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we are going to need to think in completely different ways."

  Paddy Ashdown, High Representative for Bosnia and Herzegovina 2002 - 2006

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What Happened To The $11 Oil?

".... today's $11-a-barrel price [is].... [the] lowest inflation-adjusted oil prices of the past half-century ...   Even if consumption rises dramatically over time, most analysts believe prices should remain in check because of advanced technology and because OPEC nations need to sell as much as they can to maintain their incomes..... Low oil prices are excellent news, of course, for big energy consumers. A sustained $10-per-barrel drop in the price of oil cuts about 0.7 points from the annual U.S. inflation rate over five years and adds about 0.3 points to the U.S. economy's growth.... [I]f you're still operating under the assumption that the earth's petroleum--or at least the cheap stuff--is about to run out, you're not going to thrive in the new oil era. Technology is making it possible to find, produce, and refine oil so efficiently that its supply, at least for practical purposes, is basically unlimited."
TREMORS FROM CHEAP OIL
Businessweek, 14 December 1999

Conventional Crude Oil Production Has Peaked

"While the oil forecasters were pumping out bearish calls, the market itself has stuck to its triple-digit price outlook. Oil buyers apparently know the Western world’s economic recovery will boost consumption, since growth and oil use are aligned. That’s not all. They also know that the math doesn’t work: Prices can’t go into gradual, long-term decline, or even stay flat, when the world’s conventional oil fields are in fairly rapid decline. Exotic production – oil sands, biofuels, natural gas liquids – are supposed to fill the gap. But this so-called unconventional production is highly expensive and quite possibly insufficient to cover the drop off in cheap, conventional production. Prices will rise to the point that demand will have to level off or fall. The 'peak oil' and 'peak demand' theories are really opposite sides of the same coin. A few days ago, Richard Miller, the former BP geochemist turned independent oil consultant, delivered a sobering lecture at University College London that laid out the case for dwindling future oil supply. His talk was based on published data from the U.S. Energy Information Agency, the International Energy Agency, the International Monetary Fund and other official sources.The data leave no doubt that the inexpensive oil is vanishing quickly. Conventional oil production peaked in 2008 at about 70 million barrels a day and is declining by about 3.3 million barrels a day, every year. Saudi Arabia pumps about 10 million barrels a day. The math says a new Saudi Arabia has to be found every three years to offset the conventional oil drop off. "
Inexpensive oil vanishing at alarming rate
Globe and Mail, 13 December 2013

2013

"The critical measure here is EROEI (the Energy Return On Energy Invested). The days of 100:1 energy returns are long gone. The ratio for new oil projects has declined from 30:1 to barely 10:1 since the 1970s. For global energy overall, the EROEI has declined from about 37:1 in 1990 to less than 14:1 now. The flip-side of EROEI is the real cost of energy. The cost ratio at an EROEI of 37:1 in 1990 was 2.6 per cent, but this has risen to 6.8 per cent today. The global EROEI may fall to 10:1 by 2020, increasing the energy cost 'levy' on the economy to 9 per cent. In blithe ignorance of this increasing levy, we have continued to grow the claims value of the financial system on the assumption of perpetual growth. These 'excess claims' show up as unsustainable debt, undeliverable welfare commitments, and unrealisable expectations for returns on investment. My calculations suggest that the system now owes $90 trillion (£55 trillion) more than it can deliver. For individuals, this is being manifested in the escalating real costs of fuel, power, food, water and physical infrastructure. Globally, it is visible in 'energy sprawl', as the energy-delivering infrastructure expands (both in scale and in cost) in response to the weakening in efficiency resulting from a deteriorating EROEI. As well as crimping disposable incomes and destroying returns on investment, this process is curbing our ability to invest in other things. The essential point is that the economy is not a monetary system governed by the theoretical 'laws' of economics, but an energy dynamic determined by the all-too-real laws of thermodynamics. Once we understand this, the squeeze on household prosperity becomes far less of a mystery."
Tim Morgan - The global economy sinks under its debts as the real cost of energy rises
City.AM, 24 October 2013

2012

"The most common misconception about peak oil is that it means the world is running out of oil. Many articles that seek to debunk the notion of peak oil start with that premise, and then they proceed to tear down that straw man. Peak oil is about flow rates, and the overall flow rate will begin to decline while there is still a lot of oil left in the ground. Another misconception is that peak oil beliefs are homogeneous. The beliefs among people who are concerned about the impacts of peak oil cover a wide span. There are those who believe that a peak is imminent, to be followed by a catastrophic decline....... A more mainstream peak oil position is that the real threat is much higher oil prices, leading to stagnant economies.... The points of contention are the timing, the steepness of the decline, the impact on the global economy and the ability of other energy sources to fill the supply gap. Some believe we will smoothly transition to alternatives, and some people believe peak oil will be catastrophic."
Peak Oil: Misconceptions and Realities
Investing Daily, 26 November 2012

2011

"...we are entering an era of scarce resources. Apart from the atomic bomb, this is the most dangerous development in two centuries..... New powers such as China and India are rising, not yet risen, mixing emphasis on their 'developing' status with assertiveness."
David Miliband, British Foreign Secretary, 2007-10
'It was not bin Laden who defined this decade'
London Times, 7 September 2011, Print Edition, P28

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

2009

"The most important contributors to the world’s total oil production are the giant oil fields....The evolution of decline rates over past decades includes the impact of new technologies and production techniques and clearly shows that the average decline rate for individual giant fields is increasing with time. These factors have significant implications for the future, since the most important world oil production base – giantfields –will decline more rapidly in the future, according to our findings.... By 2030 the production from fields currently on stream could have decreased by over 50% in agreement with IEA (2008) . The struggle to maintain production and compensate for the decline in existing production will become harder and harder. Our conclusion is that the world will face an increasing oil supply challenge, as the decline in existing production is not only high but also increasing."
Giant oil field decline rates and their influence on world oil production
Energy Policy Volume 37, Issue 6, June 2009

2008

"The global economy is tanking, U.S. forces remain tied up in Iraq, Afghanistan is on a downward spiral -- one might wonder why anyone would want to be U.S. president during these trying times. Recently, the nation's chief intelligence officer weighed in, painting an even more somber picture of a far more complicated world. National Intelligence Director Mike McConnell looked beyond the immediate future, focusing on what his analysts are telling him about the challenges the world community is likely to face by 2025. It isn't pretty. Speaking to an annual conference of intelligence officials and contractors, McConnell said demographics, competition for natural resources and climate change will increase the potential for conflict. President-elect Barack Obama may get a glimpse of some of those challenges on Thursday. McConnell is expected to lead Obama's first top-secret intelligence briefing, according to U.S. officials familiar with the process. According to McConnell's outlook, economic and population growth will strain resources. 'Demand is projected to outstrip the easily available supplies over the next decade,' he said at the annual conference. The intelligence community's forecast indicates oil and gas supplies will continue to dwindle and production will be concentrated in unstable areas, he said. And there appears to be no relief at hand. McConnell said studies have shown that new energy technologies -- such as biofuels, clean coal and hydrogen -- generally take 25 years to become commercially viable and widespread."
New president faces increased risk of conflict, intel chief says
CNN, 5 November 2008

2007

"If you speak to people in the industry, they will conceed that whatever my company may say publicly, we understand that we are facing decline in our own production and worldwide, we are not going to be able to produce more fuel liquids or crude oil in the near future... I was recently at a conference in New Mexico, sitting next to one of the recent CEOs of a major oil company and he, in response to a question from the audience, said 'of course I am a peakist, it is just a question of when it is coming' and I think that that is illustrative of once one is retired as a CEO, one is freer than one was in position to say I am a peakist. And what you hear privately from almost all people is we are coming to it.... I think that many of these politicians will ultimately find that the public blames them for its failure to warn them. Of course in a sense the public is responsible because it is the present public attitude to which politicians play up, and tell them what they want to hear but when the view of the world changes, what the public wanted to hear some time ago is no longer what they want to hear in the future."
James Schlesinger, former US Energy Secretary
Interview with David Strahan, ASPO 6, September 2007

2006

"The scarcity of energy supplies and the energy imbalance between nations is a threat to our prosperity and national security. As resources contract, oil-hungry economies will compete for dwindling supplies of hydrocarbons. Competition for fossil fuels will increase.... Energy resources have long been a major strategic concern: access to secure sources, control over supply lines: these are issues of national security.... The energy challenge is now more pressing than ever.... Global oil production is apparently nearing its peak.... current estimates seem to be converging on some point between 2010 and 2020.... [there] are five factors which are changing the energy landscape: rising demand; dwindling supply; greater concentration of resource in the hands of a few; limited spare capacity; and the environmental impacts of energy use.....This is not a problem that can wait ten years."
Sir David Manning, British Ambassador To The United States Of America
Speech at Stanford University, 13 March 2006

2005

".... a series of crises in oil supply is likely over the coming decades. The first, related to the peak and decline of non-OPEC production, is practically upon us and underpins the currently high oil prices...... The imminent inability of non-OPEC production to meet incremental demand and its decline after 2010 precipitates the second crisis as OPEC’s diminishing spare capacity (even with Iraq’s production back to preinvasion levels) becomes less and less able to accommodate short-term fluctuations.....The third crisis, due to OPEC’s incremental supply being unable to meet incremental demand, follows in the first half of the next decade. This assumes that OPEC’s reserves are as published. .....These crises will have global economic and geopolitical significance: The oil price will be high and volatile, and demand growth will have to be curtailed..."
Oil Supply Challenges - 2: What Can OPEC Deliver?
Oil and Gas Journal, 7 March 2005


The Energy Challenge Of The Post 9/11 Period

"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

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PEAK OIL AND ENERGY CRISIS NEWSBITES

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2014

"Otherwise known as fire ice, methane hydrate presents as ice crystals with natural methane gas locked inside. They are formed through a combination of low temperatures and high pressure, and are found primarily on the edge of continental shelves where the seabed drops sharply away into the deep ocean floor, as the US Geological Survey map shows. And the deposits of these compounds are enormous. 'Estimates suggest that there is about the same amount of carbon in methane hydrates as there is in every other organic carbon store on the planet,' says Chris Rochelle of the British Geological Survey. In other words, there is more energy in methane hydrates than in all the world's oil, coal and gas put together. By lowering the pressure or raising the temperature, the hydrate simply breaks down into water and methane - a lot of methane. One cubic metre of the compound releases about 160 cubic metres of gas, making it a highly energy-intensive fuel. This, together with abundant reserves and the relatively simple process of releasing the methane, means a number of governments are getting increasingly excited about this massive potential source of energy. The problem, however, is accessing the hydrates. Quite apart from reaching them at the bottom of deep ocean shelves, not to mention operating at low temperatures and extremely high pressure, there is the potentially serious issue of destabilising the seabed, which can lead to submarine landslides. A greater potential threat is methane escape. Extracting the gas from a localised area of hydrates does not present too many difficulties, but preventing the breakdown of hydrates and subsequent release of methane in surrounding structures is more difficult. And escaping methane has serious consequences for global warming - recent studies suggest the gas is 30 times more damaging than CO2. These technical challenges are the reason why, as yet, there is no commercial-scale production of methane hydrate anywhere in the world. But a number of countries are getting close. The US, Canada and Japan have all ploughed millions of dollars into research and have carried out a number of test projects, while South Korea, India and China are also looking at developing their reserves."
Methane hydrate: Dirty fuel or energy saviour?
BBC Online, 17 April 2014

"Russian President Vladimir Putin said on Thursday it would not be possible for Europe to stop buying Russian gas and that he was hopeful a deal could be reached with Ukraine on gas supply. 'We sell gas in European countries which have around 30-35 percent of their gas balance covered by supplies from Russia. Can they stop buying Russian gas? In my opinion it is impossible,' he said. Putin said that transit via Ukraine is the most dangerous element in Europe's gas supply system."
Putin says not possible for Europe to stop buying Russian gas
Reuters, 17 April 2014

"Germany faces a renewed debate on energy in the wake of the ongoing Ukraine crisis. To a large extent, the country depends on Russian oil and natural gas imports. Just recently Chancellor Angela Merkel made it clear that 'all of Germany's energy policies must be reconsidered.' According to Germany's Energy Balances Group (AGEB), imported rose to 71 percent of all sources of energy last year. The most important energy supplier is Russia: It provides 38 percent of Germany's natural gas imports, 35 percent of all oil imports and 25 percent of coal imports, covering a quarter of the country's entire energy needs. There are no suitable alternatives in sight that could cover shortfalls of this magnitude. Germany can supply only 15 percent of its gas needs using its own resources, the Association of Energy and Water Industries (BDEW) says. Most of its gas is supplied by Norway and the Netherlands. Both countries could increase their short-term shipments via pipelines, but not in the long run, because experts believe North Sea gas reserves are slowly being used up."
Germany has no alternative to Russian gas
Deutsche Welle, 17 April 2014

"The world needs to triple the energy it gets from renewables, nuclear reactors and power plants that use emissions-capture technology to avoid dangerous levels of global warming, United Nations scientists said. Investments needed to keep climate change within safe limits would shave a fraction of a percent off annual global growth, the UN said yesterday in the third part of its most comprehensive study on warming. A delay in stemming rising greenhouse gases will cut chances to limit the global temperature increase, add to costs and lead to increasingly reliance on unproven technologies, they said. 'The longer we wait to implement climate policy, the more risky the options we’ll have to take,' Ottmar Edenhofer, a co-chair of the 235 scientists who drafted the report, said in a phone interview from Berlin. 'We need to depart from business as usual, and this departure is a huge technological and institutional challenge.'  The UN said governments must accelerate efforts to build wind farms and solar parks and provide incentives to develop carbon capture and storage technology, or CCS, for fossil-fuel plants by making it more costly to emit carbon. The study aims to guide envoys from 194 nations next year as they devise a new accord to slash greenhouse gases.' The researchers said emissions growth accelerated to an average of 2.2 percent a year for the 2000-2010 period from an annual 1.3 percent the preceding three decades. That puts in jeopardy the target agreed upon by climate treaty negotiators to stabilize warming since pre-industrial times to below 2 degrees Celsius (3.6 degrees Fahrenheit)." The possible situation in 2100 is 'either you’ll have some fossil-fuel power generation with carbon capture and storage, or a complete switchover to renewables and smart energy storage,' Jonathan Grant, director of climate change at consultants PwC in London, said by phone. 'The problem with some of those scenarios is the transition takes too long.' Global greenhouse gas emissions would have to be lowered between 40 percent and 70 percent by mid-century from 2010 levels, and to 'near-zero' by the end of the century, efforts that would be likely to limit warming to 2 degrees Celsius, the UN Intergovernmental Panel on Climate Change said yesterday in a statement handed out in Berlin. Without extra effort to cut greenhouse gases, current trends may triple their concentration in the atmosphere this century, pushing warming since 1750 from 3.7 degrees Celsius to 4.8 degrees Celsius, according to the report. That would raise the risk of melting glaciers and sea ice, lengthening droughts and heatwaves and intensifying storms and flooding."
Renewables, Nuclear Must Triple to Save Climate, UN Says
Bloomberg, 13 April 2014

"Global crude oil supplies fell month-on-month in March by a steep 1.2 million b/d to 91.75 million b/d, with a decline in output from members of the Organization of the Petroleum Exporting Countries accounting for near 75% of the loss, according to the International Energy Agency’s most recent Oil Market Report. Due to sharply lower supplies from Iraq, Saudi Arabia, and Libya, OPEC crude oil supplies in March fell 890,000 b/d to just 29.62 million b/d—the lowest level in 5 months. 'Libyan and Iraqi outputs were down on worsening civil unrest and operational issues, respectively, while Saudi Arabia curbed supplies last month in the wake of weaker demand from refiners during the peak spring refinery turnaround period,' IEA said. OPEC’s 'effective' spare capacity in March was estimated at 3.53 million b/d, up from 3.31 million b/d in February. Following an upward revision to demand and reduced forecast for non-OPEC supplies, the 'call on OPEC crude and stock change' for the second quarter was raised by 100,000 b/d to 29.4 million b/d and for the second half by 350,000 b/d to an average 30.6 million b/d. For all of 2014, the non-OPEC supply forecast has been revised lower by 250,000 b/d compared with last month’s report due to downward adjustments to the forecast for countries of the former Soviet Union, and to a lesser extent to smaller changes to Europe and Latin America output. Output from both Russia and Kazakhstan is projected to fall in 2014 because of accelerated declines at Russia’s legacy fields and ongoing (and extensive) repairs on Kashagan field’s leaky pipeline system. The forecast of global demand growth has been marginally trimmed to 1.3 million b/d in 2014 vs. 1.4 million b/d in last month’s report, reflecting lower Russian demand projection in the wake of its annexation of Crimea."
IEA: Global oil supplies plunge in March on lower OPEC output
Oil & Gas Journal, 11 April 2014

"Can Europe credibly threaten Russia with energy sanctions? The answer, at least in the short term, is no. Today, we rely on Russia for around a third of our gas across the EU. But that average figure masks a dependency more than 50 per cent for some countries including Austria, Finland, Greece, Poland, Hungary, and the Czech Republic. .... So who, in Europe, took the decision to rely on Russia for our lifeblood? The answer is that no one did. Europe did not choose an energy policy on the basis of the optimisation of supply security, competitiveness and environmental impact. We have ended up with one, as a result of different and often incompatible ideas dreamt up by internally focused EU commissioners and individual member states. A few examples. The emissions cut targeted by the so-called 20-20-20 by 2020 programme? That means less coal and more gas. Do not like nuclear power? Even more gas. No gas grid interconnections between European countries? More long-term take or pay contracts. Not happy with domestic shale gas production? More gas from Russia. Do not like Russia? In that case, it is probably worth rethinking policies 1-4. But there has been no one to add up the consequences of our ideas, and if necessary take a different tack.... If the EU really does want to be independent, it needs to launch a medium-term programme made up of shale gas-friendly regulation, increasing alternative imports, improving interconnections between member states, energy efficiency, rational renewables, more nuclear, perhaps even more coal. That will have consequences in terms of costs, jobs and the environment. But whatever road we choose, we need to make sure someone is driving the car. If we really do want secure, competitive and clean energy we need to put someone in charge of it. A senior energy commissioner, who sits above the other four for any decision within their portfolios which affects energy policy, and therefore has the power to make the really difficult political decisions and trade-offs that energy requires. This senior commissioner would also need the authority to define which decisions are within the remit of the EU, and which can be left to individual member states."
Europe must speak with one voice on energy
Financial Times, 11 April 2014

"Shell has suspended plans to deploy technology for subsea gas compression in a major Norwegian gas field that would allow extracting resources without a platform. The technology, expected to be deployed at Ormen Lange, Norway’s second biggest gas field, was hailed for its potential to revolutionise offshore gas extraction. If successful, the innovation would allow continuing gas extraction at the site which provides about a fifth of UK gas without having to build a platform, meaning lower additional cost. The technology, consisting of subsea pumps capable to squeeze out the resources from below the seabed, was developed by Norwegian company Aker Solutions, who also built a pilot project at Ormen Lange hoping Shell and its partners would eventually expand it. However, Shell decided not to go forward with the project, citing rising cost of oil and gas production in general and the fact the technology had not been extensively tested to be the main motives behind the decision. 'The oil and gas industry has a cost challenge,' said Odin Estensen, the chairman of the Ormen Lange Management Committee in a statement. 'This, in combination with the maturity and complexity of the concepts and the production volume uncertainty, makes the project no longer economically feasible.' A Shell spokeswoman said: 'We are not giving up on offshore compression at Ormen Lange, but we can't give any timeline (of how long the postponement could last).' Statoil, however, is moving ahead with its own subsea compression project at the Aasgard field in the Norwegian Sea and expects to be the first in the world to have such a project running when it starts up in 2015."
Paolo Scaroni - Chief executive of Eni
Shell drops innovative gas field project
E & T, 11 April 2014

"Vladimir Putin is more likely to sign a 30-year deal to supply pipeline gas to China next month after more than a decade of false starts because the crisis in Ukraine is forcing Russia to look for markets outside Europe.   While Putin and President Xi Jinping will make the final decision in Beijing next month, Russia’s need for new customers means it’s pushing to complete a deal first mooted in 1997, a manager at gas-export monopoly OAO Gazprom (GAZP) and a government official said, asking not to be named because talks are ongoing. In China yesterday, Russia’s deputy prime minister said he 'hoped' a deal would be signed in May. The crisis in Ukraine has increased the importance of Russia’s relationship with China, its largest trade partner outside the European Union and the only country in the United Nations Security Council not to censure its actions in Crimea. Until a China pipeline is built, Russia has few export markets for gas outside Europe, leaving it vulnerable to sanctions and competition from U.S. exports of shale gas. 'This time, Russia really may close the China gas supply deal considering that it’ll be more flexible on the price,' Ildar Davletshin, an oil and gas analyst at Renaissance Capital, said by phone from Moscow. 'China, too, needs this contract because the further use of coal is becoming unbearable in most developed parts of the country.'... Starting not earlier than end of 2018, Gazprom plans to supply as much as 38 billion cubic meters of gas to China, about 24 percent of the company’s deliveries to Europe last year, which produced about $63 billion in export revenue, according to the company. Gazprom needs the equivalent of about $13.50 per million British thermal units to profitably finance the pipeline and the development of Siberian gas fields to feed it, a total outlay of $90 billion, Maxim Moshkov, an energy analyst at UBS AG in Moscow, said by e-mail. CNPC won’t want to pay more than $11 at the border, a price Gazprom may be forced to meet, cutting into future earnings, Moshkov said. China will increase natural-gas consumption 11 percent to 186 billion cubic meters this year as imports advance 19 percent, according to CNPC Economics and Technology Research Institute report, cited by China Daily. Gas consumption is likely to be boosted further by a drive to close coal-fired power stations to curb pollution.  "
Putin Expected to Sign China Gas Deal as Crisis Forces Hand
Bloomberg, 10 April 2014

"The European Union is close to freezing plans to complete the $50bn (£30bn) South Stream gas pipeline through the Black Sea from Russia, the first serious EU action to punish the Kremlin for the seizure of Crimea. Key details emerged in a leaked briefing by the European Commission’s chief, Jose Manuel Barroso, to Bulgarian politicians, warning the country not to stand in the way of the EU’s tough new line on the project, or attempt to undercut a unified EU response over Ukraine. 'We are telling Bulgaria to be very careful,' he said, according to reports in Bulgaria’s press. Mr Barroso said there are 'people in Bulgaria who are agents of Russia', a reference to figures in the ruling Socialist party who have been trying to clinch a bilateral deal with the Kremlin. The warning came as Ukraine once again rattled investors. Russia’s Micex index of stocks fell 2.4pc and the rouble slid 1pc against the dollar after armed pro-Russian protesters seized government buildings in the eastern Ukrainian city of Donetsk and declared the region 'independent'. They also stormed offices in Kharkiv and Luhansk. Ukraine’s premier, Arseniy Yatsenyuk, accused Russian president Vladimir Putin of preparing the ground for seizure of the Donbass region, home to most of Ukraine’s heavy industry. 'The aim of this scenario is to divide Ukraine into parts and turn part of Ukraine into a slave territory under a Russian dictatorship,' he said."
Russia's South Stream pipeline in deep freeze as EU tightens sanctions noose
Telegraph, 7 April 2014

"Jan Arps is the most influential oilman you’ve never heard of. In 1945, Arps, then a 33-year-old petroleum engineer for British-American Oil Producing Co., published a formula to predict how much crude a well will produce and when it will run dry. The Arps method has become one of the most widely used measures in the industry. Companies rely on it to predict the profitability of drilling, secure loans and report reserves to regulators. When Representative Ed Royce, a California Republican, said at a March 26 hearing in Washington that the U.S. should start exporting its oil to undermine Russian influence, his forecast of 'increasing U.S. energy production' can be traced back to Arps. The problem is the Arps equation has been twisted to apply to shale technology, which didn’t exist when Arps died in 1976. John Lee, a University of Houston engineering professor and an authority on estimating reserves, said billions of barrels of untapped shale oil in the U.S. are counted by companies relying on limited drilling history and tweaks to Arps’s formula that exaggerate future production. That casts doubt on how close the U.S. will get to energy independence, a goal that’s nearer than at any time since 1985, according to data from the U.S. Energy Information Administration. 'Things could turn out more pessimistic than people project,' said Lee. 'The long-term production of some of those oil-rich wells may be overstated.' Lee’s criticisms have opened a rift in the industry about how to measure the stores of crude trapped within rock formations thousands of feet below the earth’s surface. In a newsletter published this year by Houston-based Ryder Scott Co., which helps drillers calculate reserves, Lee called for an industry conference to address what he said are inconsistent approaches. The Arps method is particularly open to abuse, he said. U.S. oil production has increased 40 percent since the end of 2011 as drillers target layers of oil-bearing rock such as the Bakken shale in North Dakota, the Eagle Ford in Texas, and the Mississippi Lime in Kansas and Oklahoma, according to the EIA. The U.S. is on track to become the world’s largest oil producer by next year, according to the Paris-based International Energy Agency. A report from London-based consultants Wood Mackenzie said that by 2020 the Bakken’s output alone will be 1.7 million barrels a day, from 1.1 million now. Predicting the future is an inherently uncertain business, and Arps’s method works as well as any other, said Scott Wilson, a senior vice president in Ryder Scott’s Denver office. 'No one method does it right every time,' Wilson said. 'Arps is just a tool. If you blame Arps because a forecast turns out to be wrong, that’s like blaming the gun for shooting somebody. As far as Arps being old, the wheel was invented a long time ago too but it still comes in handy.' Rising reserve estimates gives the U.S. a false sense of security, said Tad Patzek, chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin. 'We have deceived ourselves into thinking that since we have an infinite resource, we don’t need to worry,' Patzek said. 'We are stumbling like blind people into a future which is not as pretty as we think.' The Arps formula is only as good as the assumptions a company puts into it, Patzek said. Estimates can be inflated when Arps is based on limited drilling history for data or on a few high-performing wells to predict performance across a wide swath of acreage. Forecasts can also be skewed higher by assuming slower production declines than Arps observed."
Old Math Casts Doubt on Accuracy of Oil Reserve Estimates
Bloomberg, 5 April 2014

