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NLPWESSEX, natural law publishing |
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| PEAK OIL AND ENERGY CRISIS NEWS | ||
| Introduction To Go Direct To Current News Reports - Click Here |
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Peak Oil and Energy Crisis News Archives |
'Highlights' 2005 - 2010 "Christophe de Margerie, CEO of the French oil giant Total...[says]
oil supplies will soon run seriously short, and until we come up with something better we
need to make sure we suck every last drop from every last nook and cranny on the planet.
'We don't know everything,' he says. 'But on oil reserves and production we know a lot.
And it's our duty to speak out.'....In an industry famous for being opaque, de Margerie
speaks openly about the nightmare scenario — oil shortages — that most energy
firms prefer to avoid or deny. De Margerie says the possible effects on the world economy
of dwindling oil supplies are so great 'I am not prepared to shut my mouth.' Shortly after
taking over at Total, he jolted oil executives at a London conference by stating the
industry would be unlikely to produce more than 100 million barrels a day, far below the
120 million or so the International Energy Agency estimates the world could produce by
2030, and which will be needed for Asia's galloping growth. De
Margerie now says 90 million barrels a day is 'optimistic.' Audiences regularly ask him when he thinks we might use earth's last drop
of oil, and de Margerie says that date is decades off. But it's important to realize, he
says during an interview with TIME, 'what will happen very soon is that oil supplies will
not cover demand. That won't mean there is no oil. There
are oil reserves, but you will need to invest billions and billions to get it.'" "Moves made to address carbon emissions are varied,
but many governments seem to be prioritizing low-carbon energy programs as an alternative
to fossil fuels. Fatih Birol [IEA Chief Economist]
recently told the US Council on Foreign Relations of his certainty that developing states
are interested in climate negotiations – and in reducing emissions – far more
for energy security reasons than
for climate ones. Diplomatically, he did not suggest
that major industrial states might be acting for much the same reasons." "The world will never be able to produce more than 89m barrels a day of oil, the head of
Europe’s third largest energy group has warned
....Christophe de Margerie, chief executive of Total, the French oil and gas company, said
he had revised his forecast for 2015 oil production
downward by at least 4m barrels a day because of the current economic crisis and the
collapse in oil prices....Delays and cancellations
in projects to extract oil from Alberta’s tar sands and Venezuela’s Orinoco belt
– both expensive and environmentally difficult operations in which Total is active
– will cut 1.5m b/d of supply that would have come on stream had oil prices remained
strong. ...Meanwhile, Mr de Margerie now expects a
faster decline in production at older fields, such
as those in the North Sea. At lower price levels, companies will find it harder to justify
the greater cost of keeping such fields pumping." "Opec has made a scathing attack on a report from the
International Energy Agency which says that the world's existing oil producers face a
'huge challenge' to keep up with a projected rise in global demand. The report from the IEA, the respected Paris-based energy advisor
to the Organisation for Economic Co-operation and Development (OECD) club of wealthy
nations, said that to compensate for the depletion of existing oilfields, by 2030 the
world would need to find new production equivalent to 45 million barrels per day, or the
output of four Saudi Arabias, to maintain present levels of supply. It added that
additional production equivalent to six Saudi Arabias would be required if a projected
rise in oil demand from 85 million barrels a day to 106 million was taken into account. The IEA, which based its findings on a landmark study of decline rates at
800 of the world's largest oilfields, said that there was, in theory, enough oil left in
the ground to meet demand. However, it would require investment of about $450 billion
(£300 billion) a year, with the bulk of this spent in the 13 member states of Opec, where
most of the world's remaining supplies lie.... The
dispute between the IEA and Opec goes to the heart of the debate over 'peak oil and how
much of the world's energy needs its existing oilfields can supply in the years ahead.
This year's World Energy Outlook report slashed its assessment of how much oil the world
would be able to produce by 2030 by ten million barrels to 106 million per day and placed
more emphasis than ever before on the need to develop alternatives. Opec has traditionally
adopted a much rosier view of the prospects for future global oil production growth. For
years, it has also been accused of overstating its reserves for political reasons and to
discourage the development of alternatives. The IEA's report also gave warning that the
present economic slowdown could have damaging consequences for the world's energy supplies
by undermining crucial investment. 'We cannot let the financial and economic crisis delay the policy
action that is urgently needed to ensure secure energy supplies and to curtail rising emissions of greenhouse gases,' Mr Tanaka [IEA
executive director] said. 'We must usher in a global energy revolution by improving energy
efficiency and increasing the deployment of low-carbon energy.” "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." "The world will have to suffer a deep economic
downturn before serious attempts are made to kick the oil habit, according to the chairman
of PFC Energy, the Washington based oil consultancy. In an interview with lastoilshock.com and Global Public Media, Robin West
said it would be very difficult for the oil industry ever to produce more than 95-100
million barrels per day, and that when output growth stops the oil price will go 'through
the roof'. This will cause 'massive demand
destruction, a huge recession, and only then will
you see very substantial substitution'. Mr West was in London to deliver a presentation at
the IP Week oil conference entitled 'Dances with Wolves', about the dwindling power of the
international oil companies....Asked if he agreed
with IEA chief economist Fatih Birol, who said last year that Iraq must increase its output exponentially if the world is to avoid a supply
crunch by 2015, Mr West said 'I think we're going to get into a nasty crunch at some
point, one way or another. If Iraq comes on, the crunch can be deferred for a while – but it's coming'." "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." Interview with David Strahan, ASPO 6, September 2007 "Oil ruled the 20th century; the shortage of oil will rule the 21st....
Last Tuesday the
lead story in The Financial Times was the latest report from the International Energy
Agency. The FT quoted the IEA as saying: 'Oil looks extremely tight in five years’
time,' and that there are 'prospects of even tighter natural gas markets at the turn of
the decade'. For an international agency, that is inflammatory language.... 27 of
the 51 oil-producing nations listed in BP’s Statistical Review of World Energy
reported output declines in 2006. One projection of world crude oil production actually
forecasts a 10 per cent reduction in total world output between 2005 and 2015. That would
be a revolution..... Some analysts think that the peak oil
moment has already been reached; some still think that it will not come until 2020 –
which is itself only 12 years away. Market trends and the statistics both support the
IEA’s view that consumption is accelerating and supplies falling faster than
expected. Of course, if the 'crunch' point is only five years’ away for oil, and
closer for natural gas, it has, for practical purposes, already arrived....The shortage of
oil and natural gas, relative to demand, had already changed the balance of world power. Historians may well conclude that the US decision to invade Iraq
was primarily motivated by the desire to gain physical control of Iraq’s oil and to
provide defence support to other Middle Eastern oil powers. Political
motivations are always mixed, but oil is an essential national interest of the United
States. If the US is now deciding to withdraw from Iraq, the price will have to be paid in
terms of loss of access to oil.... The world is coming to
the end of the age of oil, which produced its own technology, its balance
of power, its own economy, its pattern of society. It does not greatly matter whether the
oil supply has peaked already or is going to peak in five or 12 years’ time. There is a huge adjustment to be made. There will
be some benefits, including higher efficiencies and perhaps a better approach to global
warming. But nothing will take us back towards the innocent expectation of indefinite
expansion of the first months of the new millennium." London Times, 16 July 2007 "If Iraqi production does not
rise exponentially by 2015, we have a very
big problem, even if Saudi Arabia fulfills all its promises. The numbers are very simple,
there's no need to be an expert.... Within 5 to 10 years, non-OPEP production will reach a peak and begin to decline, as reserves run out.
