in cleaner forms of energy. The policy will punish coal and gas-fired power generation while benefiting producers of wind and nuclear electricity. Greg Clark, Shadow Energy Secretary, did not reveal details, but said: 'We believe that the time has come to establish new financial mechanisms to make it easier for people to invest. At the moment it is too difficult.' The policies will also include a measure that marks a return to the same principle used to defeat Nazi Germany in the 1940s. Mr Cameron will for the first time set out plans for government-backed green 'war bonds' to help to finance energy projects of up to £200 billion that are considered critical for Britain to meet its goal of cutting carbon emissions by 34 per cent by 2020. The scheme will allow money to be put into clean energy through the purchase of Treasury-backed 'Green ISAs' linked to renewable projects including tidal, solar and wind farms. The Conservatives also announced the creation of a working group to examine how to create a public-private funded Green Investment Bank to provide additional financial support. Loosely modelled on Germany’s KfW bank, which invested nearly €20 billion in environmental projects last year, it would form a key plank of a Tory push to make Britain a global centre for environmental finance and green manufacturing of everything from wind turbines to components for nuclear plants. The Tories said the bank would consolidate existing sources of funding for green energy, such as the Carbon Trust and the Marine Renewables Deployment Fund. It would act as an intermediary to help to attract and package green energy investment opportunities."
Tories’ green bank to revolutionise power policy
London Times, 19 March 2010

"Energy policy is 'nowhere near' having the right framework in place to deliver the investment and job creation that will be needed to hit government targets for cutting greenhouse gas emissions, a group of leading academics backed by the Royal Academy of Engineering warns. The academy on Thursday publishes the group’s report on the prospects for the energy system to 2050, saying 'fundamental restructuring' will be needed to prevent blackouts while delivering the government’s objective of an 80 per cent reduction in emissions. Sue Ion of Imperial College London, who led the group, said spending on low-carbon technologies could be very important for job creation. However, she warned that market mechanisms alone would not push Britain’s fragmented energy industry into making the necessary investment. 'It’s a fantastic industrial opportunity for us in the UK,' she said. 'But we are nowhere close to having a sensible plan or framework for how it would be implemented or financed. The academy’s report sets out scenarios for how the 80 per cent emissions reduction can be achieved, all of which demand massive investment in renewable energy. For example, the academics argue Britain will need 38 wind farms the size of the London Array – the world’s largest windfarm, now under construction in the Thames estuary – and 9,600 onshore turbines, which would mean erecting one a day for 25 years. On top of that, there will probably have to be huge investment in nuclear power and coal or gas-fired power stations that capture and store their carbon dioxide emissions. If demand can be cut by improving energy efficiency – for example with better home insulation – the number of those new nuclear and carbon capture plants could be kept to 30-40: already a stretch given that the government is planning about 10 new nuclear plants and four carbon capture pilots. If demand cannot be cut, there would have to be 80 of those new plants, the engineers say, and 'building new power stations on this scale is probably only achievable by monopolising most of the national wealth and resources'. There is likely to have to be widespread deployment of electric cars, and electric heat pumps to replace gas boilers in homes. Roger Kemp of Lancaster University, a member of the group, said restructuring the energy system 'needs the same political enthusiasm as was applied to the War on Terror after 9/11'. Ms Ion said: 'We have to create the right framework for investment. These things are going to be around for two or three generations, and are not going to have an investment payback of five or 10 years. So the market is not going to deliver.' She said the private sector had to be given certainty over returns for longer terms than the five-year life of a parliament to encourage investment in energy infrastructure, and warned that energy prices were bound to rise. 'The changes required to the UK energy system to meet the 2050 emissions reduction targets are so substantial that they will inevitably involve significant rises in energy costs to end users.'"
Energy policy ‘nowhere near’ ready
Financial Times, 18 March 2010

"Drivers will be hit by the scrapping of a subsidy the Government has been paying to the producers of 'environmentally friendly' biofuels, which account for 3 per cent of each litre of petrol and diesel.  This subsidy will end on April 1, raising the cost of biofuels for petrol producers - an increase which will be passed onto consumers. According to industry sources, this could add as much as 1.5 pence to the pump price a litre of petrol or diesel."
Motorists face fresh blow as Government ends biofuel subsidy
Daily Telegraph, 17 March 2010

"The key remaining question of the peak oil crisis is just when world production is going to start on an unstoppable decline. A few years ago those analysts who were deeply enmeshed in the problem were saying that 2011 or 2012 looked like the fateful year. But then the unexpected happened -- a great recession came along and the demand for oil plunged. Although global oil production set a nominal high during the great price run-up back in the summer of 2008, production soon fell away as the deepening recession cut demand by some 4 million barrels a day. As prices collapsed in the winter of 2008-2009, OPEC got its act together and cut production dramatically, leaving the world, or at least a few OPEC countries with what is known as spare productive capacity --- oil wells that are ready to produce, but have been shut down because there is no market for their product. Keep in mind when you have to shut down some of your oil wells, you usually stop those with the heaviest most sulfur-laden oil first as this oil does not bring as good a price as better grades. World oil production, including about 10 million barrels a day (b/d) of various forms of combustible liquids such as biofuels that are usually counted as 'oil,' currently stands at about 86 million b/d. This number got as high as 87 or 88 million (depending on whose numbers you like) back in the summer of 2008, fell to 83 or 84 million b/d in the winter of 2009, and then has been climbing back slowly as China, India, and the oil exporting countries step up their demand. Behind these numbers however are two forces, the inexorable depletion of existing fields which is currently running about 4 million b/d each year and new oil fields coming into production which for 2009 and 2010 is expected to add about 6 million b/d of new productive capacity each year. As long as the completion of new oil production projects exceeds 4 million b/d -- all is well. Indeed for the last few years the capacity to produce more oil has been growing ahead of the demand so spare capacity to produce more oil is now in the vicinity of 5 or 6 million b/d. This means that if there were sufficient demand, global oil production could be cranked up to 91 or even 92 million b/d - for awhile. As even the Chinese don't seem to need an additional 5 billion b/d, at least not right away (their current consumption is about 8-9 million b/d), those 5 or 6 million b/d seem destined to remain spare for a while. Now if the world's oil producers could add another 5 or 6 million b/d of oil production each year indefinitely, there would not be a problem and you would not be reading this article. Unfortunately, however, they can't. People who follow these matters, and it is rather straight forward to do, say that for the next few years we will only be adding about 3-4 million b/d of new capacity to produce oil and by 2015 this will be down to about 2 million b/d. This, of course, is well below the annual drop of 4 million barrels per day from the existing fields due to depletion. As long as the additions to our capacity to produce oil do not get too far below the pace of depletion, there would seem to be no reason for wild spikes in oil prices - in the near term. If the world continues to bump along in its current state for the next 3 or 4 years, it would seem that the availability and price of oil will not upset the apple cart with shortages or unaffordable gasoline prices. After 2013, however, all bets are off as there does not seem to be enough new production starting up to balance depletion. These days, new oil production capacity, on the scale of millions of barrels a day, does not appear overnight from the drill of a lucky wild catter. Large new oil production projects take five, six, or seven years before the first oil can be shipped and cost billions of dollars. If a major project is not already well along, we are unlikely to see any oil from it until the latter half of the decade. For the next five years we are stuck with those projects that are already underway. This train of thought seems to say that somewhere around 2014, world oil production, which has been on a rough plateau since 2005, will start to decline, perhaps rapidly.There are a number of forces already in motion which could interrupt this rather tidy schedule of four more good years and then 'le deluge.' Believe it or not the only good news in sight could come from Iraq which seems to be the last remaining place on earth where lots of cheap and easy-to-produce oil is still available. The Iraqis recently let contracts to increase their oil production by 7 or 8 million b/d in order to become the world's biggest and richest oil producer. However, anyone familiar with the history of Iraq over the last century has reason to be skeptical that the Iraqis, even with the help of nearly all the world's major oil companies, can save the world by stopping the decline in oil production for very long."
The Peak Oil Crisis: 2014– The Year of Transition
Falls Church News-Press, 17 March 2010

"The problem with wind power is that is cannot always be relied upon. The wind—and other transient, environmental energy sources such as solar—must either be used when it is harvested or stored expensively in batteries or specially designed hydroelectric schemes that use the resulting energy to pump water uphill. Alternatives would be extremely welcome. Alexander Slocum, of the Massachusetts Institute of Technology, thinks he has one. Observing that the fashion among wind-power fans is to build turbines out at sea, where the wind blows strongest, he proposes a pumped-storage system that uses seawater. Dr Slocum’s scheme involves anchoring a hexagonal array of hollow, 31-metre-diameter concrete spheres to the ocean floor at a depth of approximately 350 metres. Floating turbines would be tethered to these spheres and surplus power from these turbines, generated during periods of high wind and low electrical demand, would be used to pump water out of the spheres, evacuating the central chamber. When the wind faltered or the lights went back on, water forced into the central chamber by the pressure of the surrounding ocean would pass through a turbine and generate electricity. Each sphere would provide a five megawatt turbine with four hours of storage capacity."
Smoothing out the wind
Economist, 15 March 2010

"There needs to be a 'radical overhaul' of road travel in the UK to avoid future gridlock, the CBI business organisation has warned. It said measures that need to be explored include staggered work commutes, increased car sharing, and more working from home. The CBI estimates road congestion now costs the UK economy up to £8bn a year. It warned this could more than double by 2025 unless more action is taken to tackle the problem."
Road travel 'needs big overhaul' to avoid gridlock
BBC Online, 15 March 2010

"Predicting the end of oil has proven tricky and often controversial, but Kuwaiti scientists now say that global oil production will peak in 2014. Their work represents an updated version of the famous Hubbert model, which correctly predicted in 1956 that U.S. oil reserves would peak within 20 years. Many researchers have since tried using the model to predict when worldwide oil production might peak. Some have said production already peaked. One earlier model by Swedish researchers suggested that oil would peak sometime between 2008 and 2018. And other researchers have argued there are decades to go before oil production goes into irreversible decline. The only thing they all agree on: Oil is a finite and very valuable resource. The issue's profile was raised today with a new report projecting increased demand. After peaking above $130 a barrel in mid-2008, crude oil prices dipped to below $40 in early 2009 as global demand tanked amid the recession. Prices have been rising ever since and are above $80 now. Today, the International Energy Agency said it expects demand to resume the sort of growth that was common in recent years. Much of that growth has involved the modernizing economies of China and India. The scientists from Kuwait University and the Kuwait Oil Company adopted a newer approach by including many Hubbert production cycles, or bell-shaped curves showing the rise and fall of a non-recyclable resource. Earlier models typically assumed just one production cycle, despite the fact that most oil-producing nations have historically experienced more of a roller coaster ride in production. Such production cycles reflect the influence of new technological innovations in the oil industry, government regulations, economic conditions and political events. The factors include the discovery of new oil deposits, the recent economic recession and the rise of renewable energy. Take Mexico as just one example. The nation that has long represented a top oil exporter has experienced plummeting oil production and might even begin importing oil within the decade, the New York Times reports. Its troubles have arisen from a lack of technology to explore more inaccessible oil deposits, and a conundrum stemming from a 1938 law that banned foreign oil companies. Caltech physicist David Goodstein has argued for a practical approach that focuses on preparing for the end of oil, regardless of when it happens. He noted that the latest prediction seems to represent a serious, thoughtful estimate. 'Of course there are large uncertainties in estimates of this kind, but this one is as good as any I've seen,' Goodstein told LiveScience. Some oil companies and consultancy firms such as Cambridge Energy Research Associates have speculated that oil will peak sometime after 2020, but a number of oil geologists and executives predict it will happen much sooner. The Kuwaiti study created its world model for peak oil based on 47 individual models for each major oil-producing nation. It also took a separate look at the Organization of the Petroleum Exporting Countries (OPEC), which includes nations that control about 35 percent of the world's oil reserves. More complications may still change the ultimate end date for peak oil. OPEC's latest projection suggests that world oil demand will grow by 900,000 barrels per day in 2010, according to an Associated Press story this week. That follows a period of low oil demand during the height of the worldwide recession in 2009."
Peak oil production predicted for 2014
MSNBC/LiveScience, 12 March 2010

"The International Energy Agency raised its forecast for global oil demand this year for a second month as fuel consumption in Asia rises more than expected. The IEA increased its estimate for world demand in 2010 by 70,000 barrels a day to 86.6 million barrels a day. That would mean a gain of 1.6 million barrels a day, or 1.8 percent, from 2009 levels, it said. Economies outside the Organization for Economic Cooperation and Development continue to lead the recovery in consumption, the IEA said. 'Global oil demand resumed growth on a yearly basis in the fourth quarter of 2009 after five consecutive quarters of decline,' the Paris-based agency said in its monthly oil market report today. 'This year’s global oil demand growth will be driven entirely by non-OECD countries, with non-OECD Asia alone representing over half of total growth.'....Oil consumption in non-OECD countries is forecast to average 41.2 million barrels a day in 2010, an increase from last year of 1.7 million barrels a day, or 4.3 percent, according to the IEA. That is 190,000 barrels a day more than the agency estimated last month..... Preliminary data indicate Chinese apparent demand surged by an 'astonishing,' 28 percent year-on-year in January, with the biggest increase in naphtha demand, according to the IEA. The agency raised its 2010 demand forecast for China by 130,000 barrels a day to 9 million barrels a day, representing an increase of 6.2 percent from 2009. In contrast, the IEA cut its forecast for oil consumption in OECD countries by 120,000 barrels a day from last month to 45.4 million barrels a day. That means it now expects demand in those economies to shrink 0.3 percent this year. Even as consumption rises globally, the IEA also cut the estimate for the amount of crude OPEC will need to pump to balance demand and supply as production estimates from outside the group rise. The agency estimates that the Organization of Petroleum exporting countries will have to produce 29.3 million barrels a day this year, 100,000 barrels a day fewer than it estimated last month. OPEC, which accounts for more than a third of global supply, will meet in Vienna next week to decide on production quotas. Members pumped the most in 14 months in February, according to the IEA, with Iraq accounting for more than half the monthly increase. OPEC’s compliance with record supply cuts announced in 2008 slipped to 56 percent in February, from 58 percent the previous month, the IEA said. The group’s 11 members bound by production quotas raised output by 80,000 barrels a day to 26.70 million a day last month. That means OPEC exceeded its collective target by about 1.9 million barrels a day. Non-OPEC production is now estimated at 51.8 million barrels a day in 2010, an increase of 330,000 barrels a day from 2009, a stronger outlook from the North Sea, Egypt, Russia, Thailand and Colombia, as well as revisions to Canada’s production data, the IEA said. That is 205,000 barrels a day more than it forecast last month."
IEA Raises 2010 Oil Demand Estimate on Developing Economies
Bloomberg, 12 March 2010

"BP was preparing last night for a possible legal battle over a giant oilfield in the Caspian Sea as it announced a $7 billion (£4.6 billion) deal designed to bolster its position in three of the world’s most promising oil provinces. The purchase of a string of offshore assets in Brazil, the Gulf of Mexico and Azerbaijan from Devon Energy, of the United States, represents BP’s biggest acquisition since 2003, when the oil giant invested $8 billion in its Russian joint venture TNK-BP. It also marks a turning point for Tony Hayward, the chief executive, who has made a strategic bet on BP’s ability to discover deepwater fields in the Campos Basin off Brazil. The basin is close to an area where a spate of recent discoveries have been made that promise to transform Brazil into one of the world’s top oil exporters. However, it emerged last night that a key plank of the deal — the acquisition of Devon’s 5.6 per cent stake in a giant offshore field in Azerbaijan’s Caspian Sea, could be vetoed by Devon’s partners in the project, triggering a potential legal battle."
BP may have a fight to keep $7bn deal on tap
London Times, 12 March 2010