"Wave Hub, the offshore energy test facility in Hayle, has secured an international company to take on its last berth. Carnegie Wave Energy plans to deploy a device called CETO 6, a fully submerged technology that produces high pressure water from the power of waves and uses it to generate clean electricity. The company plans to have a 3MW array of the technology at Wave Hub in 2016, with the option to expand to 10MW. It is the third customer to commit to the renewable energy test site, located in St Ives Bay, in the past four months. Wave Hub, which consists of a giant 'socket' on the seabed connected to the grid network onshore by an underwater cable, now has three customers with the potential to generate a capacity of 30MW. Others have been reserved by UK-based Seatricity, which plans to install a device this spring prior to building out a 10MW array in the next two years; and Finnish multi-national utilities firm Fortum, which has reserved a berth for an array of up to 10MW, will shortly be confirming the wave technology it has selected."
Hayle offshore energy test facility Wave Hub secures international company Carnegie Wave Energy to take on its last berth
The Cornishman, 4 April 2014

"Ministers have vowed to curb the growth of massive solar farms that blight the countryside, pledging they will not allow it to become 'the new onshore wind'. In a solar strategy released on Friday, the Department of Energy and Climate Change (DECC) said: 'We want to move the emphasis for growth away from large solar farms.'  It unveils plans to instead put more solar panels on rooftops of commercial buildings and to install up to 4 million panels on buildings in the Government estate, including up to 24,000 schools. DECC admits that the spread of solar farms has been 'much stronger than anticipated in government modelling' and that this 'can have impacts on visual amenity'."
Energy minister vows to curb the spread of solar farms
Telegraph, 4 April 2014

"Russia raised the gas price for Ukraine on Thursday for the second time this week, almost doubling it in three days and piling pressure on a neighbour on the brink of bankruptcy in the crisis over Crimea. The increase, announced in Moscow by Russian natural gas producer Gazprom, means Ukraine will pay 80 percent more for its gas than before the initial increase on Monday. Prime Minister Arseny Yatseniuk said the latest move, two weeks after Moscow annexed Ukraine's Crimea region, was unacceptable and warned that he expected Russia to increase pressure on Kiev by limiting supply to his country. 'There is no reason why Russia would raise the gas price for Ukraine ... other than one - politics,' Yatseniuk told Reuters in an interview in the Ukrainian capital Kiev. 'We expect Russia to go further in terms of pressure on the gas front, including limiting gas supplies to Ukraine.'... The latest rise will be to $485 per 1,000 cubic metres - two days after Gazprom announced a 44 percent increase in the gas price to $385.5 per 1,000 cubic metres from $268.5 due to unpaid bills. This is much more than the average price paid by consumers in the European Union.... Earlier this week, the Russian Federation Council, the upper house of the parliament, voted to annul the agreement on the Black Sea Fleet after Crimea was annexed by Russia. On Thursday, Gazprom also said Ukraine had to increase the level of gas in storage to ensure its stable transit to Europe. According to Ukraine's Energy Ministry the country holds 7.2 billion cubic metres in gas storage. It needs 12-14 billion cubic metres to ensure a stable flow of gas to Europe in winter."
Russia raises gas prices for Ukraine by 80 percent
Reuters, 4 April 2014

"After binging on Canadian oil and gas assets at top prices, state-owned enterprises (SOEs) from Korea, China and Abu Dhabi are focused on making them profitable rather than looking at more acquisitions, executives said Friday. Efforts to turn Canadian holdings into good businesses amid unexpectedly tougher conditions are playing a bigger role in discouraging new purchases than rules adopted by the federal government restricting SOE investments in the oil sands to minority positions, said executives for Korea’s KNOC, China’s Sinopec Corp., and Abu Dhabi’s TAQA, providing a rare glimpse into their closely-held Canadian units....Capital cost pressures in the oil sands have tripled, operating costs in the oil sands at least doubled, we had a change in the oil sands royalty regime, we had greater environmental regulations, costs of compliance have increased, we had continued delays in pipelines that allow us to move products out to maximize revenue, (there is) negative public sentiment toward the oil sands, plus you have the emergence of other opportunities in the U.S. and elsewhere,' Mr. Ukrainetz told an industry conference organized by the Canadian Association of Petroleum Producers and Scotiabank."
Oil sands investment slowing because of tough market, not new SOE rules, execs say
Financial Post, 4 April 2014

"Western oil majors struggling to restart production at one of the world's biggest offshore oilfields in Kazakhstan have found that whole kilometres of pipeline are defective, two people recently returned from the $50 billion project say. Replacing the damaged section altogether may be a better bet than trying to repair it. Oil company investigators have yet to announce conclusions about what went wrong at Kashagan in October, when onshore pipes carrying corrosive gases sprang leaks and brought offshore production in the Caspian Sea to a halt a month after start-up. Yet early accounts of findings collected from engineering, banking and industry sources, some of whom have just returned from the site, reveal that the scope of technical faults may delay oil flows longer than expected. The project has presented huge engineering challenges throughout the 13 years since work began. Much of it is built on artificial islands to avoid damage from pack ice in a shallow sea that freezes for five months a year. The oil is 4,200 metres (4,590 yards) below the seabed at very high pressure, and the associated gas reaching the surface is mixed with some of the highest concentrations of toxic, metal-eating hydrogen sulphide (H2S) ever encountered. It has now emerged that sulphur-laden sour gas burped out from the oil field during production last year may have weakened long stretches of processing pipelines, two sources said. 'The problem goes on for kilometre after kilometre, it's a systemic problem,' an industry source briefed by Kashagan engineers told Reuters. That defective stretch of pipeline runs mainly through hard-to-reach swampy terrain, making intervention costly and difficult. A banker briefed by management of one of the companies involved in engineering work said he was told the best course of action could instead be to lay a new line alongside the old one.... Output remains stuck at zero despite initial projections of 180,000 barrels per day in the early phase of production build-up on a field that aims to produce 1.66 million barrels a day at peak - as much as OPEC member Angola. According to Reuters calculations, by mid-year, lost revenue is likely to amount to between $4 billion and $12 billion.... Kazakh officials have said they have no plans to nationalise the project so far and say they hope it could restart in the second half of 2014 and produce 22 million barrels of crude by the end of the year. Up to now, Kashagan has missed out on around $2.7 billion in oil revenue, a fact likely to cast a shadow over state decision-making. The contractual terms stipulate the government may refuse to reimburse the costs, potentially the entire $50 billion bill, if the consortium misses the final deadline. That was set by the state as October 2013. The Kashagan spokesman said that output had in fact briefly reached commercial levels, as written in the contract, of 75,000 bpd before its shutdown, but not for long enough to count. A nine-month delay from September 2013 to July 2014 will cost the consortium at least $12 billion of lost oil revenues based on full scale output of 450,000 barrels per day. Even if minimal output levels of 150,000 bpd are taken into account, lost revenues would still be a hefty $4 billion, according to Reuters calculations."
Kashagan oil field: Stuck between 'a widow maker' and 'a rotating bomb'
Reuters, 3 April 2014

"Iran and Russia have made progress towards an oil-for-goods deal sources said would be worth up to $20 billion, which would enable Tehran to boost vital energy exports in defiance of Western sanctions, people familiar with the negotiations told Reuters. In January Reuters reported Moscow and Tehran were discussing a barter deal that would see Moscow buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods. The White House has said such a deal would raise 'serious concerns' and would be inconsistent with the nuclear talks between world powers and Iran. A Russian source said Moscow had 'prepared all documents from its side', adding that completion of a deal was awaiting agreement on what oil price to lock in. The source said the two sides were looking at a barter arrangement that would see Iranian oil being exchanged for industrial goods including metals and food, but said there was no military equipment involved. The source added that the deal was expected to reach $15 to $20 billion in total and would be done in stages with an initial $6 billion to $8 billion tranche. The Iranian and Russian governments declined to comment."
Iran, Russia working to seal $20 bln oil-for-goods deal - sources
Reuters, 2 April 2014

"SCIENTISTS have discovered vast deposits of coal lying under the North Sea, potentially holding enough energy to power Britain for centuries.  They have studied data, from seismic tests and boreholes, collected all over the North Sea for oil and gas exploration, but instead used it to build a picture of coal deposits.  The work revealed that the sea bed holds up to 20 layers of coal extending from Britain’s northeast coast far out under the sea — and that much of it could be reached with the technologies already in use to extract oil and gas.  'We think there are between three trillion and 23 trillion tonnes of coal buried under the North Sea,' said Dermot Roddy, formerly professor of energy at Newcastle University. 'This is thousands of times greater than all the oil and gas we have taken out so far, which totals around 6bn tonnes.'"
Coal is new black gold under the North Sea
Sunday Times, 30 March 2014

"Calls are mounting for the US to export shale gas to Europe to help free the continent from Russian influence. Observers are right to focus on Moscow’s energy leverage but they are prescribing the wrong response. The most useful thing that Europe could import is not American gas itself but the open economic model that has enabled the US natural gas industry to thrive. Europe buys nearly 30 per cent of its natural gas from Russia. This has led to concern that President Vladimir Putin might turn off a few taps to gain leverage in the confrontation with Ukraine. For now, these fears are overblown – among other things, Europe has a lot of natural gas in storage – but the fundamental worry is well founded. Yet US natural gas exports would do little to reduce Russian leverage. They cannot replace Russian gas in the current crisis since it will be more than a year until any US export terminals are built. Even once these facilities are up and running, the economics of sending shale gas to Europe are unlikely to make much sense. Once the cost of shipping is included, Russian gas is far cheaper; Moscow’s share of the European market is not likely to change much. Instead, American gas will flow mainly to Asia. This is not to say that US exports would not hurt Mr Putin. They would push down the price of gas in Europe, which is one of the many reasons why they should be allowed. But it is fanciful to suppose that they could provide a decisive edge against Moscow in a future crisis. Europe’s politicians should instead put their energy into copying the successful US policies that laid the groundwork for a spectacular boom in natural gas production. This might allow Europeans to produce more gas at home instead of buying it from Russia. The US Energy Information Administration estimates that Europe has 598tn cubic feet of technically recoverable shale gas, roughly half as much as the US. Yet almost none of this is being exploited. In part, that is because the continent is playing catch-up with a boom that started elsewhere. But there are deeper reasons, too. Many European countries have banned shale gas production. Those that allow development have slapped on taxes and government royalties that do much to deter it."
Michael Levy - Hot air about American gas will not scare Putin
Financial Times, 29 March 2014

"Russia's Lukoil has opened a giant untapped oil field in Iraq that will play a major part in driving up production to new highs in the Middle Eastern country and potentially force down the price of crude. Spigots in the West Qurna-2 field, Iraq’s second-biggest, were opened officially over the weekend in a move that will release 120,000 barrels per day of crude oil onto international markets. The field in Southern Iraq near Basra will eventually pump out 1.2m barrels-per-day (bpd) of oil.  Iraq’s oil minister Abdul Kareem Luaibi has said that West Qurna-2 will enable the country to hit its target of pumping 4m bpd by the end of the year. Already the second-largest producer in the Organisation of Petroleum Exporting Countries (Opec) after Saudi Arabia according to Reuters, Iraq pumped 3.5m bpd last month. However, the sharp rise in Iraq’s oil production is likely to spark tensions within Opec, which controls the world oil market. Baghdad currently operates outside the cartel’s quota system, which helps to maintain oil prices above $100 per barrel, the figure seen by most of its members including Saudi Arabia as vital for their economies to function. The resurgence of Iraq’s oil production comes amid hopes that neighbouring Iran will soon boost production if sanctions are lifted. Hussain al-Shahristani, Iraq’s Deputy Prime Minister for Energy, said earlier this year that Baghdad and Tehran were cooperating on petroleum strategy in a move that has challenged Saudi’s dominance of the 12-member group. Iraq plans to almost triple its oil production capacity by 2020 to 9m bpd, which if achieved could flood world markets with crude. Although demand for fossil fuels continues to rise globally the development of shale oil and gas resources in the US has raised the chances of prices falling amid a glut of new supply. However, gains in Iraqi production are offset by ongoing political problems in Libya, which have disrupted exports from the North African country in addition to slow progress in lifting sanctions on Iran."
Russia's Lukoil opens giant Iraq oil field, adding to crude glut
Telegraph, 29 March 2014

"On Wednesday, March 27th, the largest state in the contiguous United States got almost one-third of its electricity by harnessing the wind. According to the Electric Reliability Council of Texas, which manages the bulk of the Lone Star State's power grid, a record-breaking 10,296 MW of electricity was whipped up by wind turbines. That's enough to provide 29 percent of the state's power, and to keep the lights on in over 5 million homes. ERCOT notes in a statement issued today that 'The new record beats the previous record set earlier this month by more than 600 MW, and the American Wind Energy Association reports it was a record for any US power system.' The landmark is further evidence of one of the nation's unlikeliest energy success stories. Conservative politicians have a renowned aversion to clean energy (though Republican voters favor it overwhelmingly), and Texas is still deep red. Yet wind farms are cropping up in there faster than almost anywhere else. ERCOT points out as much, as it boasts of the sector's recent growth..."
One-Third of Texas Was Running on Wind Power This Week
Motherboard, 28 March 2014

"German Economy Minister Sigmar Gabriel said there was 'no sensible alternative' to Russian natural gas imports and it was unlikely Russia would stop deliveries because of the crisis over Ukraine, a German daily reported on Friday. 'Even in the darkest hours of the Cold War Russia respected its contracts,' the Neue Osnabruecker Zeitung reported Gabriel, who is also energy minister and vice chancellor, as telling an energy forum."
German economy minister says no alternative to Russian gas
Reuters, 28 March 2014

"Ukraine's interim government says it will raise gas prices for domestic consumers by 50% in an effort to secure an International Monetary Fund (IMF) aid package. An official at Ukraine's Naftogaz state energy company said the price rise would take effect on 1 May, and further rises would be scheduled until 2018. Ukrainians are accustomed to buying gas at heavily subsidised rates. But the IMF has made subsidy reform a condition of its deal. Ukraine currently buys more than half of its natural gas from Russia's Gazprom, and then sells it on to consumers at below market prices. Yury Kolbushkin, budget and planning director at Naftogaz, told reporters that gas prices for district heating companies would also rise by 40% from 1 July. IMF negotiators are still in Kiev to negotiate a package of measures worth billions of dollars to help Ukraine's interim government plug its budget deficit and meet foreign loan repayments."
Ukraine agrees to 50% gas price hike amid IMF talks
BBC, 26 March 2014

"Claims that fracking offers a panacea to dependence on Russian gas don't even stack up. A study for the oil and gas industry by consultants Pöyry, found that European supplies wouldn't even come on stream at scale for at least a decade. The study also shows that while the EU's dependency on gas imports could be reduced by up to 18% depending on the success of EU shale gas extraction, it is actually supplies of liquefied natural gas from Qatar that would be displaced by shale gas. Supplies that are deemed 'secure' by Fallon. Even a shale gas boom will have no impact on Russian imports until well into the next decade, by which point demand for gas should be falling sharply in the EU as efforts to limit climate change bear fruit."
Fracking won't crack our dependence on Russian gas imports
Guardian, 25 March 2014

"Financial problems of operators in US shale gas and tight oil plays might hold production growth below current expectations, according to the author of a March comment published by the Oxford Institute for Energy Studies (OIES). But a reorientation of the industry toward 'the most commercially sustainable areas' of unconventional-resource plays might extend the period of growth, writes the analyst, Ivan Sandrea, an OIES research associate and senior partner of Ernst & Young London. The producing industry has demonstrated it can create opportunities, innovate operationally, and address environmental issues despite evolving government policies and questions of public acceptance, Sandrea writes. 'What is not clear from higher-level company data is if the industry (both large players and independents) can run a cash flow-positive business in both top-quality and in more marginal plays and whether the positive cash flow could be maintained when the industry scales up its operations.' Sandrea cites asset write-downs approaching $35 billion since the shale boom began among 15 of the main operators. 'While most of the companies that have made write-downs are not quitting, many players in this industry have already noted that the revolution is not as technically and financially attractive as they expected,' the analyst writes. 'However, to deem the [business] model flawed due to the investment write-downs of some large companies would be misleading and too early in the evolution of the business for some players.' Sandrea also cites a recent analysis by Energy Aspects, a commodity research consultancy, showing 6 years of progressively worsening financial performance by 35 independent companies focused on shale gas and tight oil plays in the US. 'This is despite showing production growth and shifting a large portion of their activity to oil since 2010, presumably to chase a higher-margin business,' he adds. Oil and gas production by the companies represented 40% of output in unconventional plays in last year’s third quarter. According to the Energy Aspects analysis, total capital expenditure nearly matches total revenue every year, and net cash flow is becoming negative as debt rises. Other financial indicators 'add to concerns about the sustainability of the business,' Sandrea says. Still, shale-gas and tight-oil development remains 'a fledgling industry' with hope for 'a positive inflection point for cash flow and a full-cycle risk-adjusted return.' Some operators see that point as still 5 years away. Meanwhile, the industry will remain challenged. Sandrea says 'above-ground reasons' include the need to constantly acquire and drill leases, infrastructure needs, transportation costs, increasing costs to manage environmental considerations as operations grow, and 'the fact that drilling and hydraulic fracturing costs respond to fluctuations in gas and oil prices as well as demand, leaving little excess profit for long.' Below ground, he says, rapid production declines and low recovery rates, despite technical improvements, remain problems in many plays and might worsen as operators move into increasingly challenging acreage. Unless financial performances improve, capital markets won’t support the continuous drilling needed to sustain production from unconventional resource plays, Sandrea suggests, asking, 'Who can or will want to fund the drilling of millions of acres and hundreds of thousands of wells at an ongoing loss?' More likely, he says, 'Parts of the industry will have to restructure and focus more rapidly on the most commercially sustainable areas of the plays, perhaps about 40% of the current acreage and resource estimates, possibly yielding a lower production growth in the US than is currently expected—but perhaps a more lasting one.'"
Financial questions seen for US shale gas, tight-oil plays
Oil and Gas Journal, 25 March 2014

"Paolo Scaroni, chief executive of Eni, is doubtful about the future of the South Stream project intended to pipe Russian gas under the Black Sea to Bulgaria, unless the EU and Russia find a way out over Ukraine. However, Mr Scaroni is clearly relieved that Italy’s oil and gas group made a profitable exit from a major Siberian gasfield at the right time. Eni sold its 60 per cent stake in the Arctic Russia field in Siberia’s northwestern Yamal peninsula in January to a group led by Russia’s Gazprom for nearly $3bn. The initial investment in 2007 cost $600m. 'We were smart to sell Arctic Russia. We got the timing right,' Mr Scaroni told the Financial Times, adding that it would have been much more difficult to get such a deal in the current climate. 'Russian companies now are more cautious with their cash.' Asked if events in Ukraine had been part of his calculations, Mr Scaroni said it was 'one of the issues in the puzzle'. 'I was smelling that Russia is Russia. Russia is not Switzerland,' he said, noting that Eni had been dependent on Gazprom for transporting the gas out of Siberia. Eni is renegotiating its long-term and loss-making gas contracts with Gazprom and Mr Scaroni believes the Ukraine crisis 'strengthens very much our hand', depending how the situation evolves. 'We feel in very good shape,' he said. Mr Scaroni said Europe is too dependent on Russian gas to stop imports in the short term, although he believed that Italy – where Russian gas accounted for 28 per cent of consumption in 2012 – could get by with difficulty."
Russia gas plan in doubt, says Eni chief
Oil & Gas, 23 March 2014

"Shale reserves are not a miracle; they are a high-cost source of fuel...."
Checkmate for cheap unconventional gas
Financial Times, 21 March 2014

"Britain has begun this year to import gas from Russia under a formal contract for the first time, just as European calls to loosen Moscow’s grip on energy supply mount because of the crisis over Ukraine. The country’s biggest utility Centrica signed a deal in 2012 with Russian state-controlled Gazprom to import 2.4 billion cubic metres of gas over a period of three years, and the supplies began flowing in January. Russia is Europe’s biggest supplier of gas, providing around a third of the continent’s needs, and some of this has previously reached Britain from continental European storage sites. The exports largely go to central and south-eastern Europe rather than to Britain, which still has significant domestic reserves and gets most of its imports from Norwegian pipelines or liquefied natural gas (LNG) shipments from further afield. With domestic production falling by around 7 percent a year, Britain has had to find more suppliers to fill the gap. One gas analyst said the Russian deal appears to explain unusually heavy import flows in 2014 via the BBL link from the Netherlands, one of two pipelines that connect Britain with mainland Europe."
Britain starts Russian gas imports under 2012 deal just as tensions mount
Reuters, 21 March 2014

"European leaders have rushed through plans aimed at breaking the Kremlin’s grip on gas and energy supplies, marking a fresh escalation in the emerging Cold War between Russia and the West. The move came as the EU slapped sanctions on 12 leading Russians in President Vladimir Putin’s inner circle, and vowed 'additional and far-reaching' action if he intervenes in eastern Ukraine or further destabilises the region. The European Commission has been told to cock the gun by preparing 'targeted measures' immediately. The South Stream pipeline intended to link the EU to Russia through the Black Sea by 2018 is now 'dead', according to sources in Brussels, hitting contractors close to Mr Putin. EU staff are to come up with plans to shield Europe from energy blackmail by Russia within 90 days, finding ways to prevent frontline states being picked off one by one. Ukraine’s premier, Arseniy Yatsenyuk, said in Brussels that the West must stop Russia deploying energy as a 'new nuclear weapon'. The radical shift in EU energy policy comes as Russia feels the chill of US sanctions imposed on Thursday..... The pan-EU group Gas Infrastructure Europe said Europe is currently well-stocked with 37bn cubic metres of gas – 47pc of storage capacity – as a result of a mild winter. 'Most of the European transmission systems currently can withstand a disruption of Russian gas through Ukraine. The pipeline network is available for diverting gas flows in case of supply problems from Russia, from storage and LNG (liquefied natural gas),' said the group. Eight EU states have LNG hubs, the largest in Britain and Spain. Poland’s new facility will come on stream this year. Deutsche Bank said gas reliance on Russia is 93pc in Slovakia, 83pc in Poland, 81pc in Hungary, 66pc in the Czech Republic and 61pc in Austria. Germany's dependence is 35pc, falling to 29pc for oil and 19pc for coal. Very little of the country’s industry relies on power from gas. The one island of vulnerability is the Baltic region, where Finland, Estonia, Latvia and Lithuania rely 100pc on Russian gas. There are plans afoot to send a 'regas ship' to the area capable of supplying liquefied natural gas to a port in Lithuania. 'President Barack Obama could commandeer all US regas ships in an emergency and send them to harbours in the Baltics,' said Mr Riley. The new energy plans were tucked away in the so-called climate dossier of the EU summit but experts said there should be no doubt that the real aim is to confront Mr Putin. Britain’s prime minister, David Cameron, said there is no symmetry in the economic damage that each side can do to the other, arguing that Russia’s reliance on Gazprom sales matters far more than Europe’s reliance on Gazprom. 'Russia needs Europe more than Europe needs Russia,' he said. Yet how the clash between Russia and the West goes is not really driven by economic calculation, and may escalate regardless of sanctions. Mr Putin’s core demand is that Ukraine remains 'politically neutral', certainly outside the Western military camp. The EU swept this grievance aside on Friday by signing an Association Agreement that includes a clause calling for the 'gradual convergence between the EU and the Ukraine in the areas of foreign and security policy, including the Common Security and Defence Policy'."
Europe scrambles to break gas dependence on Russia, offers Ukraine military tie
Telegraph, 21 March 2014

"The number of Americans who believe U.S. oil should be kept on U.S. soil to lower gasoline prices rose in the last four months, according to a new Reuters/Ipsos poll. Some 77 percent of respondents support export restrictions if that will help them save at the pump, showing how oil producers have failed to gain popular support to end a decades-old export ban. Only 69 percent thought so in a similar poll in November. A majority of respondents polled in March - 71 percent - opposed oil exports if they raise the price of gasoline, up from 67 percent in November. The country remains evenly divided over crude oil exports when they are not linked to gasoline prices. Major oil producers such as ExxonMobil and Chevron argue that export restrictions, in place since the 1970s, will depress the price of U.S. oil and crimp output from new oil fields in North Dakota and Texas, now at a 26-year high. Oil refiners, on the other hand, say exports will dry up cheap supplies and raise gasoline prices. Earlier this month, U.S. Energy Secretary Ernest Moniz said the oil industry needs to do a better job making its case in support of exports, especially since the nation relies on imports of foreign oil to this day. With voters still fretting over the price of gasoline, congress is unlikely to push for policy change before the mid-term elections in November, experts said.... It is unclear what effect oil exports would have on gasoline prices. But some analysts speculated that they could in fact make gasoline cheaper. The price of U.S. gasoline is set in a global market because the United States already exports nearly 5 percent of the gasoline it produces, a figure that is expected to rise in the coming years, analysts said. That is likely why the price of gasoline, adjusted for inflation, hovered near $3.35 a gallon in February, despite the explosive growth in the nation's oil production, some experts said. U.S. exports would add to global supplies and lower the price of international oil benchmark Brent, some analysts argue. That may in turn result in lower gasoline prices across America."
Americans want U.S. oil kept on U.S. soil, poll says
Reuters, 20 March 2014

"The UK government’s flagship home energy efficiency programme, the green deal, has all but ground to a halt, with just 33 plans signed in February. The latest figures for the policy, once vaunted as the biggest home retrofit since the war aimed at cutting energy bills for 14m homes, are by far the worst since the scheme began. 'The scheme was always going to be something of a slow burner initially, but the number of new plans is reducing to a trickle,' said John Alker, at the UK Green Building Council. 'There are fewer new plans now than at the very beginning of the scheme.' 'Government has already had its wake-up call, it is now crunch time,' Alker said. 'It needs to step in to reduce the cost of the finance plans, strengthen and make permanent tax incentives, and make energy efficiency a pre-requisite for anyone getting an extension this summer.' Earlier in March, energy secretary Ed Davey conceded that the green deal finance take up had been 'disappointing' and that the scheme has started off 'too clunky and too complex'. Greg Barker, the minister overseeing the policy, previously said he 'would not be sleeping' if 10,000 plans had not been signed by the end of 2013, a forecast he later called 'spectacularly wrong'. The total by the end of February was 1,754. Labour have pledged to scrap the 'woeful' green deal. The number of green deal assessments in February was 18,000, the highest yet, bringing the cumulative total to 163,000, but just one in 10 go on to complete the deal."
Green deal plans 'reduce to a trickle'
Guardian, 20 March 2014