There are new proofs of that fact every day. At the same we'll see the peak of China's
economic growth. The two events will coincide: the explosion
of Chinese growth, and the fall in non-OPEP oil production. Will the oil
world manage to face that twin shock is an open question.... I really hope that consuming
nations will understand the gravity of the situation
and put in place radical and extremely tough policies to
curb oil demand growth." "The world is consuming oil at a rate that will result in oil production
peaking in 15 to 25 years, a group of geoscientists told the American Association of
Petroleum Geologists' annual convention in Long Beach, Calif. When world oil production
reaches the peak by 2020-30, the rate will be 90-100 million
b/d, only 10-20% higher than it was in 2005. Depending on the level of
world oil resources, which is highly uncertain, that peak is likely to last 20-30 years
before production begins its ultimate decline. The estimates are released for the first
time following an AAPG Hedberg
Research Conference held in November 2006 in Colorado Springs.... Unconventional
resources-tar sands and extra-heavy oil, oil shale, and oil from mature source
rocks-provide a massive in-place resource. Each is known to have at least 3-4 trillion
bbl. The problem with these unconventional resources is
recoverability. Each faces a major challenge, whether poor quality oil (extra-heavy oil),
poor quality reservoirs (oil from source rocks), or both (oil shale). Production of extra
heavy oils and oil shale also requires substantial energy, enough so that oil shale
production may be severely constrained by being mostly uneconomic due to a low net energy
gain. The 75 Hedberg conference participants came from 18 countries on all
six populated continents. " Oil And Gas Journal, 4 April 2007 ".... 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..." The Energy Challenge Of The Obama Period "In the 21st century, we know that the future of our
economy and national security is inextricably linked with one challenge: energy. In the
next few years, the choices that we make will help determine the kind of country and world
that we will leave to our children and our grandchildren. All
of us know the problems that are rooted in our addiction to foreign oil. It constrains our economy, shifts wealth to hostile regimes, and leaves
us dependent on unstable regions.... For over three decades, we've listened to a growing
chorus of warnings about our energy dependence. We've heard president after president
promise to chart a new course. We've heard Congress talk about energy independence, only
to pull up short in the face of opposition from special interests. We've seen Washington
launch policy after policy, yet our dependence on foreign oil has only grown, even as the world's resources are disappearing. This time has to be different. This time we cannot fail, nor can we be
lulled into complacency simply because the price at the pump has for now gone down from $4
a gallon. To control our own destiny, America must develop new forms of energy and new
ways of using it. And this is not a challenge for government alone; it's a challenge for
all of us. The pursuit of a new energy economy requires a sustained all- hands-on-deck
effort, because the foundation of our energy independence is right here in America, in the
power of wind and solar, in new crops and new technologies, in the innovation of our
scientists and entrepreneurs and the dedication and skill of our workforce. Those are the
resources that we have to harness to move beyond our oil addiction and create a new hybrid
economy. As we face this challenge, we can seize boundless opportunities for our people.
We can create millions of jobs, starting with a 21st- century economic recovery plan that
puts Americans to work building wind farms, solar panels, and fuel-efficient cars. We can
spark the dynamism of our economy through a long-term investment in renewable energy that
will give life to new businesses and industries with good jobs that pay well and can't be
outsourced....The team that I have assembled here today is uniquely suited to meet the
great challenges of this defining moment.....Dr. Steven Chu [nomination for Energy
Secretary] is a Nobel Prize-winning physicist who has been working at the cutting edge of
our nation's efforts to develop new and cleaner forms of energy. He blazed trails as a
scientist, teacher, and administrator, and has recently led the Berkeley National
Laboratory in pursuing new alternative and renewable energies. Steven is uniquely suited
to be our next secretary of energy as we make this pursuit a guiding purpose of the
Department of Energy, as well as a national mission. The scientists at our national labs
will have a distinguished peer at the helm." "The most important contributors to
the world’s total oil production are the giant oil fields....The evolution of decline
rates over past decades includes the impact of new technologies and production techniques
and clearly shows that the average decline rate for individual giant fields is increasing
with time. These factors have significant implications for the future, since the most
important world oil production base – giantfields –will decline more rapidly in
the future, according to our findings.... By 2030 the production from fields currently on
stream could have decreased by over 50% in agreement with IEA (2008) . The struggle to maintain production and compensate for the decline
in existing production will become harder and harder. Our conclusion is that the world
will face an increasing oil supply challenge, as the decline in existing production is not
only high but also increasing." "(Steven Chu, Obama Secretary
of Energy) was my boss. He knows all about peak oil, but he can't talk about it. If the
government announced that peak oil was threatening our economy, Wall Street would crash.
He just can't say anything about it." Cheer Up, It's Going to Get Worse Bohemian.com, 17 June 2009 |
|
| MORE ENERGY INFORMATION 'ENERGY UPDATE' BULLETINS SOLAR ENERGY NEWS |
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| Contact | 'We Need A New Way Of Thinking' - Consciousness-Based Education |
| PEAK OIL AND ENERGY CRISIS NEWSBITES |
| 2010 |
| "Britain’s energy regulator
yesterday warned of power blackouts and spiralling consumer prices and raised the prospect
of partial renationalisation of the industry. In a damning report, Ofgem says Britain’s
power industry is in a dire state and in desperate need of investment. The regulator
raised the prospect of direct government intervention that would wind back the clock on 20
years of deregulation. Alistair Buchanan, Ofgem’s chief executive, said: 'We do not
advocate change lightly, but all the facts point to the need for reforms now ... Leaving
the present system unchanged is not an option.' In remarks akin to proposals by Ed
Miliband, the Energy Secretary, in an interview with The Times on Monday, Mr Buchanan said
that there was 'reasonable doubt' over the security of Britain’s energy supplies
before 2015 and set out proposals to unlock an estimated £200 billion of investment
needed to solve a looming energy crunch. 'Acting earlier will also help keep costs as low
as possible for consumers and business,' he said. Mr
Buchanan claimed that the crisis had been compounded by an 'unholy trinity' of factors
— including the impact of the recession on energy industry investment, Britain’s
growing reliance on imported gas as North Sea supplies are depleted and the closure of
nine ageing coal-fired and oil-fired power stations by 2015 in order to meet new EU
pollution laws, a move that will at a stroke scrap almost a third of UK generating
capacity." "China
overtook the USA for volumes of new installations and manufacturing of wind turbines for
the first time in 2009, according to a
report by the Global Wind Energy Council (GWEC). The world’s wind power capacity
grew by 37.5GW to 157.9GW during the year, with a third (13GW) of these additions made in
China, which doubled its capacity in the period.