"Some time in 2014 natural gas will be condensed into liquid and loaded onto a tanker docked in Kitimat, on Canada’s Pacific coast, about 650km (400 miles) north-west of Vancouver. The ship will probably take its cargo to Asia. This proposed liquefied natural gas (LNG) plant, to be built by Apache Corporation, an American energy company, will not be North America’s first. Gas has been shipped from Alaska to Japan since 1969. But if it makes it past the planning stages, Kitimat LNG will be one of the continent’s most significant energy developments in decades. Five years ago Kitimat was intended to be a point of import, not export, one of many terminals that would dot the coast of North America. There was good economic sense behind the rush. Local production of natural gas was waning, prices were surging and an energy-hungry America was worried about the lights going out. Now North America has an unforeseen surfeit of natural gas. The United States’ purchases of LNG have dwindled. It has enough gas under its soil to inspire dreams of self-sufficiency. Other parts of the world may also be sitting on lots of gas. Those in the vanguard of this global gas revolution say it will transform the battle against carbon, threaten coal’s domination of electricity generation and, by dramatically reducing the power of exporters of oil and conventional gas, turn the geopolitics of energy on its head. The source of America’s transformation lies in the Barnett Shale, an underground geological structure near Fort Worth, Texas. It was there that a small firm of wildcat drillers, Mitchell Energy, pioneered the application of two oilfield techniques, hydraulic fracturing (“fracing”, pronounced 'fracking') and horizontal drilling, to release natural gas trapped in hardy shale-rock formations. Fracing involves blasting a cocktail of chemicals and other materials into the rock to shatter it into thousands of pieces, creating cracks that allow the gas to seep to the well for extraction. A 'proppant', such as sand, stops the gas from escaping. Horizontal drilling allows the drill bit to penetrate the earth vertically before moving sideways for hundreds or thousands of metres. These techniques have unlocked vast tracts of gas-bearing shale in America. Geologists had always known of it, and Mitchell had been working on exploiting it since the early 1990s. But only as prices surged in recent years did such drilling become commercially viable. Since then, economies of scale and improvements in techniques have halved the production costs of shale gas, making it cheaper even than some conventional sources. The Barnett Shale alone accounts for 7% of American gas supplies. Shale and other reservoirs once considered unexploitable (coal-bed methane and 'tight gas') now meet half the country’s demand. New shale prospects are sprinkled across North America, from Texas to British Columbia. One authority says supplies will last 100 years; many think that is conservative. In 2008 Russia was the world’s biggest gas producer (see chart 1); last year, with output of more than 600 billion cubic metres, America probably overhauled it. North American gas prices have slumped from more than $13 per million British thermal units in mid-2008 to less than $5.... Shale is almost ubiquitous, so in theory North America’s success can be repeated elsewhere. How plentiful unconventional resources might be in other regions, however, is far from established. The International Energy Agency (IEA) estimates the global total to be 921 trillion cubic metres (see chart 2), more than five times proven conventional reserves. Some think there is far more. No one will really know until companies explore and drill. The drillers are already arriving in Europe and China, which are both expected to import increasing amounts of gas—and are therefore keen to produce their own. China has set its companies a target of producing 30 billion cubic metres a year from shale, equivalent to almost half the country’s demand in 2008. Several foreign firms, including Shell, are already scouring Chinese shales. After a meeting between the American and Chinese presidents last November, the White House announced a 'US-China shale gas initiative': American knowledge in exchange for investment opportunities. The IEA says China and India could have 'large' reserves, far greater than the conventional resource. Exploration is also under way in Austria, Germany, Hungary, Poland and other European countries. The oil industry’s minnows led this scramble, but now the big firms are arriving too. Austria’s OMV is working on a promising basin near Vienna. Exxon Mobil is drilling in Germany. Talisman recently signed a deal to explore for shale in Poland. ConocoPhillips is already there. The first results from wells being drilled in Poland, in what some analysts believe is a shale formation similar to Barnett, should be released this year. No one expects production of shale gas in Europe to make a material difference to the continent’s supply for at least a decade. But the explorers in China and Europe present a long-term worry for those who have bet on exporting to these markets. Gazprom, Russia’s gas giant, is the company most exposed to this threat, because its strategy relies on developing large—and costly—gasfields in inhospitable places. But Australia, Qatar and other exporters also face a shift in the basics of their business. These producers are already getting a taste of the global gas glut. Almost in tandem with the surge in American production, recession brought a slump in world demand. The IEA says consumption in 2009 fell by 3%. In Europe, the drop was 7%. Consumption in the European Union will grow marginally if at all this year and will not be sufficient to clear an overhang of supplies, contracted through take-or-pay agreements signed in the dash for gas of the past decade. IHS Global Insight, a consultancy, reckons that the excess could amount to 110 billion cubic metres this year, almost a quarter of the EU’s demand in 2008. The glut has been exacerbated by the suddenly greater availability of LNG. Importers with the infrastructure to receive and regasify LNG can now easily tap the global market for spot cargoes. This is partly a product of the recession, which dampened demand from Japan and South Korea, the leading LNG buyers. But another cause is that many exporters, not least Qatar, the world’s LNG powerhouse, spent the past decade ramping up supplies aimed at the American market. That now looks like a blunder.... Qatar’s low production costs mean it can still make money, even in North America. Others cannot. In February, for example, Gazprom postponed its Shtokman gasfield project by three years because of the change in the market. Some of the gas from that field, in the Barents Sea, was to be exported to America. But Shtokman’s gas will be costly, because the field is complex and its location makes it one of the world’s most difficult energy projects to execute. Some analysts now wonder whether gas will ever flow from Shtokman.... In 2007 Gazprom talked of increasing its annual exports to the EU to 250 billion cubic metres. Now, says Jonathan Stern, of the Oxford Institute for Energy Studies, Gazprom will probably only ever supply the EU with 200 billion cubic metres a year (it shipped about 130 billion in 2008). The company forecast in 2008 that its gas prices in Europe would triple, to around $1,500 per 1,000 cubic metres, on the back of rising oil prices, which help set prices in long-term contracts. But the price dropped to about $350 last year and is expected to fall again in 2010. The weak market could last for another five years, believes Wood Mackenzie. Gazprom has been renegotiating with leading customers, injecting elements of spot pricing into contracts to make them more attractive.... Even without recession or European shale, the assumption that Europe’s consumption will keep growing is looking shaky, because the EU’s efforts to boost efficiency and reduce carbon emissions are making gradual headway. Edward Christie, an economist at the Vienna Institute for International Economic Studies, says the EU could be importing a third less natural gas in 2030 than the European Commission forecast in 2005. That makes the case for additional supply lines much less compelling. The IEA expects rich European countries’ demand to grow by only 0.8% a year in the next two decades, against 1.5% for the world as a whole.  An age of plenty for gas consumers and of worry for conventional-gas producers thus seems to be dawning. But two factors could reverse the picture again. The first surrounds the uncertainty about how fruitful shale exploration will be outside North America. A clearer understanding of the geology will emerge from pilot wells in the coming months. Second, there are reasons for caution above ground, too. Despite natural gas’s greener credentials than oil’s or coal’s, shale drilling has critics among environmentalists, who worry that water sources will be poisoned and landscapes despoiled. The industry says cement casing of wells and the depth to which they are drilled make the practice safe and relatively unobtrusive. But so far it has been drilling mainly in North America, where land is plentiful and people are accustomed to the sight of oilmen’s detritus. In densely populated Europe, the rapacious rate at which shale plays must be drilled to sustain production is less likely to be tolerated....A more radical idea, and one that would have ramifications for the global oil sector, is to gasify transport. T. Boone Pickens, a corporate raider turned energy speculator, has launched a campaign to promote this, and has support from the gas industry. By converting North America’s fleet of 18-wheeled trucks to natural gas, says Randy Eresman, boss of EnCana, a Canadian gas company, America could halve its imports of Middle Eastern oil. EnCana is promoting 'natural gas transportation corridors': highways served by filling stations offering natural gas. All this is some way off. The coal industry will not surrender the power sector without a fight. The gasification of transport, if it happens, could also take a less direct form, with cars fuelled by electricity generated from gas. A gasified American economy would have profound effects on both international politics and the battle against climate change. Displacement of oil by natural gas would strengthen a trend away from crude in rich countries, where the IEA believes demand has already peaked as a result of the recent spike in oil prices. Another consequence of the energy market’s bull run, the unearthing of vast new supplies of gas, could bring further upheaval. If the past decade was characterised by the energy-security concerns of consumers, the coming years could give even the world’s powerful oil producers reason to worry, as a subterranean revolution shifts the geopolitics of global energy supply again."
An unconventional glut
Economist, 11 March 2010

"New forecasts suggest the European Union will exceed its target of getting 20 percent of its energy from renewable sources in 2020, the European Commission said Thursday. The latest national projections submitted by governments to the EU executive suggest the 27-nation bloc could reach an overall renewable share of 20.3 percent by the end of the decade."
EU to exceed 2020 green energy target: forecasts
Reuters, 11 March 2010

"Tullow said that a huge new oilfield in Ghana contains at least 60 per cent more crude than previously thought. Tullow raised its reserve estimate for the offshore Tweneboa discovery from 250 million to 400 million barrels of oil, increasing its total reserves in the country to 4.5 billion barrels."
Tullow cuts Ugandan oil stake
London Times, 11 March 2010

"Iranian President Mahmoud Ahmadinejad warned Gulf countries on Thursday against the U.S. presence in the region, saying Washington aimed to dominate their energy resources in the name of fighting terrorism. Iran opposes the U.S. military presence on its borders in Iraq, Afghanistan and the Gulf, saying western military intervention is the root of insecurity in the region. 'We warn the countries in the region over the presence of bullying powers ... they have not come here to restore security or to counter drug trafficking,' Ahmadinejad said in a speech during a visit to the southern province of Hormuzgan. The hardline president accused the West of planning to dominate energy resources in the Gulf and said: 'People in the region will cut off their hands from the Persian Gulf's oil.'"
Iran warns neighbors over U.S. presence in the Gulf
Reuters, 11 March 2010

"Some of the nation's biggest oil companies are looking at permanently reducing how much gasoline and diesel fuel they make, a move that analysts say would almost certainly trigger higher prices for drivers. Energy companies are suffering huge losses from refining because of slumping gasoline use -- a product of the economic downturn and changing consumer habits and preferences. Energy experts say refining cutbacks have begun and will accelerate as corporations strive for profits..... Major refiners have been circumspect about their plans, saying that they are considering options that could include closing refineries, selling parts of their operations, laying off workers and slashing spending. 'Refineries will have to be closed,' said Fadel Gheit, senior energy analyst with Oppenheimer & Co. 'Unless this excess capacity is permanently shuttered, a recovery in refining margins is unsustainable.' This week Chevron Corp. launched an overhaul of its fuel-making and retailing business with a plan to cut at least 2,000 jobs, put a refinery in Wales up for sale and take a hard look at its Hawaii refinery. Royal Dutch Shell said it was reviewing its refinery operations with the idea of keeping only those with the best growth potential. Sunoco Inc. has sold one plant and said last month that its previously idled Eagle Point, N.J., refinery was being shut down permanently. Valero Energy Corp., the nation's largest refiner, last year closed a Delaware refinery, laying off 500 workers, and mothballed a plant in Aruba. 'We're actually assessing the entire East Coast, whether we should be there or not,' Valero Chief Executive William R. Klesse told executives at a recent energy conference. Energy industry executives say they are facing up to what was previously inconceivable: that the nation's appetite for petroleum products may never return to levels seen earlier in the decade, even if a strong economic recovery takes hold. 'None of us will sell more gasoline than we did in 2007,' Tony Heyward, group CEO for oil giant BP, said during a recent earnings teleconference. For motorists, talk of refinery cuts promises to be anything but cheap. It's feared that leaner supplies will translate into higher pump prices punctuated by expensive spikes when operations are disrupted by weather or other events."
Oil companies look at permanent refinery cutbacks
Los Angeles Times, 11 March 2010

"In a finding that may speed efforts to conserve oil and intensify the search for alternative fuel sources, scientists in Kuwait predict that world conventional crude oil production will peak in 2014 — almost a decade earlier than some other predictions. Their study is in ACS' Energy & Fuels, a bi-monthly journal."
World crude oil production may peak a decade earlier than some predict
American Chemical Society, 10 March 2010

"Ambitious plans to build a new generation of nuclear power stations across Britain will fail because of a lack of skills and funding, engineers have warned. The Institution of Mechanical Engineers (IMech) said the UK needs to have the first new nuclear power stations up and running by the end of this decade to avoid the lights going out. However a lack of skilled engineers, delays in the planning process and a shortage in funds mean the building programme is in danger of stalling."
New generation of nuclear in doubt
Daily Telegraph, 10 March 2010

"When will we reach the peak of global oil production? It’s a question of crucial importance as governments around the world prepare for a world of declining oil resources, in which we will be much more reliant on alternative sources of energy. The body on which the UK and others rely heavily to make that assessment is the International Energy Agency (IEA) based in Paris and set up in the aftermath of the oil crisis between 1973 and 1974. For years, IEA reports have been reiterating the conclusion that peak oil was not a problem. Behind the scenes however, it is now clear that senior staff thought otherwise. It was only through the work of 22-year-old Lionel Badal, a politics student at Exeter University, that the truth about this cover-up finally emerged. It started innocently enough, as Lionel, working on his undergraduate dissertation on peak oil, set about trying to arrange interviews with politicians and figures working inside and outside the oil industry.   He was surprised when the IEA agreed to allow him to interview one of their top officials. In the end the first official pulled out of the interview but he was replaced by one of his colleagues, a senior economist at the organisation. The new interviewee turned out to be far more forthcoming than his superiors might have wanted.... Most of the interview was ‘interesting but nothing revelatory’, remembers Lionel, but that changed towards the end when the official was asked for his opinion on predictions for peak oil.The IEA has repeatedly said oil output can increase until at least 2030 as long as 'adequate investments are made in exploration and development'. Other analysts, including those behind the UK Energy Research Centre report on peak oil, say this is 'wildly optimistic' and that the IEA does not have the evidence to back up this prediction. Far from sticking to the IEA line, the official said he was actually very worried about peak oil and shared some of the more pessimistic concerns.? ‘From that meeting I understood there was a problem,’ says Lionel, ‘as publicly the IEA did not say this type of thing.’ Over the next few months Lionel continued his research and met with politicians in France....By July, Lionel had managed to arrange a meeting between himself, the IEA official and the MEP Corrine Lepage, a former French environment minister and well-known figure in French politics. ??Clearly pleased to meet such a respected figure, the IEA official became much more open about the downplaying of peak oil concerns at the agency. ‘He told her reports had been modified and that there were pressures on the IEA from the US not to make too pessimistic predictions,' Lionel remembers. 'He said just as peak oil theorists claimed, there was a big problem with oil.’ By the end of the meeting the IEA official had agreed to write a briefing note for the MEP on the issue. But by then Lionel thought the issue needed to be made public.... Having been given the green light, Lionel contacted two journalists at the Economist and the Independent. The Independent was slow to respond and did not seem convinced by the story, remembers Lionel, but the Economist journalist agreed to meet the following month when he was in London. However, at the meeting he said he could not immediately write about the issue as he was working on other stories. ‘I also got the feeling his position was isolated at the Economist and that the magazine would not want to take a stance by running such a story on peak oil,’ says Lionel. Soon after these first attempts to make the issue public, the respected NGO Global Witness released a report on peak oil, Heads in the Sand. Reading Guardian journalist Ashley Seager's article on this report, Lionel decided to contact him and sent information about his IEA whistleblower to both Seager and the paper’s environment columnist, George Monbiot. Seager forwarded it onto the Guardian’s energy editor, Terry Macalister. By coincidence the IEA was preparing to publish its latest annual report on oil supply and demand in early November. With the launch scheduled to take place in London, the Guardian had the perfect opportunity to maximise exposure of the story. Macalister spoke to Lionel’s IEA official, and on November 10th, 2009 - the same day that the IEA’s chief economist Dr Fatih Birol was launching the agency’s major annual report - the story appeared on the Guardian’s frontpage. As expected, the reaction was huge. ‘Peak oil whistleblower’ stories were splashed across the media."
How a 22-year-old student uncovered peak oil fraud
Ecologist, 10 March 2010

"Big Oil is bent on making natural gas the core of its business, arguing that its abundance, cheapness and environmental friendliness will change the energy landscape forever. The fuel seems bound to reshape an industry known for its booms and busts into a more predictable, staid creature. Companies such as Exxon Mobil Corp. (XOM), Royal Dutch Shell PLC (RDSB, RDSA, RDSB.LN) and ConocoPhillips (COP) are making the transition from dealing mostly in oil, a commodity that's increasingly scarce and difficult to produce, to natural gas, a fuel that's suddenly become ubiquitous. Their profits, which can reach unfathomably high levels during good times, are likely to go down accordingly, executives and analysts say. So will the companies' adventurous ventures in the deep waters and in dangerous regions of the globe. The industry now needs to learn the shale gas business, which has played a major role in spurring the transition and which can only be profitable if it runs like an assembly line. 'It's a manufacturing industry, and it's not at all what we're doing at Total,' said Patrick Pouyanne, senior vice president for strategy business development at Total S.A. (TOT, FP.FR), which recently entered into a shale gas joint venture in the U.S. and is acquiring shale positions in France, Denmark, Argentina and North Africa. Until now, Total's focus has been on projects such as wells in deep waters in Africa and in the North Sea, each worth $50 million and each project unique. 'Here in this (shale) business you have to be more like a Ford (Motor Co.). ... This is what we want to understand and obviously we do not have these types for oil, but it's maybe the future of the industry,' he said in an interview on the sidelines of the IHS Cambridge Energy Research Associates conference in Houston. The unexpected bounty of natural gas became evident in recent years as independent U.S. energy companies found profitable ways to tap tight rock formations known as shales. U.S. gas reserves, once in seemingly permanent decline, doubled in the past few years, according to IHS CERA. Since 2008, several Big Oil companies have plunged into North American shale gas - culminating with the announcement last December of Exxon Mobil's agreement to buy energy independent XTO Energy Inc. (XTO) for $31 billion. Exxon's move 'signals that gas is the way to go,' said Fadel Gheit, a New York-based analyst with Oppenheimer & Co. In a way, international oil companies are changing their business model 'because they have no choice,' Gheit said. National oil companies such as Brazil's Petroleo Brasileiro S.A. (PBR, PETR4.BR), or Petrobras, and Saudi Aramco, which control access to some of the best crude oil deposits, increasingly call the shots there, relegating Western companies to a minor role. In the gas business, which requires big investments in infrastructure while returning more moderate profits, the larger companies can use their size and deep pockets to gain an edge."
CERA Week:Natural Gas Focus Is Likely To Change Big Oil's Face
Dow Jones Newswires, 10 March 2010

"Saudi Arabia’s 4 million barrels a day of spare capacity can easily be absorbed into the market when global energy demand recovers after the recession, the head of the kingdom’s state owned oil company said today. In a speech at a Cambridge Energy Research Associates confernce in Houson, Khalid al Falih, chief executive officer, Saudi Arabian Oil Co, said: 'Oil supply will decline if there is no investment, so that 4 million could be absorbed by demand alone.' The kingdom, the world’s largest producer, raised output by 100,000 barrels a day to 8.25 million in February, the highest level since December 2008, a Bloomberg survey of oil companies, producers and analysts showed last month."
'Market can absorb spare Saudi capacity' - Al Falih
Bloomberg, 10 March 2010

"Taking up more than a week of your life, the train journey from London to Beijing is not one most people would currently consider. But fast forward a few years and you could find yourself stepping off in the Chinese capital in a mere two days.  The prospect of the incredible journey came closer to reality yesterday with China's ambitious plans to build a high-speed rail network to Europe....The new service will not be arriving in Britain just yet, but the Chinese are hopeful it could be here within ten to 15 years. China already has its own high-speed railway network, and is negotiating to extend this to up to 17 countries. Mr Wang said most of the countries already at the negotiating table are in south-east and central Asia. The talks involve a trade of resources for technology. Many of the countries are under-developed but mineral rich."
Orient super express: From London to Beijing by train... in just TWO days
Daily Mail, 9 March 2010

"The top U.S. environmental regulator said she was 'very concerned' about fluids blamed by some for polluting water supplies near sites where drillers use them to extract natural gas from shale deposits. U.S. Environmental Protection Agency chief Lisa Jackson said she hopes her agency will launch a study this year into the nature of fluids used in the hydraulic fracturing process of natural gas drilling. 'We are going to look at what the fluids are, what's in them. We are very concerned about that,' she told Reuters after a speech at the National Press Club. Exploitation of the cleaner-burning fuel could allow the United States to reduce greenhouse gas emissions and cut its dependence on coal and petroleum imports. When burned, natural gas emits only half of the carbon dioxide per unit as does coal, which generates about half of the electricity in the United States. Critics, however, say the chemicals used in fracturing can contaminate water supplies. Hydraulic fracturing injects millions of gallons of water, sand, and a proprietary mix of chemicals up to two miles underground where it breaks open fissures in the gas-bearing shale. Drilling companies are scrambling to develop vast shale deposits that are estimated to contain enough natural gas to meet U.S. needs for up to a century. Industry maintains its processes are safe. Energy companies say fracking chemicals are injected into the ground thousands of feet below drinking water aquifers and that well shafts are encased in layers of steel and concrete, preventing any escape of chemicals into groundwater. But some residents who live near gas-drilling rigs say their water has become foul-tasting, discolored or even flammable because methane from gas wells has seeped into domestic water supplies. Industry spokespeople say there has never been a proven case of groundwater contamination from fracking. A bill in Congress would require gas companies to disclose the chemicals used in fracking and give the EPA oversight of the industry, which is now regulated by the states."
US EPA chief concerned about gas drilling fluids
Reuters, 8 March 2010