"Companies will need to invest $641 billion over the next two decades in pipelines, pumps and other infrastructure to keep up with the gas, crude oil and natural gas liquids flowing from U.S. fields, according to a study released Tuesday. The analysis, prepared by ICF International for two natural gas advocacy groups, predicts that $30 billion worth of new midstream infrastructure will be needed each year through 2035 — essentially triple the $10 billion in average annual investments over the past decade. 'We’re in a heavy growth period right now, said Kevin Petak, an economist with ICF who authored the study. 'The next six years appears to be a pretty heavy period for expenditure and investment.' Almost half of the projected spending — $14.2 billion per year — will be needed to accommodate new gas supplies and connect new shale plays with existing infrastructure and yet-to-be-built facilities, according to the report. Some 35,000 miles of new transmission pipelines will be needed, along with 303,000 miles of gas gathering lines, the study found. 'Significant development of natural gas infrastructure (is projected) to accommodate the rapidly growing gas supplies from shale,' the report said. 'Much new gas gathering and pipeline infrastructure will be needed well into the future.' The new study finds that many of the gas pipeline projects will span shorter distances than projected in an earlier 2011 analysis, though the overall level of investment is similar because of climbing pipeline costs. 'This is still a substantial amount of new pipe,' ICF International concluded.... Beyond gas, the study predicts that companies will have to pour $12.4 billion per year into crude oil infrastructure, including pipelines, valves, manifolds and separators. Another $2.5 billion will be needed annually for infrastructure associated with natural gas liquids such as ethane, butane and propane. Most of the pipeline capacity for natural gas liquids — some 3.2 million barrels a day — will be needed by 2020, according to the projections. If spending falls short, oil and gas development could be constrained, the report warns. 'Sufficient infrastructure goes hand in hand with well-functioning markets,' ICF says. 'Insufficient infrastructure can constrain market growth and strand supplies, potentially leading to increased price volatility and reduced economic activity.' INGAA President Don Santa said he was confident that there would be enough capital to fund the infrastructure buildout."
US energy boom demands $641B in infrastructure, study finds
Fuel Fix (Blog), 18 March 2014

"Yesterday Chesapeake Energy, the second largest U.S. based oil and gas company, filed with the Securities and Exchange Commission to sell off its oilfield services unit which does the majority of the company’s oil and gas exploration, hydraulic fracking and drilling. Stung with high costs and mired in more than $20 billion in debt on its U.S. shale operations, the company continues to sell off billions in its assets base as it struggles to right itself. Its actions follow a developing trend of cutbacks, spin- offs, divestures and write downs for oil and gas majors operating in U.S. shale formations. In the last 10 days, British Petroleum, Chevron, ExxonMobil and Royal Dutch Shell have all announced they will be spending less on oil and gas exploration in the U.S. Allen Brooks, Managing Director of Parks Paton Hoepfl & Brown, an independent Houston, Texas based investment banking firm, stated yesterday, 'Chevron is the latest major oil company to implicitly declare that the oil industry has entered a new era – one marked by higher costs and more disciplined capital investment programs.' Brooks further stated several of the majors have announced plans or are considering separating their North American shale gas operations into stand alone entities, possibly positioning their U.S. operations for sale over time. These new directions by the oil and gas majors are acknowledgements their energy returns on energy investments are becoming increasingly difficult and hampering their profits despite the initial high expectations for U.S. shale formations over the last several years."
Oil and gas majors now cutting back in U.S. shale gas fields
Examiner, 18 March 2014

"North Carolina’s ‘bottomland’ forest is being cut down in swathes, and much of it pulped and turned into wood pellets – so Britain can keep its lights on.The UK is committed by law to a radical shift to renewable energy. By 2020, the proportion of Britain’s electricity generated from ‘renewable’ sources is supposed to almost triple to 30 per cent, with more than a third of that from what is called ‘biomass’. The only large-scale way to do this is by burning wood, man’s oldest fuel – because EU rules have determined it is ‘carbon-neutral’. So our biggest power station, the leviathan Drax plant near Selby in North Yorkshire, is switching from dirty, non-renewable coal. Biomass is far more expensive, but the consumer helps the process by paying subsidies via levies on energy bills. That’s where North Carolina’s forests come in. They are being reduced to pellets in a gargantuan pulping process at local factories, then shipped across the Atlantic from a purpose-built dock at Chesapeake Port, just across the state line in Virginia. Those pellets are burnt by the billion at Drax. Each year, says Drax’s head of environment, Nigel Burdett, Drax buys more than a million metric tons of pellets from US firm Enviva, around two thirds of its total output. Most of them come not from fast-growing pine, but mixed, deciduous hardwood. Drax and Enviva insist this practice is ‘sustainable’. But though it is entirely driven by the desire to curb greenhouse gas emissions, a broad alliance of US and international environmentalists argue it is increasing, not reducing them. In fact, Burdett admits, Drax’s wood-fuelled furnaces actually produce three per cent more carbon dioxide (CO2) than coal – and well over twice as much as gas: 870g per megawatt hour (MW/hr) is belched out by wood, compared to just 400g for gas. Then there’s the extra CO2 produced by manufacturing the pellets and transporting them 3,800 miles. According to Burdett, when all that is taken into account, using biomass for generating power produces 20 per cent more greenhouse gas emissions than coal. And meanwhile, say the environmentalists, the forest’s precious wildlife habitat is being placed  in jeopardy. Drax concedes that ‘when biomass is burned, carbon dioxide is released into the atmosphere’. Its defence is that trees – unlike coal or gas – are renewable because they can grow again, and that when they do, they will neutralise the carbon in the atmosphere by ‘breathing’ it in – or in technical parlance, ‘sequestering’ it. So Drax claims that burning wood ‘significantly reduces greenhouse gas emissions compared with coal-fired generation’ – by as much, Burdett says, as 80 per cent. These claims are questionable.  For one thing, some trees in the ‘bottomland’ woods can take more than 100 years to regrow. But for Drax, this argument has proven beneficial and lucrative. Only a few years ago, as a coal-only plant, Drax was Europe’s largest greenhouse gas emitter, and was often targeted by green activists. Now it boasts of its ‘environmental leadership position’, saying it is the biggest renewable energy plant in the world. It also gets guaranteed profits  from the Government’s green energy subsidies. Last year, these amounted to £62.5?million, paid by levies on consumers’ bills. This is set to triple by 2016 as Drax increases its biomass capacity. In the longer term, the Government has decreed that customers will pay £105 per MW/hr for Drax’s biomass electricity – £10 more than for onshore wind energy, and £15 more than for power from the controversial new nuclear plant to be built at Hinkley Point in Somerset. The current ‘normal’ market electricity price is just £50 per MW/hr. Mr Burdett admitted: ‘Our whole business case is built on subsidy, like the rest of the renewable energy industry. We are simply responding to Government policy.’ Company spokesman Matt Willey added: ‘We’re a power company. We’ve been told to take coal out of the equation. What would you have us do – build a dirty great windfarm?’ Meanwhile, there are other costs, less easily quantifiable. ‘These are some of our most valuable forests,’ said my trail companion, Derb Carter, director of the Southern Environmental Law Centre in Chapel Hill, North Carolina."
The bonfire of insanity: Woodland is shipped 3,800 miles and burned in Drax power station
Mail, 16 March 2014

"On February 6, 1974, Secretary of State Henry Kissinger under President Nixon unveiled ‘Project Independence,’ a comprehensive national energy plan to achieve energy independence by the end of the decade. The main goal of Project Independence was to reduce vulnerability. The nation’s 'overall objective can be summed up in one word that best characterizes this nation and its essential nature. That word is independence…In the last third of the century our independence will depend on maintaining and achieving self-sufficiency in energy. What I have called Project Independence 1980 is a series of plans and goals set to ensure that by the end of this decade Americans will not have to rely on any source of energy beyond its own.' There were three main components of the plan: accelerating domestic supply, energy conservation and demand management, and emergency programs."
Ben Gottesdiener - Attempts at Independence
Washington University, Political Review, 15 March 2014

"Before contemplating the use of US oil and gas as a strategic weapon, it might be useful to review a few key fundamentals. First, consider the following oil production, consumption and import/export numbers reported by British Petroleum for 2012. Russia produced 10.6 million barrels per day (mbd), consumed 3.2 mbd, leaving 7.4 mbd available for export. The United States produced 8.9 mbd, consumed 18.5 mbd, and imported 10.5 mbd. All the talk of America 'soon overtaking Russia' as the world’s largest oil producer comes with a rather sizeable asterisk: even if that eventually occurs, the US will still be required to import an additional five to six million barrels of oil per day, while Russia would have an additional 7 to 8 mbd to export. This fact places the Russian Federation in a considerably stronger energy-security position than the United States. Second, such action would likely penalize US citizens. Chris Nelder, an independent energy analyst and journalist hits the nail on the head: 'I don’t think U.S. consumers are willing to pay higher prices for natural gas, grid power, and gasoline to enable the uncertain possibility that doing so would ‘stick it to Putin’ some years down the line.' Petroleum geologist and energy analyst Arthur Berman also warns there would be unintended consequences to exporting American natural gas. 'The U.S. imports nearly 4 billion cubic feet of gas per day. It seems a bit premature to be discussing natural gas export when you are a net importer and are likely to remain one until at least 2018 according to the EIA.' Least we forget, conventional gas in the US accounts for almost 60 percent of the total produced and is declining at about 20 percent per year. Unconventional gas, meanwhile, is declining at more than 30 percent each year. 'Taken together,' Berman calculates, 'the US needs to replace 19 billion cubic feet per day each year to maintain production at flat levels. That’s almost four Barnett shale plays at full production each year.' It is clear the United States is going to have an increasingly difficult time in the coming years meeting its own gas needs. How it is in America’s energy-security interest to export domestic supplies when the US is already a net-gas importer, however, is not clear. Part of the problem seems to be a broadly held, though empirically unsupportable position that the US tight oil and gas boom of the past several years is a sustainable and expandable phenomenon. Yet geoscientist David Hughes—a thirty-year veteran of the Canadian Geological Survey whose data derives from over sixty-five thousand oil and gas wells shows what is commonly referred to as the 'tight oil boom' is more likely to be a temporary bump."
'The Oil and Gas Weapon Won’t Work': Davis & Leggett on Ukraine
Triple Crunch Log, 13 March 2014

"A test sale from the U.S. emergency oil reserve on Friday may or may not be a subtle warning to Russia, but it will have little effect on U.S. imports from the world's biggest producer, which will likely slow to a trickle this year. The Department of Energy will take bids later on Friday to sell 5 million barrels of sour crude from the nation's Strategic Petroleum Reserves, to be released from salt dome caverns in Texas and Louisiana. But the sale is unlikely to displace already shrinking Russian crude imports, which have significantly changed in variety and geography over the past few years. Four years ago, Gulf Coast refiners imported as much as 177,000 barrels-per-day (bpd) of Urals sour blend crude from Russia's Black Sea or Baltic ports. Now, however, most Russian barrels are light sweet ESPO or Sokol grades that cross the Pacific Ocean from Siberia to West Coast refineries. Even those are quickly losing ground as cheap crude from U.S. shale plays, such as North Dakota's Bakken, squeeze out more foreign oil.Imports from Russia stood at 16.3 million barrels in 2013, making it the 13th largest supplier, according to data from the U.S. Energy Information Administration (EIA). That was equivalent to 2 percent of the volumes imported from Canada, the largest oil exporter to the United States. The Bakken shipments 'will keep imports to a minimum' although the threat of rising rail costs due to tougher regulations may still keep some barrels flowing, said Al Troner, president of Asia Pacific Energy Consulting (APEC). 'I don't think they will abandon Russian imports altogether - no refiner wants to completely cut off slate alternatives.' Russia remains the world's top oil-producing nation with 10.58 million barrels-per-day of output in February, according to BP Statistics. But a growing share of that is now headed to China and other countries in Asia, where demand is rising."
SPR or not, Russian oil sales to U.S. already on the way out
Reuters, 13 March 2014

"Unnoticed by the mainstream media, US shale oil covers up a recent decline of crude oil production of 1.5 mb/d  in the rest of world (using data up to Oct 2013). This means that without US shale oil the world would be in a deep oil crisis similar to the decline phase 2006/07  when oil prices went up. The decline comes from many countries but is also caused by fights over oil and oil-related issues in Iran, Libya and other countries which can be seen on TV every day.... While the mainstream media lulls the public into believing that US shale oil is a revolution, peaking oil production in many countries eats like a cancer through the oil supply system. The big problem is that more oil dependent infrastructure is being built which will not be needed when US shale oil peaks and the underlying decline is revealed."
World crude production 2013 without shale oil is back to 2005 levels
Crude Oil Peak, 13 March 2013

"U.S. daily crude production will slow next year for the first time since the nation’s shale oil boom began three years ago, according to a new federal estimate. In its first forecast of the nation’s energy position in 2015, the U.S. Energy Information Administration projected Tuesday that oil producers will increase production by about 750,000 barrels of oil per day in 2015. That’s a drop from an expected daily increase of 1.03 million barrels in 2014 and the growth of the past two years. Falling oil prices could dampen the incentive for energy companies to produce as much crude in 2015, a symptom of shrinking demand for motor fuels as automakers sell more efficient cars, said John Staub, head of the EIA’s exploration and production team. 'People aren’t traveling quite as much as in the past,' Staub said. Still, the EIA’s projected daily production of 9.3 million barrels per day in 2015 comes close to levels in 1972, one of the nation’s highest years for oil production on record. The agency believes the nation set a record in 2013 with a production increase of 1 million barrels, the largest in history. The nation’s oil wells began to blossom from Texas to North Dakota three years ago when producers shifted their focus to oil after natural gas prices plummeted on a flood of supply. If the federal projections for 2015 prove accurate, U.S. crude production will have grown about 64 percent since 2011. The EIA said the growth  likely will continue to drive petroleum imports out of the market next year, when government analysts expect liquid fuel imports to shrink to 24 percent of U.S. consumption, its lowest share since 1970. But the end of the oil boom may be approaching. Last month, the EIA predicted that U.S. oil output would peak in 2016 at 9.5 million barrels, just shy of the nation’s record in 1970. Production will begin to drop in 2020, according to the agency. Oil production is 'ultimately based on how good those investments look,' because even though production rates at North American shale plays are declining rapidly, there’s still plenty of oil there, said John Lee, a professor of petroleum engineering at the University of Houston. 'These big shale plays they are by no means fully developed.' If the U.S. government accedes to the oil industry and lifts a ban on selling crude overseas, oil prices would rise and production would keep increasing after 2020, but that idea has met strong political opposition, Lee said. 'Politically, I think (lifting the ban on crude exports) would be very difficult to get through,' Lee said."
US oil boom will slow in 2015, feds forecast
Fuel Fix (Blog), 7 March 2014

"North America may be in the midst of an energy renaissance, but that could be slowed or derailed by several limitations, including nature. While shale plays and oil sands fields have multiplied North American oil production, a labor shortage, regulations and geology continue to present hurdles for the industry, speakers at the IHS Energy CERAWeek conference said Friday at the Hilton Americas-Houston. For example, in any given shale play, between 3 percent and 9 percent of the acreage holds the most profitable and productive wells, said Raoul LeBlanc, managing director of onshore oil industry research for IHS. LeBlanc compared productive underground reserves to nutrient-dense snacks. 'You have PowerBars and popcorn in your pantry,' LeBlanc said. 'Right now we’re eating the PowerBars. And at some point, the PowerBars will run out.' Since most drilling so far has focused on the best acreage, production growth in some of the hottest plays in the United States, like the Bakken and the Eagle Ford shales, will likely slow, he said. 'At some point we’ll have to go to the second best,' LeBlanc said. 'It’s not a catastrophe. It’s not a disaster. It’s just not as good.' As growth in some plays slows down, however, other emerging plays could pick up steam, LeBlanc said. He highlighted the Wolfcamp and Bone Spring shale regions as examples of emerging plays that could become prolific producers, depending on oil prices. 'We need a price that will incent us to go get it,' LeBlanc said. 'So as long as the price is there, I’m very comfortable about the resource.'
Is shale running short on ‘PowerBars’?
Fuel Fix (Blog), 7 March 2014

"The path toward U.S. energy independence, made possible by a boom in shale oil, will be much harder than it seems. Just a few of the roadblocks: Independent producers will spend $1.50 drilling this year for every dollar they get back. Shale output drops faster than production from conventional methods. It will take 2,500 new wells a year just to sustain output of 1 million barrels a day in North Dakota’s Bakken shale, according to the Paris-based International Energy Agency. Iraq could do the same with 60. Consider Sanchez Energy Corp. The Houston-based company plans to spend as much as $600 million this year, almost double its estimated 2013 revenue, on the Eagle Ford shale formation in south Texas, which along with North Dakota is one of the hotbeds of a drilling frenzy that’s pushed U.S. crude output to the highest in almost 26 years. Its Sante North 1H oil well pumped five times more water than crude, Sanchez Energy said in a Feb. 17 regulatory filing. Shares sank 7 percent."
Dream of U.S. Oil Independence Slams Against Shale Costs
Bloomberg, 27 February 2014

"U.S. oil production is on track to reach a near historic high by 2016, before leveling off and eventually beginning to taper in 2020, according to a new federal forecast. The nation’s crude output will crest at 9.5 million barrels per day in 2016, according to the U.S. Energy Information Administration’s latest annual energy outlook, released Monday. The United States hit its peak oil production in 1970, with 9.6 million barrels of crude harvested daily. Advancements in oil field technology — particularly the combination of horizontal drilling and hydraulic fracturing, or fracking — have helped reverse years of declining oil production in the United States. Growing U.S. oil production will have an impact on global crude oil prices. The spot price for Brent crude, the international benchmark, is set to decline to $92 per barrel (in 2012 dollars) in 2017, down from $112 per barrel a year ago, according to the EIA. But after 2017, the agency predicts the price for Brent crude oil will start climbing, ultimately reaching $141 per barrel in 2040, as the oil industry tries to meet growing demand by developing more costly resources. Natural gas production also will rise, despite the precipitous decline in its domestic price during the early shale gas boom. The price will remain low enough to propel domestic chemical and metal manufacturing, even as companies sell more of the U.S. harvest overseas, the EIA forecasts. The Henry Hub natural gas spot price, the U.S. benchmark, will rise to $4.80 per million British thermal units in 2018, according to the EIA outlook. That’s 77 cents higher than the agency predicted last year for 2018, and about 60 cents higher than current prices. Ultimately, by 2040, the EIA expects natural gas to sell for $7.65 per million Btu. The federal agency said the price hike will be driven by 'faster growth of consumption in the industrial and electric power sectors and, later, growing demand for export at liquefied natural gas facilities.' The EIA is the statistical arm of the U.S. Department of Energy."
US oil boom’s end in sight, feds say
Fuel Fix (Blog), 16 December 2013

"Annual household energy bills could rise by more than £600 within seven years so power companies can keep the lights on. Sky News has learned the watchdog has written to the Treasury ahead of next week's budget to warn of rising costs. In a new forecast, consumer champion Which? has predicted energy companies will need to spend £118bn on new infrastructure between now and 2020. This would include building new power stations, replacing grids and building wind farms as part of a drive to sustain Britain's power supply and cut down on carbon emissions. Which? believes this cost will inevitably be passed on to consumers, and that households and businesses will foot the bill. This would mean that the average bill would exceed £2,000 a year even if wholesale costs of gas and electricity remain stable - an annual rise of £640 per household. Richard Lloyd, executive director of Which?, said: 'I don't think consumers know that this is heading their way and that decision has already been made by the Government. This is a massive chunk potentially on everyone's bills. This means one thing: that household bills are set to rise, and to rise for many people very steeply for the foreseeable future.'"
Annual Energy Bills 'To Rocket By 2020'
Sky New, 14 March 2014

"Post Carbon Institute has an incredibly detailed (and gorgeous!) map of all US shale oil and gas wells (they count 63,000 through June 2012 using data from Drilling Info). I’ve embedded it below so you can get lost in the crazy amount of detail..."
David Wogan - Here’s where all the US shale oil and gas wells are – map
Scientific American (Blogs), 14 March 2014

"The International Energy Agency expects the pressure on global oil markets to ease, in spite of rising geopolitical tensions, because of surging supply from Iraq and other producers. 'While international tensions may be on the rise, the pressure on oil markets seems set to ease,' the Paris-based group said in its widely followed monthly report. It also noted the extreme cold weather that had dug into US oil stocks in January had abated. US oil prices rose above $100 for the first time in five months in February because of exceptionally cold weather in the US and robust refining demand. Brent, the international marker, also rose, supported by fresh supply outages in Libya and the tensions in Ukraine. However, in recent weeks prices have eased back. Nymex April West Texas Intermediate is currently trading at $98.36 a barrel, while ICE Brent April is at $107.44.The IEA, which advises western governments on energy policy, said Iraq’s oil production had increased by 530,000 barrels a day in February to a 35-year high of 3.62m b/d. Exports rose 572,000 b/d at 2.8m b/d as infrastructure bottlenecks at Iraq’s southern export terminal were finally resolved. The IEA also noted Opec crude supplies in February had breached 30m b/d for the first time in five months, led by the surge in Iraqi production, which offset a fresh dip in Libyan output....Turning to non-Opec output, the IEA said it expected supplies to increase by 1.7m b/d in 2014, the highest rate of growth since at least the 1990s. 'The projected 2014 increase in non-Opec supply is expected to be driven by the relentless growth in US and Canadian supplies and gains in Russia, China and Brazil,' the IEA said. The IEA has been criticised by some analysts and investors for consistently overestimating non-Opec supply growth over the past decade. 'In seven of the last 10 years the IEA has overestimated non-Opec production growth for the following year. Given its role to ensure adequate supply, it is concerning that it has been so consistently optimistic and wrong,' Investec Asset Management wrote in a recent white paper on global oil supply. Many think its forecasts will again prove too optimistic. Taking just one of many examples, ambitious Brazil keeps lagging behind growth rates that have been talked about for many years,' analysts at JBC Energy wrote on Friday. 'data shows that crude output was down by more than 50,000 b/d month on month and merely flat year on year as increases in pre-salt production are eaten by declines in other offshore as well as onshore output.'"
IEA says supply surge led by Iraq will ease oil tensions
Financial Times, 14 March 2014

"A Brigham Young University professor has discovered a way to transform natural gas into liquid alcohol fuel, a process that could revolutionize world markets for an abundant natural resource. The finding by chemist Daniel Ess has important implications for Utah, which is ranked No. 10 in the United States for natural gas production and No. 11 for natural gas proven reserves. Being able to tap into the state's nearly 7,000 natural gas wells and produce fuel cheaply could ultimately reduce dependence on petroleum and emissions by cutting out a key step in the production process. The study by Ess and the Scripps Research Institute was published Thursday in Science magazine, detailing an unexpected breakthrough regarding a group of ordinary metals that trigger the conversion of natural gas to liquid alcohol. Researchers found that metals like thallium and lead trigger that conversion, which occurs at 180 degrees Celsius — or the relatively low temperature of 356 degrees Fahrenheit. Ess said the discovery ultimately allows those on the production line to bypass an expensive, high-energy step. 'In Qatar, where there is the largest amount of natural gas, they take it and separate out the components,' he said. Super-heating the natural gas cocktail of several hydrocarbons, Ess added, is 'really energy intensive and capital intensive because the temperatures have to be taken up so high. … What our study shows is that we can use these main compounds to transform natural gas into liquid alcohol.'  That conversion makes it a significantly cheaper process, he said."
BYU chemist makes breakthrough discovery on natural gas
KSL, 13 March 2014

"The U.S. could suffer a coast-to-coast blackout if saboteurs knocked out just nine of the country's 55,000 electric-transmission substations on a scorching summer day, according to a previously unreported federal analysis. The study by the Federal Energy Regulatory Commission concluded that coordinated attacks in each of the nation's three separate electric systems could cause the entire power network to collapse, people familiar..."
U.S. Risks National Blackout From Small-Scale Attack
Wall St Journal, 12 March 2014

"Opec has upgraded its forecast for world oil demand, raising the prospect of higher petrol prices ahead of next week's Budget. The cartel of 12 oil-exporting nations, which control a third of global supply, expects consumption to increase by 1.14m barrels per day (bpd) in 2014, a rise of 50,000 barrels on its previous estimate. In total, Opec economists expect the world will require 91.1m bpd of oil this year. An increase in demand could see motorists in the UK paying more at the pump. Retailers Tesco and Asda have recently launched a price war, cutting the cost of a gallon of fuel at their service stations but further cuts could be placed on hold by rising oil demand. A tighter global oil market will also add to pressure on Chancellor George Osborne not to raise fuel duty on petrol and diesel when he presents the Budget next week. 'The assumption that the global economy will see a gradual recovery in 2014, led by growth acceleration in the major OECD economies, remains valid,' said Opec in its latest monthly report, which also warned 'that recent developments in Ukraine have added to this year’s growth risk'. ... The group restated its assessment of UK production saying that output from the North Sea had fallen 10pc in 2013 to its lowest level since 1977. Opec expects North Sea oil production to be as low as 800,000 bpd this year despite the economy growing at a faster pace than the rest of Europe."
UK petrol price fears as Opec raises oil forecast
Telegraph, 12 March 2014

"Investors are turning away from the North Sea due to a lack of significant new reserves, according to the founder of a leading oil and gas exploration company. Sir Bill Gammell, who founded Edinburgh-based Cairn Energy, said the balance of potential rewards and risks for investors in the North Sea was 'not attractive'. Sir Bill, who is to stand down as chairman of the company after 25 years on the board, said he did not believe the North Sea was 'disappearing' but argued a decline was evident in recent falls in production."
Bill Gammell: investors are shunning North Sea oil... but I'm shunning indyref debate
The Herald, 8 March 2014

"Four central European countries have asked the U.S. Congress to make it easier for them to import natural gas from the United States and reduce their dependence on supplies from Russia, the Czech Foreign Ministry said on Saturday. The Visegrad 4 group including Poland, the Czech Republic, Hungary and Slovakia is looking to diversify supplies to eliminate the danger Russia could use its control of gas and oil flows to exert political pressure on the former Soviet satellite states. Supplies were briefly disrupted in 2009 during a dispute between Russia and Ukraine, through which much of the Russian gas is piped, and central Europeans fear they could be under threat again due to an escalation of tensions between Russia and the West over Russia's seizure of Crimea. Last year, Russia's Gazprom supplied the European Union and Turkey with a record 162 billion cubic metres of gas, of which 86 bcm went via Ukraine. Gazprom issued a thinly veiled warning on Friday that it could stop shipping gas to Ukraine over unpaid bills. The V4 ambassadors to Washington asked House Speaker John Boehner in a letter to remove bureaucratic hurdles and make it possible to start exporting U.S. shale gas to the region, the Czech Foreign Ministry said."
Oil and gas industry faces 'biggest challenge in 50 years'
Reuters, 8 March 2014