'China is putting strong efforts into developing the country’s tremendous wind
resource. Given the current growth rates, it can be expected that the even the unofficial
target of 150GW will be met well ahead of 2020,' said Li Junfeng, secretary general of the
Chinese Renewable Energy Industries Association." "ENI SpA's chief executive said
Thursday that the Italian energy company will pull out of Iran after current contracts to
develop two gas fields there run out, as international pressure grows to isolate the
country over its disputed nuclear program. Paolo Scaroni also said the company plans to
raise around euro1.5 billion from selling off shares in three gas pipelines in order to
settle a European Union antitrust dispute. He told reporters that the company won't
prolong contracts it signed in 2001 to develop two Iranian gas fields. Iran has the
world's second largest gas resources after Russia and has resisted global pressure -
including U.S. sanctions - over its program to enrich uranium. Iran says its program is
peaceful but the U.S. says it suspects Iran is trying to build nuclear weapons." "The
last time Britain suffered a winter this bitter, the phrase 'energy security' meant having
a full coal scuttle. Now it's all about natural gas. Forty years ago, few houses had
central heating and those that did ran on imported oil. Today, following the North Sea
bonanza of the 1970s and 1980s, gas heats almost every home and generates over 40 per cent
of our electricity, making Britain the world's fifth largest consumer. Only the US,
Canada, Russia and Iran guzzle more. But these days Britain's gas supply is apparently on
thin ice. Until the beginning of this year, National Grid had only once been forced to
issue a Gas Balancing Alert – warning the market that supply might not meet demand
and urging suppliers to pump harder. Since then it has issued another four. The first came
early in the big freeze, when demand was running 30 per cent higher than a normal January
day. A fault at Troll, one of the main Norwegian gas fields, caused imports through the
Langeled pipeline to drop sharply and the wholesale gas price to jump from 30p to 60p per
therm. Eventually, more gas started to flow and the danger passed, but not before
electricity generators had switched from gas to coal-fired power stations, and industrial
customers with interruptible supply contracts had been cut off, disrupting businesses
around the country....None of this would have happened a few years ago, when North Sea
production meant Britain was more than self-sufficient in gas. But after a 30-year boom,
UK output finally peaked in 2000 and started to fall – slumping more than a third by
2008. In 2004 Britain became a net importer for the first time, and National Grid expects
we will have to import three-quarters of our gas by 2015. That makes Britain increasingly
vulnerable to any future supply interruptions like those last month, or when Russia next
cuts off Ukraine in their long-running dispute over gas prices. The Government insists
energy security is enhanced by having a range of sources of imported gas: pipelines from
Belgium, the Netherlands and Norway, along with three new Liquefied Natural Gas (LNG)
terminals in Wales and Kent, where tankers can deliver from as far afield as Qatar and
Trinidad & Tobago. But having the infrastructure does not guarantee the gas will come
to Britain. According to John Hall, countries like France and Germany that have long-term
contracts with major suppliers such as Norway are far better placed than Britain, which
buy on the open market. 'We have the import facilities but we don't have the contracts to
safeguard supplies when things go wrong,' says Mr Hall. 'Britain comes after everyone else
as far as Norway is concerned.' Britain's rising import dependency makes it increasingly
vital to have substantial amounts of gas in storage to draw down in a crisis, and the
Tories jumped on the spate of alerts in the New Year to charge the Government with
negligence over the issue. Britain has 4.3 billion cubic metres of storage capacity, which
amounts to less than 5 per cent of annual consumption, compared with more than 20 per cent
in Germany and almost 25 per cent in France. With British storage already depleted by
winter demand, Shadow Environment Secretary Greg Clark said remaining stores would last
only eight days at current levels of consumption. In fact, storage levels have fallen far
lower during previous crises – down to less than three days' supply last February,
which is when Russia last cut off supplies to Ukraine. Energy Secretary Ed Miliband
accused the Tories of using meaningless statistics, and in one sense he's right, but not
necessarily in a good way. Expressing storage in terms of days' supply overstates the
safety margin, because the gas could never be withdrawn that quickly. Three quarters of
Britain's gas storage is held at Rough, a depleted gas field off the Yorkshire coast
operated by Centrica, where suppliers can deposit gas during the summer when prices are
low, and withdraw it for sale in the winter when prices are higher. During the recent
alerts, Rough was delivering gas at its maximum rate – 45mcm per day – which
represents just 10 per cent of current demand. The vulnerability of having so much storage
in a single field was highlighted three years ago, when a fire at Rough closed the
facility for six months. The closure came just two months after an earlier Ukraine crisis
and, had the two coincided, the consequences could have been severe....Luckily the recent
alerts came at a time when the world is awash with gas, the result of new LNG production
capacity in the Middle East, new 'non-conventional' sources of gas in the US, and the
recession, which has depressed demand in Europe by some 10 per cent. The International
Energy Agency expects this glut to continue until around 2015, but many analysts predict
the market will then tighten sharply. 'Around the
middle of the decade we expect a perfect storm of falling domestic gas production,
economic recovery and tightness in the global LNG market,' says Professor Stern, 'and we
might not get very much warning. It could flip in a matter of weeks.' Britain's vulnerability to interruptions in the gas supply could be
worsened by our response to the "energy gap" resulting from the closure of
ageing coal and nuclear power stations over the next decade. In total, the closures amount
to 20 gigawatts (GW), or one third of peak electricity demand. The Government hopes much
of the gap will be filled by renewables, and last month announced the companies that have
won the right to build offshore windfarms under its ambitious plans to develop 32GW
offshore by 2020. But given the Government's record on renewables, many fear the targets
will not be met. If so, the 'energy gap' is likely to be filled by new gas-fired power
stations. Figures from New Power, an industry
journal, show that 15GW of new gas-fired stations are either under construction or have
received planning permission, with a further 15GW in the wings. Editor Dominic Maclaine says 'there is a new dash for gas in power
generation'. That is likely to raise the proportion of electricity generated from gas even
further, and increase Britain's vulnerability in the case of supply disruptions. In that
case, without a major increase in storage capacity, future gas supply crises could also
leave us in the dark." "Britain's offshore wind revolution,
launched with great fanfare by Gordon Brown last month, may struggle to get halfway to its
ambitious goals and should be scaled down in favour of a new dash for gas to keep the
lights on over the next 10 years, BP warned last night. Tony Hayward, chief
executive of the UK's largest oil company, said that British government ministers risked
being seduced by 'headline-grabbing options' such as offshore wind and clean coal in a bid
to bolster energy security and meet
climate-change goals. BP makes billions of pounds a year from oil and gas, but is also
investing in onshore wind farms in America. Talking to the Guardian exclusively, the BP
boss said he was not calling for the third round of wind licensing in the deep waters of
the North Sea to be shelved. But he did believe that the heavily subsidised move into wind power should be slowed
down, because it would not deliver anything like the targets set for it: possibly 15
gigawatts of power rather than the 25GW the wind industry expects. And in a speech due to
be delivered to the London Business school today, he says: 'Energy efficiency, gas-fired
power, lighter cars and biofuels all offer relatively low-cost routes, while other
headline-grabbing options are not the most cost-effective. With today's technology, carbon
capture to make clean coal, for example, is very expensive. Offshore wind is also costly
– for example in comparison to onshore wind, which is now a big business for BP in
the United States – and indeed to nuclear.' Hayward told the Guardian that wind
power, like nuclear energy, was nowhere near being commercially viable and would rely for
some time on "sovereign" intervention by governments. Instead, he said, there
should be more emphasis put on gas, which was very commercial, using a mixture of what
remained of UK North Sea supplies and imports. The BP man believed the UK should drop its
'paranoid' concerns about gas imports from Russia and accept that piped and
liquefied natural gas from overseas sources offered a better solution to help beat global
warming and energy insecurity in the short term. 'There is a lot of gas in the world.
There are a lot of diverse sources of gas in the world. The paranoia has been about
Russia, but it is misplaced. We have approximately
zero Russian gas in the UK [imported currently] and if you look at Europe, the imports of
Russian gas into Europe have halved since 1980.' Hayward, whose Russian TNK-BP joint
venture is a major part of the wider oil company's business, said the fear of Russia using
energy as a political weapon was 'massively exaggerated'. He believed Britain should not
be concerned even if Siberian gas accounted for 10% of Britain's imports, as long as 90%
came from a diverse group of suppliers such as Norway, Qatar and Algeria, as they already
did....The BP chief executive did agree with Ofgem's
Alistair Buchanan that the UK had reached a critical point in its energy history and
needed to change the market model with increased government involvement. 'It has been true
throughout history that at certain points in time government has had to intervene to shift
the boundaries of the market to allow the right market structure to evolve,' said Hayward.
He added: 'We did not displace coal with gas in the 1960s and 1970s without a massive
government intervention ... we are probably at one of those points again.'" "BP raised its oil and gas production
levels by 4%, while Shell saw a 2% fall over 2009. But the latter has also been looking
madly for cost-savings and has rowed back on plans to invest more heavily in carbon-intensive tar sands.