"Britain £9.5 billion plan to bury power station pollution under the seabed will move a step closer this week. Ed Miliband, the Energy Secretary, is ready to give tens of millions of pounds to E.ON and ScottishPower, the utility groups, to finish designs for carbon capture and storage equipment that would be fitted to coal-fired power stations. CCS catches carbon dioxide generated by burning fossil fuels, liquefies it and pumps it into underground storage caverns. The Government sees it as a key element of its plans to cut Britain’s greenhouse gas emissions. Last year, it introduced a carbon levy to raise £9.5 billion to fund up to four of the experimental plants. Mr Miliband will also supply fresh details of the Government’s vision to build 'carbon clusters' in regions where heavy industry and power plants are located. Moving millions of tonnes of carbon from plants to spent oil and gasfields in the North Sea will require a large new pipeline network."
Ed Miliband sinks millions into carbon
London Times, 7 March 2010

"Ethiopia is only one of 20 or more African countries where land is being bought or leased for intensive agriculture on an immense scale in what may be the greatest change of ownership since the colonial era. An Observer investigation estimates that up to 50m hectares of land – an area more than double the size of the UK – has been acquired in the last few years or is in the process of being negotiated by governments and wealthy investors working with state subsidies. The data used was collected by Grain, the International Institute for Environment and Development, the International Land Coalition, ActionAid and other non-governmental groups. The land rush, which is still accelerating, has been triggered by the worldwide food shortages which followed the sharp oil price rises in 2008, growing water shortages and the European Union's insistence that 10% of all transport fuel must come from plant-based biofuels by 2015. In many areas the deals have led to evictions, civil unrest and complaints of 'land grabbing'. The experience of Nyikaw Ochalla, an indigenous Anuak from the Gambella region of Ethiopia now living in Britain but who is in regular contact with farmers in his region, is typical. He said: 'All of the land in the Gambella region is utilised. Each community has and looks after its own territory and the rivers and farmlands within it. It is a myth propagated by the government and investors to say that there is waste land or land that is not utilised in Gambella. 'The foreign companies are arriving in large numbers, depriving people of land they have used for centuries. There is no consultation with the indigenous population. The deals are done secretly. The only thing the local people see is people coming with lots of tractors to invade their lands. 'All the land round my family village of Illia has been taken over and is being cleared. People now have to work for an Indian company. Their land has been compulsorily taken and they have been given no compensation. People cannot believe what is happening. Thousands of people will be affected and people will go hungry.' It is not known if the acquisitions will improve or worsen food security in Africa, or if they will stimulate separatist conflicts, but a major World Bank report due to be published this month is expected to warn of both the potential benefits and the immense dangers they represent to people and nature. Leading the rush are international agribusinesses, investment banks, hedge funds, commodity traders, sovereign wealth funds as well as UK pension funds, foundations and individuals attracted by some of the world's cheapest land. Saudi Arabia, along with other Middle Eastern emirate states such as Qatar, Kuwait and Abu Dhabi, is thought to be the biggest buyer. Together they are scouring Sudan, Kenya, Nigeria, Tanzania, Malawi, Ethiopia, Congo, Zambia, Uganda, Madagascar, Zimbabwe, Mali, Sierra Leone, Ghana and elsewhere. Ethiopia alone has approved 815 foreign-financed agricultural projects since 2007. Any land there, which investors have not been able to buy, is being leased for approximately $1 per year per hectare. Saudi Arabia, along with other Middle Eastern emirate states such as Qatar, Kuwait and Abu Dhabi, is thought to be the biggest buyer.... Some of the African deals lined up are eye-wateringly large: China has signed a contract with the Democratic Republic of Congo to grow 2.8m hectares of palm oil for biofuels. Before it fell apart after riots, a proposed 1.2m hectares deal between Madagascar and the South Korean company Daewoo would have included nearly half of the country's arable land. Land to grow biofuel crops is also in demand. 'European biofuel companies have acquired or requested about 3.9m hectares in Africa. This has led to displacement of people, lack of consultation and compensation, broken promises about wages and job opportunities,' said Tim Rice, author of an ActionAid report which estimates that the EU needs to grow crops on 17.5m hectares, well over half the size of Italy, if it is to meet its 10% biofuel target by 2015. 'The biofuel land grab in Africa is already displacing farmers and food production. The number of people going hungry will increase,' he said. British firms have secured tracts of land in Angola, Ethiopia, Mozambique, Nigeria and Tanzania to grow flowers and vegetables. Indian companies, backed by government loans, have bought or leased hundreds of thousands of hectares in Ethiopia, Kenya, Madagascar, Senegal and Mozambique, where they are growing rice, sugar cane, maize and lentils to feed their domestic market. Nowhere is now out of bounds. Sudan, emerging from civil war and mostly bereft of development for a generation, is one of the new hot spots. South Korean companies last year bought 700,000 hectares of northern Sudan for wheat cultivation; the United Arab Emirates have acquired 750,000 hectares and Saudi Arabia last month concluded a 42,000-hectare deal in Nile province."
How food and water are driving a 21st-century African land grab
Guardian, 7 March 2010

"China's western Qinghai Province, containing major deposits of the country's 'combustible ice,' will see increased explorations for this emerging clean energy, Provincial Governor Luo Huining said on Saturday. The plateau province plans to allow large energy companies along with researchers to tap this new source of energy while minimizing environmental threats, Luo said on the sidelines of the annual session of the National People's Congress (NPC), China's top legislature. 'Combustible ice,' or natural gas hydrate, is mainly found in deep seas and atop plateaus. Approximately one cubic meter of 'combustible ice' equals 164 cubic meters of regular natural gas. At a time of energy bottlenecks, the new energy resource has drawn interest from many countries. Additional attention has focused on the 'ice' having a low proportion of impurities, resulting in it generating almost no pollutants when burned. More than 100 countries around the world have found deposits of 'combustible ice.' The deposits in Qinghai Province, home to one-quarter of China's total reserve on the Qinghai-Tibet Plateau, were discovered in September 2009. 'Combustible ice' reserves on the Qinghai-Tibet Plateau are estimated to equal at least 35 billion tonnes of oil, which could supply energy to China for 90 years. Luo said tapping this new energy resource should be given high priority in China's energy strategy."
China to move ahead on clean energy 'combustible ice'
Xinhua, 6 March 2010

"2010 is a big year for nuclear fusion but experts fear that a lack of fuel could push the dream of cheap, safe, clean and limitless energy far into the future. As fossil fuels run dry and increasingly desperate attempts are made to control carbon emissions, the seductive promise of fusion energy has attracted billions of pounds of international funding. Later this year the payback on this investment should begin. A laser at the National Ignition Facility in California will fuse together pairs of hydrogen nuclei, releasing high energy neutrons that should, for the first time, produce more power than the laser itself has put in. As Professor Mike Dunne, head of Europe's laser fusion project says, 'The first credible attempt is now just a few months away after 50 years of trying. Incredibly exciting times.' Rumbling voices of discontent may, however, be audible beneath the Californian back-slapping. At Greenpeace International, Jan Beranek worries about the safety and security of the radioactive tritium used in the reactor. 'There is always a risk that either the technology or the nuclear materials can fall into the wrong hands... Some of the materials can be used for hydrogen bombs.'... Dr Marc Beurskens at the Culham Centre for Fusion Energy in Oxfordshire says that nuclear waste is not a serious problem as tritium decays relatively quickly. There is, he says, 'a proliferation issue with tritium because it is used in weapons and obviously decent security has to be set up, but it's much easier to control than stocks of uranium.' That still leaves the fundamental problem with fusion - the fuel supply. Professor Steve Cowley, director of the fusion programme at the United Kingdom Atomic Energy Authority explains that the fuel is derived from two different forms of hydrogen. 'Deuterium is in sea water. The oceans of the world contain sixty billion year's worth of deuterium. Tritium comes from lithium, lithium salts are in sea water.' Things, sadly, aren't quite as simple as that sounds. There are only around 20 kilograms of tritium in the world. Supplies come principally from nuclear reactors, specifically Canadian heavy water reactors. They can produce enough tritium to supply current experimental fusion plants but not enough for commercial production. Jan Beranek of Greenpeace claims that, 'to sustain a reaction for a year for just one reactor it would need to burn 50 kgs of tritium... at the moment we are able to get one kg for about $30 million (£20 million)'. And that price is expected to rise. So where could affordable fuel come from? Professor Cowley admits: 'That's part of the problem that we haven't done yet but we do know how to do it because it's been done with nuclear reactors.' Cowley and his colleagues expect fusion reactors to become self-sustaining, 'breeding' their own fuel supply. 'The principles are right, but there's a lot of difference between principles and practice and that's where we have to do our work,' he says. Dr Michael Dittmar, a physicist at CERN working for the Swiss Federal Institute of Technology thinks this is a comforting folly, a process fraught with problems in physics, mathematics and engineering. 'You put 20 kgs of this tritium in and then you start to operate a kind of chain reaction. Even to come to the chain reaction there are so many fundamental problems that cannot be addressed at a single place in the world.' He says the vast expenditure on experimental reactors should be halted until that basic problem is resolved. Some $3.5 billion (£2.1 billion) is being spent on America's National Ignition Facility and, at least 10 billion euros (£9 billion) on the ITER reactor under construction in France. 'If this doesn't work we can forget the entire rest of the project,' he says."
Is fusion power really viable?
BBC Online, 5 March 2010

"Today’s biofuels targets risk causing another oil supply crunch in the middle of this decade, a key report for the international energy ministers’ meeting in Mexico this month has warned. The report, which will be a central topic for discussion at the summit, says there is an 'urgent need' to review existing biofuel policies. It says targets to boost the use of biofuels create uncertainty over future oil demand, and so ran the risk of prompting oil-producing countries to cut investments in projects needed to ensure sufficient oil supply once the world emerges from recession. 'Oil-producing countries ... are justified in being cautious in making new investments in new production capacity if there is a risk that energy security and climate change policies in consuming countries could destroy the corresponding demand,' says the report, which was written by a former head of Opec, the oil producers’ cartel, and a former head of the International Energy Agency, the oil-consuming countries’ watchdog. New targets for more advanced forms of biofuel should be considered only after careful evaluation of their long-term sustainability, the report states. 'Setting strong and ambitious targets before ensuring sustainability, as has been the case for most first-generation biofuels, adds to uncertainty of supply, which could increase market volatility in the medium term. This in turn would increase energy security risk rather than improve it,' it says. The main opposition to biofuels targets, such as the European Union’s goal of their comprising 10 per cent of all transport fuel by 2020, has come from those who argue biofuel production pushes food prices higher. However, such opposition generally does not encompass second-generation biofuels, which have smaller carbon footprints and use sources such as algae that do not compete with food."
Warning biofuel targets may hit oil supply
Financial Times, 3 March 2010

"Russia crude production neared a post-Soviet record in February as TNK-BP, the venture owned by BP Plc and a group of billionaires, raised output at new fields in both western and eastern Siberia. Crude production reached almost 10.08 million barrels a day, a gain of 3.3 percent from a year earlier and 0.2 percent from the previous month, according to preliminary data from the Energy Ministry’s CDU-TEK unit. Output, which has exceeded 10 million barrels a day for six months in a row, was slightly below November’s record. Oil exports slumped to 5.21 million barrels a day, down 1.3 percent from January and 5.7 percent on the year, as the export tax climbed following the price of Urals, Russia’s benchmark blend. TNK-BP boosted output to 1.42 million barrels day after ramping up new projects, such as the Uvat and Kamennoye fields in western Siberia and Verkhnechonsk in the east. Production advanced 4.5 percent from a year earlier and 0.5 percent from the previous month, not including its OAO Slavneft venture."
Russia February Output Nears Post-Soviet Record on TNK-BP Gains
Bloomberg, 2 March 2010

"Capturing heat from power plants could help reduce Britain’s future generation capacity, projected to exceed 150 gigawatts by 2050, by 13 percent, according to a Combined Heat and Power Association report. Diversifying the ways heat is supplied and using combined heat and power, or CHP, plants would reduce peak demand, making it easier to manage electricity usage, the report said. Heat represented 41 percent of Britain’s total final energy consumption in 2007."
Heat From Power Generation Could Trim U.K.’s 2050 Energy Needs
Bloomberg, 1 March 2010

"Asian buyers are taking record volumes of West African crude oil this year as fuel consumption rises in India, China and other East Asian countries, a Reuters survey of trade sources showed on Monday. Imports of cargoes of unrefined oil from Nigeria, Angola and other African producers via Atlantic ports averaged around 1.79 million barrels per day (bpd) in the first quarter, up from about 1.53 million bpd in the fourth quarter and close to 1.1 million bpd a year ago. In the first three months of this year, Asia consumed about 40 percent of all the West African crude produced, up from around 25 percent in Q1 2009, the Reuters survey shows. Asian buyers have so far taken 52 cargoes of West African crude oil due to load in March, compared with around 50 in February and at least 59 cargoes loading in January."
Asia buys record volume of W.African oil in Q1
Reuters,   1 March 2010

"The oil supply challenge is often summarized in terms of the production volume equivalent of Saudi-Arabia’s that needs to be replaced. This popular metric is based on in-depth studies of global decline rates that show a decline range between 4.5 and 6 percent over the current 73 million barrels of crude oil produced per day. By using such literature values for all types of production, it can be shown that:
* In the coming three years sufficient oil supply capacity to supply world demand is available under any economic scenario.
Supply constraints can only arise if OPEC proves to be too slow in turning available capacity into production.
*
Oil supply can no longer meet growing demand beyond 2013 in case of an unlikely rapid economic recovery.
*
In case of a fairly weak economic recovery the oil market will begin to tighten in 2014 when production capacity begins to decline and growing demand can no longer be met around 2017.
*
If we suffer another economic downturn, ample oil supply will be available for a period of at least a decade.

These results are based on a study that will be published next month, written by ASPO Netherlands in collaboration with NEA transport research. As a part of this study a boundary assessment was made for total production capacity. The resulting picture gives lower and upper boundaries for production capacity between 87 million and 98 million barrels per day in 2015, and 63 million and 111 million barrels per day in 2030. This is based on analyzing production developments from current fields, an oil field projects database, estimates for unconventional oil and natural gas liquids production, enhanced oil recovery developments, and future discovery estimates. Comparing these boundary estimates with demand forecasts from the IEA makes it clear that the International Energy Agency demand scenario from the World Energy Outlook 2009 can only be met under the most optimistic of assumptions."

Commentary: Drawing the lower and upper boundaries of future oil supply
ASPO USA, 1 March 2010

"Using fossil fuel in vehicles is better for the environment than so-called green fuels made from crops, according to a government study seen by The Times. The findings show that the Department for Transport’s target for raising the level of biofuel in all fuel sold in Britain will result in millions of acres of forest being logged or burnt down and converted to plantations. The study, likely to force a review of the target, concludes that some of the most commonly-used biofuel crops fail to meet the minimum sustainability standard set by the European Commission. Under the standard, each litre of biofuel should reduce emissions by at least 35 per cent compared with burning a litre of fossil fuel. Yet the study shows that palm oil increases emissions by 31 per cent because of the carbon released when forest and grassland is turned into plantations. Rape seed and soy also fail to meet the standard. The Renewable Transport Fuels Obligation this year requires 3¼ per cent of all fuel sold to come from crops. The proportion is due to increase each year and by 2020 is required to be 13 per cent. The DfT commissioned E4tech, a consultancy, to investigate the overall impact of its biofuel target on forests and other undeveloped land. The EC has conducted its own research, but is refusing to publish the results. A leaked internal memo from the EC’s agriculture directorate reveals its concern that Europe’s entire biofuels industry, which receives almost £3 billion a year in subsidies, would be jeopardised if indirect changes in land use were included in sustainability standards....Last year, 127 million litres of palm oil was added to diesel sold to motorists in Britain, including 64 million litres from Malaysia and 27 million litres from Indonesia. Kenneth Richter, biofuels campaigner for Friends of the Earth, said: 'The billions of subsidy for biofuels would be better spent on greener cars and improved public transport.'"
Green fuels cause more harm than fossil fuels, according to report
London Times, 1 March 2010

"The Canadian Oil Sands Trust has announced it will increase synthetic crude oil production capacity at its Syncrude project near Fort McMurray, Alberta. The company said that, based on preliminary scoping and design work by Syncrude and ExxonMobil, the existing Mildred Lake upgrading facility has latent capacity that can be 'unlocked' through a series of steps, allowing synthetic crude oil production to grow to approximately 425,000 barrels per day (bpd) by the end of the decade. The projects include accessing excess coking capacity, modifying facilities, and potentially adding new ancillary units. Alberta tar sands project will increase production."
Alberta tar sands project will increase production
Canadian Driver, 25 February 2010

"Shell Oil Co. said Tuesday it is abandoning its quest for water rights from the Yampa River in northwest Colorado to develop oil shale production, citing delays in the project due to the global economic downturn. The Yampa is the last free-flowing river in Colorado, uninterrupted by dams or other diversions. It winds through Dinosaur National Monument and is a popular rafting spot for the region's boaters. Colorado, Wyoming and Utah are thought to hold 800 billion barrels of recoverable oil in shale. But critics of a federal management plan for developing oil shale on public lands say the process would use too much of the region's scarce water. Though Shell dropped its bid for Yampa water this week, the company left open the possibility of pursuing the oil-shale project in the future. 'The exact scale and timing for development will depend on a number of factors, including progress on our technology development, the outcome of regulatory processes, market conditions, project economics and consultations with key stakeholders'” the company said in a statement. Shell was seeking a conditional water right to take up to 375 cubic feet per second, about 8 percent of the Yampa's average April-to-June flow. The company would have pumped the water into a new reservoir covering 1,000 acres and holding 45,000 acre-feet of water, or about 15 billion gallons."
Shell Oil walks away from Colorado's last free-flowing river
Vail Daily, 25 February 2010