"EU leaders are rapidly drawing up plans to send some of their stocks of Russian gas back to Ukraine and other eastern European countries that need it, if Vladimir Putin reacts to western sanctions over the Crimea crisis by starving the continent of energy. Russia’s largest gas producer, Gazprom, said on Friday that Kiev had missed a deadline to pay $440m for gas received in February and threatened to cut off the country’s supply if it did not make the payment. Gazprom provides Ukraine with around half its gas, and other countries in eastern and southern Europe, including Poland and Greece, reportedly have low stocks of gas. Although Gazprom said the threat to Kiev would not affect the supply to the rest of Europe, western leaders are steeling themselves for a possible battle with Moscow over energy supplies. At least half of the Russian gas that is piped to Europe passes through Ukraine. Gazprom last cut off supplies to Ukraine in early 2009, leading to a slump in the supply of Russian gas to Europe. 'Either Ukraine makes good on its debt and pays for current supplies, or there is risk of returning to the situation of early 2009,' Gazprom CEO Alexei Miller said on Friday, adding that Ukraine now owed $1.89bn in unpaid bills."
EU leaders draw up plans to send gas to Ukraine if Russia cuts off supply
Guardian, 7 March 2014

"As bankers, traders and investors gathered at Gazprom's London offices for its annual champagne reception, the message from the world's most powerful gas trader was clear: the Russians don't want another gas war with Ukraine. The company, the Moscow bourse's biggest, lost over a tenth of its value on Monday as forces loyal to Russian President Vladimir Putin tightened their grip on Ukraine's Crimea region, rejecting the authority of a new pro-Western government in Kiev. Gazprom, once the world's third most valuable stock, was now worth $84 billion, five times less than during the oil boom of 2008. Fund managers with billions invested wanted to know how long the bleeding would last. 'The political agenda is out of our control,' Gazprom's export boss Alexander Medvedev told the gathering, among them the world's leading oil trader, Ian Taylor from British trading house Vitol. 'But if you look at what kind of economic decisions were taken during the Cold War, you would really hope wise people will take the right decisions....Over the past decade, Gazprom, 51-percent controlled by the state, has twice cut its supplies to Ukraine over pricing disputes with Kiev. That action also cut supplies to the EU, which gets 50 percent of Russian deliveries via Ukraine. Gazprom also helped the Kremlin nationalise Royal Dutch Shell's Sakhalin gas project as Putin re-established Russia's grip on the energy sector after predecessor Boris Yeltsin let it slip with the collapse of the Soviet Union. Though Gazprom says it defends its economic interest in such disputes, they can cost billions of dollars in value and draw criticism from investors that it is a stick for Moscow to beat its neighbours."
Insight: Third time unlucky - why Gazprom wants no new gas war
Reuters, 7 March 2014

"The political will to tackle climate change is so low that investors are happy to plough huge amounts of money into fossil fuel projects but fearful to back green energy initiatives – even though the reverse needs to happen if the world is to have any chance of meeting its agreed objective to limit global warming to 2C. That is the conclusion of a new parliamentary report, which finds that a £100bn hole has opened up in Britain's green energy finances, with investment in renewable power generation such as wind turbines and solar panels running at less than half the level required this decade. The Environmental Audit Committee report blames the Government's inconsistent approach to supporting green energy for the lack of financial backing. And it warns that investment in low-carbon energy generation is running at 'less than half' of the £200bn needed between 2010 and 2020 if Britain is to reduce its carbon emissions sufficiently to enable the country to meet legally binding environmental targets and play its part in cutting global warming to 2C. The report also blames a global political effort which it says is so weak that it has allowed investors to create a 'carbon bubble' – estimated to be well in excess of $1trn (£600bn) – by significantly overvaluing producers and heavy users of fossil fuels. This is because if the world is to limit climate change, more than half of the world's fossil fuel reserves will have to remain in the ground, the report says."
A £100bn red alert over green energy gap
Independent, 6 March 2014

"Britain must find new sources of energy fast as the quantity of imported natural gas is expected to increase at a much faster rate than the government had previously expected, the chief executive of Centrica has warned. 'In primary energy, the UK’s production of gas is falling rapidly,' Sam Laidlaw has told an international energy conference in Houston. 'North Sea oil and gas output has fallen by 38pc over the last three years. By 2020 we will be reliant on imports to meet 70pc of the country’s gas needs. So when it comes to security of supply, there is a pressing need for solutions.' Energy Minister Michael Fallon had previously said in November than Britain would import three-quarters of its natural gas by 2030, up from about 50pc at present. Late last year, Centrica signed a new deal with Qatar to import liquefied natural gas by tanker. The Gulf state already accounts for 15pc of UK supplies. Rising energy bills and a growing dependence on imported gas have increased pressure to step up development of shale resources in the UK through fracking. The vulnerability of UK energy supplies has also been exposed by the unfolding dispute between Russian and Europe over Ukraine in Crimea. Russia is Europe's largest supplier of gas and a significant exporter to the UK....Centrica has said that in the UK an estimated 3.7 gigawatts of coal-fired electricity generating capacity will be shut down by the end of 2015 as a result of European directives to curb emissions. The country’s reserve capacity is forecast to shrink to 4pc, increasing the risk of power cuts, the company said."
UK energy security at risk as gas imports surge - Centrica
Telegraph, 5 March 2014

"Russian energy giant Gazprom has increased the price of gas supplies to Ukraine, sending a chilling reminder of the power Russia holds over European energy markets. The price rise comes as escalating unrest in Ukraine threatens to boil over into war – a situation that has already stoked fears of disruption to energy supplies from Russia to other parts of the world. Gazprom chief executive Alexei Miller said his company would raise prices next month because Ukraine was not able to pay its debts in full, and would owe the company around $2bn if it did not meet its bill for February. In the past, Russian president Vladimir Putin has granted Ukraine a discount on its gas supplies. However, the deal, which has to be renegotiated every three months, has not been renewed and has handed Russia a mechanism with which to ratchet up pressure on Kiev. Mr Putin insisted that Gazprom’s decision was unrelated to political tensions. 'This makes perfect commercial sense. This has nothing to do with situation in Ukraine. We gave them money, they failed to deliver,' he said in a televised conference."
Russia cancels Ukraine's gas discount and demands $1.5bn
Telegraph, 4 March 2014

"Relying on shale gas would be a 'very expensive' solution to meeting the world’s growing demand for energy, the chief executive of BHP Billiton, the mining, oil and gas group, has said. Andrew Mackenzie, who took over at BHP last year, also called for a price to be put on greenhouse gas emissions to address the threat of global warming, and said the mining industry needed to do more to develop technology to capture and store carbon dioxide.... Speaking to the Financial Times in Houston, Mr Mackenzie said it was 'completely impractical' to suggest that shale gas could be the sole answer to providing affordable energy for the world while cutting carbon emissions. 'We have to be a little cautious about extrapolating the US experience to the rest of the world,' he said. Outside North America, shale reserves were still unproven and required much more testing and development, he added. 'It’s not particularly helpful to talk about how all our problems can be solved by something that is a very expensive solution for most countries.' BHP has gas production in the US and Australia, but also mines coal burnt in power plants, uranium used for nuclear power and copper used for electric wires, so Mr Mackenzie argues that it has an 'objective' view of the competition between different energy sources. He expects natural gas to be the world’s fastest-growing fossil fuel over the next three decades, and BHP has committed to investing $4bn a year in capital spending in its shale oil and gas business, in a planned total across the group of $16bn. It has had a bruising experience in US shale, being forced to write down $2.8bn in 2012 on assets it acquired the previous year for $4.8bn. However, it has been working to improve the efficiency of the business and says it has cut production costs in the Eagle Ford oil and gas shale formation of south Texas by 30 per cent over the past year."
BHP chief warns of shale gas reliance
Financial Times, 4 March 2014

"Household spending on energy rose 55pc over a decade, excluding the impact of inflation, as soaring prices more than offset a 17pc drop in consumption, new data show. Electricity, gas and other household fuels such as heating oil cost a typical household £106 a month in 2012, up from £69 a month in 2002, the Office for National Statistics (ONS) said - with both figures expressed in 2012 money. Energy costs increased from 3.3pc of a household's annual income to 5.1pc as a result. Consumption fell over the same period as cash-strapped consumers responded to the rising prices by cutting back on their energy usage, and as homes were fitted with insulation and energy-efficient boilers. Despite political controversy over household energy price rises in recent years, the ONS said the surge in costs had mostly taken place between 2004 and 2009.... The ONS also highlighted how retired people faced a greater burden from energy costs than their working-age counterparts, even after receipt of winter fuel payments and cold weather payments. A retired household - averaging 1.5 people - spends £97 a month on energy, comprising 7pc of their disposable income. A working-age household, by contrast, with an average 2.6 people, spends £110 a month but this comprises only 4pc of their disposable income."
Household energy costs leap 55pc in a decade, despite falling usage
Telegraph, 3 March 2014

"The North Sea produces almost half of the energy Britain needs. Scottish nationalists hope the taxes it generates, which amounted to £6.5 billion ($10.1 billion) last year, will make an independent state rich. But the oil and gas is running out. Production fell by 6% a year on average between 1999 and 2010; since then it has dived by nearly 40% (see first chart). Meanwhile costs are spurting upwards: it is nearly five times more expensive to extract a barrel of North Sea oil than it was in 2002. Investment in exploration, which once rose and fell with the oil price, is at rock bottom (see second chart) even though nine billion barrels may remain unfound. On February 25th Malcolm Webb of Oil & Gas UK, an industry body, said exploration is facing its biggest challenge in 50 years. Some of these problems are simply signs of age. Britain’s offshore fields have gushed for longer than pioneers expected; as a result, much time and cash must be spent maintaining ageing kit. As the most profitable reserves dwindle, drillers are opening up smaller fields in more difficult locations, such as the deep, wild waters found west of the Shetland Islands. Yet roughnecks say the British government’s policies have made an ever-trickier job harder. Oilmen once thought the North Sea a safe harbour from risks run in more exotic places, but successive tax grabs have changed their minds. The Labour government increased corporation tax for oil firms in 2002 and 2006; in 2011 the coalition raised it again, crushing investment. Westminster has churned through 14 energy ministers in 17 years."
Running on fumes
Economist, 1 March 2014

"Iraq exported 2.8 million barrels of oil per day in February, a top minister said Saturday, a sharp month-on-month gain and the highest such figure in at least a quarter-century. Production, meanwhile, reached 3.5 million bpd, the deputy prime minister for energy affairs, Hussein al-Shahristani, told reporters in the southern port city of Basra as he inaugurated a refinery. 'Production in February was 3.5 million barrels per day, and we exported 2.8 million barrels per day,' he said. The export figure was the highest since then dictator Saddam Hussein invaded Kuwait in 1990, triggering a crippling embargo and international sanctions that massively restricted Iraq's energy industry. In 2012, when average daily exports reached 2.5 million barrels per day, the oil ministry said it was the highest such figure since 1989. Shahristani said February output would have been significantly higher if not for energy disputes with the country's three-province autonomous Kurdish region."
Iraq oil exports hit 25-year high in February
AFP, 1 March 2014

"Prime Minister Nouri al-Maliki's dispute with Iraq's Kurdish minority over its independent oil exports has escalated with the central government blocking Kurdistan's share of the state budget and banning two airlines that operate between Europe and the Kurds' semiautonomous northern enclave. Kurdistan's president, Massoud Barzani, warned Maliki that his actions are 'a declaration of war against the people of Kurdistan.' The simmering feud between the autocratically inclined Maliki and the independence-minded Kurds seems set to escalate sharply. But Maliki is facing a potentially explosive parliamentary election on April 30, the first since U.S. military forces withdrew in December 2011. He hopes it will bring him a third term as premier, while battling a widening insurgency by the minority Sunnis and al-Qaida that many in Baghdad fear will eventually spread to Iraq's all-important oil industry, which is largely in the Shiite-controlled south."
Iraq: 'This is war,' say Kurds in oil fight with Baghdad
United Press International, 28 February 2014

"Power companies are being refused insurance cover for cyber-attacks because their defences are perceived as weak, the BBC has learned. Underwriters at Lloyd's of London say they have seen a 'huge increase' in demand for cover from energy firms. But surveyor assessments of the cyber-defences in place concluded that protections were inadequate. Energy industry veterans said they were 'not surprised' the companies were being refused cover. 'In the last year or so we have seen a huge increase in demand from energy and utility companies,' said Laila Khudari, an underwriter at the Kiln Syndicate, which offers cover via Lloyd's of London. The market is one of few places in the world where businesses can come to insure such things as container ships, oil tankers, and large development projects and to secure cash that would help them recover after disasters."
Energy firm cyber-defence is 'too weak', insurers say
BBC Online, 27 February 2014

"Investment in the UK’s North Sea, which hit a record level of £14.4bn last year, is forecast to fall by half within three years. The forecast by industry group Oil and Gas UK confirmed that overall output fell by 8 per cent, to an average of 1.43m barrels of oil equivalent a day last year. That fall followed a 31 per cent drop in production levels between 2010 and 2012."
North Sea investment forecast to fall by half
Financial Times, 26 February 2014

"Britain's oil and gas industry has warned it faces its 'biggest challenge in 50 years' due to the low levels of exploration. Industry body Oil and Gas UK said only 15 wells were drilled last year.That was despite strong levels of investment, reaching a record last year and sustained this year. Exploration drilling was down from 44 wells six years ago, only sufficient to recover a fraction of the estimated oil and gas remaining offshore. The annual activity survey by Oil and Gas UK found a rapid increase in production costs, up by 15% last year. The average cost of extracting a barrel of oil was up by 27% in only a year, to reach £17. The number of fields with cost per barrel above £30 has doubled in the last 12 months. Rising costs were cited last week by Centrica, which has decided to focus future investments in Norway and North America, rather than UK waters. With rising costs, production tax payments to the UK Treasury are expected to fall from £6.5bn during the 2012-13 financial year to £5bn in the current year. However, there is a more positive picture from high levels of investment in known reserves. That is estimated to reach £13bn during this year, slightly below the £14.4bn record set last year. Much of that was focused in four big fields. Investment is scheduled to fall by nearly half within three years, according to the industry survey. Following the rapid decline in oil and gas production from UK waters in recent years, the rate of fall slowed during 2013 - down by 8% to 1.43m barrels of oil per day, or its gas equivalent. Output is expected to rise during this year, as 25 new fields come on stream. Malcolm Webb, chief executive of Oil and Gas UK, said the results showed the contradictions at play between high investment but worrying trends in drilling, output and costs. He said: 'Even if currently planned wells proceed, the rate of drilling is still too low to recover even a fraction of the estimated six to nine billion barrels yet to be found. Britain's waters contain an abundance of oil and gas yet to be found and it is critical we find the means to turn the current state of exploration around. Rig availability and access to capital are the two main barriers noted by our members.' In addition to exploration wells, the industry last year drilled 120 development wells, a similar level to 2012. Much of the activity was in existing offshore oil and gas reserves, known as brownfield sites. Of 26 such projects, 23 were linked to new tax breaks from the UK Treasury."
Oil and gas industry faces 'biggest challenge in 50 years'
BBC Online, 25 February 2014

"Royal Dutch Shell has launched a broadside against what it says is a 'European energy crisis' that could drive a raft of new coal power plants across the continent at the expense of cleaner alternatives such as gas. Policy confusion in Brussels means as much as 11 gigawatts of coal-fired generating capacity could come on line in Europe over the next four years, according to the company, one of the world’s largest natural gas producers. That would be equal to around a dozen coal plants and it could lead to a situation where coal was locked in as an energy source even though gas is much cleaner to burn, said Dick Benschop, Shell’s head of gas market development. This would imperil the EU’s efforts to cut its greenhouse gas emissions at the same time as state support for wind, solar and other renewable energy schemes has been amounting to as much as €30bn a year, with energy consumers bearing the costs, he said. 'Europe is following a coal-plus-renewables pathway and that is a very unappealing scenario with rather high costs and low results,' he said in an interview with the FT after speaking at a London energy conference. 'At Shell, we call this the European energy paradox,' he told the conference. 'But maybe that’s an understatement. It’s a European energy crisis.' Mr Benschop’s comments underline the growing pressure on EU leaders as they prepare to meet next month to discuss the shape of the bloc’s energy and climate policies as far ahead as 2030.... The EU’s current policies last until 2020 and require a 20 per cent cut in greenhouse gas emissions from 1990 levels and 20 per cent of energy to be derived from renewable sources such as wind farms and solar plants. A new plan proposed in January would require emissions to be cut by 40 per cent by 2030 – a move Shell and many other large industry groups support. However it also says there should be a 27 per cent renewable energy target that would be binding for the EU as a whole but not for individual member states."
Shell hits out at Brussels energy policy
Financial Times, 24 February 2014

"Lundin Petroleum AB (LUPE), the Swedish explorer focused on Norway, said there won’t be any new oil output in the ice-filled waters of the Arctic for at least 15 years because of technical and logistical challenges. 'I don’t think we’ll see any oil production in the Arctic any time soon -- probably not this decade and not the next,' Chairman Ian Lundin said in a Feb. 20 interview in Stockholm. 'The commercial challenges are too big.'  The Arctic holds 30 percent of the world’s undiscovered natural gas reserves and 13 percent of its undiscovered oil, according to U.S. Geological Survey estimates. Still, exploration of the Arctic ocean floor, where 84 percent of these resources are thought to be trapped, has suffered setbacks in recent years.... As companies including Shell and Norway’s state-controlled Statoil ASA (STL) cut planned investments amid rising costs across the industry, expensive Arctic projects could get a lower priority. 'It may take a while to develop the right technology,' Lundin’s chairman said. 'Investments are very, very high so it still has to be commercially justified.' Another factor undermining the appeal of expensive exploration projects is the outlook for crude prices. Brent oil for delivery in 2016 is trading at about $97.45 a barrel, down 11 percent from the current spot price of $110.07 for the global benchmark, according to data compiled by Bloomberg from the Ice Futures Europe Exchange. An exception to Arctic challenges is the southern part of Norway’s Barents Sea, Lundin said. While inside the Arctic circle, it benefits from a less-harsh climate and shallower and ice-free waters, and may hold 8 billion barrels of oil equivalent in undiscovered resources, more than 40 percent of the country’s total. To compensate for dwindling reserves in aging North Sea fields, Norway is pushing into the Barents, which holds 54 of the 61 blocks the government has proposed issuing in its next licensing round. More than half will be in a newly opened area previously disputed with Russia. 'In the Barents Sea we’ll probably see production much sooner because there’s no technological gap,' he said. 'It’s now just a matter of having the reserve base that you’re required to have to justify the investment.'"
Arctic Oil Still Seen Decades Off as Producers Balk at Costs
Bloomberg, 24 February 2014

"Energy-saving homes, appliances and devices are sold as the cost-saving solutions of the future with claims they can cut hundreds of pounds from annual power bills. And with the cost of gas and electricity rising at far above the rate of inflation, these claims are attractive. There are increasing concerns, however, that many of these items, which can be expensive to buy and install, may not be as cost-effective as they claim. Last week, the Energy Saving Trust said customers were being duped into buying fridges, dishwashers and other household appliances that claim to be more energy efficient than they actually are. Even devices created solely to cut energy or water consumption – such as solar battery chargers, water-saving shower heads and plug-in adaptors that claim to cut appliances’ electricity consumption – have been criticised as expensive gimmicks that deliver negligible savings. There are also questions about the claims made regarding bigger purchases."
The energy 'savers' that cost you more
Telegraph, 23 February 2014

"The use of wind, solar, and other renewable energy resources will increase significantly over the next few decades, but fossil fuels such as oil, coal, and natural gas likely will continue to dominate the energy mix and drive the global economy, said Daniel Yergin, one of the world’s foremost energy experts. 'It’s a contest, or even a battleground,' Yergin said in an interview this week. 'Renewables will grow a lot, but they will still be, 20 years from now, a relatively small part of the overall mix.' Yergin is the founder of the consulting firm IHS Cambridge Energy Research Associates, and the author of the definitive history of the oil industry. 'The Prize: The Epic Quest for Oil, Money, and Power' won the Pulitzer Prize for general nonfiction in 1992. His most recent book, 'The Quest: Energy, Security, and the remaking of the Modern World,' is a follow-up to that earlier work. Yergin on Friday delivered the keynote address at the MIT Energy Conference, an annual two-day gathering of industry insiders, academics, and policy makers."
Fossil fuels remain at the forefront, energy expert says
Boston Globe, 22 February 2014

"The mothballing of Keadby [coal fired power station] is sad for the dozens of staff who have had to be redeployed. It is part of a far larger problem for the UK as a whole. The plant has been shut down just as Britain braces for a sharp reduction in its power capacity as ageing coal-fired plants and nuclear reactors are decommissioned. Some are even warning the UK could be facing its first wave of blackouts in 40 years. Britain’s power problems are symptomatic of a global industry undergoing wrenching change. Traditional thermal generation is under pressure from climate change policies, volatile commodity markets and the rise of renewables. All of Europe’s incumbent power providers are facing what Peter Terium, chief executive of RWE, the German utility, has described as the 'worst structural crisis in the history of energy supply'. Few experts predict UK power cuts on the scale of the 1970s miners’ strikes, when industry moved to a three-day week and households switched to candlelight. But there could still be a palpable impact, especially if the constraints coincide with an outage on the scale of a nuclear plant such as Sizewell B in Suffolk. 'Your light will flicker or the intensity will be reduced,' says Paul Smith, head of generation at SSE, one of the Britain’s Big Six energy suppliers. 'Or industry will be asked to switch off.' Dieter Helm, professor of energy policy at Oxford university, says the capacity squeeze is the result of years of policy mistakes. 'There have been 20 years of complacency about security of supply,' he says. 'We’ve been living on the legacy of the stuff we built in the 1970s.' The alarm was first sounded by Ofgem, the energy regulator, in a 2009 report that said Britain faced an 'unprecedented challenge to secure supplies to consumers'. It said that by mid-decade, the UK would face a troubling tightening in the electricity margin, the safety cushion of available generation over peak demand. Over the intervening years, its warnings have become even more strident. Last summer it said the margin could drop to between 2 and 5 per cent by the winter of 2015-16 from more than 15 per cent in 2011-12. Ignacio Gálan, head of Iberdrola, the Spanish utility which owns Scottish Power, says: 'Anything less than 10 per cent is risky.' At issue is the lack of plans for new power plants to replace the coal and nuclear facilities being retired over the next few years. Companies complain that the economic signals are absent for investment in new capacity, particularly gas-fired stations. The economics of gas are now so poor that existing plants such as Keadby are being shut. Furthermore, the pledge by the Labour party to freeze gas and electricity prices if it wins the next election was met with horror by the biggest power suppliers. 'It is inconceivable that the board of directors of one of the Big Six would sign off on a big investment in the UK with this price freeze hanging over them,' says Peter Atherton of Liberum Capital. That, in turn, could affect the plans of other companies. 'If you’re a big industrial firm, you’re really going to think twice about building a new manufacturing facility in the UK with reserve margins where they are,' says Ziko Abram, co-director of Kiwi Power, which helps companies reduce energy consumption. 'Not having enough electricity is going to affect your production and returns.' Britain is not the only country where gas-fired generation is in dire straits. All over Europe, the big utilities are mothballing plants. The problem is particularly acute in Germany, where booming renewables have depressed wholesale electricity prices and shoved aside traditional thermal generation. RWE announced this month that it was shutting its Claus C gas plant in the Netherlands – one of the most modern power stations of its kind – just two years after it was commissioned. 'The energy sector in Europe is really in danger,' said Gérard Mestrallet, chief executive of GDF Suez, the French power group, which has been forced to close gas plants equivalent to the capacity of 10 nuclear reactors in recent months. It is the US shale boom that is killing gas-fired power in Europe. As American generators switched to plentiful domestic shale gas, US coal went in search of a new market – and flooded into Europe. Suddenly it became far more profitable for European utilities to generate electricity from cheap US coal than from gas. Fukushima did not help. In the wake of the 2011 tsunami and nuclear disaster, Japan closed all its reactors, and started consuming much more natural gas. As Japanese demand rose, gas prices shot up in Europe and Asia. As a result, the 'clean spark spread' – the profit margin from gas-fired power generation – went into sharp decline. In the UK, it went into a loss. Companies started to take their gas stations offline. Across Europe, the closure of so much thermal capacity was a setback for the utilities, but did not undermine the resilience of the energy system. It was worse in the UK, where the industry was already struggling with the effect of the Large Combustion Plant Directive, an EU measure designed to limit power plant emissions. Some stations could opt in to the directive and commit to cleaning up. Those that opted out received an allocation of hours and would close once they had used them up. But because of the unexpected influx of US coal, Britain’s opted-out coal plants have been burning through their allotted hours more quickly than expected – and so will shut down sooner than thought. By the end of next year, 11.5 gigawatts of coal and oil-fired capacity will have closed due to the directive. The UK authorities have known for years that this was going to happen. But they expected the old plants to be replaced by new offshore wind farms and nuclear reactors. That has not happened. 'We’re not seeing the wave of new construction that the government has pencilled in,' says Liberum’s Mr Atherton. Ministers have not been idle as the reserve margin tightened. In a bid to ensure that the lights stay on, the Conservative-Liberal Democrat coalition has pushed ahead with the most radical reform of the electricity market since privatisation. The energy bill that was passed last year establishes a new subsidy regime for low-carbon generation, which will cost consumers £7.6bn a year by 2020. It also has a new 'capacity mechanism' for gas-fired power, under which generators will be paid to keep their plants available as back-up. That is seen as crucial as the UK brings on more intermittent wind power. The government argues there is no risk of the lights going out. 'Government, Ofgem and National Grid are taking co-ordinated action to ensure security of electricity supply,' it says, citing the capacity market as an example. But experts say the mechanism will be launched too late to get Britain through its coming energy squeeze. 'The first capacity auctions will happen later this year, for delivery in 2018,' says Prof Helm. 'And the crunch is coming in 2015-16.'.... Prof Helm says that was one of the factors behind the current mess. 'The market that was created is not designed to incentivise investment sufficiently,' he says. 'So there was inevitably going to be a crunch.' Others see the problem more broadly – in a privatised energy system where no one is in overall charge of making sure the lights stay on. National Grid is responsible for balancing supply and demand but it cannot build power stations. The companies that can – the Big Six – have no obligation to do so. 'When the gas and power sector was in public ownership, the Central Electricity Generating Board had a national plan of what was required and the government ensured that power stations got built,' says Neil Upton, co-head of energy and infrastructure at King & Wood Mallesons, a law firm. 'Now the primary obligation of the Big Six is to shareholders, not to the UK populace, in terms of security of supply.'... Experts believe power cuts are unlikely. Before it gets to that point, National Grid will pay companies to switch off their energy supply. So shutdowns will be voluntary and by consultation, not forced or by surprise. But what is not in doubt is that if supply tightens, prices will rise. That will inevitably have a knock-on effect on household bills. 'The UK wholesale price is already about twice the German power price,' says Dieter Helm, professor of energy policy at Oxford university. Capacity crunches are not new to the British energy system. In January 2009 the output of the UK’s wind turbines fell close to zero megawatts for a period of 10 days. In May 2008 there were simultaneous unplanned outages at Longgannet coal-fired power station in Scotland and the Sizewell B nuclear plant in Suffolk. Britain has an important safety valve – interconnectors that link up with the European mainland. The country can use them to import electricity at times of tight supply, but they are also used to export power. In a report published last year, the Royal Academy of Engineering warned that, in theory, the interconnectors could export electricity at a time when UK generators were struggling to meet peak demand. The report modelled a worst-case scenario. It assumed that by the end of the decade, ageing power plants would continue to close and not be replaced. What if that was combined with zero wind, two big plant failures and significant exports of power through the UK’s interconnectors? And what if you added an economic recovery that fed into an increase in peak electricity demand from the current 58,000MW to about 60,000MW? In such a scenario, the report said 'the system would struggle to meet demand'. The report emphasised that such a doomsday situation was unlikely."
Energy: Power down
Financial Times, 20 February 2014