Hayward has kept Browne's sunburst logo and 'beyond petroleum' slogan on its marketing
material but has followed Shell into Canada's tar sands. The BP boss – an improbably
youthful 52-year-old – says he is not cutting back there despite mounting criticism
from green groups that they are in danger of triggering runaway global warming. He is keen
to emphasise that BP is engaged in a much more limited way than Shell while steering clear
of the more controversial mining techniques. 'BP has never been in the strip-mining of the
tar sands and never will be. We are focused on
so-called steam-assisted gravity drainage, which is
much more akin to conventional reservoir engineering … therefore the environmental
footprint on the ground is no more or worse than normal oil or gas operation.' 'It is
clearly carbon-intensive and we also see that it will remain commercial even with a very
high legislative price of CO2'. Tar sands are part of a wider diversity of supply of
energy sources that the world is going to require, Hayward argues, dismissing the idea
that the growing pressure on the US military not to use these imports will bear fruit. By 2015 BP could be providing 100,000-200,000 barrels a day from
this source for which the company is preparing two US refineries specially to process the
crude. 'The likelihood of the US army not using a secure local supply of energy is quite
low … Canadian heavy oil is going to be a very
important part of America's energy,' he argues. He rejects the suggestion that exploiting
tar sands contradicts the "beyond petroleum" mantra, seeing it instead as just
another fuel source on top of its wind, solar and biofuel investments. He is particularly
upbeat about the prospects of the latter even allowing for the food-not-fuel arguments
that arose when crop-price increases were blamed on biofuels. By 2020 up to 10% of global petrol supplies will be made up of
plant-based biofuels, Hayward believes, while the figure could be as high as 20% in the
US. BP is preparing for this by making big investments of between $5bn-$6bn in Brazil on
sugar-based ethanol 'first-generation' biofuels. But BP is also working on synthetic
'second generation' biofuels in conjunction with US chemical group, Du Pont, in this
country. The wind operations that BP is involved
with are based onshore in the US where the land is cheap and planning easy to obtain. But
Hayward makes clear he has enormous reservations about the North Sea wind 'revolution'
launched by the UK government. He questions whether the UK can build 14 to 15 gigawatts
(GW) of offshore wind by 2020, never mind the 25-27GW – the total expected by
ministers and industry here. Equally, he questions how quickly nuclear power plants can be
built and whether a rush will help either develop in the most cost-efficient way....The straight-talking oil explorer, who is said to still enjoy the
occasional triathlon, is an optimist and has little time for those who argue the world has
passed, or is even approaching, peak oil supplies. 'I personally – and BP – have
never believed we will see peak oil because of supply. We always believed we would see
peak oil because of demand. There will come a time – I believe it is beyond 2020
– when because of the changes in the energy portfolio, because of the drive for
energy efficiency, because of the introduction of biofuels, demand for oil will peak.'
There is plenty of oil in the world, he argues, not least in Iraq, where BP has staff
working on the ground, even ahead of important political elections. Hayward expects Iraq's oil production to grow from a couple
of million barrels a day today to close to 10m, putting it on par with Saudi Arabia. This
makes it 'a big part of oil security for the world.'" "Total has previously mentioned 100
Mb/d [for the peak of global oil production] and that they are now saying 95 Mb/d shows
that they are approaching the conclusion that my Ph.D. student Fredrik Robelius
presented in his thesis. That scenario had a
maximal production of 93 Mb/d in 2018. The requirement for that level of production was
that production from 7 giant oil fields in Iraq would commence immediately. The fact that this has been delayed makes it all the more difficult to
reach that production level." "Algae have
been touted as a solution to environmental worries over biofuels, but they may be a
long way from providing a truly green option. Unlike maize, soya beans and oilseed rape
(canola), algal farms don't take up valuable farmland, so algae-based biofuels don't
threaten food supplies. However, Andres Clarens at the University of Virginia in Charlottesville has
modelled the environmental impacts of algal farms and concludes that they require six times as much energy as growing land plants - and emit
significantly more greenhouse gases (Environmental
Science and Technology, DOI:
10.1021/es902838n). 'You have to add a whole lot more fertilisers, and the
environmental cost of producing these is the primary drawback,' Clarens says. Using waste
water instead of fertilisers helps, but not enough, he says. The only trick that tipped
the balance in favour of algae in his models was to use nutrient-rich household waste like
concentrated urine to fertilise the algae, but this would require new infrastructure and
so is no short-term fix." |
"Energy regulator Ofgem today
warned Britons may not be able to afford to heat their homes in the years ahead unless
there is radical overhaul of the country's energy supplies. The regulator warned the
country's current system may not be sufficient to ensure 'secure and sustainable' power
across the country beyond 2015. In announcing
proposals for a radical range of options (pdf), including setting up central buying of
power, Ofgem's chief executive, Alistair Buchanan, admitted that maintaining the current
free-market approach was no longer an option. Energy
bills could rise between 14% and 25% by 2020 as the industry pays for the £200bn cost of
investment needed to overhaul of the current system. He warned that increasing number of
consumers would be unable to afford the cost of heating their homes. The proposals could
force the government to undo the privatisation of the energy markets led by Margaret
Thatcher and could force a form of nationalisation again if it decides to implement
central buying of power. The regulator had previously warned that average household gas
and electricity bills could reach nearly £2,000 a year without drastic action to shore up
supply. Buchanan said: 'Our evidence shows that
Britain has a window of opportunity to put in place far-reaching reforms to meet the
potential security of supply challenges we may face beyond the middle of this decade. We
do not advocate change lightly, but all the facts point to the need for reforms now to
provide resilient supply security. Acting earlier will also help keep costs as low as
possible for consumers and business.'...The regulator
said reform was needed because of a confluence of events ranging from the global financial
crisis, significant worldwide demand for investment in energy, tough EU emissions targets,
the closure of ageing power stations and an increasing dependency on gas imports. The regulator set out five key issues: • A need for unprecedented
levels of investment over many years in difficult financial conditions and against a
background of increased risk and uncertainty. • The uncertainty in future carbon
prices is likely to delay or deter investment in low carbon technology and lead to greater
decarbonisation costs in the future. • Short-term price signals at times of system
stress do not fully reflect the value that customers place on supply security which may
mean that the incentives to make additional peak energy supplies available and to invest
in peaking capacity are not strong enough. • Interdependence with international
markets exposes Britain to a range of additional risks that may undermine the country's
security of supply. • The higher cost of gas and electricity may mean that increasing
numbers of consumers are not able to afford adequate levels of energy to meet their
requirements and that the competitiveness of industry and business is affected." |
"Global oil demand is set to
peak between 2020 and 2030, as falling developed
world demand balances growing demand in emerging markets, the chief executive
of Europe's largest oil company said on Tuesday. Tony Hayward told Reuters
Television that government policies in the developed world were eroding demand at the rate
of 1 percent per year. Hayward said this was contributing to an oversupply of refineries,
which was prompting rivals to close and sell facilities. However, he added: 'We've got the
right set of refineries.'" |
"China aims to raise the annual
production capacity of shale gas to 15-30 billion cubic meters by 2020 as part of its
response to recent widespread gas shortages, the
Ministry of Land and Resources said. The National Development and Reform Commission, the
country's top economic planner, is reviewing a plan to encourage the development and
utilization the unconventional gas source in an effort to meet rising energy demand
without excessively increasing greenhouse gas emissions, the ministry said in its in-house
newsletter..." |
"Royal Dutch Shell, Europe's
second biggest energy company, is poised to become the biggest oil major in biofuels as it battles to
reassure investors about profitability. The Anglo-Dutch company has signed a memorandum of
understanding with the most powerful Brazil bioethanol producer, Cosan, in a joint venture
said to be worth $12bn (£8.19bn). The move, if
finalised, will cement Brazil's position as the world's alternative energy superpower with
the potential to ship huge quantities of fuel to the United States and Europe. Shell will
now lobby the US administration to reduce its tariffs on biofuel imports in a move that
could transform profitability. The company hopes the aggressive moves into biofuels it has
plotted for two years will signal to investors that it has growth potential as it readies
itself to announce what is expected to be a 40% drop in quarterly profits on Thursday.
Analysts expect the group to report a quarterly profit of $2.9bn. This would take its
annual profit to $13.4bn, down on the $31.4bn it made in 2008. There are suggestions the
company will make further job losses on top of the 5,000 already announced. The joint
venture is intended to more than double Cosan's existing bioethanol production, which
currently stands at 2bn litres. Cosan is Brazil's leading bioethanol producer in a country
where virtually all new cars run on sugar cane. But there are serious reservations among
environmentalists that the growing attraction of biofuels in Brazil could see agricultural
land earmarked for food shifted to fuel crops, creating pressure to chop down more
rainforests....Biofuel in the UK powers 2.7% of the country's transport according to the
Renewable Fuels Agency. Britain is on target to meet its 5% target by 2014." |
| "The Government is drawing up plans for a wholesale reform of
Britain’s energy markets that could wind back the clock on 12 years of deregulation.