"A survey of 70 active companies by industry body Oil & Gas UK shows that there are more projects under consideration than at this time last year. However, difficulties raising finance and the fact that the easiest – and therefore cheapest – reserves to extract have already been exploited means fewer projects are actually being developed. This will lead to a fall in the UK's domestic oil production and increase the need for imports. There are 11bn barrels of oil and gas in existing projects, up 15pc from the previous year – enough to meet half the UK's demand in 2020. However, companies will need to raise £60bn of capital expenditure to extract this oil. Oil companies are planning to extract only 5.25bn barrels from approved projects, up from a target of 6bn barrels at this time last year. Mike Tholen, the industry group's economics director and author of the report, said confidence had improved, but the investment climate was still not good."
Companies 'can't afford' to drill for North Sea oil and gas
Daily Telegraph, 24 February 2009

"Five years ago, when oil prices were climbing steadily and economists were stoking fears about peak oil and gas, it seemed that major energy producers like Russia were holding all the cards. Then-president Vladimir Putin spoke of his country as an 'energy superpower' and used energy supplies as a blunt instrument of Kremlin foreign policy. Gas cutoffs to Ukraine caused panic in Europe, while Western energy companies fell over each other to get a slice of Russia's oil and gas fields. But all that is over. Today, the super-giant Shtockmann natural-gas field under the Arctic sea—Russia's only big hydrocarbon discovery since Soviet times—has just been mothballed due to the towering cost of extracting the undersea gas. At the same time, worldwide demand for Russia's gas has plummeted. And meanwhile, the government has punctured investor confidence by pressuring BP, one of the few major foreign investors left in Russia's energy sector, to hand over a giant Siberian gas field to a government-owned rival. It's time for Moscow to kiss goodbye those dreams of energy hegemony. One problem is that the recession has eviscerated European demand for Russian natural gas (consumption dipped by 7 percent in 2009). Another is that demand in the United States for imported natural gas has fallen off too. Thanks to shale gas and other unconventional sources like tar sands, the U.S. is now close to self-sufficient in natural gas. It's a nightmare for Shtockmann, where the business plan hinged on freezing the product into liquified natural gas, or LNG, for export to the United States....The $20 billion cost of extracting the deep-buried gas in the harsh conditions of the Arctic has proved prohibitive for Gazprom and its minority partners, Total of France and Statoil of Norway....Now the European market seems oversupplied. More worrying still, Gazprom's traditional suppliers (gas fields in the Central Asian nations of Turkmenistan and Kazakhstan) have begun opening their own direct pipelines to China, where gas consumption has a future. And though Gazprom still controls about 17 percent of the world's proven natural-gas reserves, many of its existing fields are beginning to run dry. Getting at the remainder—for instance at the Bovanenkovo field in the remote Yamal Peninsula in Siberia—will need massive investment of cash and know-how. Who wants to sink in that kind of money with no guarantee of returns?....Russia remains the largest exporter of oil and gas in the world—bigger even than Saudi Arabia. But unlike the Gulf nations, Russia is fast pumping its existing wells of both oil and gas dry. To tap its reserves—and to maintain Russia's status as an 'energy superpower'—Russia needs to stop ripping off its investors just because a demand falloff has hurt its bottom line. Gas consumption will come back. But Russia's superpower aspirations won't also rise if Russia has alienated its partners. Without them, its new reserves—like the Shtockmann field—will remain buried in the ground."
So Long, Salad Days
Newsweek, 24 February 2010

"Forget global warming – the more pressing problem is that the lights are about to go out. Look at the projections, and you will see why Ed Miliband, the Cabinet minister responsible for energy (there have been eight since 1997), should be up at night worrying. Over the next seven years, all the assumptions about where our power comes from will be overturned. Five years ago, Britain became a net importer of fossil fuels. The depletion of North Sea oil and gas means that we are depending increasingly on foreign supplies. In 2000, we imported just one per cent of our natural gas supplies; now it's nearly half, and the National Grid expects it will reach 70 per cent by 2018. On Tuesday, Oil & Gas UK, which represents the industry, issued a warning that without more investment in the North Sea, its contribution towards our energy needs will continue to dwindle. At the same time, generating capacity is set to drop off sharply, as ageing coal, gas and nuclear power stations are taken out of service. As so often, Europe is playing its part, in the shape of the EU Large Combustion Plant directive, which says that they should be cleaned up at vast cost or closed. The Government admits that by 2020 the lost capacity will be vast – 22.5 gigawatts, or almost a third of our total requirements....the present Government has done to address the looming blackout. It has stuck to a policy designed for an age of plenty, when what is needed is one to deal with the insecurities of the 21st century. How, for example, should we protect ourselves against the prospect of rising oil prices at a time when economic growth elsewhere will drive up demand for ever scarcer supplies? How do we insure against political instability abroad? When Russia tightened the tap on its natural gas pipelines last year in a dispute with Ukraine, Britain suffered, because we are at the other end of that network and have far smaller stockpiles than our European counterparts. Argentina's sabre-rattling over oil exploration in the Falklands may be comical today, but what about a nuclear-armed Iran blockading the Strait of Hormuz, through which much of the world's oil supplies must pass? Last year, the Government admitted that by 2017, demand will at times exceed supply, and that we could expect the first power outages since the rationing of the 1970s. That would mean up to 16 million households sitting in the dark for an hour. Charts from Mr Miliband's own department show that the situation will be even worse a decade later....Energy security – or our lack of it – is where those on either side of the [climate change] debate can find common ground....We face a looming crisis that has inescapable parallels with the banking disaster that nearly brought the world's money system to a halt."
Labour has pushed us to the brink of a blackout
Daily Telegraph, 24 February 2010

"Spare capacity, the market term for difference in supply and demand of crude, has remained constrained despite recession and a massive reduction in oil demand in 2009, Francisco Blanch, Global Head of commodities research at Bank of America Merrill Lynch, said in his latest report. Blanch cited the decline in supply from non-Opec suppliers for the reduction in spare capacity without giving a figure. He warned geopolitics and protectionism may play spoilsport for the oil markets. 'Last year, we estimated that global non-Opec production decline rates averaged 4.8 per cent for fields producing between 2003 and 2008. When adding 2009, we find non-Opec decline rates have increased from 4.8 per cent to 4.9 per cent. This step up shaves one million barrels a day by 2015 from our non-Opec supply projections,' Blanch wrote in his report. The global demand for oil will rise two million barrels a day this year with emerging economies accounting for three-fourth of this rise, Blanch had told Emirates Business earlier. 'While the demand in emerging economies will rise by 1.5 million barrels a day, it will rise by 0.5 million barrels a day in the OECD economies.' Oil will average at $85 a barrel this year, Blanch said. 'It will potentially get close to $90 a barrel by the third quarter. It will break into a hundred in the first quarter of the next year,' the analyst credited for forecasting $147 a barrel price for oil almost on the nose in 2008 had told this newspaper earlier. For most industries around the world the crisis was exceptional, but not for oil, Blanch's new report said adding that the commodity has fared the crisis with strength. Oil had already suffered two back-to-back recessions in the 80s and 90s, where utilisation rates dropped to very low levels. The first recession in oil occurred in the early 80s as increased North Sea crude production and a major switch in OECD oil demand towards natural gas and nuclear power forced Saudi Arabia to cut output by 6.7 million barrels a day. In the early 90s, the oil industry suffered a second large recession, as the economic collapse of the Soviet Union left five million barrels a day of spare capacity. Blanch has predicted that the non-Opec supply will peak by 2011. 'We conclude that non-Opec supply, including non-conventional oil, NGLs and biofuels, will likely peak by 2011 at around 52.3 million barrels a day. Thereafter we see steady declines in production, reaching 51 million barrels a day by 2015. The world will thus become more reliant on Opec and we see utilisation rates reaching 95 per cent by 2014,' he said.... Reliance on Opec crude will only grow from now to 2015, Blanch said. 'We see Opec utilisation rates reaching 94 per cent by 2014 despite large investments in Saudi Arabia, Angola and Algeria.' Blanch reiterated his opinion that the emerging markets (EMs) will drive the demand for oil until 2015....With Opec capacity utilisation rates now running at around 81 per cent, any return to the recent demand growth path will likely eat into spare capacity sooner rather than later, Blanch said.....As a result, large fluctuations in prices will likely remain the norm to bring medium-term supply and demand trends into balance. 'In line with this view, we see the band for oil prices widening from $70-$85 per barrel at present, to $65-105 barrel the next year. By 2014, the range could expand again to the $50-150 barrel band observed in 2008,' Blanch wrote in his report..... Following two decades of exceptionally high spare productive capacity in the 80s and 90s, the global oil market tightened at a very rapid pace in the 2000s as robust demand from emerging economies stumbled against limited supply growth, said Blanch. However, the recession brought about a substantial contraction in OECD oil demand, forcing Opec cartel members to cut supply by 3.1 million barrels a day in early 2009 and late 2008. 'While oil demand has started to recover again, the medium-term outlook for oil and the global economy remains extremely uncertain. What does oil have in store for the 2010s. A potential four-fold surge in Iraqi production, dramatic increases in oil efficiency and substitution or a demand bubble in the emerging economies could all create large swings in global oil supply and demand balances. But the departure point matters, suggesting that oil the oil markets could be very tight again by 2014,' said Blanch. He sees large fluctuations in oil prices after 2014....Taking the Iraqi government's announcement of raising its oil production capacity from 2.5 million barrels a day to 10-12 million barrels a day over the next decade with a pinch of salt, blanch said that such a development would keep oil prices below $100 a barrel. 'While we remain sceptical that these large increases in volumes can be achieved, a four-fold increase in Iraqi production over the coming years could be sufficient to keep oil prices from rising above $100 a barrel for much of this decade,' said Blanch."
Non-Opec output decline restricts spare capacity 
Emirates Business 24/7, 22 February 2010

"BP Plc and Royal Dutch Shell Plc may falter in their campaigns to save billions in oil and gas project costs as a resurgence in drilling and demand for engineers threaten to revive inflation in the industry. Crude prices doubled to near $80 a barrel in the past year, prompting producers to resume projects put on hold during the recession. Oil and gas industry spending will rise 11 percent this year to $439 billion, according to Barclays Capital. 'Oil price inflation and cost inflation are highly correlated, albeit with some delay,' said Paul Wheeler, a London-based managing director in the oil and gas group at investment bank Jefferies International Ltd. 'The oil industry is always people constrained. It’s one of the biggest challenges: a lack of young engineers and geologists.'
BP, Shell Cost Cuts May Falter on Drilling Inflation
Bloomberg, 22 February 2010

"When world oil producers and consumers convened in Jeddah for an emergency summit in June 2008, Samuel Bodman, then US energy secretary, had a simple message for Saudi Arabia: pump more oil now. As Steven Chu, his successor, flies to the kingdom this week, the agenda instead has a heavy focus on research and technology. The different messages underscore the fact that crude prices have fallen from $130 a barrel in June 2008 to $80 a barrel. They also reflect a further tilt in the balance of demand growth from west to east. While the US's thirst for oil still leads the world, demand fell in 2008-09 and most analysts expect that efficiency measures and bad memories of the recent price spike will keep a lid on any rebound. The US has also been diversifying its sources of oil. Canada has overtaken Saudi Arabia as the top supplier amid aggressive investment in its tar sands region. Angola, Nigeria and Brazil have also contributed. More important, these producers are competing for a smaller market. US crude imports peaked above 10m barrels a day in 2005, and in the past two years have fallen 9 per cent as recession thinned traffic and pared industrial activity. China's crude imports, meanwhile, rose about 14 per cent last year. Purchases from Saudi Arabia, its largest supplier, rose faster and reached a record 1.2m b/d in December. Saudi imports averaged 843,000 b/d last year, still lower than the US average in the first 11 months for which data are available. Jim Burkhard, managing director of global oil at IHS Cambridge Energy Research Associates, the consultant, said: 'This is a reflection of the global economy. China has been growing. The US hasn't. We've seen that reflected in oil demand figures.' For Saudi Arabia, in need of stable markets for 264bn barrels in oil reserves, China promises reliable demand as slower economic growth and efficiency measures take hold in the west. Analysts do not expect the shift in oil flows to undermine the strong political relationship between the US and the kingdom. Mr Chu's office said his visit is meant to strengthen US partnerships in the region. Greg Priddy, global oil analyst at Eurasia Group, a political risk consultancy, said the US was 'actually encouraging the Saudis to export more to China as an offset to Iran', which faces increasing international pressure over its nuclear programme. Saudi Aramco, the state oil company, owns half of Motiva Enterprises, a US refinery joint venture that it helps to supply. Still, there are signs the world's top crude producer is shifting attention east. Saudi Arabia is ending a lease for some of the vast storage facilities in the Caribbean it used to dispatch cargoes to US refineries. Ali Naimi, Saudi oil minister, recently said the kingdom was leasing new storage in Okinawa, Japan, from which to ship oil to the booming Asian market. 'Asia will be a huge market,' Mr Naimi said. Saudi Arabia has shouldered the bulk of the output cuts announced by Opec, the oil cartel. Analysts say it shut in cheaper, heavier crudes in order to preserve profit margins. This has squeezed operations at US refineries that specialise in the heavier grades, further damping US demand for Saudi oil. Amy Myers Jaffe, a research fellow at Rice University in Houston, said that while market forces had redirected Saudi exports, US energy policy was also a factor. 'Everything in oil is geopolitical,' she said. 'For sure, the Saudis have commercial reasons . . But oil is never 100 per cent commercial.'"
Saudi oil flows east as demand in Asia grows
Financial Times, 22 February 2010

"BP Plc and Royal Dutch Shell Plc may falter in their campaigns to save billions in oil and gas project costs as a resurgence in drilling and demand for engineers threaten to revive inflation in the industry. Crude prices doubled to near $80 a barrel in the past year, prompting producers to resume projects put on hold during the recession. Oil and gas industry spending will rise 11 percent this year to $439 billion, according to Barclays Capital. 'Oil price inflation and cost inflation are highly correlated, albeit with some delay,' said Paul Wheeler, a London-based managing director in the oil and gas group at investment bank Jefferies International Ltd. “The oil industry is always people constrained. It’s one of the biggest challenges: a lack of young engineers and geologists.”
BP, Shell Cost Cuts May Falter on Drilling Inflation
BusinessWeek, 22 February 2010

"The API reported that total US oil consumption is now at the lowest level, 18.4 million b/d, in 12 years despite the fact that gasoline rose steadily in January. US gasoline consumption is now about 8.7 million b/d as opposed to a high of 9.6 million reached in July 2007. Consumption of low sulfur diesel fuel, used in heavy trucks is down by 11.5 percent, a bad sign for the US economy."
Peak Oil Review - Feb 22
ASPO USA, 22 February 2010

"The world’s most powerful investors have been advised to buy farmland, stock up on gold and prepare for a 'dirty war' by Marc Faber, the notoriously bearish market pundit, who predicted the 1987 stock market crash. The bleak warning of social and financial meltdown, delivered today in Tokyo at a gathering of 700 pension and sovereign wealth fund managers. Dr Faber, who advised his audience to pull out of American stocks one week before the 1987 crash and was among a handful who predicted the more recent financial crisis, vies with the Nouriel Roubini, the economist, as a rival claimant for the nickname Dr Doom. Speaking today, Dr Faber said that investors, who control billions of dollars of assets, should start considering the effects of more disruptive events than mere market volatility. 'The next war will be a dirty war,' he told fund managers: 'What are you going to do when your mobile phone gets shut down or the internet stops working or the city water supplies get poisoned?' His investment advice, which was the first keynote speech of CLSA’s annual investment forum in Tokyo, included a suggestion that fund managers buy houses in the countryside because it was more likely that violence, biological attack and other acts of a 'dirty war' would happen in cities....One of Dr Faber’s darker scenarios involves growing military tension between China and the United States over access to limited oil resources. Today the US has a considerable advantage over China because it has free access to oceans on both coasts, and has potential energy suppliers to the north and south in Canada and Mexico. It also commands an 11-strong fleet of aircraft carriers that could, if necessary, secure supply routes in a conflict situation. China and emerging Asia, meanwhile, face the uncertainty of supplies that must travel from the Middle East through winding sea lanes and the Malacca bottleneck. American military presence in Central Asia, Dr Faber said, may add to the level of concern in Beijing. 'When I tell people to prepare themselves for a dirty war, they ask me: 'America against whom?' I tell them that for sure they will find someone.' At the heart of Dr Faber’s argument is a fundamentally gloomy view on the US economy and its capacity to service a growing mountain of debt. His belief, fund managers were told, is that the US is going to go bankrupt. Under President Obama, he said, the country’s annual fiscal deficit will not drop below $1 trillion and could rise beyond that figure."
'Buy farmland and gold,' advises Dr Doom
London Times, 22 February 2010

"Bank of America and Barclays Capital, two leading oil traders, have told clients to brace for crude above $100 (£64) a barrel by next year, before it pushes relentlessly higher over the decade. This is a stark contrast from recessions in the 1980s and 1990s, when it took years to work off excess drilling capacity built in the boom. 'Oil has the potential to flirt with $100 this year. We forecast an average price of $137 by 2015,' said Amrita Sen, an oil expert at BarCap. The price has doubled to $78 in the last year.   'The groundwork for the next sustained step up in oil prices is now almost complete. Global spare capacity is likely to be reduced to low levels within a relatively short time. The global economic crisis has postponed, but not cancelled, a crunch which would otherwise be starting to bite now,' said Barclays. Francisco Blanch, from Bank of America Merrill Lynch, said crude may touch $105 next year, with $150 in sight by 2014. 'Approximately 1.7bn consumers in emerging markets with a per capita income of $5,000 to $20,000 are eagerly waiting to buy cars, air-conditioning units, or white goods,' he said. China has overtaken the US as the world's top car market. Mr Blanch expects oil demand to rise by a further 2.8m barrels per day (bpd) in China and 2.5m bpd in India by 2015, when two giants will be absorbing the lion's share of Gulf output. Consumption in the West has already peaked and will fall each year as populations shrink and we waste less, but the West no longer sets the price. Global use will increase by 8.8m bpd to 95m bpd....Mr Blanch said output from non-OPEC states is falling by 4.9pc each year, despite Russia's reserves. Saudi Arabia and the Emirates can plug a quarter of the gap, but global spare capacity must soon drop to wafer-thin levels – leaving us vulnerable to the sort of 'super-spike' seen in 2008. The wildcard is whether Iraq can quadruple output to Saudi levels this decade, a target dismissed by most analysts as pie-in-the-sky. Painfully high prices are needed to unlock fresh supplies as reserves are depleted in the North Sea and the Gulf of Mexico. Deep-water rigs off Brazil are costly and require drilling far below the seabed. Canadian oil sands and US biofuels have break-even costs near $70. While the US, UK, and the Far East are turning to nuclear power, it takes a decade to build reactors. 'peak uranium' lurks in any case. The oil spike brought the global economy to a shuddering halt in 2008. This time the crunch may hit before the West has fully recovered. Whatever happens, the US, Europe and Japan will soon transfer a chunk of their wealth to the petro-powers. It is a new world order."
Barclays and Bank of America see looming oil crunch
Daily Telegraph, 18 February 2010