"Wind turbines can remain productive for up to 25 years, making wind farms a good long-term choice for energy investors, according to new research. The UK has a target of generating 15 per cent of the nation's energy from renewable resources such as wind farms by 2020. There are currently 4,246 individual wind turbines in the UK across 531 wind farms, generating 7.5 per cent of the nation's electricity. There has been some debate about whether wind turbines have a more limited shelf-life than other energy technologies. A previous study used a statistical model to estimate that electricity output from wind turbines declines by a third after only ten years of operation. Some opponents of wind power have argued that ageing turbine technology could need replacing en masse after as little as ten years, which would make it an unattractive option in economic terms. In a new study, researchers from Imperial College Business School carried out a comprehensive nationwide analysis of the UK fleet of wind turbines, using local wind speed data from NASA. They showed that the turbines will last their full life of about 25 years before they need to be upgraded. The team found that the UK's earliest turbines, built in the 1990s, are still producing three-quarters of their original output after 19 years of operation, nearly twice the amount previously claimed, and will operate effectively up to 25 years.  This is comparable to the performance of gas turbines used in power stations."
New research blows away claims that ageing wind farms are a bad investment
Imperial College London, 20 February 2014

"One might have the impression that hydraulic fracturing (fracking) of shale deposits is the answer to world energy security. Certainly fracking has received much attention and investment, but its prospects must be considered in a broader context. In the US, where practically all such operations have been conducted to date, fracking now accounts for 40% of domestic gas production and 30% of oil production. The price of natural gas has plummeted, and overall US oil production has increased for the first time since 1970, which had otherwise been falling in accordance with the predictions M King Hubbert made in 1956. However, this last point is the salient one. Sources of unconventional oil (listed below) such as tight oil (or ‘shale oil’ in popular discourse) are only commercially viable because the need to match the declining rate of conventional oil production has raised oil prices. It is the rate of production of oil that determines its supply, rather than the size of the reserves: ‘The size of the tap, not the tank.’ Current data for the decline in oil fields’ production indicates that around 3 million barrels per day of new production must be achieved year on year, simply to sustain supply levels. This is equivalent to finding another Saudi Arabia every 3–4 years. In this context, fracking is at best a stop-gap measure. Conventional oil production is predicted to drop by over 50% in the next two decades and tight oil is unlikely to replace more than 6%. Once conventional oil’s rate of loss exceeds unconventional oil’s rate of production, world production must peak. Production of sweet, light crude actually peaked in 2005 but this has been masked by the increase in unconventional oil production, and also by lumping together different kinds of material with oil and referring to the collective as ‘liquids’. (More recently, the term ‘liquids’ is often upgraded to ‘oil’, which is highly disinformative since the properties of the other liquids are quite different from crude oil.). Fracking produces mostly shale gas (rather than oil), and the major growth in global ‘oil’ production has been from natural gas liquids (NGL; in part from shale gas). But the principal components of NGL are ethane and propane, so it is not a simple substitute for petroleum. The energy return on energy invested (EROEI) is worse for all unconventional oil production methods than for conventional oil. This means that more energy must be invested to maintain output. As a rough comparison, conventional crude oil production has an EROEI in the range 10–20:1, while tight oil comes in at 4–5:1. Oil recovered from (ultra)deepwater drilling gives 4–7:1, heavy oil 3–5:1, and oil shale (kerogen) somewhere around 1.5–4:1. Tar sands is around 6:1, if it is recovered by surface mining, but this falls to around 3:1 when the bitumen is ‘upgraded’ by conversion to a liquid ‘oil’ substitute. As conventional oil production has fallen, so has oil’s EROEI as we recover it from increasingly inhospitable locations, and with new technologies. The price of a barrel of oil has trebled over the past decade, but output has effectively flatlined. We may be close to the ceiling of global oil production, and the prospect of filling the gap with oil from alternative sources is daunting. Although fracking has produced sizeable volumes of oil and gas in the US, there is no guarantee that a similar success will be met elsewhere, including the UK, in part because the geology is different. Even in the US, it is the sweet spots that have been drilled, and the shale plays elsewhere across the continent are likely to prove less productive. The shale gas reserves in Poland have been revised down from 187 trillion cubic feet (tcf) to 12–27 tcf: at best, a mere 14% of the original estimate. And most of the production is likely to be gas. Even if we can exhume large volumes of gas at a generous production rate, converting our transport system to run on it would be a considerable undertaking, particularly given the timescale imposed by conventional oil production’s rate of decline. And there are many uses for oil other than to provide liquid fuels, for which substitutes must also be found. Renewables do not provide a comparable substitute for crude oil and the liquid fuels that are refined from it, since the potential contribution from biofuels is relatively minor. Replacing the UK’s 34 million oil-powered vehicles with electric versions is an unlikely proposition, given the limitations of time and resources such as rare earth metals. Mass transit is the more likely future for electric transport than personal cars. The end of cheap, personal transport is a real possibility and may seed changes in our behaviour, such as building resilient communities that produce more of their essentials, such as food and materials, at the local level. There are many uncertainties, but it seems clear that the age of cheap oil is over. We are entering a very new and different phase of human experience."
Peak oil is not a myth
Chemistry World, 20 February 2014

"As the years go by, those studying peak oil are beginning to develop a better understanding of what has been happening since the concept of limits to oil production came to widespread attention. First of all, it is important to understand that in one sense, production of what had been thought of as 'conventional oil' really did peak back in 2005. While there has been growth in certain sectors of the 'oil' industry in the last nine years it has come in what are known as 'unconventional liquids' and as we shall see the maintenance of existing conventional oil production has come at a very high price. The recent growth in the 'oil' production has been nowhere near what had been normal prior to the 'great recession' so that if anyone should wonder why our economy has been stagnant in recent years, one can take the price and availability of oil as a good starting point. US consumption has been falling at 1.5 percent a year since 2005 as opposed to a normal growth rate of 1.8 percent in prior years. In the last decade global oil production grew by only 7.5 percent and not the 23 percent that would have been needed to support the growth the world’s GDP at a rate we would have liked to have seen. Since 2005, total 'oil' production has grown by 5.8 million b/d of which 1.7 million consists of natural gas liquids (NGL). While NGL’s are valuable and a useful form of what we now call 'oil', they do not contain the same energy as crude and have a more limited range of uses thereby contributing less to economic growth. US unconventional liquids (shale oil and NGL’s) now are up by 5.1 million b/d since 2005. Along with an additional million b/d from the Canadian tar sands, North American non-conventional liquids constitute nearly all the growth in the world’s oil supply in recent years. Production of conventional crude has remained essentially flat during the period. Moreover, OPEC production has dropped by nearly two million b/d in the last three years largely due to wars, insurgencies, and embargoes and another 1.7 million b/d of its 'oil' production has been NGL’s and not crude. The world’s existing fields are depleting at rate of circa 4 million b/d each year so without constant drilling of new wells in new fields global production will quickly wither and prices will climb still more. A good estimate is that the oil which now costs about $110 a barrel will be at $140 or above by the end of the decade unless some major geopolitical upheaval sends it still higher. To keep the oil flowing, the world’s oil companies have invested some $4 trillion in the last nine years to drill for oil. About $2.5 trillion of this was spent on simply replacing production from existing oil fields. Even this gigantic expenditure was not enough since conventional oil production fell by 1 million b/d during the period. About $350 billion went to drill shale oil and gas wells in the US, and increase Canadian oil sands production. This was clearly a bargain as compared to maintaining conventional oil production which now is focused on ultra-expensive deep water wells. Recent announcements by the major oil companies indicate that they reached their limit. Profits and production are falling. Expenditures for finding and developing oil fields have tripled in the last decade and the return from these expenditures has not been enough to justify the costs. Nearly all of the major oil companies have announced major reductions in their exploration and drilling programs and several are selling off assets as they are caught in a trap between steady oil prices and rapidly rising operating costs.... What is going to happen in the next few years? First, investments in future production are going down, meaning that in a few years depletion likely will overwhelm new production and output of conventional oil will drop.... With much of the growth in global oil production coming from US shale producers, a fair question is just how long fracked shale oil production will continue to grow — opinions vary. Some foresee the possibility that growth will slow considerably this year, while others think there are two or three years of large production increases ahead. The three months of extremely cold and snowy weather we have had this winter is already hurting production, but most believe production will rebound in the spring. Even though production of conventional oil peaked nine years ago, massive investment and a five-fold increase in oil prices has allowed the economical production of shale and deepwater oil at a profit since 2005. Further growth shale oil production, however, clearly has a half-life, be it one, three or five years. Recent news concerning deepwater oil production is not encouraging. Brazil’s deepwater oil fields which are thought to contain many billions of barrels of oil are not looking too good at the minute due to the very high costs and risks of production. All in all, the recent news from the oil industry tends to be one of growing pessimism."
The Peak Oil Crisis: A Winter Update
Falls Church News-Press Online, 18 February 2014

"Companies that pay low levels of corporation tax in the UK and use large amounts of energy could be penalised under proposals to overhaul the controversial business rates system. Retailers are proposing a radical change to business rates - a tax which is currently charged on commercial properties such as shops, offices and pubs - to focus on energy usage or contributions to the UK economy through corporation tax. A proposal to transform the business rates system from a property-based tax into an energy levy is one of four recommendations published on Tuesday by the British Retail Consortium (BRC), whose members claim the present system is 'outmoded' and 'anachronistic'."
Retailers propose new energy tax to replace business rates
Telegraph, 18 February 2014

"China imported historically high quantities of uranium last year, apparently pre-purchasing at low prices before the commissioning of new nuclear plants. The spot price rose just US25c a pound last week, to $US35.75/lb, insufficient to encourage a uranium explorer to get out of bed in the morning, let alone contemplate starting a new mine. Yet it was reported that this slight upward movement was triggered by news that an 'institutional investor' was in the market for one million pounds of the stuff."
China stockpiles cheap uranium as severe shortage is anticipated
The Australian, 17 February 2014

"Oil flows relatively easily through the porous rocks that make up a conventional reservoir, so a conventional well can tap a large area. As a result, the volume of oil pumped each day declines slowly, on average at 6% per year. By contrast, oil flows much more sluggishly through impermeable tight rock. A well will tap a much smaller area and production declines quite rapidly, typically by 30% a year for the first few years (see chart 2). Maintaining a field’s production levels means constant drilling. The International Energy Agency reckons maintaining production at 1m barrels per day in the Bakken requires 2,500 new wells a year; a large conventional field in southern Iraq needs just 60. This all means that when oil prices rise, producers can quickly drill more holes and ramp up supply. When prices fall, they simply stop drilling, and production soon declines. In early 2009, after prices collapsed with the global financial crisis, Pioneer shut down all its drilling in the Permian Basin. Within six months, output in the affected areas dropped by 13%.... The oil price at which shale producers break even ranges from $60 in the Bakken to $80 in Eagle Ford, reckons Michael Cohen of Barclays, a bank. If exports yielded an extra $1 to $1.30 a barrel, he estimates that might raise total output by as much as 200,000 barrels per day. If the ban were lifted, crude-oil exports could start more or less straight away."
The economics of shale oil - Saudi America
Economist, 15 February 2014

"The biggest western oil companies are continuing to see their oil output decline, despite record investment in recent years spurred by sustained crude prices in excess of $100/barrel, according to data released by the companies. Furthermore, with total world oil output continuing to rise every year, the western majors are seeing their share of the global market fall even faster, with new volumes coming largely from their rivals in places like Russia and a host of smaller companies at the heart of the shale oil boom in the US. Combined output of crude and other liquids by the seven biggest western majors -- ExxonMobil, Shell, BP, Chevron, Total, ConocoPhillips and Eni -- amounted to 9.517 million b/d last year, down 2.2% from 2012 and marking the fourth consecutive year of decline. Liquids output from the same group has been falling every year of late, having been as high as 10.865 million b/d in 2009. As a group, the seven have seen their combined liquids output fall by 1.348 million b/d, or 12.4% over the period from 2009 to 2013. The most notable contribution to the overall decline comes from BP, whose production of oil and other liquids has fallen by more than 30% from 1.695 million b/d in 2009 to 1.176 million b/d in 2013. These figures do not include production associated with BP's current 19.75% stake in Russia's Rosneft or its previous 50% stake in Russian oil producer TNK-BP. This is a much sharper fall than other majors have experienced, and is evidence of the scale of the asset divestment program the company has been going through to cover its actual and potential liabilities in the wake of the disastrous Gulf of Mexico oil spill in 2010. While its peers have not seen production fall by the same degree, they have nonetheless all experienced declining oil production since 2009. Even ExxonMobil, the biggest of the group in terms of production and profitability, saw its oil output fall by 4.5% in 2011 and 5.5% in 2012, the two years with the highest average international oil prices of all time. In 2013 ExxonMobil's oil output rose by 0.8% to 2.202 million b/d, but it still remained more than 200,000 b/d below where it was in 2010. Shell, Chevron, Total, ConocoPhillips and Eni also all saw their liquids production fall in 2013. Total's output declined by 15.5% between 2009-13, Eni's by 17.3% and ConocoPhillips' by 12.4%. Shell has seen the smallest fall of 2.5% over thesame period. According to the International Energy Agency, total world oil supply has risen in recent years from 85.66 million b/d in 2009 to an average of 91.53 million b/d in 2013. As a result, the seven leading western majors have seen their share of this total supply fall from 12.7% to 10.4% over the same period. While this group is seeing its production fall, others have clearly been heading in the opposite direction. The most obvious is Russia's Rosneft, which has grown at breakneck pace in recent years on the back of a debt-funded acquisition spree, including the purchase of former rival TNK-BP. Rosneft is now the world's biggest publicly listed oil producer with total crude and liquids output of close to 4.2 million b/d. In other words, Rosneft alone now produces almost as much oil as ExxonMobil, BP and ConocoPhillips combined. The western majors are not short of either the expertise to produce more oil or the money to fund developments after 2013 marked the third consecutive year of Dated Brent prices above $108/barrel. The recurring challenge for the western companies in recent years has been to find attractive investment opportunities, with several of the world's leading oil reserves holders offering limited, or even no access to international operators. 'It's an access question,' said an official from one of the western majors, who asked not be identified. 'Who will let us in? They'll only let us into the difficult bits like the deepwater projects, or tight gas, that kind of thing,' he said. With their liquids output falling, the so-called 'oil majors' are gradually becoming less oily and more reliant on gas production. Oil accounted for more than 60% of ExxonMobil's total hydrocarbons output in 2009, but by last year this figure had fallen to less than 53%. It is a similar story for Total, where oil's share of total production has fallen from 60.5% in 2009 to 50.8% in 2013. Shell produced more gas than liquids last year, the third time in the last four years this has happened, and BP is not far away from a 50:50 split. Of the seven majors who embody the image of 'Big Oil' the only one bucking the trend towards greater gas exposure is Chevron, where oil continues to account for two thirds of all production -- a full 10 percentage points more than any of the rest of the peer group."
'Big oil' getting smaller as production keeps falling
Platts, 14 February 2014

"Plans to explore for shale gas on a site in a national park located southwest of London have been temporarily put on hold by the local authority after the application received an unprecedented number of responses. The British government is strongly supporting the development of shale gas by offering favourable tax terms as it seeks to reduce dependence on gas imports. Opposition to the unconventional drilling method has been growing in Britain, however, on grounds that it is harmful to the environment and that one project had triggered earth tremors. The South Downs National Park Authority has requested oil and gas explorer Celtique Energie Weald to submit more details on noise and geological aspects of its application to drill for oil and gas and, if found to be present, later extract shale gas on a site at Fernhurst. 'National Park will be submitting a request for further information," the authority's chief executive, Trevor Beattie, said at a planning meeting late on Thursday, according to his speech sent to Reuters. 'This will put the Fernhurst application on hold whilst the applicant provides the additional information we require.'"
Local British authority puts shale gas exploration on hold
Reuters, 14 February 2014

"If you thought shale gas was a nightmare, you ain't seen nothing yet. A subterranean world of previously ignored reserves is about to be opened up. These are the vast coal deposits that have proved unreachable by conventional mining, along with gas deposits around them. To the horror of anyone concerned about climate change, modern miners want to set fire to these deep coal seams and capture the gases this creates for industry and power generation. Some say this will provide energy security for generations to come. Others warn that it is a whole new way to fry the planet. A primitive version of the technology behind this Dantean inferno of underground coal gasification (UCG) has already been running for 50 years.."
Fire in the hole: After fracking comes coal
New Scientist, 13 February 2014

"The founder of shale gas firm Cuadrilla is planning a venture to frack in the Irish Sea, the BBC has learned. Dr Chris Cornelius believes there are large volumes of offshore shale gas that could be extracted. If successful, it would be the first such project in the world. Dr Cornelius' new firm Nebula Resources was awarded three licences in the Irish Sea last month by the Department for Energy and Climate Change and hopes to begin exploration soon. 'Certainly offshore shale gas is a new concept, and there's no reason with the UK's history of offshore development that we can't develop these resources offshore,; he told the BBC. No longer involved with Cuadrilla, he now hopes to drill the world's first offshore shale gas wells..... The British Geological Survey has estimated that the UK's total offshore shale gas resources could be between five and 10 times the size of the resources available onshore. 'We're very comfortable that the resource is there and the numbers are absolutely ginormous,' Dr Cornelius said. 'Is any of that exploitable? That's the billion dollar question and we won't know that for many years.' Though it has only recently become controversial, fracking has been used on a smaller scale for many years, to improve the flow from conventional oil and gas wells. It has also been routinely undertaken offshore on conventional reserves, including in the North Sea. But fracking the large numbers of wells needed to extract offshore shale gas commercially has never been done. Professor Dieter Helm of Oxford University is sceptical about whether offshore shale gas could be a big contributor to UK energy in the next decade, but says that it could have potential in the longer term. 'It's perfectly plausible that in 20, 30 or 40 years, the fracking technology will have so advanced and the way in which we deal with the offshore environment will have so advanced that this could be a really big industry. The task in the next 10 years is to try these things out, see if they work.'"
Shale gas pioneer plans world’s first offshore wells in Irish Sea
BBC Online, 13 February 2014

"US scientists have announced an important milestone in the costly, decades-old quest to develop fusion energy, which, if harnessed successfully, promises a nearly inexhaustible energy source for future generations. For the first time, experiments have produced more energy from fusion reactions than the amount of energy put into the fusion fuel, scientists at the federally funded Lawrence Livermore National Laboratory in California said on Wednesday. The researchers, led by physicist Omar Hurricane, described the achievement as important but said much more work is needed before fusion can become a viable energy source. They noted that did not produce self-heating nuclear fusion, known as ignition, that would be needed for any fusion power plant. Researchers have faced daunting scientific and engineering challenges in trying to develop nuclear fusion - the process that powers stars including our sun - for use by humankind. 'Really for the first time anywhere, we've gotten more energy out of this fuel than was put into the fuel. And that's quite unique. And that's kind of a major turning point, in a lot of our minds,' Hurricane told reporters. 'I think a lot of people are jazzed.' Unlike fossil fuels or the fission process in nuclear power plants, fusion offers the prospect of abundant energy without pollution, radioactive waste or greenhouse gases. Unlike the current nuclear fission energy that is derived from splitting atoms, fusion energy is produced by fusing atoms together. Experts believe it still will be many years or decades before fusion can become a practical energy source. 'I wish I could put a date on it,' said Hurricane. 'But it really is [just] research. And, you know, although we're doing pretty good, we'd be lying to you if we told you a date.'"
Scientists achieve 'turning point' in fusion energy quest
Syndney Morning Herald, 13 February 2014

"The prices and profits of British Gas have been questioned by the energy minister, who suggested it might have to be broken up. In a letter to regulators, Ed Davey said profit margins made by the "big six" energy firms when supplying gas were higher than previously thought. He called on regulators to study the dominance of British Gas, which said it would participate in any discussions.... Tables accompanying Mr Davey's letters show that Centrica, which owns British Gas, saw profit margins of 11.2% for its gas business in 2012 and a 41% share of the gas market. SSE also has a high profit margin of 11.4% but a much smaller market share; therefore this was not seen as such a problem. A spokesman for the company said: "SSE expects that it should make an average profit margin in energy supply of 5% over the medium term. "In recent years our accounts show that we have made less than that. Profit margins from supplying gas, in particular, can be heavily influenced by the weather in any given year, as abnormally cold temperatures can increase the amount customers use." Rival EDF made a 4.1% loss on gas in 2012. The analysis compares this with the profit margins of supermarkets, which typically range from 3.5% to 5%."
Energy firms' gas profit margins questioned by minister
BBC Online, 10 February 2014

"Campaigners who claim Britain is engaged in a 'gas grab' in Algeria at the expense of its commitment to human rights and climate change will protest at an investor conference at the London Stock Exchange on Monday morning. A demonstrations will take place outside the meeting taking place in Paternoster Square from 8.30am to 9.30am, which is supported by the government's UK Trade & Investment (UKTI) arm and the Algerian embassy. It comes as a highly critical report, Reinforcing Dictatorships: Britain's Gas Grab and Human Rights Abuses in Algeria, is published....'The Algerian regime, lacking in popular legitimacy, is seeking to deepen its relations with western capitals such as London. Arms and gas deals being made at this investor conference in London directly contribute to the longevity of an authoritarian and repressive regime at the expense of the human rights of the Algerian people,' said Hamza Hamouchene, the report's author and chair of the Algeria Solidarity Campaign, which has been working alongside the London-based oil and gas watchdog Platform. Algeria has some of the largest natural gas reserves in Africa and is already an important supplier of energy to the UK via liquefied natural gas (LNG) shipped to import terminals such as the Isle of Grain in Kent. A recent briefing from the UKTI Defence and Security Organisation said Algeria could provide as much as 10% of the UK's gas needs through the newly expanded terminal in the south of England. Platform says documents it has obtained under the Freedom of Information Act show the British government is engaged in a high-level push to strengthen energy ties with Algeria. Partly as a result of the takeover of the US oil firms Amoco and Arco in 1998 and 2000 respectively, BP is one of the largest foreign investors in Algeria, with two operating fields and assets estimated to be worth about $5bn. BG also has interests there as the operator of the Hassi Ba Hamou permit. Of the £303m worth of UK export licences to Algeria approved between 2008 and June 2013, £290m worth were classified as 'military', according to research carried out by the Campaign Against Arms Trade group. In a separate 2013 briefing produced by Amnesty International, the Algerian authorities were accused of restricting freedom of expression, dispersing demonstrations and harassing human rights defenders. On Sunday the British government defended the investor conference and the UKTI activities, but said human rights was one of the subjects under discussion between the two countries."
Activists accuse Britain of 'gas grab' in Algeria despite human rights abuses
Guardian, 9 February 2014

"Israel has taken a step closer to becoming a natural gas exporter after Australia's Woodside Petroleum Ltd signed a deal to take a 25 percent stake in the huge East Mediterranean Leviathan gas field. The Australian company, considered a leader in the booming liquefied natural gas (LNG) sector, signed a preliminary agreement on Thursday to buy a quarter of the Leviathan field off the coast of Israel for up to $2.55 billion. Leviathan is estimated to hold about 19 trillion cubic feet (540 billion cubic metres) of natural gas, enough to supply all of Europe for over a year. The field is being developed by U.S.-based Noble Energy Corp , which will remain the project's lead partner with a 30 percent stake, while the other groups involved, Israel's Delek Group, Avner Oil Exploration and Ratio Oil Exploration, will each sell one-quarter of their stakes to Woodside."
Israel takes step towards becoming a gas exporter
Reuters, 7 February 2014

"The United States is awash in oil, yet analysts at RBC Capital Markets don't expect that to pull benchmark crude prices much lower. In its five-year outlook, published Thursday, RBC analysts said soaring U.S. production will be absorbed by the rest of the world 'with only modest price impact' over the next year. The world's largest economy is churning out record amounts of crude, and is mulling whether to export some of it abroad—something it hasn't done in decades.  Last month, the Energy Information Administration said the U.S. would pump huge amounts of oil and natural gas through at least 2016, with annual crude production challenging the 1970 record of 9.6 million barrels per day. The bank pointed out that U.S. production has surged by nearly 50 percent since its 2008 low, to its current 8 million barrels per day (bpd). With the shale boom accelerating, RBC estimates that production could grow by at least 700,000 bpd each year through 2016. That could lead to oil supply from the U.S. partly displacing that from OPEC, which is in the throes of supply disruptions amid turmoil in Libya and Iraq. 'We see OPEC continuing to cede market share to the U.S. in the near to medium term,' said the analysts, who do not view supply growth from non-OPEC countries as a major threat to prices.  They wrote that they expect U.S. oil production to reach 11 million bpd in 2018 and for 'the U.S. to become the world's largest oil producer in late 2016.'  In spite of these crosswinds, RBC said, 'we don't believe the current wave of U.S. oil growth will cause an oil price collapse.' It foresees West Texas Intermediate trading between $92 and $94 in 2014-15, with Brent floating in a range of $102 to $103."
US cranking out crude, but don't expect lower prices: RBC
CNBC, 6 February 2014