In an interview with The Times, Ed Miliband, the Energy and Climate Change Secretary, said
that Britain’s existing, highly liberalised market regime, introduced under Labour in
1998, was failing to deliver the investment needed to cut UK carbon emissions by more than
a third by 2020. A market structure was being designed to boost long-term investment in
low-carbon sources of electricity, including wind parks, nuclear reactors and fossil fuel
stations equipped with carbon capture and storage (CCS) technology. Mr Miliband said: 'We
are going to need a more interventionist energy policy to deliver the low-carbon
investment we need....Mr Miliband said that details
of the reforms would be in a document to be published in April called Roadmap to 2050,
published with the 2010 Budget. He said that the changes were essential to help Britain to
prepare for a doubling of electricity demand by 2050, driven by other policy objectives
such as a growth of electric cars and a move from gas to electricity for heating.'" Labour prepares to tear up 12 years of energy policy London Times, 1 February 2010 |
"In their exuberance, oil- and gas-industry officials repeat a single
refrain when describing the natural gas from Pennsylvania's Marcellus Shale: A
game-changer. Tony Hayward, chief executive officer of oil giant BP P.L.C., was the latest
to gush enthusiastically when he called unconventional natural gas resources like the
Marcellus 'a complete game-changer.' 'It probably
transforms the U.S. energy outlook for the next 100 years,' Hayward said Thursday at the World Economic Forum in Davos, Switzerland.
The breathtaking emergence of natural gas as America's energy savior was not in the cards.
Just four years ago, after Hurricanes Katrina and Rita devastated Gulf Coast rigs and
rattled gas markets, energy pundits forecast a bleak winter of short supplies, high
prices, and low thermostats. The vast scale of
shale-gas resources has come into focus quickly, and industry officials are touting the
possibility of steady supplies for decades to come. The Potential Gas Committee in
Colorado last year revised its outlook of America's future gas supply - up 35 percent in
just two years. The forecast was the highest in its 44-year history. The Marcellus Shale is the nation's fastest-growing producing area.
Though it lies under five states, about 60 percent of its reserves are in Pennsylvania,
according to Terry Engelder, a Pennsylvania State University geologist. 'In terms of its
impact on Pennsylvania, this is probably without peer in the last century,' said Engelder,
whose projections in 2008 alerted the public about the size of the Marcellus. 'America's energy portfolio has undergone a first-order paradigm
shift just in the last two years,' he said. 'This is
such an exciting thing.'....Not everyone has climbed aboard the bandwagon. Some
environmentalists are uneasy about the hydraulic-fracturing process that has unlocked the
shale gas. The technique requires the injection of millions of gallons of water into a
well to break up the shale to initiate production. And some
analysts say they believe the gas industry's estimates are too optimistic. 'I would look
at all this with a bit of healthy skepticism,' said Arthur E. Berman, a Houston
gas-industry consultant, who says he believes some operators have overstated the
production potential and understated the cost of Texas shale-gas wells. His pointed criticism got him banished from one trade journal - and
invited to speak at scores of investor workshops. 'Two years ago, we were talking about
importing gas from the Middle East,' he said. 'And now we have a hundred-year supply of
domestic gas?' Berman said he had been unable to conduct a similar analysis of Marcellus
wells because Pennsylvania law allows operators to keep their production data secret for
five years, unlike other states, where output is reported to taxing authorities
promptly. 'If something looks too good to be true,' he said, 'I need to look more
closely.' Questioning voices such as Berman's are uncommon in the industry, which portrays
natural gas as abundant, cheap, and cleaner than coal and oil - a domestically produced
'bridge fuel' to ease the transition to renewable wind and solar generation." |
"The International Energy Agency
(IEA) expects total natural gas output in the EU to decrease from 216 billion cubic meters
per year (bcm/year) in 2006 to 90 bcm/year in 2030. For the same period, EU demand for
natural gas is forecast to increase rapidly. In 2006 demand for natural gas in the EU
amounted to 532 bcm/year. By 2030, it is expected to reach 680 bcm/year. As a consequence,
the widening gap between EU production and consumption requires a 90% increase of import
volumes between 2006 and 2030. The main sources of
imported gas for the EU are Russia and Norway. Between them they accounted for 62% of the
EU’s gas imports in 2006. The objective of this thesis is to assess the potential
future levels of gas supplies to the EU from its two main suppliers, Norway and Russia.
Scenarios for future natural gas production potential for Norway and Russia have been
modeled utilizing a bottom-up approach, building field-by-field, and individual modeling
has been made for giant and semi- giant gas fields. In order to forecast the production
profile for an individual giant natural gas field a Giant Gas Field Model (GGF-model) has
been developed. The GGF-model has also been applied to production from an aggregate of
fields, such as production from small fields and undiscovered resources. Energy security
in the EU is heavily dependent on gas supplies from a relatively small number of giant gas
fields. In Norway almost all production originates from 18 fields of which 9 can be
considered as giant fields. In Russia 36 giant fields account for essentially all gas
production. There is limited potential for increased gas exports from Norway to the EU,
and all of the scenarios investigated show Norwegian gas production in decline by 2030.
Norwegian pipeline gas exports to the EU may even be, by 2030, 20 bcm/year lower than
today’s level. The maximum increase in exports of Russian gas supplies to the EU
amount to only 45% by 2030. In real numbers this means a mere increase of about 70 bcm In
addition, there are a number of potential downside factors for future Russian gas supplies
to the European markets." |
"Using biofuel in vehicles may
be accelerating the destruction of rainforest and resulting in higher greenhouse gas
emissions than burning pure petrol and diesel, a watchdog said yesterday. The Renewable
Fuels Agency also warned that pump prices could rise in April because of the
Government’s policy of requiring fuel companies to add biofuel to petrol and diesel.
More than 1.3 million hectares of land — twice the area of Devon — was used to
grow the 2.7 per cent of Britain’s transport fuel that came from crops last year.
Under the Renewable Transport Fuels Obligation, a growing proportion of biofuel
must be added to diesel and petrol. This year fuel must be at least 3.25 per cent biofuel
on average. By 2020 the proportion will be 13 per cent. The agency’s first annual report revealed that fuel companies had
exploited a loophole to avoid reporting the origin of almost half the biofuel they
supplied to filling stations last year. The origin of fuel from land recently cleared can
be described as 'unknown'. Last year Esso reported the source of only 6 per cent of its
biofuel and BP reported 27 per cent. Shell was the best-performing of the main oil
companies but still failed to report the origin of a third of its biofuel....From March
2011 companies will be required under a European directive to report the previous use of
all the land from which they derive their biofuels. However, they will also gain an
additional loophole because they will not have to admit using rainforest land if the trees
were removed before 2008." |
"Royal Dutch Shell chief
executive Peter Voser cannily chose the safe ground of an exclusive interview with
the Financial Times to finally admit the all-too-obvious - the Canadian oil sands
development Shell has touted as a major growth driver is instead a costly distraction, on
which time is now being called. Mr Voser said the massive expansion the company had
previously planned for its Athabasca Oil Sands Project (AOSP) - envisioning growth from
the current 155,000 barrels per day (bpd) capacity to an eventual 770,000bpd - was now
'clearly scaled down' and would be 'very much slower'. Over the past few years Shell has emphasised heavy investment in
so-called 'unconventional' hydrocarbon sources, both Canadian oil sands and gas-to-liquids
projects elsewhere, as a substitute for the new conventional oil and gas resources the
company has been notably lacking since its reserves-booking scandal of 2004. But the
relatively high costs of new oil sands developments in particular mean scant profits with
oil prices anchored stubbornly in a $70-$80 a barrel trading range. As recently as
November, Shell oil sands head John Abbott indicated the in-construction $14bn (£8.69bn)
AOSP Expansion 1 project, coming onstream later this year to boost total AOSP output to
255,000bpd, needs oil prices around $60 per barrel just to break even. And new investments
would require higher prices. Two previously-slated medium-term expansions of 100,000bpd