"Billions of barrels of oil may lie trapped in the rocks deep beneath the ocean floor of the South Atlantic, but finding them and bringing them to market is likely to be a big struggle — vastly expensive and fraught with political complications. A study by the British Geological Society suggested that the region could contain up to 60 billion barrels of oil — a similar-sized deposit to the North Sea. But such figures may give little sense of how much is recoverable using existing technology. No drilling has been carried out in the Falklands since 1998, when Shell and Lasmo drilled six wells in an area to the north of the islands, not far from where the current drilling programme is set to start next week. Traces of crude were discovered in all but one of the wells — where gas was found instead — but the following year the global price of oil fell to $10 per barrel, ending the commercial logic of further exploration....The drilling site lies in relatively shallow waters about 400 metres (1,300ft) deep and between 30 and 60 miles north of the islands. Two of the other companies, Falkland Oil and Gas and Borders & Southern, are prospecting in another region that lies to the south of the islands in deeper and more challenging waters up to 1,200m (3,900ft) deep. There is a reasonable chance that at least one of the companies will find oil — but whether it is found in commercial quantities is less clear. The Falklands are so remote that any oil discovery would need to be large to justify the multibillion- pound costs of building pipelines, export terminals and other infrastructure. Then there are the political obstacles with Argentina, which are likely to deter industry giants such as BP, Shell and Exxon. Until a resolution with Argentina can be reached over who owns the oil, they are likely to remain sceptical."
Oil may be there, but bringing it to market is another matter
London Times, 18 Feburary 2010

"With oil majors given the cold shoulder in many developing countries, it is no mean feat that Exxon Mobil managed to replace 100 percent of last year’s production with new reserves. Even so, not all energy is equal. The stuff Exxon is using to fill its pipeline will be harder to extract and of lower value to investors....clearing the crucial 100 percent hurdle by S.E.C. standards should be child’s play in 2010. With reserves of more than two billion barrels of oil equivalent, Exxon’s latest acquisition, XTO Energy, will replace more than a year of Exxon’s output at a stroke. The bigger concern for Exxon will be the nature of these new reserves. On the bright side Exxon is steering away from capricious developing nations, meaning fewer political headaches. Recent reserve additions have been in politically placid areas, notably Canada and Australia. But economic risks may offset fewer political ones. Discoveries of oil that is easy to extract and refine are failing to keep pace with output. The barrels taking their place may be tougher or more costly to reach, and therefore less profitable. Hopes are high that cleaner-burning natural gas will grow in popularity. The trouble is that gas still trades at a discount to its liquid cousin crude, especially in the United States, where it is worth about half the price of a barrel of oil. Liquids, about 57 percent of Exxon’s reserves 10 years ago, are now just half, according to IHS Herold. And squeezing energy from oil sands, an increasingly important source for Exxon, is often economical only when oil trades above $60 a barrel. Conventional wells are generally profitable at just half that level."
Barrels in Reserve but Harder to Get
Reuters, 17 February 2010

"EDF could face 'massive' new investment to extend the life of its French nuclear reactors beyond 40 years, the country’s safety authority has warned. Extending the life of its French reactors is crucial to EDF, which is hoping to secure 60-year life-cycles for its plants – a term that is already common in the US. The move comes as the French state-owned utility faces the prospect of greater competition in its home market and struggles to cope with record debt. André-Claude Lacoste, president of the French nuclear safety authority, said on Tuesday that the watchdog was 'beginning to treat' the question of the conditions EDF would have to meet to extend the life of its reactors beyond 40 years. 'To go beyond that without doubt would require massive investment,' he warned. The warning came as the regulator revealed that EDF has already been forced to commit hundreds of millions of euros to replacing the ageing steam generators on 34 of its 58 reactors."
EDF warned of ‘massive’ reactor bill
Financial Times, 16 February 2010

"Two of Britain’s biggest energy companies are lobbying the Conservative Party to keep some of the nation’s most polluting power stations operating beyond a deadline set by the European Union, The Times has learnt. RWE npower and E.ON, the two German-owned companies, have held private talks with senior Conservative politicians about the legal position of nine coal and oil-fired power plants due to close by the end of 2015 under new EU pollution rules. Together, the six coal and three oil-fired plants generate 12.3 gigawatts of electricity, about 15 per cent of total UK electricity supplies. E.ON and RWE are pressing for at least some of the plants to be exempted from the EU rules on the grounds that, without them, Britain could face blackouts by 2015 because not enough replacement stations are being built."
Energy giants turn up the heat for dirty power
London Times, 16 February 2010

"EU companies have taken millions of acres of land out of food production in Africa, central America and Asia to grow biofuels for transport, according to development campaigners. The consequences of European biofuel targets, said the report by ActionAid, could be up to 100 million more hungry people, increased food prices and landlessness. The report says the 2008 decision by EU countries to obtain 10% of all transport fuels from biofuels by 2020 is proving disastrous for poor countries. Developing countries are expected to grow nearly two-thirds of the jatropha, sugar cane and palm oil crops that are mostly used for biofuels. 'To meet the EU 10% target, the total land area directly required to grow industrial biofuels in developing countries could reach 17.5m hectares, over half the size of Italy. Additional land will also be required in developed nations, displacing food and animal feed crops onto land in new areas, often in developing countries,' says the report. Biofuels are estimated by the IMF to have been responsible for 20-30% of the global food price spike in 2008 when 125m tonnes of cereals were diverted into biofuel production. The amount of biofuels in Europe's car fuels is expected to quadruple in the next decade. The report attributes the massive growth in biofuel production to generous subsidies. It estimates that the EU biofuel industry has already received €4.4bn (£3.82bn) in incentives, subsidies and tax relief and that this could triple to over €13.7bn if the EU meets its 2020 target. The greatest support to the industry is exemption from excise duties. Duty at the pump is 20 pence less per litre compared to conventional fuels although this exemption due to end in 2010, a change which supermarket Morrisons cited last week as the reason for dropping one of its biodiesel blends. In 2009, the duty on low- sulphur petrol and diesel in the UK was 54.19 pence per litre; for biodiesel and ethanol it was 34.19 pence per litre."
EU biofuels significantly harming food production in developing countries
Guardian, 15 February 2010

"A 'miracle' plant, once thought to be as the answer to producing renewable biofuels on a vast scale, is driving thousands of farmers in the developing world into food poverty, a damning report concludes today. Five years ago jatropha was hailed by investors and scientists as a breakthrough in the battle to find a biofuel alternative to fossil fuels that would not further impoverish developing countries by diverting resources away from food production. Jatropha was said to be resistant to drought and pests and able could grow on land that was unsuitable for food production. But researchers have found that it has increased poverty in countries including India and Tanzania. Seeds of discontent: the 'miracle' crop that has failed to deliver... Millions of the plants have been grown in anticipation of rich returns, only for growers to be hit by poor yields, conflict over land and a lack of infrastructure to process the oil-rich seeds. Oil giant BP, which planned to spend almost £32m on a joint venture to set up jatropha plantations, has now pulled out and the charity ActionAid today warns that jatropha needs to be cultivated on prime food-growing land to produce significant yields. According to one estimate, up to one million hectares of jatropha – an area equivalent to Devon and Cornwall combined – are being cultivated around the globe, despite little evidence that it can produce enough oil to make the crop commercially sustainable....despite jatropha's much-lauded ability to grow where food crops cannot flourish, campaigners say there is evidence that commercially viable yields can only be obtained in fertile soil. In India, forecasted annual yields of three to five tonnes of seeds per hectare have been scaled back to 1.8 to two tonnes. The Overseas Development Institute, a leading international development think-tank, has stated that 'as the mainstay of people's livelihoods, jatropha looks distinctly marginal'."
Seeds of discontent: the 'miracle' crop that has failed to deliver
Independent, 15 Feburary 2010

"Saudi Arabia must be 'very serious' about any possible peak in oil demand, which is an 'alarm' for OPEC’s biggest exporter to diversify its economy, a Saudi Oil Ministry adviser said. Saudi Arabia is making a push into renewable energy and is starting its first carbon-capture project, Oil Ministry adviser Mohammad al-Sabban said today at the Jeddah Economic Forum. The country will start injecting carbon dioxide into Ghawar, the world’s largest oilfield, in 2012, he said. 'Talk of oil demand peaking is an alarm to speed up the economic diversification process,' al-Sabban said. 'The challenges facing Saudi Arabia are huge: we need to develop Saudis in order to be innovative, creative, to catch up with the rest of the world.' The world’s largest oil producer is investing in new industries such as aluminum and steel and pushing for more science and technology in education as it seeks to diversify away from dependence on income from exporting crude oil. More than 25 percent of the kingdom’s youth are unemployed. Oil demand in some developed industrialized nations is contracting, partly as a result of the economic slowdown. Those concerns are different from 'peak oil' theorists who say oil production has already reached maximum levels and will inevitably decline."
Saudi Arabia Says Peak Demand for Oil Is an ‘Alarm’
Bloomberg, 15 February 2010

"Britain's gas storage capacity will increase by a third after the Government today officially licenced a new development but the £600m investment will only be capable of meeting five days' average demand. The Gateway Project, 15 miles offshore, south west of Barrow-in-Furness will store 1.5bn cubic meters of gas in 20 salt caverns 750 meters below the seabed. It will be linked by pipeline to the national gas transmission system but will not be in service until 2014. Britain currently has only one offshore gas storage facility, Centrica's Rough field in the North Sea, and is vulnerable to winter surges in demand when supplies are stretched. Total gas storage is equivalent to 16 days demand compared with 88 in France and 77 in Germany."
New £600m gas storage caverns will handle just five days' demand
Daily Telegraph, 15 February 2010

"After attacking America's efforts to develop shale gas last week as 'dangerous to drinking water', it seems Russia has decided that not all unconventional supplies are bad news. Gazprom, the Russian state energy monopoly and world's largest gas producer, has decided to dip its toe into coal bed methane. It wants 1.5bn cubic metres of output a year by 2012 from a field in Siberia's coal-rich Kuzbass area. Russia may have 87 trillion cubic metres of coal-bed methane, which is the size of 'two Gazproms', says President Dmitry Medvedev. And it's even more than the 57 trillion cubic metres that has changed the face of US gas production."
Mining industry warns of another energy price spike
Telegraph, 14 February 2010

"Canada, faced with growing political pressure over the extraction of oil from its highly polluting tar sands, has begun courting China and other Asian countries to exploit the resource. The move comes as American firms are turning away from tar sands because of its heavy carbon footprint and damage to the landscape. Whole Foods, the high-end organic grocery chain, and retailer Bed Bath & Beyond last week both signed up to a campaign by ForestEthics to stop US firms using oil from Canadian tar sands. The Pentagon is also scaling down its use of tar sands oil to meet a 2007 law requiring the US government to source fuels with lower greenhouse gas emissions. Major oil companies such as Shell are also coming under shareholder pressure to pull out of the Canadian projects. Earlier this year, Shell announced it was scaling back its expansion plans for the tar sands after a revolt by shareholders. Producing oil from the Alberta tar sands causes up to five times more greenhouse gas emissions than conventional crude oil, according to the campaign group Greenpeace. In the most significant deal to date, the Canadian government recently approved a C$1.9bn (£1.5bn) investment giving the Chinese state-owned oil company Petro­China a majority share in two projects. Prime minister Stephen Harper said: 'Expect more Chinese investment in the resource and energy sectors … there will definitely be more.' China's growing investment in the tar sands is seen in Canada as a useful counter to waning demand for tar sands oil from the US, its biggest customer. The moves, which have largely gone unnoticed outside north America, could add further tension to efforts to try to reach a global action plan on climate change."
Canada looks to China to exploit oil sands rejected by US
Guardian, 14 February 2010

"The brains trust of the Pentagon says it is just months away from producing a jet fuel from algae for the same cost as its fossil-fuel equivalent. The claim, which comes from the Defense Advanced Research Projects Agency (Darpa) that helped to develop the internet and satellite navigation systems, has taken industry insiders by surprise. A cheap, low-carbon fuel would not only help the US military, the nation's single largest consumer of energy, to wean itself off its oil addiction, but would also hold the promise of low-carbon driving and flying for all. Darpa's research projects have already extracted oil from algal ponds at a cost of $2 per gallon. It is now on track to begin large-scale refining of that oil into jet fuel, at a cost of less than $3 a gallon, according to Barbara McQuiston, special assistant for energy at Darpa. That could turn a promising technology into a ­market-ready one. Researchers have cracked the problem of turning pond scum and seaweed into fuel, but finding a cost-effective method of mass production could be a game-changer. "Everyone is well aware that a lot of things were started in the military," McQuiston said. The work is part of a broader Pentagon effort to reduce the military's thirst for oil, which runs at between 60 and 75 million barrels of oil a year. Much of that is used to keep the US Air Force in flight. Commercial airlines – such as Continental and Virgin Atlantic – have also been looking at the viability of an algae-based jet fuel, as has the Chinese government. 'Darpa has achieved the base goal to date,' she said. 'Oil from algae is projected at $2 per gallon, headed towards $1 per gallon.' McQuiston said a larger-scale refining operation, producing 50 million gallons a year, would come on line in 2011 and she was hopeful the costs would drop still further – ensuring that the algae-based fuel would be competitive with fossil fuels. She said the projects, run by private firms SAIC and General Atomics, expected to yield 1,000 gallons of oil per acre from the algal farm. McQuiston's projections took several industry insiders by surprise. 'It's a little farther out in time,' said Mary Rosenthal, director of the Algal Biomass Association. 'I am not saying it is going to happen in the next three months, but it could happen in the next two years.' But the possibilities have set off a scramble to discover the cheapest way of mass-producing an algae-based fuel. Even Exxon – which once notoriously dismissed biofuels as moonshine – invested $600m in research last July. Unlike corn-based ethanol, algal farms do not threaten food supplies. Some strains are being grown on household waste and in brackish water. Algae draw carbon dioxide from the atmosphere when growing; when the derived fuel is burned, the same CO2 is released, making the fuel theoretically zero-carbon, although processing and transporting the fuel requires some energy. The industry received a further boost earlier this month, when the Environmental Protection Agency declared that algae-based diesel reduced greenhouse gas emissions by more than 50% compared with conventional diesel. The Obama administration had earlier awarded $80m in research grants to a new generation of algae and biomass fuels. For Darpa, the support for algae is part of a broader mission for the US military to obtain half of its fuel from renewable energy sources by 2016."
Algae to solve the Pentagon's jet fuel problem
Guardian, 13 February 2010

"Britain’s relations with Argentina fell last night to their lowest point since the Falklands conflict in a row over an oil platform that is due to arrive north of Port Stanley next week. The Ocean Guardian is expected to complete its journey to the disputed waters 100 miles off the Falklands coast from the Scottish Highlands as part of a campaign that Britain hopes will bring a black-gold rush to the windswept, sparsely populated islands. But, almost three decades after Britain and Argentina fought a bloody 72-day conflict over the islands, its impending arrival has stoked fury in a country that is still intent on claiming the territory as its own....The British Foreign Office denied that the oil operations were illegal. 'We are absolutely clear this is legitimate business in Falkland Islands waters and we will continue to reiterate our position that we have no doubt about our sovereignty over the Falkland Islands and the surrounding maritime areas,' a spokesman said. Analysts say that as many as 60 billion barrels of high-grade oil could be found in a 200 sq mile zone surrounding the islands, which is to be developed by Desire, AGR and Diamond Offshore Drilling. That could make the Falklands one of the world’s largest oil reserves, comparable with the North Sea, which so far has produced about 40 billion barrels."
British drilling for Falklands oil threatens Argentine relations
London Times, 13 February 2010

"Fresh controversy is mounting within the European Union over biofuels and their unintended impact on tropical forests and wetlands, documents show. One leaked document from the EU's executive, the European Commission, suggests biofuel from palm oil might get a boost from new environmental criteria under development. But another contains a warning from a top official that taking full account of the carbon footprint of biofuels might 'kill' an EU industry with annual revenues of around $5 billion. The European Union aims to get a tenth of its road fuels from renewable sources by the end of this decade, but has met with criticism that biofuels can force up food prices and do more harm than good in the fight against climate change. Most of the 10 percent goal will be met through biofuels, creating a market coveted by EU farming nations, which produce about 10 billion litres a year, as well as exporters such as Brazil, Malaysia and Indonesia. Environmentalists say biofuels made from grains and oilseeds are forcing farmers to expand agricultural land by hacking into rainforests and draining wetlands -- known as 'indirect land-use change' (ILUC). Clearing and burning forests puts vast quantities of carbon emissions into the atmosphere, so the EU risks promoting damage to the climate by creating such a valuable market."
Controversy mounts in EU over fall-out from biofuel
Reuters, 11 February 2010

"Cameco Corp., the world’s second- largest uranium producer, said crews safely re-entered the main working level of the Cigar Lake mine in Canada’s Saskatchewan province yesterday after the site was fully drained of water. Access was established to 480 meters (1,575 feet) underground and inspections of the development are under way, Saskatoon, Saskatchewan-based Cameco said today in a statement. Cigar Lake, which sits atop the world’s richest untapped uranium deposit, flooded in October 2006 and again in August 2008. Work to secure the underground is expected to be completed before October and an update on the project will be included in Cameco’s earnings release on Feb. 24, the company said."
Cameco Says Crews Re-Entered Cigar Lake Working Level
Bloomberg, 11 February 2010