"Large-scale fracking in the UK is not likely to lead to big reductions in household gas bills, Chancellor George Osborne has said. Extracting shale gas would boost tax receipts and aid the UK economy, Mr Osborne said. But he played down expectations that consumers would see big reductions in prices in evidence to a Lords committee. David Cameron has previously said it had 'real potential' to cut bills. Speaking to the House of Lords economic affairs committee, Mr Osborne said both he and the prime minister were big supporters of fracking. But he said he did not want to suggest that the UK would see the kind of price cuts seen in the US - where prices are down by up to 40%."
Osborne: Fracking may not slash household energy bills
BBC Online, 4 February 2014

"Shale gas is no more than a long-term possibility for the UK and should not be a key plank of energy policy for the next decade, one of the most senior Liberal Democrats in the cabinet has warned. Vince Cable, the business secretary, told the Guardian shale gas would not be a reality in the UK for at least a decade, and that energy policies should focus on renewable energy. His views are at odds with the attitude of many senior members of the Tory party, who have spoken out in favour of shale gas exploitation as a form of indigenous energy that could bring down energy bills and an alternative to investment in renewable energy."
Vince Cable: shale gas won't be a reality in UK for at least a decade
Guardian, 4 February 2014

"Natural gas once promised to revolutionise the transport industry in the 1970s, as skyrocketing petrol prices following the Arab oil embargo forced some hard-pressed motorists to convert their vehicles to the cheaper fuel. But gas conversion in cars never really caught on in Britain as oil markets quickly stabilised and the high cost of converting engines to run off the fuel put off many consumers. That’s not to mention the propensity for some natural gas-powered cars back then to catch fire unexpectedly. Today, natural gas is once again being tipped to transform the global transportation industry as governments impose tighter controls on emissions and large industrial users seek cheaper fuel sources to reduce the cost of hauling goods around the world. A recent study by Wood Mackenzie claims that demand for natural gas for transportation will surge over the next 20 years and could even have a significant impact on world oil markets. The Edinburgh-based company expects that consumption of gas in the transport industry will quadruple to 160bn cubic metres a year, accounting for 3.4pc of total world demand by 2030. Cars, large ships and even trains will increasingly convert from diesel and other oil-based fuels, according to the energy consultancy firm.'Gas has traditionally played a niche role in global transport but it is now garnering greater attention due to two principal drivers,' said Noel Tomnay, head of global gas research for Wood Mackenzie.'First, oil and gas price differentials are now making investment in gas refuelling infrastructure worthwhile and second, increased environmental restrictions on emissions are encouraging wider global uptake.' Despite Wood Mackenzie’s forecast for the growing use of natural gas in transport, its application in practice faces significant challenges such as the availability of refuelling points and the poor driving range of vehicles using the fuel. The choice of new natural gas vehicles (NGVs) on the market is also limited, with alternatives such as hydrogen and electric power attracting more investment. Car manufacturers are spending billions of pounds to develop more efficient electric cars, which could have greater appeal than natural gas.... The impact which the growing use of natural gas for transportation would have on oil markets could be profound. According to Wood Mackenzie, natural gas used for transportation in 2012 was equivalent in raw energy terms to about 700,000 barrels a day (b/d) of crude oil. By 2030, this will be equal to about 3m b/d of oil. Diesel demand, mainly for large articulated lorries and buses, as well as gas oil used in shipping, will be the hardest-hit areas of the market. Wood Mackenzie forecasts that 10pc of the global bunker market for shipping will be met by liquefied natural gas (LNG) by 2030. As with the outlook for most hydrocarbons, increasing urbanisation in China will also play a critical role in the use of natural gas in transportation."
Natural gas tipped to transform transport industry
Telegraph, 2 February 2014

"The world's first magma-based geothermal energy system has been built in Iceland, taking advantage of the Earth's heat to generate electricity. Regular geothermal systems are now an established science - where water is pumped deep below ground, boils, turns to steam and drives a turbine as it returns back to the surface. But Iceland's new system is the first to produce that steam in a region of molten, rather than solid, rock. It's only the second time that researchers have successfully drilled into a magma bubble. The first was in Hawaii, where a concrete plug was installed at the bottom of the hole for safety. In Iceland, however, the researchers installed a valve where superheated steam could flow through in sufficient quantities to generate 36 megawatts of power. Preparations were made to connect the steam output to a nearby electrical plant in Krafla in Northeast Iceland, but then the hole had to be closed after a valve failure. Nonetheless, the Iceland Deep Drilling Project (IDDP) believes that it can reopen the hole, 2.1 kilometres below the surface."
Iceland drills into magma for renewable energy
Wired, 1 February 2014

"California, the third-largest oil-refining state in the U.S., is bringing in a record volume of oil from Canada by rail as it faces shrinking supplies fromAlaska and within the state. The most populous U.S. state received 709,014 barrels of crude from Canada by rail in December, a 4.9 percent increase from November and up from zero a year ago, data posted on the state Energy Commission’s website show. Canada made up 67 percent of the state’s total oil-by-rail receipts. North Dakota, where fields in the Bakken formation are producing a recordvolume of crude, shrank to a 5.9 percent share....Oil-by-rail receipts from Wyoming totaled 221,793 barrels in December, making up the second-largest share of the state’s volume at 21 percent. North Dakota sent 62,325 barrels and New Mexico 12,927. Alaskan oil output has declined every year since 2002 as the yield from existing wells shrinks. Alaska North Slope crude production averaged 567,600 barrels a day in December, down from 582,150 a year earlier, data posted on the Alaska Department of Revenue’s website today showed."
California Getting Record Volume of Canadian Oil by Rail
Bloomberg, 1 February 2014

"Permanently anchored in the choppy waters of the eastern Mediterranean, the gas tanker Excellence is in a constant state of alert, waiting for the phone call that Israel needs fuel. The only country in the world to rely on a boat for its emergency energy supplies, the unconventional system proved its worth last month when a rare snowstorm swept Israel, leading technicians to call in for help to meet the surging demand. The gas, imported and stored on board in liquid form, was'regassified' and pumped through a special buoy into an underwater pipeline. In less than an hour, the Israel Electric Corp (IEC) had received its badly needed boost. Israel is near a tipping point. Sometime in the next year or so, gas will surpass coal to become the main fuel for electricity production, a shift made possible by the discovery of huge offshore natural gas fields."
Israel’s back-up gas supply floats far offshore
Reuters, 31 January 2014

"It will take five years and the drilling of 20 to 40 fracking wells to judge whether the UK has a viable shale gas industry, the chairman of the only company yet to have used modern hydraulic fracturing techniques here has told the Guardian. Lord Browne of Madingley, former chief of BP and now chairman of Cuadrilla, said the work must be done, because exploiting shale gas was 'a national imperative'. He said the process would take so long because of the UK's strict planning laws. 'We have very tight regulation, particularly on planning permission,' he said. Browne, who is also a government adviser on business, was speaking on the fringes of a debate on fracking held by the thinktank Policy Exchange. He said that the UK had the potential for a large amount of shale gas exploration, but that aspiring companies would need much more information on whether the gas reserves are economic to exploit, and that could only come from further exploration.' ... 'We have an idea of the UK's potential for shale - what we now need to do is figure out how much we can produce economically and how fast, which means wells need to be drilled and need to be fracked – there is no other way to do it,' said Browne, who is also a managing partner at Riverstone Holdings, the venture capital firm that backs Cudrilla. Tony Bosworth, energy campaigner at Friends of the Earsh, said: 'Despite all the government bluster about fracking, the industry still doesn't know if it's viable in Britain, and it will take years to find out. And with experts warning it won't cut fuel bills and will do little to tackle climate change, the coalition's shale gas enthusiasm is looking increasingly ill-judged.'"
UK shale gas viability check will take five years, says Cuadrilla boss
Guardian, 31 January 2014

"Coal use has increased markedly in the UK in the past few years, reaching about 40% of electricity generation despite its high greenhouse gas emissions. That is partly because coal is cheap at present, as the massive exploitation of gas in the US has meant that coal that would have been burned there is now exported abroad. But Browne was downbeat on the potential for carbon capture and storage, which some experts have advocated as a way of rendering coal and other fossil fuels low-carbon. He said: 'Carbon capture and storage (CCS) is a very interesting idea – I tried to do the first CCS [project in the UK, while leading BP] but there was a gap between what it would cost and what we could afford. There are very few places in the world where CCS could be made to work. I would not rule it out but I would not rule it in.' Prof Dieter Helm, an energy economist at Oxford University, agreed: 'Don't get terribly excited about CCS any time soon – the volume of [carbon dioxide] gas is greater than the stuff that comes out of the ground. And there aren't enough holes [in which to store the CO2].'"
UK shale gas viability check will take five years, says Cuadrilla boss
Guardian, 31 January 2014

"Oil and gas production is booming in much of the world, but it's not boosting Big Oil's bottom line. As supplies of easily obtainable oil dwindle and prices remain flat, the world's oil majors are getting less in return for the vast sums they invest on big, risky projects that don't always pan out. Royal Dutch Shell and Exxon Mobil announced drops in fourth quarter profits Thursday. Chevron announced similar results Friday.... 'Almost all growth in crude production globally is coming from small, nimble risk tolerant US independents engaging in fracking,' Morgan Downey, a New York based commodities trader and author of the book 'Oil 101,' writes in an e-mail. 'Big oil has missed out on fracking and is sitting on the sidelines with a heap of cash possibly waiting for a fall in oil prices, and biding their time for potential acquisitions of these smaller growth companies.'"
Chevron follows Shell, Exxon Mobil profit slide. Is Big Oil in trouble?
Christian Science Monitor, 31 January 2014

"Brazilian state-run energy giant Petroleo Brasileiro, or Petrobras, said Friday that domestic crude oil production in 2013 fell short of the company's target as output at mature fields declined and new offshore platforms were delayed. Petrobras produced 1.93 million barrels of crude in 2013, down 2.5% from 2012, Petrobras said. That was also less than the company's target of 2.02 million barrels a day. In December, output was up 0.4% from November at 1.96 million barrels a day, the company added. Brazil's crude oil output was undercut by ongoing maintenance at aging offshore platforms as Petrobras tried to reverse natural declines at mature oil fields in the Campos Basin, where more than 85% of Brazil's crude is produced. 'It's important to note that natural declines at fields in production during 2013 were in line with levels expected by the company and compatible with industry standards,' Petrobras said. Petrobras officials have said that output at Campos Basin fields are declining at the rate of about 10% a year.... Petrobras continued to boost crude oil production from the pre-salt region, an area off Brazil's southeast coast where billions of barrels of crude were discovered trapped under a thick layer of salt. Output from fields producing from the deposits surged to a record 344,900 barrels a day in December—not including a single-day record production of 390,000 barrels on Jan. 14, Petrobras said.  Total crude oil and natural gas production averaged 2.54 million barrels of oil equivalent, or BOE, in 2013, Petrobras said. That was down from 2.59 million BOE in 2012."
Petrobras 2013 Crude Oil Output Falls Short of Target
Wall St Journal, 31 January 2014

"After pushing up domestic crude oil production by about three million barrels a day (mb/d) in the United States, shale oil has inspired speculation about radical shifts in the global oil market. Radical shifts are certainly on the horizon, but something other than shale is likely to be driving them. That something is Iraq. Iraq is ramping up oil-exports in 2014, according to the Economist Intelligence Unit. The draft budget anticipates average exports of 3.4 mb/d, marking a nearly 30% increase from 2013 export levels. Considering the political struggle between Baghdad and the semi-autonomous region of Kurdistan, the budget forecast seems bullish but not beyond the realm of possibility. New sources of production in the south are coming on-stream and infrastructure bottlenecks are easing. Iraq is currently the world’s third-largest oil exporter. and has the resources and plans to increase rapidly its oil and natural gas production as it recovers from three decades punctuated by conflict and instability. 'The emergence of Iraq as an oil power of the nature of Saudi Arabia is the big thing in the future of the oil business,' said Henry Groppe, a seasoned oil and gas analyst from Texas, in an interview on Wednesday with Toronto’s Globe & Mail .'It dwarfs everything else. It’s the thing that everybody ought to be watching and following as closely as possible.' Oil exploration efforts in the post Saddam era have suggested that Iraq’s oil resource is much bigger than analysts had previously anticipated. International oil companies have already secured contracts that imply an epic increase in Iraq’s oil production capacity by 2020. 'Reaching output in excess of 9 mb/d by 2020 would equal the highest sustained growth in the history of the global oil industry,' the International Energy Agency concluded in the 2012 Iraq Energy Outlook. The barriers to achieving these admittedly ambitious targets are as big as they are diverse, including everything from infrastructure inadequacies and skilled labor shortages to financial risks and lack of security. While it is questionable whether Iraq will be able to meet this ambitious target, increasing Iraq’s oil production by half of that target would make Iraq the largest contributor to global supply growth over the next 20 years and on course to displacing Russia as the world’s second-largest oil exporter by 2030. In any scenario, Iraq is the primary force affecting the long-term outlook for oil markets. 'Almost every second barrel of world oil production growth in the next two decades will come from Iraq, with the potential to provide prosperity for all of Iraq’s 32 million people,' said Dr. Fatih Birol, the lead author of the IEA’s report in 2013."
Sorry, Shale. Iraq Is The Real Oil Revolution

Forbes, 31 January 2014

"To export or not to export American oil? That was the question explored yesterday at the Senate Energy and Natural Resources Committee. Analysts and business leaders from both sides of the debate presented the pros and cons of lifting the decades-long ban on exports of domestic crude. Whether or not to lift that ban, in the face of exploding supplies of American crude oil, is a tough question with a complex answer. But as you’ll see, the answer is this: the ban should be lifted. Yes, the U.S. is producing oil at levels not seen in decades. But we still have to import roughly 40% of our needs. So it would seem, on its face, that there would be no point in ending the ban. The wrinkle comes in the reality that not all crude oil is the same. Some is heavy, some is light. Some is'sour,' with high sulfur content, other is 'sweet.' Much of the boomtime oil flowing out of the Eagle Ford shale of Texas and the Bakken formation of North Dakota is relatively light and is easy to refine in refineries that are not terribly complex. The problem is that U.S. oil refineries were not ready for this kind of high-quality oil. Over the past decade (before the shale oil boom) refiners spent tens of billions to optimize their plants based on the assumption that their crude oil supplies would be getting heavier and more sour — like Canadian oil sands or heavy oil from Venezuela and Mexico. To process that gunk you need more complex refineries with hydrotreaters and cokers. As it turns out, the refiners made the wrong upgrades at precisely the wrong time. After already sinking so much capital to optimize their plants for heavy crudes, they can’t easily turn around and just gulp up the light crudes that American drillers are producing. Even factoring in higher transportation costs it makes more sense for them to import heavy crudes from other parts of the world rather than to use the lighter shale oil. Naturally, with less demand for their product at home, the U.S. shale producers want to be able to export their oil to less complex overseas refineries where they can get higher prices. One of the most vociferous proponents of lifting the ban is Harold Hamm, the billionaire founder and CEO of Continental Resources Continental Resources, one of the biggest producers in the Bakken. Hamm gave his testimony to the senate yesterday, explaining that contrary to popular belief U.S. oil is being exported, but as refined fuels, not crude oil."
Why America's Crude Oil Export Ban Should Be Lifted
Forbes, 31 January 2014

"High gas and electricity prices will continue to plague Europe for at least 20 years, damaging the competitiveness of industries that employ almost 30m people, the world’s leading energy forecaster has warned. In findings likely to inflame claims EU climate change policies are damaging the bloc’s manufacturers, the International Energy Agency said Europe will lose a third of its global market share of energy-intensive exports over the next two decades because energy prices will stay stubbornly higher than those in the US. A number of EU countries have embraced green energy subsidies, shunned nuclear power and resisted the shale exploration that has fuelled a manufacturing renaissance in the US, prompting growing anger among industry leaders who say this has been a recipe for competitive ruin. Fatih Birol, the IEA’s chief economist, said environmental policies alone had not pushed up energy costs but the price gap between the EU and the US was going to last much longer than some expected.'This is a new thing and it’s structural. It’s not a one-off,' he told the Financial Times.'Europe didn’t realise the seriousness of this competitive issue,' he said, warning the situation raises concern for the almost 30m people working in heavy industries such as iron, steel and petrochemicals across the continent. European gas import prices are currently around three times higher than in the US while industrial electricity prices are about twice as high, creating an energy price gap Dr Birol said would last'at least 20 years'. Although industry leaders blame the region’s ambitious climate change policies – especially generous renewable energy subsidies – Dr Birol said he had'great respect' for the EU’s climate actions and it was a mistake to say they were chiefly responsible for the bloc’s dilemma.'Too much of the blame for Europe’s high energy prices is being directed at its ambitions on climate change while the main factor – the high cost of imported energy – is being all but ignored,' he said in a speech to London’s Imperial College where he elaborated on the IEA’s analysis of the problem.'Even renewable subsidies, which have become a serious burden in some markets, are still far from being the dominant factor in price formation,' he said. It was important to recognise the big role natural gas played in electricity generation in Europe, which has yet to experience anything like the US shale boom that has driven down prices."
Energy price gap with the US to hurt Europe for ‘at least 20 years’
Financial Times, 29 January 2014

"North Sea oil and gas exploration is at a 'crossroads', according to a report on the industry. Deloitte's Petroleum Services Group (PSG) found the number of fields starting to produce in the UK hit its highest level for five years, with a 44% increase in 2013 compared with the previous year. But it also found a 28% drop in exploration and appraisal drilling. Optimism and pessimism are about equal within the industry, the firm's energy partner Graham Hollis said. He added: 'The rise in field start-ups over the last year and increased interest in licensing rounds are positive indicators for the future of the North Sea. 'However, more than ever companies appear to be at a crossroads in their attitude towards it, with optimism and pessimism seemingly present in equal measure. 'We have recently seen a number of announcements of significant, and in some instances all-time high, levels of investment in the UK continental shelf. 'However, a number of other companies, some of whom have been key players in the UK sector for many years, have publicly announced or are taking steps that seem to indicate that the North Sea is no longer a core focus for investment within their global portfolios. 'Any longer-term decline in exploration and appraisal drilling will be of concern and there are measures that seriously need to be considered by industry and government to reinvigorate drilling activity and ensure the longevity of the UK continental shelf."
North Sea oil and gas exploration at 'crossroads' says report
STV, 29 January 2014

"Iraq is poised to flood the oil market by tripling its capacity to pump crude by 2020 and is collaborating with Iran on strategy in a move that will challenge Saudi Arabia's grip on the Organisation of Petroleum Exporting Countries. 'We feel the world needs to be assured of fuel for economic growth,' Hussain al-Shahristani, Deputy Prime Minister for Energy in Iraq told oil industry delegates attending a Chatham House Middle East energy conference. Al Shahristani said on Tuesday that Iraq plans to boost its capacity to produce oil to 9m barrels a day (bpd) by the end of the decade as Baghdad rushes to bolster its economy, which is still shattered by war and internal conflict. Iraq was producing 3m bpd in December, according to the International Energy Agency. Iraq's intention to challenge Saudi Arabia's status as the 'swing producer' in the OPEC cartel could see a dramatic fall in oil prices if Baghdad decides to break the group's quotas and sell more of its crude on the open market. 'It's very difficult to predict actual world (oil) demand by 2020 because the world economy is unpredictable,' said Mr al-Shahristani. .... British oil giants BP and Royal Dutch Shell are also poised to benefit from Iraq's ambitious production plans. Both companies are already managing two huge oil fields in southern Iraq which are vital if Baghdad is to achieve its goal. However, even if Iraq is able to achieve its target of boost production capacity it is unlikely to be able to put in place sufficient pipeline and port infrastructure to export the additional crude. Iraq's main export terminal for loading oil tankers at Al Faw near Basra will require billions of pounds worth of improvements in addition to the refurbishment of its pipeline network. Iraq's ambitious plan could see it clash increasingly with the regime in Saudi Arabia, which has used its influence in OPEC over the last decade to keep oil prices above $100 a barrel. Saudi itself is now under pressure to boost output to maintain market share. The kingdom pumped 9.8m bpd in December up by about 100,000 barrels from the previous month. Experts say that attention within OPEC, which pumps 30pc of the world's crude, could increasingly focus on compliance with more of the group's members tempted to pump more barrels to protect their share of the market as the cartel grapples with the rise of US shale oil production."
Iraq and Iran plot oil revolution in challenge to Saudi Arabia
Telegraph, 28 January 2014

"Moves to start fracking for shale gas across Britain have received a major setback after one of the largest firms involved in the industry dramatically scaled back its plans. The firm, Cuadrilla, has admitted to a BBC investigation that it has decided to 'withdraw previous permit applications for our sites in Lancashire'. The move means that while the firm can drill test sites it cannot frack any gas or oil reserves it finds. Work can go ahead only if it has Environment Agency radioactive waste permits proving extractors can safely remove dangerous waste products. Fracking involves pumping high-pressure water into rock deep underground to open fissures and release trapped gas. A by-product is waste water contaminated by natural low-level radiation. Cuadrilla insisted to BBC Inside Out North West that it does hope in the future to submit new waste permit applications in Lancashire where shale rock is thought to contain huge amounts of natural gas. But radiation waste adviser Dr Trevor Jones told BBC investigators that significant investment is likely to be needed to find a way to solve the waste problem, meaning plans for fracking all across the UK could be held up. The Government has pinned hopes for cheaper energy on the success of fracking....Cuadrilla believes it can overcome the issue of disposing of radioactive water and says it has run successful trials. But these have yet to be proven full-scale. The TV investigation, to be shown at 7.30pm tonight on BBC1 in the North-west, also reveals that almost two million gallons of radioactive water produced by Cuadrilla under earlier rules was authorised for discharge, legally, into the Manchester Ship Canal. Marine expert and explorer Paul Rose, who presents the programme, concludes: 'Fracking may or may not become a boom industry. The operators will know what’s down there only by drilling many more exploratory wells. If the gas is viable, they’ll be producing lots and lots of water contaminated with radiation. The only certainty we have now is that no one, yet, can guarantee how those sorts of volumes are going to be cleaned.'"
Dashed hopes of cheap gas as fracking giant Cuadrilla scales back
Express, 27 January 2014

"The oil is ready and waiting – but buyers are few and far between. That is the predicament facing officials from the Kurdistan Regional Government – Iraq’s northernmost province – as they target regular exports of crude that could give a new level of economic viability to their fledgling nation. Since the US-led invasion of Iraq a decade ago, the Kurdish government has been developing its oil industry in defiance of the central government in Baghdad. Crude is now finally flowing via pipeline to Turkey and the KRG has invited bids for it A successful tender would catapult the tiny region into the middle ranks of global oil exporters and give its politicians leverage in their dispute with the central government over who should oversee the sale of Kurdish oil. But there is a pressing problem: the largest energy companies and traders are steering clear for fear of upsetting Baghdad, which controls major crude oil supply contracts and some of the world’s largest production projects.... Kurdistan’s giant reserves and attractive geology have made it a hotspot for the world’s largest energy companies, with operators from ExxonMobil to Total taking up exploration licences in recent years. But current production of about 200,000 barrels a day is tiny in the context of a global market of 90m barrels a day, and has not been enough to tempt the largest companies into participating in the Kurdish tender. Executives are also wary of stepping into a dispute which has pitted the KRG and Turkey – which wants Kurdish oil and gas to feed its energy-hungry economy – against Baghdad and the US, which is worried that independent exports of Kurdish crude oil could presage a break-up of the Iraqi state. Last year only a trickle of Kurdish crude made it to Turkey, and that sold at large discounts to reflect the cost of trucking it over long distances. But in December a pipeline linking Kurdish fields to the Turkish port of Ceyhan was finally opened, bringing the possibility of large scale exports."
Oil majors shy away from first major Kurdish export deal
Financial Times, 26 January 2014

"Oil production in the United States rose by a record 992,000 barrels a day in 2013, the International Energy Agency estimated last week. 'We keep raising our forecasts, and we keep underestimating production,' said Lejla Alic, a Paris-based analyst with the agency. The increase left U.S. production at 7.5 million barrels a day, with both November and December production estimated to have been over 8 million barrels a day. American consumption of oil also rose last year, by 390,000 barrels a day, or 2.1 percent, to 18.9 million barrels a day. The agency increased its estimate of U.S. oil use in the final quarter of the year, although it lowered its estimate of the increase in some other countries, including China. Overall, world consumption rose 1.4 percent, making 2013 the first year since 1999 that the use of oil in the United States rose more rapidly than in the rest of the world.... The agency estimated that demand for gasoline in the United States rose as a result of increasing consumer confidence and more sales of sport utility vehicles. Despite the 2013 increases, oil use in most developed countries remains well below the levels of 2007, the last pre-recession year. The United States is estimated to have used 8.5 percent less oil in 2013 than it did in 2007, while demand is down by about 25 percent in Italy and Spain, European countries that were hard hit by the euro area’s problems. Germany stands out, with 2013 usage equal to that of 2007. In the developing world, oil use has been rising steadily. Demand in China and Brazil is up more than 30 percent since 2007, and India’s consumption is 17 percent higher. The agency estimates that in 2014, the 34 mostly rich countries in the Organization for Economic Cooperation and Development will consume less than half the oil used in the world. That would be a first: As recently as 2004, their share was over 60 percent, and in 2013, it was estimated to be 50.5 percent. Over the same period, the U.S. share of the market fell to 21 percent from 25 percent, while China’s share rose to 11 percent from less than 8 percent. But the U.S. share was estimated to have risen slightly in 2013, the first annual increase since 1999. The increase in U.S. production in 2013 exceeded the increase of 836,000 barrels a day in 2012. The largest increase before that, of 751,000 barrels, was in 1951, according to the U.S. Energy Information Administration. In percentage terms, the 15.3 percent increase in 2013 was the largest since an 18.9 percent gain in 1940. U.S. oil production fell steadily from the early 1990s through 2008, but has since risen for five consecutive years, largely because of increased production of shale oil. Not since the late 1960s, when production in Texas was peaking and Alaska oil was beginning to come on stream, has there been such a string of annual increases."
U.S. oil production keeps rising beyond the forecasts
New York Times, 26 January 2014