each are on ice indefinitely, and any serious AOSP growth beyond de-bottlenecking, which
could add perhaps some 100,000bpd in small increments by 2020, seems moot. Mr Voser was
not questioned on what this strategic U-turn means for Shell's resource base, defined as
its portfolio of hydrocarbon exploitation opportunities not yet migrated into developed
reserves. But the effective scrapping of further large-scale AOSP growth will presumably
have a material impact - while oil sands currently account for 8.4 per cent of proved
Shell reserves, totalling 11.9bn barrels-of-oil-equivalent (boe), they were previously
thought to account for perhaps a third of Shell's total resource base, estimated at 66bn
boe." |
"At a meeting of oil leaders at
the World Economic Forum at Davos, Tony Hayward, group chief executive of BP, said that
there was a 'supply challenge' for the industry which would have to increase output to
100mbd - a new peak for oil. Mr Hayward said that at present the world was producing
between 83 and 84mbd. He said he hoped Iraq would become a major oil player,
producing up to 10mbd in the next decade if the political situation remains relatively
stable. A need for a new peak in oil production will
dismay environmental campaigners who hoped that the West’s declining reliance on oil
would mean less CO2 emissions. Instead, demand from the emerging economies, including
India and the other BRIC countries, China, Russia and Brazil, will lead to new record
levels of consumption. Mr Hayward’s comments were supported by Peter Voser, the chief
executive of Shell, who said that the industry would have to find up to $27trn of
investment over the next 20 years to meet demand. At the session new figures from
PriceWaterhouseCoopers revealed that non-OECD countries will account for two-thirds of
world consumption by 2030. Mr Hayward said that demand from non-OECD nations would
increase by 40pc. 'The obvious thing in the mature markets of Europe and the United States
is that demand for oil products is in structural decline,' Mr Hayward said. He argued that
demand was now coming from the East, pointing out that China sold 13m cars last year. 'The challenge is how do we meet this growing demand for oil and
keep a lid on price?' Hayward said.....Turning to Iraq, Mr Hayward said that he was 'cautiously
optimistic' that the country could increase world supply. 'BP has a major contract to
redevelop an existing field that BP first found in 1953,' Mr Hayward said, revealing that
he wanted to increase BP production from 1mbd to 3mbd. Iraq could eventually produce
10mbd. Mr Voser said that although much of the oil in Iraq was 'easy oil' (onshore and
relatively accessible) its technology was 20 years behind much of the rest of the sector. He also argued that although renewables would be able to supply some of
the increase, there needed to be a 'more balanced discussion between oil and renewables'
and that increasing gas supply had a lot of potential. 'There is plenty of gas. Here we
have an energy source which from a CO2 point of view is better than other fuels –
than for example coal for electricity generation.' Andrew Liveris, chairman and chief
executive of Dow Chemical Company, one of the largest industrial users of oil in the
world, said that price stability was essential for economic growth. He revealed that in
2002 the cost to the company of its oil needs was $8bn and that had risen to $32bn by
2008. At times such was the volatility of the market there would be a '10pc aberration' in
the oil price in a week. 'We need certainty, we need predictability,' he said." |
"A controversial method of
extracting gas from shale rocks and coal seams pioneered in the US has been described by
the head of BP as a 'complete game changer' that would transform the future of energy in
that country over the next 100 years. Excitement in the industry over 'unconventional' gas
supplies has led to a wave of investment in America which Tony Hayward, BP's chief
executive, believes could eventually spread around the world. '[Unconventional gas is a]
complete game changer in the US,' he said in answer to a question at an energy summit
which was part of the World Economic Forum in Davos, Switzerland.' 'It probably transforms the US energy outlook for the next 100 years.
It's yet to seen if it can be applied globally.'....There
is also speculation that there could be shale-based gas schemes available in mainland
Europe now that new drilling and extraction techniques have been proven in the US, largely
Texas, Wyoming and Pennsylvania. Development of
these reserves in major quantities has sent the price of natural gas spinning downwards in
America but promises a much-sought increase in self-sufficiency. It also offers a lower
carbon footprint than oil....Unconventional gas has burst to prominence as US-based oil
companies – often led by smaller independents – have used new directional and
horizontal drilling techniques to exploit new reserves. But rock formations have to be
broken up with a mixture of water, sand and chemicals in a process called hydraulic
fracturing.....Environmentalists have major reservations about these techniques, saying
enormous amounts of water are needed and that the drilling can pollute local water tables.
The Texas Oil and Gas Accountability Project has blamed hydraulic fracturing for making
people ill and poisoning cattle by polluting water supplies, which is denied by the oil
and gas industry....But there are already bills being prepared for Congress that would
tighten restrictions on unconventionals and Exxon has inserted a clause in its takeover
documents for XTO that enable it to scrap the transaction if there were changes to the law
that made hydraulic fracturing 'illegal or commercially impracticable'." |
"There is still plenty of oil in
the ground and the world should put aside fears about 'peak oil', the head of the Saudi
state oil firm Saudi Aramco said on Thursday. 'The concern about peak oil is behind us,'
chief executive Khalid al-Falih told a session on energy supplies at the World Economic
Forum in Davos. The peak oil theory that oil supply
is at or near its peak gained currency when prices zoomed to a record of nearly $150 a
barrel in 2008. The issue remains a concern for many in the industry. Total's chief executive Thierry Desmarest said the world would
struggle to surpass 95 million barrels per day (BPD) in the future -- 10 percent above
present levels. 'The problem of peak oil remains,'
he told the same panel. His contention was swatted aside by Falih. 'Of the 4 trillion
(barrels) of oil the planet is endowed with, only 1 has been produced,' Falih said.
'Granted most of what remains is more difficult and complex (to exploit) ... there's no
doubt we can do a lot more than the 95, 100 (million barrels) that are projected in the
next few decades. Saudi Arabia has a long list of projects in its portfolio that would
more than offset declines, he said." |
"Venezuela Oil Minister Rafael Ramirez was leaving Wednesday
for Russia and then to China to discuss plans for developing heavy crude blocks in the
eastern Orinoco region, the Venezuelan government said in a statement." |
"CNNC International Ltd. on
Monday said it will acquire a 37.2% stake in the Azelik uranium mine in Niger through an
acquisition of Ideal Mining Ltd. for as much as $414 million Hong Kong dollars (US$53.3
million), extending its footprint to Africa for the first time. The deal comes as China rapidly expands its capacity to generate nuclear
power as part of a strategy to minimize use of coal and crude oil, which are widely blamed
for making Chinese cities among the smoggiest in the world. CNNC International is the sole
platform for its parent, China National Nuclear Corp., to secure uranium resources
overseas. Shares of CNNC International jumped 8.3% to HK$8.88 in Hong Kong trading Monday.
CNNC International's financial controller, Philip Li,
said the company is looking for acquisition targets in Kazakhstan to boost its uranium
reserves in order to fuel China's nuclear power boom.
'We hope to become the largest uranium supplier in China in the long run. We will buy more
uranium mines through acquisitions or our parent if the project can deliver a reasonable
return for us,' he said. The Africa mine is expected to start production in the second
half of the year, Mr. Li said." |
"It is past midnight in a jet high above the Persian Gulf, and one of
the key figures in global energy shows no sign of retiring. Instead, Christophe de
Margerie, CEO of the French oil giant Total, zeroes in on a favorite target: criticisms of
oil companies by environmental groups, gathered in Copenhagen for the U.N. Climate Summit.
'People say they are inventing electric cars,' de Margerie says, puffing on a Marlboro.
'Well, where is the electricity coming from? Flowers? Maybe someday. But what is available
now is oil and gas.' The argument is delivered in de Margerie's trademark style: blunt and
impassioned, with an almost cocky certitude. He credits his confidence to years spent
traveling — 'moving my ass,' as he calls it — and witnessing the world up close.
All that time on the road has convinced him of this: oil supplies will soon run seriously
short, and until we come up with something better we need to make sure we suck every last
drop from every last nook and cranny on the planet. 'We don't know everything,' he says.