"The International Energy Agency (IEA) gave the market some fresh optimism today by boosting its global oil demand forecast by 50,000 barrels per day for 2009 and by 170,000 bpd for this year, on the back of stronger economic projections by the International Monetary Fund (IMF). Global oil demand is now estimated at 86.5 million bpd for 2010, up 1.8% year-on-year and a 170,000 barrel increase compared with agency's last report.   For 2009, global demand is expected to come in at 84.9 million bpd, down 1.5% year-on-year but 50,000 barrels higher than the last forecast....Growth comes entirely from non-Organisation for Economic Co-operation & Development (OECD) countries and higher demand readings from China and Asian countries, the agency said. Demand in non-OECD is now forecast to increase by 4%, while stagnating at 2009 levels in OECD countries. Meanwhile, oil price projections for 2009 and 2010 were revised up $1 and $4 respectively, to $58 per barrel and $75 per barrel."
IEA boosts oil outlook
Upstream Online, 11 February 2010

"As Europe's leaders gather in Brussels today, they have only one crisis in mind: the debts that threaten the stability of the European Union. They are unlikely to be in any mood to listen to warnings about a different crisis that is looming and that could cause massive disruption. ....the work of the Industry Taskforce on Peak Oil and Energy Security shouldn't be disparagingly dismissed. Its arguments are well founded and lead it to the conclusion that, while the global downturn may have delayed it by a couple of years, peak oil—the point at which global production reaches its maximum—is no more than five years away. Governments and corporations need to use the intervening years to speed up the development of and move toward other energy sources and increased energy efficiency. In the first report from the task force, Lord Ron Oxburgh, a former chairman of Shell, wrote that 'It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. Any new or unconventional oil is going to be expensive.'... The Taskforce, assimilating various opinions, believes 92 million barrels a day will be the most that global supplies will be able to generate, 'unless some unforeseen giant, and easily accessible, finds are reported very soon.' It may be that the oil companies are keeping some giant secrets from us but that seems unlikely. So what lies ahead is a mismatch between supply and demand. According to Chris Skrebowski, of the Peak Oil Consulting firm, mid-2015 is when the crunch hits. 'This is when capacity starts to be overwhelmed by depletion and lack of new capacity additions.' Some dubious emails and slightly dodgy dossiers have cast a new, and unflattering, light on the global-warming debate, raising the risk of a return to the belief that we can go on consuming oil with impunity. Being a 'climate-change denier' is in danger of becoming almost fashionable. But whatever the risk to the climate, scarce and expensive oil would be a threat to established economies. We need alternatives."
The Next Crisis: Prepare for Peak Oil
Wall St Journal, 11 February 2010

"Venezuela awarded on Wednesday the largest oil investment of President Hugo Chavez's 11-year rule, drawing tens of billions of dollars of much-needed foreign finance to the Orinoco Belt just three years after the leftist leader nationalized operations there. U.S.-based Chevron (CVX.N) and Spain's Repsol (REP.MC) led groups that looked beyond the risks of operating in Venezuela to tap into the OPEC member's 100-plus billion barrels of reserves, a sign oil giants need to replenish crude reserves that are increasingly under control of producer nations. The results show victories for both sides. Oil companies agreed to tough conditions laid down by Caracas while Venezuela softened fiscal terms in another sign resource nationalism around the world has been weakened by falling oil prices.....Analysts say the world's reserves of easy-to-produce light oil are quickly running out, meaning the future of the industry is in difficult production areas such as the Orinoco Belt, Brazil's deep water fields or Canada's tar sands.....Venezuela's oil production has fallen below 2.5 million barrels per day (bpd) from more than 3 million bpd in 2001, according to the U.S. Department of Energy, due principally to limited oilfield investment and lack of qualified personnel."
Venezuela seals biggest oil deals under Chavez
Reuters, 11 February 2010

"Finding oil and gas to replace the world's fast dwindling reserves is increasingly risky as rigs probe areas once seen as too difficult or too dangerous, and costs are rocketing, which could imperil future supply. The cost of discovering each new barrel of oil and gas has risen three-fold over the last decade as technology has pushed the frontiers of exploration into ever more remote areas. As old fields run dry, oil companies are drilling wells in some of the most inhospitable regions, where political, physical, geological, geographical, technical and contractual risks are high, and they have had remarkable success....unless consumers pay more for oil in future, some analysts think we could face an energy supply crunch within a few years. 'The age of cheap oil has gone and it is not going to come back,' said Paul Stevens, senior research fellow at the Royal Institute of International Affairs at Chatham House in London. 'The world is not going to run out of oil tomorrow, but it is more and more expensive to find and will continue to be so,' he said. 'The worry is that investment may be squeezed as risks rise, and that could bring us to a looming supply crunch.'....The search for oil has always been costly and involved risk taking, but the challenges facing explorers have intensified as wells have moved further offshore, into deeper reservoirs and to places with much higher political and physical risks. Figures from upstream consultant Wood Mackenzie in Edinburgh show the cost of finding oil has almost tripled over the last decade even though the rate of discovery has barely changed. Each barrel of oil equivalent cost an average of just over $3 to discover last year, compared with just $1.18 in 2001, according to Wood Mackenzie. Data from BP Plc for the cost of finding new oil show an even bigger increase -- more than four fold in the five years to 2008. Those figures may seem low given that world spot oil prices are close to $75 per barrel, but discovery costs need to be multiplied many times as oil is pumped out of the ground, processed at a refinery and becomes fuel at a service station. Even established oilfields, such as those in the North Sea, now have breakeven costs of around $50 per barrel. The new ultra-deep offshore fields that lie beneath oceans more than 3 km (1.88 miles) deep and in positions up to 5 miles from rigs impose even higher costs. Because the rigs work in deeper water, they use more steel, new technology and are operated by highly trained and expensive specialists."
Oil exploration costs rocket as risks rise
Reuters, 11 February 2010

"OPEC expects the world will need more of its crude oil this year than previously forecast, as the organization lowered its outlook for production of natural gas liquids. The Organization of Petroleum Exporting Countries, responsible for 40 percent of global supplies, predicted in a monthly report today that consumers worldwide will need 28.75 million barrels a day of OPEC crude in 2010. While that’s 150,000 barrels a day more than anticipated in last month’s report, the resulting 'call on OPEC' in 2009 is unchanged from last year. 'Required demand for OPEC crude is forecast to remain almost at the same level as last year, following two consecutive annual declines,' the group’s Vienna-based secretariat said in the report. 'World oil demand and non-OPEC supply remained almost unchanged' while 'OPEC NGLs experienced a downward revision.'....OPEC, next scheduled to meet on March 17 in Vienna, left its forecast for worldwide oil consumption in 2010 at 85.12 million barrels a day, which equates to growth from last year of 800,000 barrels a day. The group’s implementation of a record supply cut announced in 2008 slipped to 53 percent as oil prices around $70 a barrel encouraged members to exceed their quotas. OPEC Secretary-General Abdalla El-Badri told reporters in London on Feb. 2 that if market conditions change little and prices stay in their current range, then ministers will be 'reluctant' to alter their production target at next month’s gathering."
OPEC Raises Forecast Demand for Its Oil on Lower NGL Outlook
Bloomberg, 10 February 2010

"It's not been a great week for the 'greener driver'. First, Toyota announced it was ­recalling all its Prius hybrids ­after detecting a potential fault with the braking system. And ­yesterday Morrisons, the largest supplier of biofuels in the UK, ­announced it is withdrawing one of its most popular blends from its forecourts. From 1 April, it says it will no longer be selling B30, a blend of 30% rapeseed and recycled vegetable oil and 70% ordinary mineral diesel. The move follows last Nov­ember's pre-budget report announcing the '20p per litre duty differential' subsidy for biofuels was to be axed, although the subsidy for 'used cooking oil biofuels' would remain for two years.... This is undoubtly a big blow for the fledgling biofuel industry. However, the true environmental credentials of these blends is ­debatable. While they might offer marginal reductions in greenhouse gas emissions compared to pure mineral diesels, do they, by being reliant on biomass from food crops, act to drive up prices of commodi­ties such as corn and wheat?"
If biofuels go, should we mourn them?
Guardian, 10 February 2010

"An oil crunch more serious than the financial crisis threatens to strike Britain within five years, Sir Richard Branson and other business leaders have warned. Consumers face a spike in costs for heating, transport, food and other goods, according to the report entitled 'The Oil Crunch - a wake up call for the UK economy'. It said the challenges facing the UK would exceed those presented by the financial crisis and said the poorest in society were most vulnerable to potentially significant increases. The report said Government must acknowledge the risks to the economy and to produce contingency plans for transport, retail, agriculture and alternative power. 'Unless we do so, we face a situation during the term of the next government where fuel price unrest could lead to shortages in consumer products and the UK's energy security will be significantly compromised,'' it said. The report was compiled by the Industry Taskforce for Peak Oil and Energy Security, a group of private British companies whose members include Sir Richard, Brian Souter, chief executive of Stagecoach, Scottish & Southern Energy boss Ian Marchant and Philip Dilley, chairman of consultancy firm Arup. Virgin Group founder Sir Richard - whose airline and rail businesses are sensitive to volatility in the cost of crude - said businesses and Government should work together to prepare the economy. 'UK competitiveness will be hampered unless we can develop viable, affordable and secure long term sources of alternative energy,' he said.... Energy watchdog Ofgem has warned electricity and gas may become unaffordable for an increasing number of households unless drastic action is taken to secure power supplies. Oil prices have been particularly volatile in recent years, spiking at $147 a barrel in July 2008 before plummeting to $32 a barrel that December amid the financial crisis and onset of the economic downturn. It climbed again to around $70 to $80 late last year and has stayed relatively static as many world economies remain under pressure. Global economic woes have pushed the 'oil crunch' point - when global demand will use up stocks faster than they can be replaced by new production - back by two years and given governments and firms more time to work out how to act. But oil prices are still predicted to climb to a sustained level above $100 a barrel within the next five years. And the UK is seen to be particularly vulnerable to price fluctuations as it increasingly relies on energy imports."
Britain faces 'oil crunch' within five years, Richard Branson warns
Daily Telegraph, 10 February 2010

"Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years. The founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the ­coming crisis could be even more serious than the credit crunch. 'The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well,' Branson will say. 'Our message to government and businesses is clear: act,' he says in a foreword to a new report on the crisis. 'Don't let the oil crunch catch us out in the way that the credit crunch did.' Other British executives who will support the warning include Ian Marchant, chief executive of Scottish and Southern Energy group, and Brian Souter, chief executive of transport operator Stagecoach. Their call for urgent government action comes amid a wider debate on the issue and follows allegations by insiders at the International Energy Agency that the organisation had deliberately underplayed the threat of so-called 'peak oil' to avoid panic on the stock markets. Ministers have until now refused to take predictions of oil droughts seriously, preferring to side with oil companies such as BP and ExxonMobil and crude producers such as the Saudis, who insist there is nothing to worry about. But there are signs this is about to change, according to Jeremy Leggett, founder of the Solarcentury renewable power company and a member of a peak oil taskforce within the business community. '[We are] in regular contact with government; we have reason to believe their risk thinking on peak oil may be evolving away from BP et al's and we await the results of further consultations with keen interest.' The issue came up at the recent World Economic Forum in Davos where Thierry Desmarest, chief executive of the Total oil company in France, also broke ranks. The world could struggle to produce more than 95m barrels of oil a day in future, he said – 10% above present levels. 'The problem of peak oil remains.' Chris Skrebowski, an independent oil consultant who prepared parts of the peak oil report for Branson and others, said that only recession is holding back a crisis: 'The next major supply constraint, along with spiking oil prices, will not occur until recession-hit demand grows to the point that it removes the current excess oil stocks and the large spare capacity held by Opec. However, once these are removed, possibly as early as 2012-13 and no later than 2014-15, oil prices are likely to spike, imperilling economic growth and causing economic dislocation.'"
Branson warns that oil crunch is coming within five years
Guardian, 7 February 2010

"BP has become the latest oil company to face a shareholder revolt over its investments in Canada’s controversial oil sands. A coalition of shareholders has tabled a resolution for the oil giant’s annual meeting on April 15 highlighting what they describe as the environmental and social risks of tar sands development. The resolution, which follows a similar action taken by investors in Royal Dutch Shell, follows BP’s announcement last week that it is set to press ahead with a $10 billion investment in the industry. Vast reserves of oil lie locked in the bitumen-rich sands of Northern Alberta but processing them into a heavy form of synthetic crude oil is an expensive and environmentally fraught activity which critics say is unsustainable and should be stopped. Shareholders sponsoring the resolution, led by FairPension, include the Co-operative Asset Management, the Unison Staff Pension Scheme, Rathbone Greenbank, CCLA Asset Management and other fund managers, foundations and faith groups. Niall O'Shea, head of responsible investing at the Co-operative Asset Management said: 'BP, which previously made a virtue of its lack of exposure to oil sands, is now gearing up to exploit them. We believe that environmental costs may make an expensive business prohibitively so - without fundamentally addressing the issue of a large net rise in emissions. BP should reassure shareholders that what they're embarking on is fully costed, prudent and can withstand a more carbon-constrained world.' The resolution raises questions about the high costs of producing oil sands, and the risks to BP’s future profits presented by rising costs for emitting carbon dioxide as well as the legal and reputational risks stemming from environmental damage."
BP faces protest over oil sands development
London Times, 7 February 2010

"On the face of it the world’s big and publicly quoted oil companies should be celebrating some pleasing results this week. Royal Dutch Shell unveiled its results on Thursday February 4th, reporting that it had made $9.8 billion in 2009. Two days earlier BP boasted profits of $14 billion for the same year. Yet these billions are a disappointment compared with the bonanza of previous years (Shell, for example, raked in $31.4 billion in 2008 alone) when soaring oil prices pulled profits ever higher. In the long term, however, the firms’ success depends on sustaining reserves. The big western oil companies are trying to expand through acquisitions and investment, but the opportunities do so are becoming scarcer. The firms are spending where they can. Exxon Mobil, the biggest listed oil company, says that exploration and capital spending hit $27.1 billion in 2009, 4% higher than in 2008. The company expects to spend $25 billion to $30 billion annually to the same end over the next five years. BP intends to spend some $20 billion this year on investment in new projects and drilling, roughly the same level as last year. But there are limits to what money can buy. State-controlled rivals—in the Middle East, Russia and beyond—jealously guard oil reserves on their home patches. Few new big fields of oil, at least those that are easy to reach and cheap to exploit, have been discovered in recent years. And where new opportunities emerge, such as in Iraq, Western oil giants are scrambling to pay big sums at auctions for drilling rights in territory where the local government tightly limits their returns. Even then, competition from Chinese, Russian and other state-run oil firms can be severe. National oil companies will often pay prices that would alarm shareholders in the big listed oil companies. Thus Western firms are increasingly looking for different sorts of growth. One option is to deploy their expertise in the hunt for oil that is harder to reach, for example deep offshore, or to go for reserves such as tar sands that are trickier, and so much pricier, to refine. Another route is to speed up the quest for other energy reserves. France’s Total has branched out into nuclear-power generation. This week Shell announced a $12 billion joint-venture with Cosan, a Brazilian producer of ethanol from sugar cane. This is something of a change of tack. Exxon and Shell are both spending money on “second generation” biofuels made from algae or waste materials, but these could take years to develop. Now Shell can sell Cosan’s 'first generation' wares through it global distribution network. By far the biggest bet laid, however, has been on natural gas. Around 40% of Shell’s daily production is now in the form of gas. Total and BP are not far behind. Gas is increasingly important for power generation and heating and the global market is expected to grow by half by 2030. Big oil companies are keen to expand, calculating that their skills at managing huge capital projects will be useful when building gas-liquefaction plants that make the stuff readily transportable. Late last year Chevron, Shell and Exxon agreed to spend $37 billion to develop the Gorgon field off Australia, another potentially huge source of gas."
Beyond the black stuff
Economist, 4 February 2010

"Britain’s energy regulator yesterday warned of power blackouts and spiralling consumer prices and raised the prospect of partial renationalisation of the industry. In a damning report, Ofgem says Britain’s power industry is in a dire state and in desperate need of investment. The regulator raised the prospect of direct government intervention that would wind back the clock on 20 years of deregulation. Alistair Buchanan, Ofgem’s chief executive, said: 'We do not advocate change lightly, but all the facts point to the need for reforms now ... Leaving the present system unchanged is not an option.' In remarks akin to proposals by Ed Miliband, the Energy Secretary, in an interview with The Times on Monday, Mr Buchanan said that there was 'reasonable doubt' over the security of Britain’s energy supplies before 2015 and set out proposals to unlock an estimated £200 billion of investment needed to solve a looming energy crunch. 'Acting earlier will also help keep costs as low as possible for consumers and business,' he said. Mr Buchanan claimed that the crisis had been compounded by an 'unholy trinity' of factors — including the impact of the recession on energy industry investment, Britain’s growing reliance on imported gas as North Sea supplies are depleted and the closure of nine ageing coal-fired and oil-fired power stations by 2015 in order to meet new EU pollution laws, a move that will at a stroke scrap almost a third of UK generating capacity."
Energy regulator warns of power blackouts and renationalisation
London Times, 4 February 2010

"China overtook the USA for volumes of new installations and manufacturing of wind turbines for the first time in 2009, according to a report by the Global Wind Energy Council (GWEC). The world’s wind power capacity grew by 37.5GW to 157.9GW during the year, with a third (13GW) of these additions made in China, which doubled its capacity in the period. 'China is putting strong efforts into developing the country’s tremendous wind resource. Given the current growth rates, it can be expected that the even the unofficial target of 150GW will be met well ahead of 2020,' said Li Junfeng, secretary general of the Chinese Renewable Energy Industries Association."
China overtakes USA in wind
Business Green, 4 February 2010

"ENI SpA's chief executive said Thursday that the Italian energy company will pull out of Iran after current contracts to develop two gas fields there run out, as international pressure grows to isolate the country over its disputed nuclear program. Paolo Scaroni also said the company plans to raise around euro1.5 billion from selling off shares in three gas pipelines in order to settle a European Union antitrust dispute. He told reporters that the company won't prolong contracts it signed in 2001 to develop two Iranian gas fields. Iran has the world's second largest gas resources after Russia and has resisted global pressure - including U.S. sanctions - over its program to enrich uranium. Iran says its program is peaceful but the U.S. says it suspects Iran is trying to build nuclear weapons."
Italy's ENI to pull out of Iran
Washington Post, 4 February 2010