"About 400,000 carloads of crude oil traveled by rail last year to the nation’s refineries, up from 9,500 in 2008, according to the Association of American Railroads. But a series of recent accidents — including one in Quebec last July that killed 47 people and another in Alabama last November — have prompted many to question these shipments and have increased the pressure on regulators to take an urgent look at the safety of the oil shipments. In the race for profits and energy independence, critics say producers took shortcuts to get the oil to market as quickly as possible without weighing the hazards of train shipments. Today about two-thirds of the production in North Dakota’s Bakken shale oil field rides on rails because of a shortage of pipelines. And more than 10 percent of the nation’s total oil production is shipped by rail. Since March there have been no fewer than 10 large crude spills in the United States and Canada because of rail accidents. The number of gallons spilled in the United States last year, federal records show, far outpaced the total amount spilled by railroads from 1975 to 2012. The stakes are high. In five years, domestic oil production has jumped by 50 percent, to reach 7.5 million barrels a day last year. But with little pipeline infrastructure, energy producers had to scramble for new ways to get their oil to refiners. Rail was the answer. 'The reality is that this came out of nowhere,' said Anthony B. Hatch, a rail transport consultant. 'Rail has gone from near-obsolescence to being critical to oil supplies. It’s as if the buggy-whips were back in style.' Far more toxic products are shipped on trains. But those products, like chlorine, are transported in pressurized vessels designed to survive an accident. Crude oil, on the other hand, is shipped in a type of tank car that entered service in 1964 and that has been traditionally used for nonflammable hazardous liquids like liquid fertilizers. Safety officials have warned for more than two decades that these cars were unsuited to carry flammable cargo: their shell can puncture and tears up too easily in a crash."
Accidents Surge as Oil Industry Takes the Train
New York Times, 25 January 2014

"Eastern Mediterranean countries, including Israel, may be 'fooling their people with false promises of an offshore gas bonanza,' The Economist writes in its latest issue. The influential British financial magazine quotes oil analysts as saying that 'even Israel, whose development of offshore gas is most advanced, is unlikely … to start exporting large amounts by 2020, as it hopes.' The main obstacle to realizing the potential of the gas fields, the magazine says, is not a shortage of oil and gas but 'a lack of regional co-operation.' The estimated potential of the eastern Mediterranean, from the coast of Gaza to southern Turkey, is 122 trillion cubic feet of gas, according to the American Geological Survey, which puts it on a par with the reserves of Iraq. However, weak governments, disputes between countries, a disputed maritime border between Israel and Lebanon and the civil war in Syria all mitigate against the full and timely exploitation of the gas reserves."
Can the promises of an Israeli gas bonanza come true?
Haaretz, 25 January 2014

"Hariga, the biggest oil terminal in east Libya run by the central government, can’t export because gunmen nearby pose a threat to tankers, the port’s inspection and measurement coordinator said. Curbs on the sales helped lift crude prices to a six-month high last year. 'There’s an armed group in boats facing the port, and some men with guns are on the coast itself,' Abdel-Wahab Salem Mohammed said in a phone interview from the facility on Jan. 20. 'One person with a rocket propelled grenade can close the entire thing.' "
Libya Oil Growth Crimped as Gunmen Block Eastern Port Hariga
Bloomberg, 24 January 2014

"When computer coders at the Intercontinental Exchange built a platform for trading natural gas in 2001, they only allowed space for two-digit entries. With gas around $5 per million British thermal units, prices above $99 just didn't seem feasible. A freezing start to 2014 changed all that....The United States has ample supplies of gas, but the price spikes reflect a recurring conundrum: A lack of pipelines to take gas from major supply centers to market. This bottleneck pushes prices higher during periods of high demand like the first few weeks of this year."
Natural gas prices above $100? Better tweak the system
Reuters, 22 January 2014

"Global oil demand will increase more quickly this year as economic growth accelerates, outstripping supply even as shale oil production in the United States reaches record highs, the west's energy watchdog said on Tuesday. The International Energy Agency (IEA) said world oil consumption would increase by 1.3m barrels per day (bpd) this year, 50,000 bpd higher than previously forecast. 'Global oil demand growth appears to have gradually gained momentum in the last 18 months, driven by economic recovery in the developed world,' the IEA said in its monthly report. 'Most OECD economies have by now largely exited the restraints of recession, with strong gains in some countries in the energy-intensive manufacturing and petrochemical sectors.' US oil production is increasing rapidly and is forecast to rise by 780,000 bpd this year, but the Organization of the Petroleum Exporting Countries (Opec) will also have to pump more to meet increasing demand. The IEA, which advises most of the largest energy-consuming countries on energy policy, raised its forecast of demand for Opec oil this year by 200,000 bpd to 29.4m bpd. Last year, political unrest led to a plunge in Libyan exports, at times to less than 10% of capacity, and more Iranian barrels disappeared from the market due to sanctions. But Opec crude oil supply edged higher in December, reversing four months of declines, it said, with Saudi Arabia and the United Arab Emirates leading the increase. Libya saw a modest rise and Iraq was the only member to post a fall. Iranian supplies contracted by 320,000 bpd last year but edged higher in December as diplomatic activity aimed at halting Tehran's nuclear activity gained momentum. The IEA said rising US crude production helped balance the effects of supply disruptions among some OPEC countries. 'Most prominent among those shifts was the relentless rise in US crude production, whose 990,000 bpd growth, one of the largest annual gains on record for any country, helped blunt the impact of supply declines elsewhere, notably Libya and Iran,' the report said. The loss of oil production from Libya and Iran has helped keep a floor under prices, but the increasing US output has limited rises. Brent crude averaged around $108.70 a barrel last year, about $3 less than in 2012, and on Tuesday traded around $107. US production growth in 2013 far surpassed the IEA's own projections, registering the fastest absolute annual supply expansion of any country in the past two decades, the report said."
Oil demand to rise as global economy recovers, energy watchdog says
Guardian, 21 January 2014

"More crude oil was spilled in U.S. rail incidents last year than was spilled in the nearly four decades since the federal government began collecting data on such spills, an analysis of the data shows. Including major derailments in Alabama and North Dakota, more than 1.15 million gallons of crude oil was spilled from rail cars in 2013, according to data from the Pipeline and Hazardous Materials Safety Administration. By comparison, from 1975 to 2012, U.S. railroads spilled a combined 800,000 gallons of crude oil. The spike underscores new concerns about the safety of such shipments as rail has become the preferred mode for oil producers amid a North American energy boom. The federal data does not include incidents in Canada where oil spilled from trains. Canadian authorities estimate that more than 1.5 million gallons of crude oil spilled in Lac-Megantic, Quebec, on July 6, when a runaway train derailed and exploded, killing 47 people. The cargo originated in North Dakota. Nearly 750,000 gallons of crude oil spilled from a train on Nov. 8 near Aliceville, Ala. The train also originated in North Dakota and caught fire after it derailed in a swampy area. No one was injured or killed.... until just a few years ago, railroads weren’t carrying crude oil in 80- to 100-car trains. In eight of the years between 1975 and 2009, railroads reported no spills of crude oil. In five of those years, they reported spills of one gallon or less."
More oil spilled from trains in 2013 than in previous 4 decades, federal data show
McClatchy, 20 January 2014

"On Tuesday the Telegraph runs a revealing story, the thrust of which is becoming increasingly familiar: Tory Ministers in the Government have again overstated the evidence on shale gas. While today it is on the likely timetable for fracking, in recent weeks we have seen similar exaggerations on the impact on bills, on the level of community benefit and on the number of jobs that might be created. Unsubstantiated claims degrade the quality of the public debate on shale gas. They provoke more extreme reactions from critics, marginalise moderate voices and inflate a bubble of expectation that is highly unlikely to ever be met. Unfortunately, shale gas is an issue in which overstatement appears to have become the default setting of the government. For this, David Cameron must accept a sizeable share of the blame. His promises concerning the potential benefits of shale gas frequently outrun the evidence or the likely reality. It is not him alone – while his first Energy Minister Charles Hendry wisely warned against betting the house on shale prospects - other Ministers including George Osborne, Owen Paterson, and Michael Fallon, the part time part time Energy Minister, are less measured. By shamelessly cherry-picking their figures and focussing on the most optimistic assessments, this group of Ministers are guilty of making statements that contradict the evidence produced by relevant government departments. Last week, David Cameron promised that shale gas would deliver 74,000 jobs, citing a study from the Institute of Directors last May. As it happens, that figure was superseded by a Strategic Environmental Assessment undertaken by AMEC, commissioned by his own government and published last month, which concluded there would be 16,000 – 32,0000 jobs in the next (14th) licensing round. Even by extending their model to include the current licensed sites, the estimate would be between 10,000 and 25,000 fewer than the figures quoted by the Prime Minister. Then the Prime Minister spoke about the community benefit, putting the figure at £5-10m per well site. Once again the Government’s own, more recent figures (from December) are significantly lower: £2.4-4.8m. Then Michael Fallon waded in, talking about the opportunity to drill '20-40 wells' in the next two years. In truth, as the Telegraph piece makes plain, we are unlikely to see more than one or two wells fracked at all over the next year. Finally George Osborne seems unable to resist repeating one of the most pervasive myths of shale gas extraction in the UK: that it will deliver significantly cheaper energy bills, as in the USA. Differences in geology, extraction rights and the market realities (including the fact that the UK is plugged into a European market many times larger than itself, whereas the US is currently unable to export shale) mean experts have repeatedly warned that this is unlikely to be the case. They include the Government’s Chief Scientific Adviser, David MacKay, who said that 'the effect of UK shale gas production on gas prices is likely to be small.'"
Tom Greatrex MP, UK shadow energy minister
Shale gas is not the silver bullet to all our energy problems
Telegraph, 20 January 2014

"... the maturity of markets such as the US, the EU and Japan means demand in the industrialised world is already on a structural downtrend, and – together with ongoing improvements in energy efficiency and the opportunities for substituting gas for oil – this will inevitably lead to a peak and then a decline in the demand for oil globally. Some say the peak could come within five years. But does this peak demand theory bear scrutiny?... the increase in US oil demand reflects rising US GDP, which also accelerated over the year: official data show GDP rising from the fourth quarter of 2012 through to the third quarter of 2013 at 0.1 per cent, 1.1 per cent, 2.5 per cent and 4.1 per cent. Yet the recent rise in US oil consumption is not solely due to faster economic growth. It also reflects the increasing availability of domestic supply and the competitive pricing of US light-tight oil against both Brent, the global oil price benchmark, and WTI, another US crude oil benchmark. Owing to the ban on exports of US crude oil, and the fact that shale oil is not suitable for refining into the distillate products that US refiners are legally permitted to export, light-tight oil is being sold at a discount against WTI to refiners geared up to produce gasoline. As shown by the EIA’s pricing data, this has led to a stabilisation in the average price of gasoline over the past three years, and even to a modest drop in 2013 versus 2012. Finally, unlike other industrialised countries such as Japan and the EU, the US population is still growing at a healthy rate. According to UN data, in the five years from 2007 to 2012 the US population grew by 14m to 318m, and is expected to rise by a further 82m (to 400m) by 2050. All of this implies that the reduction in US oil demand over 2008-12 was not so much structural as due mainly to the weakness of the US economy following the global financial crisis, and the tightness of the local oil market until recently. As the economy has started to recover and rising domestic supply has made local prices more affordable, US consumers – whose ranks have swollen by 14m since 2007 – have started coming back to market. Against this backdrop, the peak-demand narrative looks deficient at best and a distraction at worst. This is not to deny that improving energy efficiency and increasing substitution of gas for oil will help mitigate the continuing demand pressure that a global population set to expand by a further 800m people over the course of this decade alone will exert. Nor is it to say peak demand will not arrive one day. It is simply to emphasise that if and when peak demand does arrive it will more likely be due to the rationing effect of high prices brought on by supply-side constraints. These are both economic (for example, the astronomical levels of capex now needed to keep production growing even modestly), and geopolitical in nature, but environmental factors will also be increasingly important in future. Such supply-side constraints explain why global oil prices remain at or close to all-time high real levels. They also show why a more robust interpretative model than that offered by the peak-demand narrative is required to understand the dynamics of the global oil market."
‘Peak demand’ oil theory fails scrutiny test
Financial Times, 20 January 2014

"Eni, the Italian oil giant, is giving up on producing natural gas from shale rock in Poland, not long ago considered the most promising country in Europe for the new fuel source. Eni has allowed two of its three shale gas exploration licenses in Poland to expire and is likely to allow the third to lapse, according to a person with knowledge of the matter who spoke only on the condition of anonymity. The acreage, acquired in 2010, had not produced enough gas to be commercially viable, the person said. Other companies have made similar comments about their initial drilling efforts. Exxon Mobil ended its Polish shale gas exploration efforts in 2012; Marathon Oil said it was leaving last year. Chevron is one of the few major players still interested in Poland. 'The geology has not worked out,' said Paul Stevens, an oil analyst at Chatham House, a research institute based in London. The experience in Poland shows how difficult it will be to replicate the United States shale gas boom in Europe or elsewhere. Mr. Stevens said European governments had not been willing to make the necessary investment in research and development that helped companies figure out how to extract natural gas and oil from impermeable rock formations in the United States.... The hot country for shale gas exploration in Eastern Europe is now Ukraine; Chevron, Eni and Shell have all acquired acreage there. In Western Europe, Britain is now in the forefront; Total just agreed to explore for shale gas there. But little, if any, shale gas is being produced in these countries so far. Three years ago, Poland was considered among the most promising of European countries outside Russia for replicating the American shale gas boom. A study in 2011 by the United States Energy Information Administration ranked Poland first among European countries in terms of technically recoverable reserves, with enough to cover domestic demand for about three hundred years."
Eni Is Said to Abandon Polish Shale Aspirations
New York Times, 14 January 2014

"The UK's push for shale gas will result in unavoidable changes to the countryside, the US energy secretary has warned. Ernest Moniz, who took over as energy chief for President Obama's second term, has overseen arguably the biggest changes to US energy production since the discovery of oil. He said the exploitation of shale gas and oil on a vast scale in the US had been 'transformative', vastly reducing energy prices, boosting industry and lowering carbon emissions as more electricity production shifted from coal to gas. But he warned that any boost to the economy would come at a serious cost, as 'you can't avoid' the fact that extracting gas on such a scale involves a massive industrial effort. 'The one thing it's very hard to change is that this is a big industrial enterprise. That's one thing you can't avoid. That is something communities and governments have to cope with.'"
Shale gas extraction 'will transform Britain'
Guardian, 17 January 2014

"Just two weeks into his tenure, Royal Dutch Shell chief executive Ben van Beurden has had the tough job of delivering the oil major’s first profits warning in a decade. The last time Shell, a bellwether for British investors expecting reliable returns, provided such disturbing guidance it was Sir Philip Watts and the scandal over misstating the company’s oil reserves at fault.Mr van Beurden has found himself in a similar position to his predecessor, Peter Voser, in having to deal with the consequences of strategic decisions made by previous hierarchies at the Anglo-Dutch company. Shell said that it expects earnings in the fourth quarter to be 70pc lower at $2.2bn (£1.34bn), but the scarier figure was the blowout in capital expenditure to $44.3bn.... Shell has pressed on with expensive high-risk projects, such as drilling in the Arctic, when some analysts would have preferred to see more capital restraint from management. The company is gaining an unwanted reputation for placing big strategic bets with investors’ money that don’t always pay off. Its significant investment into liquified natural gas (LNG) production and the more exotic gas-to-liquids (GTL) processing are perhaps good examples.Jeroen van der Veer, former chief executive, and Linda Cook, then gas head, aggressively continued to commit Shell to expensive LNG ventures aimed at capturing the US market at a time when gas prices on the east coast of America were only expected to climb higher. At around the same time, Shell rushed into building the world’s largest GTL plant in Qatar at a huge cost of $19bn when rival Exxon Mobil cancelled a similar scheme after deeming it too much of a risk. The company’s commitment to LNG came at a time when natural gas spot futures were trading above $17 per unit compared with around $4 today. More than any other major oil company, Shell miscalculated the dramatic changes that shale gas and oil development in the US would have on energy markets. Although much of its LNG heads to thirsty consumers in Asia, where it commands a higher price, the company is yet to see its bet on refrigerated gas pay off. To be fair, gas wasn’t the issue that Shell chose to raise on Friday. Higher exploration costs and underperforming refining businesses were at the heart of the problems, along with fuel theft in Nigeria."
Shell’s gas gamble has left a sour taste

Telegraph, 17 January 2014

"Oil giant Shell is set to make a staggering £6billion LESS this year, it emerged today. In a shock profit warning, the mega firm said it had been hit by everything from lower production to higher costs for finding oil and gas. Profits in the last three months of 2013 are expected to have plunged from £4.5billion to £1.3billion. That’s likely to mean it will make £10.2billion this year – still a huge amount – but well down from £16.6billion the previous year. The surprise warning spooked investors, wiping a massive £3.9billion off its share price. Shell’s new boss Ben van Beurden admitted the oil giant’s performance was 'not what I expect' from the group in 2013. Van Beurden only took over from Peter Voser as chief executive on January 1. The group also said today it expects hefty writedowns of £429million for the fourth quarter and £1.7billion for the full year....Rival BP also saw shares fall as the market feared an industry-wide impact. The entire sector has already been suffering from low refining margins –how much money is made from processing crude oil into petrol and diesel."
Shell shock as oil giant posts profit warning and expects to make £6BILLION less this year
Mirror, 17 January 2013

"Ministers have been accused of overhyping the potential benefits of shale gas by using fracking industry figures that promise local communities up to £10m in cash – ignoring an independent government-commissioned report that suggested it could be as little as quarter of that. Shale gas companies have promised they will pay local communities £100,000 up front for each exploratory well that is fracked, and then 1pc of any revenues from shale gas drilling. The companies claim this could be worth £5m to £10m over the lifetime of a fracking site - likely to be at least 10 years. This is based on a report by the Institute of Directors, sponsored by fracking firm Cuadrilla. But an independent Strategic Environmental Assessment report by consultants Amec, commissioned by the government and released just last month, estimates the share of the revenues would actually equate to between £2.4m and £4.8m per site.  Yet the government has since opted to use the IoD figures, making no mention of the Amec report. .... A spokesman for the Department of Energy and Climate Change said the discrepancy between the IoD and the Amec estimates was because the IoD assumed more intensive drilling at each site. The IoD estimates one drilling site would have 10 vertical wells, each with up to 4 horizontal wells coming off them, while the Amec report assumed up to 24 vertical wells, each with just one horizontal well. This means production and therefore revenues would be greater under the IoD scenario – although the disruption faced by the local community could also be greater. 'There is uncertainty at this stage about using any scenario for the future of the industry, which is why we are promoting exploration to determine the potential of shale gas,' the DECC spokesman said. ... A government announcement on fracking on Monday initially erroneously promised communities a sum of £5m to £10m each year, before being corrected to say it could be over the lifetime of the site.... A report by Euractiv cited an EU source who said that the tax concessions were designed to advantage shale gas companies, implying it could be open to state aid scrutiny.  A DECC spokesman said: '100pc business rate retention for shale gas operations does not affect the amount of money operators must pay, but means that local government retains this rather than passing it to central government. It does not qualify as State Aid.'"
Government accused of 'overhyping' shale gas benefits
Telegraph, 17 January 2014

"A conference sponsored by a US military official convened experts in Washington DC and London warning that continued dependence on fossil fuels puts the world at risk of an unprecedented energy crunch that could inflame financial crisis and exacerbate dangerous climate change.  The 'Transatlantic Energy Security Dialogue', which took place on 10th December last year, was co-organised by a US Army official, Lieutenant Colonel Daniel L. Davis, operating in a private capacity, in association with former petroleum geologist Jeremy Leggett, chairman of the UK Industry Taskforce on Peak Oil and Gas....The dialogue opened with a presentation by Mark C. Lewis, former head of energy research at Deutsche Bank's commodities unit, who highlighted three interlinked problems facing the global energy system: 'very high decline rates' in global production; 'soaring' investment requirements 'to find new oil'; and since 2005, 'falling exports of crude oil globally.' Lewis told participants that the International Energy Agency's (IEA) own 'comprehensive' analysis in its World Energy Outlook of the 1,600 fields providing 70% of today's global oil supply, show 'an observed decline rate of 6.2%' - double the IEA's stated estimate of future decline rate out to 2035 of about 3%.The IEA report also shows that despite oil industry investment trebling in real terms since 2000 (an increase of around 200-300%), this has translated into an oil supply increase of just 12%. Lewis said:  'That is a very striking number and one I think that should be ringing alarm bells. It indicates to me that something has fundamentally changed in the economics of the oil industry and that you're having to invest more and more for diminishing incremental production.' Lewis also referred to US Energy Information Administration (EIA) data showing that although global crude oil exports increased 'year on year from 2001 to 2005', they 'peaked in 2005 and have been trending down since 2009.' Lewis attributed this trend to rapidly rising populations in the Middle East which has led to escalating domestic oil consumption, effectively eating into the quantity of oil available to export onto world markets.  OPEC (Organisation of Petroleum Exporting Countries) populations since 2000 have increased at twice the rate of the world as a whole. This has driven them to increase their oil consumption four times faster, or by 56%, relative to the rest of the world. Such increases in domestic consumption, curtailing global exports, have been enabled by a corresponding increase in domestic subsidies, said Lewis. Fossil fuel subsidies have increased to $544 billion, nearly half of which amounted to oil subsidies dominated by Saudi Arabia and Iran. Against this consistent trend of rapidly declining oil exports, Lewis questioned the IEA's projection of an increase in global crude oil exports and imports from 35 to 38 million barrels a day out to 2035. He pointed out that if such domestic subsidies are removed by OPEC to facilitate increased exports, this would increase 'the risk of greater domestic stress and social disorder', as already seen since the 'Arab spring'. Lewis' presentation was complimented by geoscientist David Hughes, formerly of the Geological Survey of Canada, who cited a wealth of official data demonstrating that shale oil production is likely to peak around 2016-17. Similarly, US shale gas production has sustained a plateau for the last year that is unlikely to retain long-term sustainability due to spectacularly high decline rates, and because the vast majority of production comes from just two or three plays. The upshot is that continued dependence on fossil fuels is becoming increasingly expensive, with oil prices continuing to rise for the foreseeable future, impinging evermore on global economic growth. At worst, declining global exports point to a risk of an oil crunch that could, in turn, trigger another financial crash."
US Army colonel: world is sleepwalking to a global energy crisis
Guardian (Blog), 17 January 2014

"The extent of shale gas drilling about to begin in England and Wales despite safety and environmental fears is revealed on a new map. Our graphic reveals where 'fracking' wells could be situated now PM David Cameron has given it the green light. And he has said town halls will receive 100% of the business rates collected from schemes, rather than the usual 50%. Britain is rich in shale gas reserves and Mr Cameron told MPs just 7% of the fuel in the Bowland Basin in the North West could provide enough energy for 30 years. He said energy firms must explain more clearly how shale gas could be a source of 'low-cost green energy'. He said: 'There are a huge amount of myths being put around to frighten people about shale gas extraction – whereas we can see in the US it can be extracted safely and cleanly, providing effective low-cost green energy for homes and businesses.' Among the licences available up and down the country are 23 covering parts of Merseyside, Cheshire and much of Greater Manchester. Another 12 cover Humberside, 18 take in South Wales and more than 30 cover Nottinghamshire."
Fracking map shows extent of shale gas drilling about to begin despite safety and environmental fears
Mirror, 16 January 2014

"The once-in-a-millennium event at the Fukushima reactor killed nobody, although the tsunami claimed 16,000 lives. However, it was enough to panic Germany’s green middle class. Ms Merkel caved in to shrill demands for the country’s atomic reactors to be closed. This decision, from a former chemist, who is personally pro-nuclear, is perhaps the most important economic call she has made. It is a disaster. In March 2011, at the height of the eurozone recession, Germany switched off eight of its 17 nuclear reactors, cutting 7pc of electricity generation, with another 18pc to go over the next decade. The other nine reactors will be phased out from 2015 to 2022, bringing forward a previous 2036 deadline by 14 years. Germany has also stepped up energiewende, as it switches to meet a target of producing 80pc of the country’s electricity from renewable, wind and solar power by 2050. ....German consumers already pay the highest electricity prices in Europe; before long, the average three-person household will spend around €90 a month for electricity, almost twice as much as in 2000. Currently, more than 300,000 German households a year are seeing their power shut off because of unpaid bills. Two-thirds of the electricity price increase is due to new government surcharges and taxes to subsidise renewable energy. While electricity prices have rocketed and the middle classes receive handouts to put solar panels on their houses, pensions and wages have not kept up, hitting Germany’s poorest hardest. There are some serious practical problems emerging. Solar and wind power is erratic, which means that Germany will require storage capacity for 20bn to 30bn kilowatt-hours by 2050. So far, the storage capacity has grown by little more than 70m kilowatt-hours. Compounding problems, when the wind stops blowing or the sun disappears, the electricity supply needed to power the national grid becomes scarce. This has pushed Germany into increased use of heavy oil and coal power plants, which is why the country released more carbon dioxide into the atmosphere in 2012 than in 2011. Its decision to phase out nuclear power also led to a rise in coal prices, as traders realised that it was likely to keep more coal for domestic consumption. Germany has got used to delivering economic homilies on competitiveness to the rest of Europe. But a new picture is emerging: German industry is in trouble. Energy prices are 40pc more expensive than in France and the Netherlands, and the bills are 15pc higher than the EU average. Even though Germany’s energy-intensive manufacturing sector is given a break with reduced levies, industries such as chemicals and steel are among the hardest hit, with energiewende costs of up to €740m a year."
Germany is a cautionary tale of how energy polices can harm the economy
Telegraph, 16 January 2014