'But on oil reserves and production we know a lot. And it's our duty to speak out.'....In
an industry famous for being opaque, de Margerie speaks openly about the nightmare
scenario — oil shortages — that most energy firms prefer to avoid or deny. De
Margerie says the possible effects on the world economy of dwindling oil supplies are so
great 'I am not prepared to shut my mouth.' Shortly after taking over at Total, he jolted
oil executives at a London conference by stating the industry would be unlikely to produce
more than 100 million barrels a day, far below the 120 million or so the International
Energy Agency estimates the world could produce by 2030, and which will be needed for
Asia's galloping growth. De Margerie now says 90
million barrels a day is 'optimistic.' Audiences
regularly ask him when he thinks we might use earth's last drop of oil, and de Margerie
says that date is decades off. But it's important to realize, he says during an interview
with TIME, 'what will happen very soon is that oil supplies will not cover demand. That
won't mean there is no oil. There are oil reserves,
but you will need to invest billions and billions to get it.'" |
"United Nations climate talks are a bigger threat to top oil exporter
Saudi Arabia than increased oil supplies from rival producers, its lead climate negotiator
said on Sunday. Saudi Arabia's economy depends on oil exports so stands to be one of the
biggest losers in any pact that curbs oil demand by penalizing carbon emissions.....The possibility that oil demand might peak this decade was a
'serious problem' for Saudi Arabia, Sabban said. The
kingdom had looked at the assumptions behind studies that pointed to demand peaking in 2016 and
saw 'some truth in it,' Sabban said. The kingdom was
watching future demand projections closely and would match any future investment in
capacity expansion with demand, Sabban said. 'We
will continue keeping the same spare capacity but no more,' he said. Saudi had plenty of
spare capacity to increase output if global demand warrants, Sabban said. Demand should
grow this year with the economic recovery, he added. The kingdom completed a program to
boost its capacity last year, coinciding with the global contraction in oil demand due to
the economic recession, and led record OPEC output cuts, leaving it with more than double
the spare capacity it targets. The kingdom has around
4.5 million bpd of spare capacity while having a policy of holding 1.5 million to 2.0
million bpd to deal with any surprise outage in the global oil supply system. The kingdom
is producing around 8 million bpd. Meanwhile Saud
Arabia plans to invest heavily in solar energy technology, Sabban said, and hopes to begin
exporting power from solar energy by 2020. Saudi Oil Minister Ali al-Naimi has said the
kingdom aims to make solar a major contributor to energy supply in the next five to 10
years." |
"It is only a matter of days
before the last of Iraq’s yet-to-be awarded oil contracts are due to be signed,
bringing to a close a two-stage, seven-month process under which Western energy majors
have gained access to a country with the planet’s third-largest oil reserves. Such
deals will inevitably be a focus of the UK oil sector’s year-end reporting season,
which begins the following week, and the annual round of strategy presentations to
investors that starts shortly after. No more so than for BP, which has a 38 per cent
interest in Rumaila, the vast 18 billion-barrel field in southern Iraq that was the
biggest single project on offer, and Shell, which has stakes in two other bumper schemes:
the first phase of West Qurna, where it is working alongside ExxonMobil, and Majnoon,
where it has teamed up with Malaysia’s Petronas. Indeed, with the exception of Chevron, which failed to secure licences in
either round, Iraq is destined to become a significant contributor to the output of the
world’s 'super major' oil companies for many years to come. But rather than welcoming
such deals as a fillip to future profitability, shareholders might instead come to rue
them. Not because of the large sums of capital expenditure involved, or the political and
security risks of operating in what remains a volatile territory. Rather, contends RBS,
the opening up of Iraq — or rather the unprecedented production commitments the
majors have signed — threaten to pull long-term oil prices steadily lower. 'Investors
expecting the imminent return of oil price rises fuelled by increasing Chinese demand may
be disappointed,' says David Cline, RBS’s oil and gas analyst. 'Instead, the
rehabilitation of Iraq may dominate oil markets and weigh on prices for much of this
decade.'... It is that view that underpins Mr Cline’s prediction that oil prices,
currently hovering around $75 a barrel, will inexorably slide over the next few years to
touch $50 by 2016 — not far above the nadir reached in late 2008 amid the height of
the financial crisis. That perspective sets RBS firmly apart from both the oil futures
market, which prices in a rise in Brent crude to $94 a barrel by the middle of the decade,
and rival investment banks, whose consensus forecasts assume a price of $82 a barrel by
2013. Mr Cline’s case is persuasive. If newly agreed contracts are honoured, Iraq
faces a period of output growth unparalleled in the history of the oil industry: a
quintupling of production capacity to nearly 12 million barrels a day by 2017, about the
same level that Saudi Arabia, the world’s biggest producer, is forecast to reach in
the next few years. On consensus forecasts of global oil consumption that take
China’s growth into account — that is, consecutive annual rises of 1.5 per cent
— RBS calculates that Iraq’s increase in output will satisfy 88 per cent of
projected oil demand over the next eight years (see chart, below). If further Iraq
contracts are signed and production from Kurdistan also starts to pick up, that figure
would be even higher. RBS believes that such developments could between them add a further
4 million barrels a day by the end of the decade. What is unusual about Iraq is that its
oilfield contracts are predicated on oil production rising to a peak within six or seven
years of the licence award but then staying at those levels for at least as long: seven
years in the case of those granted under the first licence round (such as Rumaila and West
Qurna phase 1) and up to 13 years for those handed out in the second (including West Qurna
phase 2, won by Lukoil of Russia and Statoil of Norway). Such terms are in stark contrast
to commercial agreements forged elsewhere in the world, where fields are worked at a peak
levels for only a few years at most. Sceptics suggest that security problems, inadequate
transport and export infrastructure and the potential imposition by Opec of quota
restraints on Iraq (which have been suspended since its invasion of Kuwait 20 years ago)
mean that the projected rapid growth of the country’s oil output is unlikely to be
met....RBS concedes there are difficulties but counters that its forecasts are pegged on
binding contracts agreed with multinational companies that are experts in oilfield
development — and face substantial fee penalties if they fail to deliver. Of course,
most investors’ time horizons do not stretch too far. Increases in Iraqi output will
be modest until 2013 and, as next month’s full-year results season is set to confirm,
a rebound in oil prices has underpinned a strong recovery in profits." |
"The British oil major and its
partner China National Petroleum Corporation won the right to develop the massive Rumaila
field in a historic televised oil field auction last June. The contract was formally
signed in November. But amid rising public anger about the foreign 'colonisation' of
Iraq's oil fields, Shatha al Musawi, an independent MP, is contesting the prize contract
in her country's federal court. Iraq's efforts to
boost its oil output could lift it from being the 11th biggest producer to the top three,
after years of under-investment and neglect under its former leader Saddam Hussein. If
successful, Mrs al Musawi's case could set a legal precedent that would invalidate all the
agreements that Iraq secured last year – with BP, CNPC, ExxonMobil, Petronas, Royal
Dutch Shell, Eni, Gazprom and Lukoil. The court is due to hear the case next week, on
February 1, with Mrs al Musawi arguing that the BP contract violates the constitution on
four counts. She claims that the deals with foreign oil companies need to be properly
approved by parliament under Iraq's constitution. The government contests the allegations
and it is trying to get the case thrown out, insisting that its actions were lawful....BP
was the first oil major to secure a long-term contract in Iraq, when it agreed to cut its
fee per barrel from $3.99 to $2. Many oil majors were shocked by the fact that Iraq
insisted on much lower returns than they are used to being paid. The Rumaila field, which
contains 17bn barrels, is considered one of the world's prime oil fields." |
"Cameco Corp. says it's on track
to restart development of its flood ravaged Cigar Lake mine as early as this spring and
remains focused on doubling its production by 2018,
while sticking close to its uranium core. Saskatoon, Sask.-based Cameco has struggled with
the Cigar Lake project as a result of two floods in the past three years, leading to long
delays in production.....The mine was originally set to begin production in 2007. That was
gradually pushed back to 2011, which is the most recent company estimate. Mr. Goheen said
yesterday that Cameco will put out new production and cost estimates at the end of the
first quarter. Some analysts are now expecting
production to begin around 2013. Cameco's last cost
estimate for its share of capital costs
was about $508-million in March, 2007, according to a company spokesman. Cameco is the
mine operator and has a 50-per-cent stake in the project. French nuclear giant Areva Group
owns a 37-per-cent stake, Idemitsu Canada Resources Ltd. holds 8 per cent and Tepco
Recources Inc. has 5 per cent. Once up and running, Cigar Lake is expected to produce 18
million pounds of uranium annually, half of it belonging to Cameco. Mr. Goheen said the
company is also making uranium its sole focus, in particular after selling its stake in
Centerra for proceeds of about $871-million late last year. 'The focus in the company
right now front and centre is moving from 20 to 40 million pounds [of production],' Mr.