"The last time Britain suffered a winter this bitter, the phrase 'energy security' meant having a full coal scuttle. Now it's all about natural gas. Forty years ago, few houses had central heating and those that did ran on imported oil. Today, following the North Sea bonanza of the 1970s and 1980s, gas heats almost every home and generates over 40 per cent of our electricity, making Britain the world's fifth largest consumer. Only the US, Canada, Russia and Iran guzzle more. But these days Britain's gas supply is apparently on thin ice. Until the beginning of this year, National Grid had only once been forced to issue a Gas Balancing Alert – warning the market that supply might not meet demand and urging suppliers to pump harder. Since then it has issued another four. The first came early in the big freeze, when demand was running 30 per cent higher than a normal January day. A fault at Troll, one of the main Norwegian gas fields, caused imports through the Langeled pipeline to drop sharply and the wholesale gas price to jump from 30p to 60p per therm. Eventually, more gas started to flow and the danger passed, but not before electricity generators had switched from gas to coal-fired power stations, and industrial customers with interruptible supply contracts had been cut off, disrupting businesses around the country....None of this would have happened a few years ago, when North Sea production meant Britain was more than self-sufficient in gas. But after a 30-year boom, UK output finally peaked in 2000 and started to fall – slumping more than a third by 2008. In 2004 Britain became a net importer for the first time, and National Grid expects we will have to import three-quarters of our gas by 2015. That makes Britain increasingly vulnerable to any future supply interruptions like those last month, or when Russia next cuts off Ukraine in their long-running dispute over gas prices. The Government insists energy security is enhanced by having a range of sources of imported gas: pipelines from Belgium, the Netherlands and Norway, along with three new Liquefied Natural Gas (LNG) terminals in Wales and Kent, where tankers can deliver from as far afield as Qatar and Trinidad & Tobago. But having the infrastructure does not guarantee the gas will come to Britain. According to John Hall, countries like France and Germany that have long-term contracts with major suppliers such as Norway are far better placed than Britain, which buy on the open market. 'We have the import facilities but we don't have the contracts to safeguard supplies when things go wrong,' says Mr Hall. 'Britain comes after everyone else as far as Norway is concerned.' Britain's rising import dependency makes it increasingly vital to have substantial amounts of gas in storage to draw down in a crisis, and the Tories jumped on the spate of alerts in the New Year to charge the Government with negligence over the issue. Britain has 4.3 billion cubic metres of storage capacity, which amounts to less than 5 per cent of annual consumption, compared with more than 20 per cent in Germany and almost 25 per cent in France. With British storage already depleted by winter demand, Shadow Environment Secretary Greg Clark said remaining stores would last only eight days at current levels of consumption. In fact, storage levels have fallen far lower during previous crises – down to less than three days' supply last February, which is when Russia last cut off supplies to Ukraine. Energy Secretary Ed Miliband accused the Tories of using meaningless statistics, and in one sense he's right, but not necessarily in a good way. Expressing storage in terms of days' supply overstates the safety margin, because the gas could never be withdrawn that quickly. Three quarters of Britain's gas storage is held at Rough, a depleted gas field off the Yorkshire coast operated by Centrica, where suppliers can deposit gas during the summer when prices are low, and withdraw it for sale in the winter when prices are higher. During the recent alerts, Rough was delivering gas at its maximum rate – 45mcm per day – which represents just 10 per cent of current demand. The vulnerability of having so much storage in a single field was highlighted three years ago, when a fire at Rough closed the facility for six months. The closure came just two months after an earlier Ukraine crisis and, had the two coincided, the consequences could have been severe....Luckily the recent alerts came at a time when the world is awash with gas, the result of new LNG production capacity in the Middle East, new 'non-conventional' sources of gas in the US, and the recession, which has depressed demand in Europe by some 10 per cent. The International Energy Agency expects this glut to continue until around 2015, but many analysts predict the market will then tighten sharply. 'Around the middle of the decade we expect a perfect storm of falling domestic gas production, economic recovery and tightness in the global LNG market,' says Professor Stern, 'and we might not get very much warning. It could flip in a matter of weeks.' Britain's vulnerability to interruptions in the gas supply could be worsened by our response to the "energy gap" resulting from the closure of ageing coal and nuclear power stations over the next decade. In total, the closures amount to 20 gigawatts (GW), or one third of peak electricity demand. The Government hopes much of the gap will be filled by renewables, and last month announced the companies that have won the right to build offshore windfarms under its ambitious plans to develop 32GW offshore by 2020. But given the Government's record on renewables, many fear the targets will not be met. If so, the 'energy gap' is likely to be filled by new gas-fired power stations. Figures from New Power, an industry journal, show that 15GW of new gas-fired stations are either under construction or have received planning permission, with a further 15GW in the wings. Editor Dominic Maclaine says 'there is a new dash for gas in power generation'. That is likely to raise the proportion of electricity generated from gas even further, and increase Britain's vulnerability in the case of supply disruptions. In that case, without a major increase in storage capacity, future gas supply crises could also leave us in the dark."
How long before the lights go out?
Daily Telegraph, 4 February 2010

"Britain's offshore wind revolution, launched with great fanfare by Gordon Brown last month, may struggle to get halfway to its ambitious goals and should be scaled down in favour of a new dash for gas to keep the lights on over the next 10 years, BP warned last night. Tony Hayward, chief executive of the UK's largest oil company, said that British government ministers risked being seduced by 'headline-grabbing options' such as offshore wind and clean coal in a bid to bolster energy security and meet climate-change goals. BP makes billions of pounds a year from oil and gas, but is also investing in onshore wind farms in America. Talking to the Guardian exclusively, the BP boss said he was not calling for the third round of wind licensing in the deep waters of the North Sea to be shelved. But he did believe that the heavily subsidised move into wind power should be slowed down, because it would not deliver anything like the targets set for it: possibly 15 gigawatts of power rather than the 25GW the wind industry expects. And in a speech due to be delivered to the London Business school today, he says: 'Energy efficiency, gas-fired power, lighter cars and biofuels all offer relatively low-cost routes, while other headline-grabbing options are not the most cost-effective. With today's technology, carbon capture to make clean coal, for example, is very expensive. Offshore wind is also costly – for example in comparison to onshore wind, which is now a big business for BP in the United States – and indeed to nuclear.' Hayward told the Guardian that wind power, like nuclear energy, was nowhere near being commercially viable and would rely for some time on "sovereign" intervention by governments. Instead, he said, there should be more emphasis put on gas, which was very commercial, using a mixture of what remained of UK North Sea supplies and imports. The BP man believed the UK should drop its 'paranoid' concerns about gas imports from Russia and accept that piped and liquefied natural gas from overseas sources offered a better solution to help beat global warming and energy insecurity in the short term. 'There is a lot of gas in the world. There are a lot of diverse sources of gas in the world. The paranoia has been about Russia, but it is misplaced. We have approximately zero Russian gas in the UK [imported currently] and if you look at Europe, the imports of Russian gas into Europe have halved since 1980.' Hayward, whose Russian TNK-BP joint venture is a major part of the wider oil company's business, said the fear of Russia using energy as a political weapon was 'massively exaggerated'. He believed Britain should not be concerned even if Siberian gas accounted for 10% of Britain's imports, as long as 90% came from a diverse group of suppliers such as Norway, Qatar and Algeria, as they already did....The BP chief executive did agree with Ofgem's Alistair Buchanan that the UK had reached a critical point in its energy history and needed to change the market model with increased government involvement. 'It has been true throughout history that at certain points in time government has had to intervene to shift the boundaries of the market to allow the right market structure to evolve,' said Hayward. He added: 'We did not displace coal with gas in the 1960s and 1970s without a massive government intervention ... we are probably at one of those points again.'"
Dash for gas is UK's best energy strategy, says BP chief
Guardian, 4 February 2010

"BP raised its oil and gas production levels by 4%, while Shell saw a 2% fall over 2009. But the latter has also been looking madly for cost-savings and has rowed back on plans to invest more heavily in carbon-intensive tar sands. Hayward has kept Browne's sunburst logo and 'beyond petroleum' slogan on its marketing material but has followed Shell into Canada's tar sands. The BP boss – an improbably youthful 52-year-old – says he is not cutting back there despite mounting criticism from green groups that they are in danger of triggering runaway global warming. He is keen to emphasise that BP is engaged in a much more limited way than Shell while steering clear of the more controversial mining techniques. 'BP has never been in the strip-mining of the tar sands and never will be. We are focused on so-called steam-assisted gravity drainage, which is much more akin to conventional reservoir engineering … therefore the environmental footprint on the ground is no more or worse than normal oil or gas operation.' 'It is clearly carbon-intensive and we also see that it will remain commercial even with a very high legislative price of CO2'. Tar sands are part of a wider diversity of supply of energy sources that the world is going to require, Hayward argues, dismissing the idea that the growing pressure on the US military not to use these imports will bear fruit. By 2015 BP could be providing 100,000-200,000 barrels a day from this source for which the company is preparing two US refineries specially to process the crude. 'The likelihood of the US army not using a secure local supply of energy is quite low … Canadian heavy oil is going to be a very important part of America's energy,' he argues. He rejects the suggestion that exploiting tar sands contradicts the "beyond petroleum" mantra, seeing it instead as just another fuel source on top of its wind, solar and biofuel investments. He is particularly upbeat about the prospects of the latter even allowing for the food-not-fuel arguments that arose when crop-price increases were blamed on biofuels. By 2020 up to 10% of global petrol supplies will be made up of plant-based biofuels, Hayward believes, while the figure could be as high as 20% in the US. BP is preparing for this by making big investments of between $5bn-$6bn in Brazil on sugar-based ethanol 'first-generation' biofuels. But BP is also working on synthetic 'second generation' biofuels in conjunction with US chemical group, Du Pont, in this country. The wind operations that BP is involved with are based onshore in the US where the land is cheap and planning easy to obtain. But Hayward makes clear he has enormous reservations about the North Sea wind 'revolution' launched by the UK government. He questions whether the UK can build 14 to 15 gigawatts (GW) of offshore wind by 2020, never mind the 25-27GW – the total expected by ministers and industry here. Equally, he questions how quickly nuclear power plants can be built and whether a rush will help either develop in the most cost-efficient way....The straight-talking oil explorer, who is said to still enjoy the occasional triathlon, is an optimist and has little time for those who argue the world has passed, or is even approaching, peak oil supplies. 'I personally – and BP – have never believed we will see peak oil because of supply. We always believed we would see peak oil because of demand. There will come a time – I believe it is beyond 2020 – when because of the changes in the energy portfolio, because of the drive for energy efficiency, because of the introduction of biofuels, demand for oil will peak.' There is plenty of oil in the world, he argues, not least in Iraq, where BP has staff working on the ground, even ahead of important political elections. Hayward expects Iraq's oil production to grow from a couple of million barrels a day today to close to 10m, putting it on par with Saudi Arabia. This makes it 'a big part of oil security for the world.'"
Tony Hayward: BP's straight-talking chief on evolution not revolution
Guardian, 4 February 2010

"Bankers and the financial sector may have displaced energy from the front pages of the newspapers right now, but Energy Security remains at the top of the global political and economic agenda....The need to balance energy security, jobs and economic development while addressing the problem of climate change all contributed to the challenge politicians faced in Copenhagen. And that challenge means that energy security will dominate politics and policy for the next 12 months and considerably beyond.... Reliable and affordable supplies of hydrocarbon energy were taken for granted through much of the 20th century and laid the foundation for the world’s extraordinary economic progress. When concerns arose, it tended to be at times of war or turbulence, notably in the Middle East, or, closer to home, with industrial action. What’s different now is that energy security has become a defining issue for the 21st century, as one element in a complex energy challenge with strategic, economic and environmental dimensions.... Opening access to a range of potential operators encourages the most efficient solutions, and often involves partnerships that provide new combinations of skills. Iraq is a very good example. BP is teaming up there with CNPC of China and Iraq’s South Oil Company to drive a major investment programme that will nearly triple production from the super-giant Rumaila field. With this and the other agreements concluded with national and international oil companies in the last six months, Iraq has the potential to contribute 10mmb/d to global supplies in the next 10-15 years. That’s a big piece of the additional resource we need....The current debate about Copenhagen and sustainability add new urgency and importance to the broader discussion of energy security.  The challenge of creating a low-carbon economy is far from easy, requiring the wholesale re-engineering of the global economy over time."
Tony Hayard, Chief Executive of BP
The Challenge of Energy Security
Speech at London School of Economics, 4 February 2010

"Total has previously mentioned 100 Mb/d [for the peak of global oil production] and that they are now saying 95 Mb/d shows that they are approaching the conclusion that my Ph.D. student Fredrik Robelius presented in his thesis. That scenario had a maximal production of 93 Mb/d in 2018. The requirement for that level of production was that production from 7 giant oil fields in Iraq would commence immediately. The fact that this has been delayed makes it all the more difficult to reach that production level."
Kjell Aleklett, President of ASPO International
ASPO Intenational, 4 February 2010

"Energy regulator Ofgem today warned Britons may not be able to afford to heat their homes in the years ahead unless there is radical overhaul of the country's energy supplies. The regulator warned the country's current system may not be sufficient to ensure 'secure and sustainable' power across the country beyond 2015. In announcing proposals for a radical range of options (pdf), including setting up central buying of power, Ofgem's chief executive, Alistair Buchanan, admitted that maintaining the current free-market approach was no longer an option. Energy bills could rise between 14% and 25% by 2020 as the industry pays for the £200bn cost of investment needed to overhaul of the current system. He warned that increasing number of consumers would be unable to afford the cost of heating their homes. The proposals could force the government to undo the privatisation of the energy markets led by Margaret Thatcher and could force a form of nationalisation again if it decides to implement central buying of power. The regulator had previously warned that average household gas and electricity bills could reach nearly £2,000 a year without drastic action to shore up supply. Buchanan said: 'Our evidence shows that Britain has a window of opportunity to put in place far-reaching reforms to meet the potential security of supply challenges we may face beyond the middle of this decade. We do not advocate change lightly, but all the facts point to the need for reforms now to provide resilient supply security. Acting earlier will also help keep costs as low as possible for consumers and business.'...The regulator said reform was needed because of a confluence of events ranging from the global financial crisis, significant worldwide demand for investment in energy, tough EU emissions targets, the closure of ageing power stations and an increasing dependency on gas imports. The regulator set out five key issues: • A need for unprecedented levels of investment over many years in difficult financial conditions and against a background of increased risk and uncertainty. • The uncertainty in future carbon prices is likely to delay or deter investment in low carbon technology and lead to greater decarbonisation costs in the future. • Short-term price signals at times of system stress do not fully reflect the value that customers place on supply security which may mean that the incentives to make additional peak energy supplies available and to invest in peaking capacity are not strong enough. • Interdependence with international markets exposes Britain to a range of additional risks that may undermine the country's security of supply. • The higher cost of gas and electricity may mean that increasing numbers of consumers are not able to afford adequate levels of energy to meet their requirements and that the competitiveness of industry and business is affected."
Energy bills will be unaffordable without system overhaul, says regulator
Guardian, 3 February 2010

"Global oil demand is set to peak between 2020 and 2030, as falling developed world demand balances growing demand in emerging markets, the chief executive of Europe's largest oil company said on Tuesday. Tony Hayward told Reuters Television that government policies in the developed world were eroding demand at the rate of 1 percent per year. Hayward said this was contributing to an oversupply of refineries, which was prompting rivals to close and sell facilities. However, he added: 'We've got the right set of refineries.'"
BP sees peak oil demand in 2020-2030
Reuters, 2 February 2010

"China aims to raise the annual production capacity of shale gas to 15-30 billion cubic meters by 2020 as part of its response to recent widespread gas shortages, the Ministry of Land and Resources said. The National Development and Reform Commission, the country's top economic planner, is reviewing a plan to encourage the development and utilization the unconventional gas source in an effort to meet rising energy demand without excessively increasing greenhouse gas emissions, the ministry said in its in-house newsletter..."
China Aims To Sharply Raise Shale Gas Output Capacity By 2020
Wall St Journal, 1 February 2010

"Royal Dutch Shell, Europe's second biggest energy company, is poised to become the biggest oil major in biofuels as it battles to reassure investors about profitability. The Anglo-Dutch company has signed a memorandum of understanding with the most powerful Brazil bioethanol producer, Cosan, in a joint venture said to be worth $12bn (£8.19bn). The move, if finalised, will cement Brazil's position as the world's alternative energy superpower with the potential to ship huge quantities of fuel to the United States and Europe. Shell will now lobby the US administration to reduce its tariffs on biofuel imports in a move that could transform profitability. The company hopes the aggressive moves into biofuels it has plotted for two years will signal to investors that it has growth potential as it readies itself to announce what is expected to be a 40% drop in quarterly profits on Thursday. Analysts expect the group to report a quarterly profit of $2.9bn. This would take its annual profit to $13.4bn, down on the $31.4bn it made in 2008. There are suggestions the company will make further job losses on top of the 5,000 already announced. The joint venture is intended to more than double Cosan's existing bioethanol production, which currently stands at 2bn litres. Cosan is Brazil's leading bioethanol producer in a country where virtually all new cars run on sugar cane. But there are serious reservations among environmentalists that the growing attraction of biofuels in Brazil could see agricultural land earmarked for food shifted to fuel crops, creating pressure to chop down more rainforests....Biofuel in the UK powers 2.7% of the country's transport according to the Renewable Fuels Agency. Britain is on target to meet its 5% target by 2014."
Shell to do deal with Brazilian biofuel producer Cosan to secure future
Guardian, 1 February 2010

"The Government is drawing up plans for a wholesale reform of Britain’s energy markets that could wind back the clock on 12 years of deregulation. In an interview with The Times, Ed Miliband, the Energy and Climate Change Secretary, said that Britain’s existing, highly liberalised market regime, introduced under Labour in 1998, was failing to deliver the investment needed to cut UK carbon emissions by more than a third by 2020. A market structure was being designed to boost long-term investment in low-carbon sources of electricity, including wind parks, nuclear reactors and fossil fuel stations equipped with carbon capture and storage (CCS) technology. Mr Miliband said: 'We are going to need a more interventionist energy policy to deliver the low-carbon investment we need....Mr Miliband said that details of the reforms would be in a document to be published in April called Roadmap to 2050, published with the 2010 Budget. He said that the changes were essential to help Britain to prepare for a doubling of electricity demand by 2050, driven by other policy objectives such as a growth of electric cars and a move from gas to electricity for heating.'"
Labour prepares to tear up 12 years of energy policy
London Times, 1 February 2010