"Energy giants' claims that 5pc is a fair profit margin have been called into question by a leading City analyst, who said the basis for the claim was 'not clear' and that margins in comparable sectors were far lower. Britain's Big Six energy firms have repeatedly defended their profits in the face of political and consumer anger. Centrica's British Gas household supply business typically makes a 5pc margin after tax, or nearly 7pc pre-tax, while the other five major suppliers including SSE say they aim for a 5pc pre-tax margin. In a research note, Peter Bisztyga, analyst at Barclays, wrote: 'We are used to hearing Centrica and SSE argue that 5pc or 6pc is an appropriate retail energy supply margin. However, the basis for this is not clear to us.' He said: 'We find that 2pc to 4pc is typical in comparable competitive sectors.'... He said figures suggested that 'in Europe, energy supply margins (for both domestic and non-domestic supply) in the 2pc-3pc range are frequent', while margins for non-domestic energy supply sector in the UK have fallen from 5pc in 2010 to 2.6pc in 2012 'as businesses have become more price sensitive during the recession'.  He said that UK water utilities - although not directly comparable - had proposed household supply margins averaging just 1.2pc. Margins in food retail were 'the most legitimate comparator' outside the utilities sector and averaged 4pc across Europe, he said."
Energy giants' claims that 5pc is a 'fair' profit margin challenged by City analyst
January, 15 January 2014

"Household energy bills are hurting. In the past ten years, they've more than doubled. In 2004, the dual gas and electricity average annual bill was £590. It rose most steeply in the following five years to £1,205, and by last year, it was at £1,320. For families in bigger homes, and those in poorly insulated housing, the pain of that rise is particularly acute. And it has fuelled the problems from inflation being well above target for much of the past five years - only returning to its 2% target in this month's figures.  While that has been the case, average pay has lagged, and household budgets have been squeezed. The problem has put pressure on government and on the big energy suppliers to ease the pain."
Heat is on: Why are energy bills so high?
BBC Online, 15 January 2014

"Nearly half of Britons polled in a study said they would be unhappy to have shale gas fracking carried out within 10 miles of their home. The government is actively supporting the development of shale gas, an uncoventional fossil fuel extracted by blasting chemicals, sand and water into rock formations, a method also known as fracking. The government is counting on shale gas production to help it reduce import dependency, but the technology has seen fierce opposition from green activists and local residents who claim it damages the environment. The Institution of Mechanical Engineers (IMechE) poll showed just 14 percent of 2,000 Britons asked were happy to have shale gas exploration close to their homes and that 47 percent were not happy. As many as 30 percent said they had no understanding of what fracking was."
Half of Britons against shale gas drilling in vicinity - poll
Reuters, 15 January 2014

"Europe's energy supply options will broaden later this decade as new pipelines feed natural gas from Russia and the Caspian Sea to consumers in big Mediterranean markets such as Italy, Greece and Turkey.Russian state-owned producer Gazprom will bring its 2400km South Stream gas pipeline on line next year while the massive BP-led Shah Deniz 2 project in Azerbaijan will link into a new Southern Gas Corridor to Europe from 2018-19."
Energy map of Europe about to be redrawn
The Australian, 13 January 2014

"In one of those economic paradoxes, US crude futures climbed by nearly a dollar on Friday to close at $92.72 a barrel after the US jobs report came in much worse than expected. The reasoning of course is that a weaker economy will deter the Federal Reserve from slowing its bond buying program which supports oil prices. Even with Friday’s increase, US crude was still down $1.50 for the week due to lower demand and a large jump in US gasoline and distillate inventories. In London where oil prices have been supported by supply problems in Libya, Sudan, Iraq, and Nigeria in addition to lower Saudi production, Brent futures ended at $107.25, up about a dollar for the week. The large difference between US and London which is the world benchmark price has created a clamor in the US to lift the ban on US crude exports that has been in place since the 1970s. US oil producers would love to get another $10-15 a barrel for their crude which has been suppressed in recent years due to the shale oil boom and lack of access to world markets. If the US resumes crude exports, oil producers would do better, while US refiners who are currently doing quite well buying cheap US crude, refining with cheap US gas, and exporting gasoline and distillates to the world markets at a nice profit would do less well. Lifting the export ban would transfer much of the profit to the producers from the refiners and would likely result in higher prices for US consumers."
Peak Oil Review
ASPO, 13 January 2014

"The man who masterminded London's highly successful Olympic Games has said power blackouts would be 'the best possible thing' because they would force politicians to confront the looming energy crisis. Sir John Armitt, who is also advising the Labour Party on Britain's infrastructure needs, said the country was heading towards an energy-capacity crunch because ministers had failed to ensure the construction of new power stations to take over from decommissioned nuclear and coal plants. And as Britain faces a weekend of freezing weather there were new warnings about the proximity of a capacity crunch from Dieter Helm, a leading energy academic who believes ministers have underestimated future power demand. Angry business leaders dismissed Armitt's comments as irresponsible, but Armitt, who worked on the Sizewell-B nuclear reactor while at the construction group Laing, insisted new capacity was needed."
Blackouts are 'best possible thing' for UK energy crisis, says Labour adviser
Guardian, 10 January 2014

"Ukraine has ceased buying gas from Europe and will instead purchase the fuel solely from Russia, as it offers the lowest prices, Ukraine’s energy minister Eduard Stavitsky said yesterday (9 January). After Russia's gas monopoly Gazprom has brought down the price of its natural gas for Ukraine by a third - to $268 dollars per thousand cubic meter (tcm), Ukraine suspended imports of natural gas from European countries at the beginning of 2014. Ukraine had been paying around $400 per tcm to import an estimated 26-27 billion cubic metres (bcm) of gas from Russia, its main supplier. But last December, Russia agreed to slash the price of gas for Ukraine to $268.50 per tcm after Kyiv walked away from a free trade pact with the European Union. In recent years, the EU had made possible 'reverse gas flows', meaning sending gas to Ukraine from Poland, Hungary and more recently from Slovakia. Although this was basically Russian gas, it was still cheaper than the price of around $400 per tcm Kyiv was paying until recently. Nearly 2 billion cubic meters (bcm) of natural gas has been imported by Ukraine from Poland and Hungary in 2013. According to the December agreement between Moscow and Kyiv, the new price level must be confirmed every quarter, an arrangement that creates financial leverage for Moscow to prevent Kiev from seeking to revive ties with the EU. Asked by EurActiv to comment this development, the Commission said today (10 January) that it had taken note of the media reports regarding the decision of Ukraine not to seek reverse gas supplies. 'Reverse gas flows are for Ukraine a possibility to increase competition and the security of supply. The Commission is a facilitator in the regard, but it’s for this country and companies concerned to decide on reverse flows,' Sabine Berger, spokesperson to Energy Commissioner Guenther Oettinger said."
Ukraine no longer wants reverse gas flows from EU
EurActiv, 10 January 2014

"Investment in North Sea oil and gas production is expected to pick up significantly this year. Energy consultancy Wood Mackenzie has forecast that 14 new fields with the capacity to produce 438m barrels of oil equivalent will be brought on stream by the industry in 2014. However, the Edinburgh-based firm cautions that the next 12 months will be “pivotal” for the UK’s major energy producing basin due to the Scottish independence referendum in September and the final recommendations of the Wood Review, which could lead to significant change in how the industry is regulated. Investment in the area last year reached its highest levels since the boom years of the 1970s, according to a report by the company. 'We anticipate £21.3bn will be spent on capital investment across 2013 and 2014,' said Lindsay Wexelstein, head of UK Upstream Research for Wood Mackenzie, which released its annual UK oil and gas review. Despite the positive outlook provided by investment and new production coming on stream, exploration for undiscovered oil reserves in the North Sea is falling behind, signalling that the offshore region is entering the final stages of its lifespan. 'Due to poor exploration performance in recent years, capital investment is unlikely to be sustained at the current high levels beyond 2015,' said Ms Wexelstein. More than 40bn barrels of oil equivalent have already been produced from the North Sea and estimates of remaining reserves are between 12bn and 24bn, based on what may be viable to extract at current oil prices. The Government appointed Sir Ian Wood last year to develop proposals to maximise its potential. However, the region’s long-term prospects arguably hang on whether Scotland remains in the UK."
Investment in North Sea oil and gas to rise sharply, say analysts
Telegraph, 10 January 2014

"While the head of the watchdog committee overseeing Canada’s intelligence agency is under attack for also being a lobbyist for the controversial Northern Gateway pipeline, it turns out that half of the other Harper government appointees keeping an eye on the spies also have ties to the oil business. NDP Leader Tom Mulcair has joined a growing chorus of critics calling for the resignation of former Conservative cabinet minister Chuck Strahl as chairman of the Security Intelligence Review Committee (SIRC).  The committee oversees the activities of Canada’s spy service, the Canadian Security Intelligence Service (CSIS), including surveillance of groups opposed to construction of the Northern Gateway pipeline from Alberta to the B.C. coast. Strahl has touched off a political controversy for registering with the B.C. government as a lobbyist for Enbridge, the company wanting to build the pipeline. To be clear: Strahl has long had a reputation as one of the straightest arrows in Canadian politics, and there is no evidence of any actual conflict of interest in his work for Enbridge. In a recent television interview, Strahl said he would recuse himself from anything to do with the proposed pipeline that came before the spy service review committee, passing the case to one of the other four members. But a few of them may have their own problems of perception. For example, Denis Losier is an accomplished former New Brunswick politician, bureaucrat and insurance company top executive. But he is also on the board of directors of Enbridge N.B., a wholly-owned subsidiary of the pipeline and gas company of the same name, Strahl’s client. Yves Fortier is one of Canada’s most pre-eminent and highly respected lawyers. He was previously a member of the board of TransCanada Pipelines, the company now behind the proposed Keystone XL pipeline from Alberta to Texas. That project is currently being blocked in the U.S. by the Obama administration, and has been the target of huge protests. Former Reform MP Deborah Grey is one member of the spy service oversight committee with no apparent connections to the oil industry."
Other spy watchdogs have ties to oil business
CBC News, 10 January 2014

"Britain would have to drill up to 2,000 shale wells a year to achieve a substantial drop in energy costs, according to experts. Sir David King, the government's former chief scientist, suggested cost benefits from fracking may only be achieved with major disruption to the landscape. He expressed support for firms drilling to explore the size of the UK's reserves which could reduce reliance on imported gas from Russia and Qatar. But he warned those expecting gas prices to plummet as in the United States, that the far higher concentration of people and resulting planning issues in Britain would make it very difficult to do it 'on anything like the same scale'.... Each well requires tons of sand and water delivered in lorries used to crack open the rocks, he said, which causes damage to roads and problems with 'social acceptance'. And the gas produced from each well drops by around 70pc after the first year, he said. 'If you want to keep up production you need to keep up fracking.' Professor David MacKay, Chief Scientific Officer at the Department of Energy and Climate Change, told peers that the UK's shale gas reserves are estimated to be around a third of the size of those in the North Sea. But he said how much could be extracted, and the impact on energy prices, would remain 'extremely uncertain' until the first 20 to 40 wells are drilled in the coming years."
Up to 2,000 frack wells a year needed to cut gas bills
Mail, 9 January 2014

"Domestic energy consumers are £53 a year worse off today than they were back in January 2013, even after the government has reduced green and social obligations on power companies, according to new calculations. As npower became the last of the big six suppliers to trim back earlier bill increases, uSwitch said consumers were still paying on average £1,264 a year – 4.3% more – for their energy than 12 months ago."
Domestic energy users £53 a year worse off than 12 months ago, says uSwitch
Guardian, 8 January 2014

"The stakes could not be higher for China, the largest investor in South Sudan's oil sector, as fierce fighting continues between forces loyal to President Salva Kiir and those of his former deputy. Some of the largest oil fields China operates are in areas controlled by fighters backing Riek Machar, the country's vice-president until he was sacked in July. Oil production has already dropped by 20% since the onset of the conflict three weeks ago and more than 300 Chinese workers have been evacuated.  The spectre of their Libyan experience also weighs heavily on the Chinese minds - project after project now lies deserted because of heavy fighting during the Arab Spring uprising of 2011, inflicting huge losses on China....China invested some $20bn (£12bn) in Sudan before it split into two countries in 2011, according to Chinese media reports. Another $8bn was pledged to President Kiir during his visit to China the year following secession, to be used for infrastructure projects and the oil sector. The heavy investment seems to have borne fruit, as in the first 10 months of 2013, China imported 1.9 million tonnes of oil (nearly 14 million barrels) from South Sudan, twice as much as China imports from Nigeria each year. Though amounting to less than 1% of China's total oil imports, it makes up roughly two-thirds of oil exported by the world's youngest nation and is expected to increase. Two years ago, China suffered heavy losses in its Libyan projects, including infrastructure, telecommunications and oil. Many constructions were halted and sites looted or destroyed during the revolution which toppled long-time leader Muammar Gaddafi. The total loss was estimated by several Chinese media reports to be in the region of $20bn, although no official figures exist. Compensation talks with the new Libya government stalled as their priority was very much on nation-building and improving the living conditions of the Libyan people. Experts point out that China has taken tremendous risks in its search for oil. This is because the country's economic boom continues to require a great deal of oil - home production is limited and reliance on exports reached 56% in 2012. But all the known global markets have been dominated by Western companies or have been off-limits because of sanctions, leaving China with little choice but to adopt high-risk strategies. Nowadays, more than half of China's investment in the overseas oil sector is found in areas which are considered unstable, including Iran, Nigeria, Sudan, South Sudan and Venezuela."
China's oil fears over South Sudan fighting
BBC Online, 8 January 2014

"China has embarked on the greatest push for renewable energy the world has ever seen. A key element involves more than doubling the number of wind turbines in the next six years. Already the world's largest producer of wind power, China plans further massive increases. From a current installed capacity of 75 gigawatts (GW), the aim is to achieve a staggering 200GW by 2020. By contrast, the European Union countries together have just over 90GW of installed wind capacity. The far western province of Xinjiang is one of seven areas designated for wind development. Against a backdrop of snow-capped mountains, turbines are massed in their thousands over the frozen desert. New units are being installed in a frenzy of construction in which the pace of work has been accelerated. Jiang Bo, an engineer with the manufacturer Goldwind, told me: 'Seven years ago we could only do one wind turbine in about two days - but our current speed is that we can do two in one day.' However, integrating this surge in wind power has posed a series of challenges. The windiest regions, such as Xinjiang, tend to be extremely distant from the biggest cities where the electricity is most needed. And the construction of wind farms has often outstripped the building of the connections needed to link the turbines to the grid. The grid itself, accustomed to handling the predictable output of power stations burning coal, has struggled to cope with the intermittency of wind. The result has been that some wind farms have been ordered to shut down even on windy days - a process known as curtailment. Last year as many as 20%-30% of turbines across China were left idle at particular times but wind industry officials say the problem is now being tackled. ... The most recent figures, for 2012, show that wind only generated 2% of the country's electricity. Coal, the largest contributor, generated 75%. However, since China's total generation is more than that of all European Union countries combined, wind's percentage is large in absolute terms."
China on world's 'biggest push' for wind power
BBC Online, 8 January 2014

"Investors in Gazprom seemed unconcerned about it missing another deadline to sign a massive deal for gas supplies to China by the end of 2013. In fact, Russia’s state gas company has been discussing the planned deal with China’s CNPC for so many years that many started doubting it would ever happen. But now an agreement is within reach...Both Chinese and Russian sources say the two sides are getting close to a pricing arrangement that would allow the gas to arrive in eastern Chinese markets at about $13 per million British thermal units. That would translate into $10-$11 per mBtu at the Chinese border – a price that suits both Chinese and Russian calculations. China has long insisted that it will not pay Gazprom much more than the $9 per mBtu it pays for gas from Turkmenistan, and that the piped gas must be cheaper than liquefied natural gas. 'Price talks have become less difficult for Gazprom now that LNG prices are high,' says Julia Pribytkova, a gas analyst at Moody’s in Moscow....The formula for the deal is expected to be based on a reference to oil price products in Asia, possibly Singapore crude. The Chinese side is quick to point out it no longer needs the Gazprom gas as much as it did when negotiations began a decade ago. China has now constructed alternate gas pipeline links with central Asia and Myanmar. LNG terminals already import shipped gas and more are in the works, to take gas from Qatar, Australia and even Russia itself. 'Russia is already 10 years too late in entering China’s gas market,' says China-Russia energy expert Feng Yujun of the China Institutes of Contemporary International Relations. 'Time is on China’s side,' he adds. But China cannot be too dismissive of Gazprom either. The country faces a large future gas deficit, thanks to plans to cut coal-fuelled pollution in the more prosperous eastern cities. An important part of those plans simply call for moving coal-burning power and industrial projects further out to the poor and arid west, but eastern cities’ manufacturing, heating and power will still require a lot more gas."
Gazprom close to agreeing pricing deal on China gas supplies
Financial Times, 5 January 2014

"Safety rules will probably be tightened on crude oil shipments from North Dakota following a string of railway explosions, threatening to damp an energy boom that has boosted the region’s economy. U.S. regulators yesterday issued a safety alert after a train carrying oil crashed and caught fire earlier this week in North Dakota, where surging production has helped lead a renaissance in domestic energy and driven the state’s unemployment rate to the nation’s lowest. The type of oil pumped from the shale formations of North Dakota may be more flammable and therefore more dangerous to ship by rail than crude from other areas, the Transportation Department said in the alert. Regulators are considering imposing tougher rules on railcar construction, among other steps, potentially raising the cost of moving the crude to market. “A couple years ago, we really weren’t transporting much oil by train,” Brigham McCown, a former administrator of the Pipeline and Hazardous Materials Safety Administration, said today in a phone interview. “The monumental growth in oil transport by rail means there are opportunities to have things not classified right.” This week’s incident, near the town of Casselton, is the fourth major derailment in six months by trains transporting crude. An explosion of a runaway train carrying North Dakota oil in July killed 47 in Quebec. Restrictions on railcars could worsen a shortage of capacity for moving oil to refineries. Pipelines could be affected as well. .... Record volumes of oil are moving by rail as production from North Dakota and Texas have pushed U.S. output to the most since 1988 and pipeline capacity has failed to keep up. North Dakota in particular relies on the railways to carry its crude East or West and away from the bottlenecks to the Gulf Coast refineries.  If the lighter crude releases gases that could be explosive after a rail crash, it could also lead to an explosion after oil leaks from a pipeline, Carl Weimer, the executive director of the Pipeline Safety Trust, an independent advocate for pipeline-safety rules, said in an interview. “If it’s the same type of oil, it could be the same type of issues with pipelines,” Weimer said.  PHMSA, the Transportation Department unit that issued yesterday’s alert, said it is also looking at how corrosive shale oil is to railcars, something Weimer said also could affect pipelines. Three pipeline companies including Enbridge Inc. (ENB) warned regulators that North Dakota oil with too much hydrogen sulfide, which is toxic and flammable, was reaching terminals and putting workers at risk.... Crude from the Bakken, which is along the northwest section of North Dakota and east of Montana, accounts for more than 10 percent of the nation’s oil production, after more than doubling between 2010 and 2012. Drillers use a combination of horizontal drilling and hydraulic fracturing to unlock previously unreachable shale deposits. Bakken crude tends to be flammable because it contains a large fraction of volatile propane and butane, said Zak Mortensen, business development manager for Inspectorate America Corp., which performs oil quality inspections."
Bakken Crude Pegged as More Dangerous Imperils Shale Boom
Bloomberg, 3 January 2014

"China's biggest producer of rare earths, the Inner Mongolia Baotou Steel Rare Earth Group (600111.SS), has acquired nine regional mining companies as part of a government masterplan to consolidate the sector. China produces more than 90 percent of the world's rare earth metals, a group of 17 elements used in a wide range of applications in sectors like renewable energy, telecommunications and defense. Since 2010, it has tried to improve industry regulation, imposing tough new production and export quotas, raising environmental standards and cracking down on smuggling, once the source of nearly a third of the rare earths flowing to international markets. It has also sought to consolidate miners under the control of a small number of state-owned producers."
China Baotou Rare Earth acquires nine regional miners
Reuters, 2 January 2014

"Russia retained the title of the world's top oil producer with 2013 output reaching a post-Soviet high as rising exports to China and strong prices allow the Kremlin to maintain record spending from an overstretched budget. Energy has been the engine of Russia's growth during more than a decade of leadership by President Vladimir Putin, with oil and gas accounting for more than half of budget revenues.... The IEA, the West's energy watchdog, expects Russian production to remain flat at around 10.5 million barrels per day (bpd) until the end of the decade, and then decrease to about 9.5 million bpd by 2035. The IEA says that key to maintaining Russian production levels would be the Kremlin's ability to extract hard-to-recover oil, emulating U.S. successes, and to encourage more production in remote Arctic and East Siberia regions."
Rise in Russian oil output supports overstretched budget
Reuters, 2 January 2014

"World energy power Russia said on Thursday that its oil output hit a post-Soviet high in 2013 while natural gas production at its vast Gazprom holding slipped for the second straight year. The mixed figures — highlighted by yet another dip in oil exports outside ex-Soviet territories — point to lingering problems in a sector that accounts for about half of Russia’s budget revenues. It also remains instrumental to President Vladimir Putin as he battles a rapid economic slowdown that has put a strain on the commitment to broader social spending he made when re-elected to a third term in 2012. The Russian energy ministry’s reporting unit said oil and gas condensate production grew by 1.0 percent last year to reach a new record of 523.3 million tonnes (10.51 million barrels per day). Analysts and Russian media reports attributed the jump to soaring output by state-owned Rosneft — the world’s largest publicly traded oil firm — at the mammoth Vankor field it launched in Siberia in 2009. Gazprom is also ramping up production of gas condensate as its seeks to diversify away from its traditional but stalling pipeline supplies of blue fuel to Europe. Russia had established its previous oil output high in 2012 when it reached 10.40 million barrels per day. Its post-Soviet low came in 1994 when daily output slumped to 6.0 million barrels — less than half of the 12.4 million barrels Russia and 14 other republics produced as part of the Soviet Union in 1988. The current rate outpaces Saudi Arabian output and clinches for Russia the title of the world’s biggest oil producer. But Russia lacks the quick ability of Saudi Arabia to boost output in case of a strong global economic rebound or more serious turmoil in the Middle East. It also appears to be unable to break through any further on large foreign markets to which it has no direct pipeline and that in some cases are starting to depend on US shale oil. Thursday’s figures showed Russia’s exports outside the former Soviet nations declining by 2.2 percent. Russia’s overall natural gas production rose last year amid stiffer competition for state-owned Gazpom from privately-owned firms such as Novatek and Lukoil. Total natural gas output rose by 2.1 percent to 668.0 billion cubic metres (23.6 trillion cubic feet). Gazprom’s production was reported at 476.1 billion cubic metres — down from 478.8 billion cubic metres in 2012 and well off 2011 output of 513.1 billion cubic metres. The drop reflects the reality that almost all of Gazprom’s foreign sales are focused on European and post-Soviet countries now experiencing some of the slowest growth rates in the world. Gazprom has also been slow to shift its focus to liquefied natural gas (LNG) production that could help it reach the growing markets of Asia and Latin America. Russia’s shale supplies are only now being probed in detail and estimates vary over how much oil and natural gas they might hold. The US Energy Information Adminstration (EIA) said last year that Russia had the world’s largest supplies of shale oil but only the ninth-biggest quantity of such untapped natural gas. But the report said that most of Russia’s shale oil rested in western Siberia’s Bazhenov formation that is particularly difficult to extract. The EIA believes only only six percent of that oil may be reached with currently available technology."
Russia’s 2013 oil output highest in post-Soviet era
AFP, 2 January 2014

"Energy firms ‘deliberately inflated’ the price they paid for electricity from their own power stations - leaving customers out of pocket by up to £150 over the last three years, it was claimed today. The so-called Big Six - British Gas, SSE, E.ON, EDF, npower, and Scottish Power - paid £4billion more for power than the market rate, according to shadow energy secretary Caroline Flint. The Labour politician accused the companies of paying over the odds to increase profits in other divisions of their companies or doing deals that were bad for customers."
Big Six energy firms 'deliberately inflated' price paid for electricity from their own power stations
Mail, 2 January 2014

"For a third year, international oil prices have gone nowhere. Brent, the global marker, has averaged more than $108 a barrel in 2013 – like it did in 2012 and 2011 – as feared oversupply from the US shale revolution failed to materialise because of production setbacks in other parts of the world. Many believe 2014 will be the year in which rising output finally overwhelms modest demand growth, sending prices lower and testing Opec’s resolve to balance the market and keep prices stable. “The US shale revolution, coming on top of the maturation of deepwater production, paints a robust supply picture,” says Ed Morse, head of commodities research at Citi. His bank expects Brent to average $98 a barrel in 2014. Others, though, argue supply will disappoint, providing a powerful prop for Brent. 'The patterns of recent years are likely to repeat themselves because nothing has really changed,' says Michael Dei-Michei of JBC Energy, a consultant which is forecasting an average Brent price of $110 a barrel next year.Why the opposing forecasts? The main reason is differing views on the risk of more supply disruptions within Opec....With the prospects for supplies hard to predict, a more fruitful way for investors to assess the oil market may be to look at demand growth, where more clear-cut shifts are discernible. Indeed, the IEA recently raised its forecasts for global oil consumption amid the strongest US demand growth in a decade. It is now forecasting global oil demand growth of 1.2m b/d in 2014....One thing on which everyone appears to agree is that US oil prices will remain volatile in 2014. Surging shale oil production along with severe restrictions on exports has led the North America oil market to diverge from the global market in recent years. And a build-out of pipeline infrastructure has allowed the glut of oil produced in shale rock formations such as the Bakken in North Dakota and Eagle Ford in Texas to move to markets on the US Gulf Coast."
Opec supply risk divides oil strategists
Financial Times, 1 January 2014

    


".... if you look around and see what the world is now facing I don't think  in the last two or three hundred years we've faced such a concatenation of  problems all at the same time.....[including] the inevitability, it seems to me, of resource wars....  if we are to solve the issues that are ahead of us,
we are going to need to think in completely different ways. And the probability, it seems to me, is that the next 20 or 30 years are going to see a period of great instability... I fear the [current] era of small wars is merely the precursor, the pre-shock, for something rather larger to come... we need to find new ways to be able to live together on an overcrowded earth."
Paddy Ashdown, High Representative for Bosnia and Herzegovina 2002 -2006

BBC Radio 4, 'Start The Week', 30 April 2007

"Individual peace is the unit of world peace. By offering Consciousness-Based Education to the coming generation, we can promote a strong foundation for a healthy, harmonious, and peaceful world.... Consciousness-Based education is not a luxury. For our children who are growing up in a stressful, often frightening, crisis-ridden world, it is a necessity."
Academy Award Winning Film Producer David Lynch (Elephant Man, Blue Velvet, etc)
David Lynch Foundation

NLPWESSEX, natural law publishing
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