"In their exuberance, oil- and gas-industry officials repeat a single refrain when describing the natural gas from Pennsylvania's Marcellus Shale: A game-changer. Tony Hayward, chief executive officer of oil giant BP P.L.C., was the latest to gush enthusiastically when he called unconventional natural gas resources like the Marcellus 'a complete game-changer.' 'It probably transforms the U.S. energy outlook for the next 100 years,' Hayward said Thursday at the World Economic Forum in Davos, Switzerland. The breathtaking emergence of natural gas as America's energy savior was not in the cards. Just four years ago, after Hurricanes Katrina and Rita devastated Gulf Coast rigs and rattled gas markets, energy pundits forecast a bleak winter of short supplies, high prices, and low thermostats. The vast scale of shale-gas resources has come into focus quickly, and industry officials are touting the possibility of steady supplies for decades to come. The Potential Gas Committee in Colorado last year revised its outlook of America's future gas supply - up 35 percent in just two years. The forecast was the highest in its 44-year history. The Marcellus Shale is the nation's fastest-growing producing area. Though it lies under five states, about 60 percent of its reserves are in Pennsylvania, according to Terry Engelder, a Pennsylvania State University geologist. 'In terms of its impact on Pennsylvania, this is probably without peer in the last century,' said Engelder, whose projections in 2008 alerted the public about the size of the Marcellus. 'America's energy portfolio has undergone a first-order paradigm shift just in the last two years,' he said. 'This is such an exciting thing.'....Not everyone has climbed aboard the bandwagon. Some environmentalists are uneasy about the hydraulic-fracturing process that has unlocked the shale gas. The technique requires the injection of millions of gallons of water into a well to break up the shale to initiate production. And some analysts say they believe the gas industry's estimates are too optimistic. 'I would look at all this with a bit of healthy skepticism,' said Arthur E. Berman, a Houston gas-industry consultant, who says he believes some operators have overstated the production potential and understated the cost of Texas shale-gas wells. His pointed criticism got him banished from one trade journal - and invited to speak at scores of investor workshops. 'Two years ago, we were talking about importing gas from the Middle East,' he said. 'And now we have a hundred-year supply of domestic gas?' Berman said he had been unable to conduct a similar analysis of Marcellus wells because Pennsylvania law allows operators to keep their production data secret for five years, unlike other states, where output is reported to taxing authorities promptly.  'If something looks too good to be true,' he said, 'I need to look more closely.' Questioning voices such as Berman's are uncommon in the industry, which portrays natural gas as abundant, cheap, and cleaner than coal and oil - a domestically produced 'bridge fuel' to ease the transition to renewable wind and solar generation."
The sudden emergence of the shale-gas frenzy
Philadelphia Inquirer, 31 January 2010

"The International Energy Agency (IEA) expects total natural gas output in the EU to decrease from 216 billion cubic meters per year (bcm/year) in 2006 to 90 bcm/year in 2030. For the same period, EU demand for natural gas is forecast to increase rapidly. In 2006 demand for natural gas in the EU amounted to 532 bcm/year. By 2030, it is expected to reach 680 bcm/year. As a consequence, the widening gap between EU production and consumption requires a 90% increase of import volumes between 2006 and 2030. The main sources of imported gas for the EU are Russia and Norway. Between them they accounted for 62% of the EU’s gas imports in 2006. The objective of this thesis is to assess the potential future levels of gas supplies to the EU from its two main suppliers, Norway and Russia. Scenarios for future natural gas production potential for Norway and Russia have been modeled utilizing a bottom-up approach, building field-by-field, and individual modeling has been made for giant and semi- giant gas fields. In order to forecast the production profile for an individual giant natural gas field a Giant Gas Field Model (GGF-model) has been developed. The GGF-model has also been applied to production from an aggregate of fields, such as production from small fields and undiscovered resources. Energy security in the EU is heavily dependent on gas supplies from a relatively small number of giant gas fields. In Norway almost all production originates from 18 fields of which 9 can be considered as giant fields. In Russia 36 giant fields account for essentially all gas production. There is limited potential for increased gas exports from Norway to the EU, and all of the scenarios investigated show Norwegian gas production in decline by 2030. Norwegian pipeline gas exports to the EU may even be, by 2030, 20 bcm/year lower than today’s level. The maximum increase in exports of Russian gas supplies to the EU amount to only 45% by 2030. In real numbers this means a mere increase of about 70 bcm In addition, there are a number of potential downside factors for future Russian gas supplies to the European markets."
Doctoral thesis: Production from Giant Gas Fields in Norway and Russia and Subsequent Implications for European Energy Security
Acta Universitatis Upsaliensis, Uppsala University, Sweden, 29 January 2010

"Using biofuel in vehicles may be accelerating the destruction of rainforest and resulting in higher greenhouse gas emissions than burning pure petrol and diesel, a watchdog said yesterday. The Renewable Fuels Agency also warned that pump prices could rise in April because of the Government’s policy of requiring fuel companies to add biofuel to petrol and diesel. More than 1.3 million hectares of land — twice the area of Devon — was used to grow the 2.7 per cent of Britain’s transport fuel that came from crops last year.   Under the Renewable Transport Fuels Obligation, a growing proportion of biofuel must be added to diesel and petrol. This year fuel must be at least 3.25 per cent biofuel on average. By 2020 the proportion will be 13 per cent. The agency’s first annual report revealed that fuel companies had exploited a loophole to avoid reporting the origin of almost half the biofuel they supplied to filling stations last year. The origin of fuel from land recently cleared can be described as 'unknown'. Last year Esso reported the source of only 6 per cent of its biofuel and BP reported 27 per cent. Shell was the best-performing of the main oil companies but still failed to report the origin of a third of its biofuel....From March 2011 companies will be required under a European directive to report the previous use of all the land from which they derive their biofuels. However, they will also gain an additional loophole because they will not have to admit using rainforest land if the trees were removed before 2008."
Using biofuel in cars 'may accelerate loss of rainforest'
London Times, 29 January 2010

"Algae have been touted as a solution to environmental worries over biofuels, but they may be a long way from providing a truly green option. Unlike maize, soya beans and oilseed rape (canola), algal farms don't take up valuable farmland, so algae-based biofuels don't threaten food supplies. However, Andres Clarens at the University of Virginia in Charlottesville has modelled the environmental impacts of algal farms and concludes that they require six times as much energy as growing land plants - and emit significantly more greenhouse gases (Environmental Science and Technology, DOI: 10.1021/es902838n). 'You have to add a whole lot more fertilisers, and the environmental cost of producing these is the primary drawback,' Clarens says. Using waste water instead of fertilisers helps, but not enough, he says. The only trick that tipped the balance in favour of algae in his models was to use nutrient-rich household waste like concentrated urine to fertilise the algae, but this would require new infrastructure and so is no short-term fix."
Algal power not so green after all, yet
New Scientist, 28 January 2010

"Royal Dutch Shell chief executive Peter Voser cannily chose the safe ground of an exclusive interview with the Financial Times to finally admit the all-too-obvious - the Canadian oil sands development Shell has touted as a major growth driver is instead a costly distraction, on which time is now being called. Mr Voser said the massive expansion the company had previously planned for its Athabasca Oil Sands Project (AOSP) - envisioning growth from the current 155,000 barrels per day (bpd) capacity to an eventual 770,000bpd - was now 'clearly scaled down' and would be 'very much slower'. Over the past few years Shell has emphasised heavy investment in so-called 'unconventional' hydrocarbon sources, both Canadian oil sands and gas-to-liquids projects elsewhere, as a substitute for the new conventional oil and gas resources the company has been notably lacking since its reserves-booking scandal of 2004. But the relatively high costs of new oil sands developments in particular mean scant profits with oil prices anchored stubbornly in a $70-$80 a barrel trading range. As recently as November, Shell oil sands head John Abbott indicated the in-construction $14bn (£8.69bn) AOSP Expansion 1 project, coming onstream later this year to boost total AOSP output to 255,000bpd, needs oil prices around $60 per barrel just to break even. And new investments would require higher prices. Two previously-slated medium-term expansions of 100,000bpd each are on ice indefinitely, and any serious AOSP growth beyond de-bottlenecking, which could add perhaps some 100,000bpd in small increments by 2020, seems moot. Mr Voser was not questioned on what this strategic U-turn means for Shell's resource base, defined as its portfolio of hydrocarbon exploitation opportunities not yet migrated into developed reserves. But the effective scrapping of further large-scale AOSP growth will presumably have a material impact - while oil sands currently account for 8.4 per cent of proved Shell reserves, totalling 11.9bn barrels-of-oil-equivalent (boe), they were previously thought to account for perhaps a third of Shell's total resource base, estimated at 66bn boe."
Shell forced into oil sands U-turn
Investors Chronicle, 28 January 2010

"At a meeting of oil leaders at the World Economic Forum at Davos, Tony Hayward, group chief executive of BP, said that there was a 'supply challenge' for the industry which would have to increase output to 100mbd - a new peak for oil. Mr Hayward said that at present the world was producing between 83 and 84mbd.  He said he hoped Iraq would become a major oil player, producing up to 10mbd in the next decade if the political situation remains relatively stable. A need for a new peak in oil production will dismay environmental campaigners who hoped that the West’s declining reliance on oil would mean less CO2 emissions. Instead, demand from the emerging economies, including India and the other BRIC countries, China, Russia and Brazil, will lead to new record levels of consumption. Mr Hayward’s comments were supported by Peter Voser, the chief executive of Shell, who said that the industry would have to find up to $27trn of investment over the next 20 years to meet demand. At the session new figures from PriceWaterhouseCoopers revealed that non-OECD countries will account for two-thirds of world consumption by 2030. Mr Hayward said that demand from non-OECD nations would increase by 40pc. 'The obvious thing in the mature markets of Europe and the United States is that demand for oil products is in structural decline,' Mr Hayward said. He argued that demand was now coming from the East, pointing out that China sold 13m cars last year. 'The challenge is how do we meet this growing demand for oil and keep a lid on price?' Hayward said.....Turning to Iraq, Mr Hayward said that he was 'cautiously optimistic' that the country could increase world supply. 'BP has a major contract to redevelop an existing field that BP first found in 1953,' Mr Hayward said, revealing that he wanted to increase BP production from 1mbd to 3mbd. Iraq could eventually produce 10mbd. Mr Voser said that although much of the oil in Iraq was 'easy oil' (onshore and relatively accessible) its technology was 20 years behind much of the rest of the sector. He also argued that although renewables would be able to supply some of the increase, there needed to be a 'more balanced discussion between oil and renewables' and that increasing gas supply had a lot of potential. 'There is plenty of gas. Here we have an energy source which from a CO2 point of view is better than other fuels – than for example coal for electricity generation.' Andrew Liveris, chairman and chief executive of Dow Chemical Company, one of the largest industrial users of oil in the world, said that price stability was essential for economic growth. He revealed that in 2002 the cost to the company of its oil needs was $8bn and that had risen to $32bn by 2008. At times such was the volatility of the market there would be a '10pc aberration' in the oil price in a week. 'We need certainty, we need predictability,' he said."
Davos 2010: a new peak in oil production is needed, energy leaders argue
Daily Telegraph, 28 January 2010

"A controversial method of extracting gas from shale rocks and coal seams pioneered in the US has been described by the head of BP as a 'complete game changer' that would transform the future of energy in that country over the next 100 years. Excitement in the industry over 'unconventional' gas supplies has led to a wave of investment in America which Tony Hayward, BP's chief executive, believes could eventually spread around the world. '[Unconventional gas is a] complete game changer in the US,' he said in answer to a question at an energy summit which was part of the World Economic Forum in Davos, Switzerland.' 'It probably transforms the US energy outlook for the next 100 years. It's yet to seen if it can be applied globally.'....There is also speculation that there could be shale-based gas schemes available in mainland Europe now that new drilling and extraction techniques have been proven in the US, largely Texas, Wyoming and Pennsylvania. Development of these reserves in major quantities has sent the price of natural gas spinning downwards in America but promises a much-sought increase in self-sufficiency. It also offers a lower carbon footprint than oil....Unconventional gas has burst to prominence as US-based oil companies – often led by smaller independents – have used new directional and horizontal drilling techniques to exploit new reserves. But rock formations have to be broken up with a mixture of water, sand and chemicals in a process called hydraulic fracturing.....Environmentalists have major reservations about these techniques, saying enormous amounts of water are needed and that the drilling can pollute local water tables. The Texas Oil and Gas Accountability Project has blamed hydraulic fracturing for making people ill and poisoning cattle by polluting water supplies, which is denied by the oil and gas industry....But there are already bills being prepared for Congress that would tighten restrictions on unconventionals and Exxon has inserted a clause in its takeover documents for XTO that enable it to scrap the transaction if there were changes to the law that made hydraulic fracturing 'illegal or commercially impracticable'."
BP chief hails American breakthrough in gas supplies from shale rocks
Guardian, 28 January 2010

"There is still plenty of oil in the ground and the world should put aside fears about 'peak oil', the head of the Saudi state oil firm Saudi Aramco said on Thursday. 'The concern about peak oil is behind us,' chief executive Khalid al-Falih told a session on energy supplies at the World Economic Forum in Davos. The peak oil theory that oil supply is at or near its peak gained currency when prices zoomed to a record of nearly $150 a barrel in 2008. The issue remains a concern for many in the industry. Total's chief executive Thierry Desmarest said the world would struggle to surpass 95 million barrels per day (BPD) in the future -- 10 percent above present levels. 'The problem of peak oil remains,' he told the same panel. His contention was swatted aside by Falih. 'Of the 4 trillion (barrels) of oil the planet is endowed with, only 1 has been produced,' Falih said. 'Granted most of what remains is more difficult and complex (to exploit) ... there's no doubt we can do a lot more than the 95, 100 (million barrels) that are projected in the next few decades. Saudi Arabia has a long list of projects in its portfolio that would more than offset declines, he said."
DAVOS-Saudis say don't worry about peak oil
Reuters, 28 January 2010

"Venezuela Oil Minister Rafael Ramirez was leaving Wednesday for Russia and then to China to discuss plans for developing heavy crude blocks in the eastern Orinoco region, the Venezuelan government said in a statement."
Venezuela Oil Chief Heads To Russia, China To Discuss Pacts
Wall St Journal, 27 January 2010

"CNNC International Ltd. on Monday said it will acquire a 37.2% stake in the Azelik uranium mine in Niger through an acquisition of Ideal Mining Ltd. for as much as $414 million Hong Kong dollars (US$53.3 million), extending its footprint to Africa for the first time. The deal comes as China rapidly expands its capacity to generate nuclear power as part of a strategy to minimize use of coal and crude oil, which are widely blamed for making Chinese cities among the smoggiest in the world. CNNC International is the sole platform for its parent, China National Nuclear Corp., to secure uranium resources overseas. Shares of CNNC International jumped 8.3% to HK$8.88 in Hong Kong trading Monday. CNNC International's financial controller, Philip Li, said the company is looking for acquisition targets in Kazakhstan to boost its uranium reserves in order to fuel China's nuclear power boom. 'We hope to become the largest uranium supplier in China in the long run. We will buy more uranium mines through acquisitions or our parent if the project can deliver a reasonable return for us,' he said. The Africa mine is expected to start production in the second half of the year, Mr. Li said."
CNNC Buys Stake in Niger Uranium Mine
Wall St Journal, 26 January 2010

"It is past midnight in a jet high above the Persian Gulf, and one of the key figures in global energy shows no sign of retiring. Instead, Christophe de Margerie, CEO of the French oil giant Total, zeroes in on a favorite target: criticisms of oil companies by environmental groups, gathered in Copenhagen for the U.N. Climate Summit. 'People say they are inventing electric cars,' de Margerie says, puffing on a Marlboro. 'Well, where is the electricity coming from? Flowers? Maybe someday. But what is available now is oil and gas.' The argument is delivered in de Margerie's trademark style: blunt and impassioned, with an almost cocky certitude. He credits his confidence to years spent traveling — 'moving my ass,' as he calls it — and witnessing the world up close. All that time on the road has convinced him of this: oil supplies will soon run seriously short, and until we come up with something better we need to make sure we suck every last drop from every last nook and cranny on the planet. 'We don't know everything,' he says. 'But on oil reserves and production we know a lot. And it's our duty to speak out.'....In an industry famous for being opaque, de Margerie speaks openly about the nightmare scenario — oil shortages — that most energy firms prefer to avoid or deny. De Margerie says the possible effects on the world economy of dwindling oil supplies are so great 'I am not prepared to shut my mouth.' Shortly after taking over at Total, he jolted oil executives at a London conference by stating the industry would be unlikely to produce more than 100 million barrels a day, far below the 120 million or so the International Energy Agency estimates the world could produce by 2030, and which will be needed for Asia's galloping growth. De Margerie now says 90 million barrels a day is 'optimistic.' Audiences regularly ask him when he thinks we might use earth's last drop of oil, and de Margerie says that date is decades off. But it's important to realize, he says during an interview with TIME, 'what will happen very soon is that oil supplies will not cover demand. That won't mean there is no oil. There are oil reserves, but you will need to invest billions and billions to get it.'"
Christophe de Margerie: Big Oil's Straight Talker
TIME, 25 Januarry 2010

"United Nations climate talks are a bigger threat to top oil exporter Saudi Arabia than increased oil supplies from rival producers, its lead climate negotiator said on Sunday. Saudi Arabia's economy depends on oil exports so stands to be one of the biggest losers in any pact that curbs oil demand by penalizing carbon emissions.....The possibility that oil demand might peak this decade was a 'serious problem' for Saudi Arabia, Sabban said. The kingdom had looked at the assumptions behind studies that pointed to demand peaking in 2016 and saw 'some truth in it,' Sabban said. The kingdom was watching future demand projections closely and would match any future investment in capacity expansion with demand, Sabban said. 'We will continue keeping the same spare capacity but no more,' he said. Saudi had plenty of spare capacity to increase output if global demand warrants, Sabban said. Demand should grow this year with the economic recovery, he added. The kingdom completed a program to boost its capacity last year, coinciding with the global contraction in oil demand due to the economic recession, and led record OPEC output cuts, leaving it with more than double the spare capacity it targets. The kingdom has around 4.5 million bpd of spare capacity while having a policy of holding 1.5 million to 2.0 million bpd to deal with any surprise outage in the global oil supply system. The kingdom is producing around 8 million bpd. Meanwhile Saud Arabia plans to invest heavily in solar energy technology, Sabban said, and hopes to begin exporting power from solar energy by 2020. Saudi Oil Minister Ali al-Naimi has said the kingdom aims to make solar a major contributor to energy supply in the next five to 10 years."
Climate talks bigger threat to Saudi than oil rivals
Reuters, 24 January 2010

"It is only a matter of days before the last of Iraq’s yet-to-be awarded oil contracts are due to be signed, bringing to a close a two-stage