Goheen said. He said the production target doesn't rely on new acquisitions, but that the
company is always looking for new opportunities to grow." |
"One-quarter of all the maize
and other grain crops grown in the US now ends up as biofuel in cars rather than being
used to feed people, according to new analysis which suggests that the biofuel revolution
launched by former President George Bush in 2007 is impacting on world food
supplies. The 2009 figures from the US Department of
Agriculture shows ethanol production rising to record levels driven by farm subsidies and
laws which require vehicles to use increasing amounts of biofuels. 'The grain grown to
produce fuel in the US [in 2009] was enough to feed 330 million people for one year at
average world consumption levels,' said Lester Brown, the director of the Earth Policy
Institute, a Washington thinktank ithat conducted the analysis. Last year 107m tonnes of
grain, mostly corn, was grown by US farmers to be blended with petrol. This was nearly
twice as much as in 2007, when Bush challenged farmers to increase production by 500% by
2017 to save cut oil imports and reduce carbon emissions. More than 80 new ethanol plants
have been built since then, with more expected by 2015, by which time the US will need to
produce a further 5bn gallons of ethanol if it is to meet its renewable fuel standard.
According to Brown, the growing demand for US ethanol derived from grains helped to push
world grain prices to record highs between late 2006 and 2008. In 2008, the Guardian
revealed a secret
World Bank report that concluded that the drive for biofuels by American and European
governments had pushed up food prices by 75%, in stark contrast to US claims that prices
had risen only 2-3% as a result." |
"As many as 1,400 jobs at one of Britain’s largest oil
refineries are under threat after Chevron said last night that it was planning a
restructuring that would involve sweeping cuts across its global refining operation. The
announcement, which came after notice was given to employees on Monday, has raised fears
relating to Chevron’s refinery at Pembroke in South Wales, which employs 600
permanent workers and 800 contractors. A UK spokesman for Chevron, the second-biggest
American oil company, confirmed that the future of Pembroke was being considered but that
no final decisions had been taken.....Unions and Chevron workers in Wales reacted angrily
to the announcement, saying that they were deeply concerned about the possible
implications of the redundancies and for Britain’s energy security.... The oil refining business has been hit by a combination of low
margins and the recession. The threat of tougher carbon regulation is also a concern,
particularly for operators of plants in Europe." |
"A major new oil sands
project by international players ConocoPhillips Co. (COP-N50.60-1.64-3.14%) and Total SA is the
latest sign of recovery in northern Alberta, a driver of the Canadian economy that had
been waylaid by soaring construction costs and a steep drop in the price of crude. Conoco of Houston and Paris-based Total said Tuesday they are
expanding their Surmont project south of Fort McMurray, Alta., to 110,000 barrels a day
from a current capacity of 27,000, buoyed by results from the first phase that was
completed in 2007. The companies didn't disclose a
price, but based on recent industry costs the investment will likely be about
$1.5-billion. Since the financial crisis,
oil sands development has proceeded slowly, as some companies retrenched after a period in
which they were faulted for expanding too quickly. Today, new projects are considered more
carefully, and the Surmont expansion joins a small group that is going ahead, including
Suncor's Firebag and Imperial Oil Ltd.'s Kearl." |
"Shell chief executive Peter Voser will be forced to defend the
company's controversial investment in Canada's tar sands at his first annual
general meeting, after calls from shareholders that the project be put under further
scrutiny. A coalition of institutional investors has forced a resolution onto the agenda
calling for the Anglo-Dutch group's audit committee to undertake a special review of the
risks attached to the carbon-heavy oil production at Athabasca in Alberta. Co-operative
Asset Management and 141 other institutional and individual shareholders raise
'concerns for the long-term success of the company arising from the risks associated with
oil sands.' Shell, which will hold its AGM in May, has been one of the lead companies in
moves to develop oil reserves that are either mined or sucked out of the ground using
expensive and energy-intensive techniques. BP
and Total of France are also engaged in the sector. Shell has
insisted that 'unconventional' hydrocarbon sources such as tar sands are all justified to
ensure that the world does not run out of oil too soon. But environmentalists have
condemned their exploitation as "the biggest environmental crime in history"
and said it must be stopped before it tips the planet over into runaway climate
change....Shell disputes the scale of the pollution but also says it will
use carbon, capture and storage techniques to mitigate any negative impact. This argument
has not stopped environmentalists – or shareholders – from opposing the plans. 'Given Shell's level of commitment to oil sands there is a greater
obligation to shareholders to reassure how it would cope under a number of scenarios,'
said Niall O'Shea, head of responsible investing at Co-operative Asset Management. 'What
if carbon capture and storage proves too costly in the oil sands? What if sustained high oil prices and carbon regulation lead to switching
away from marginal, high-cost, high-carbon sources? And then there's the cost of cleaning
up the locality. Companies must be more rigorous and transparent with their investors,' he
added....'Given Shell's level of commitment to oil sands there is a greater obligation to
shareholders to reassure how it would cope under a number of scenarios,' said Niall
O'Shea, head of responsible investing at Co-operative Asset Management. 'What if carbon
capture and storage proves too costly in the oil sands? What if sustained high oil prices
and carbon regulation lead to switching away from marginal, high-cost, high-carbon
sources? And then there's the cost of cleaning up the locality. Companies must be more
rigorous and transparent with their investors,' he added." |
"Ageing coal-fired
power stations should be exempted from environmental regulations and kept open to stop the
lights from going out, the chief executive of E.ON UK has urged the government. Paul Golby told the Guardian that some of the coal and oil-fired plants
due to close this decade because of European pollution regulations should remain
operational and ready to come online during periods of peak demand such as those
experienced in recent weeks. The Guardian revealed this month that almost 100
large power users had to switch to alternative sources when National Grid triggered clauses
in their interruptible supply contracts." |
"Oil and gas sector spending is
forecast to grow by 12 percent this year, driven by
large national oil companies, according to the latest research. Total capital expenditure
of leading listed oil and gas companies is expected to exceed $798bn, a report by
GlobalData released on Thursday said." |
"Goldman Sachs Group Inc. said that shortages will reappear in the crude
oil market as supply fails to keep pace with a recovery in demand. Global oil consumption
will return to levels seen before the financial crisis by the third quarter of this year, Goldman analyst Jeffrey Currie said in a presentation
in London today. At the same time, projects to bring new oil to consumers are still
lagging as a result of the credit crunch, he said. 'By 2011, the market is back to
capacity constraints,' Currie said in slides shown with the presentation. 'The financial
crisis created a collapse in company returns which has significantly interrupted the
investment phase.' Crude oil futures traded around $78 a barrel in New York today, having
recovered 78 percent last year with the passing of
the biggest economic shock since World War II.
Investment into new oil capacity is being held up because 'political impediments on the
flow of capital are still very large,' Currie said at the conference." |
"North Sea oil and gas
exploration dropped by 35 per cent last year, taking it back to levels last seen five
years ago, according to figures published by Deloitte yesterday. Only 78 new wells were drilled in 2009, compared with 121 in 2008.
Exploration activity was down by almost half, appraisals by a quarter. Meanwhile, new
drilling in the Norwegian North Sea shot up by 18 per cent last year thanks to a more
generous tax regime..... Despite the signs of recovery elsewhere in the economy, there are
no green shoots in UK Continental Shelf (UKCS) exploration activity so far because of the
long lead times of the oil and gas industry. Some improvements are expected in 2010. The danger is that lower exploration rates now will lead to a
market dip in production in the future, as the oil and gas industry's long lead times feed
through. 'We've got to keep things going year on
year or production will drop back, the decline will be accelerated, and we will not make
the most of what we have,' Mike Tholen, the economic director at industry group Oil and
Gas UK, said. There are also worrying implications for Britain's oil and gas industry. 'If
companies providing resources to the UK see the market starting to shrink they will move
their resources elsewhere in the world and then the decline will snowball,' Mr Tholen
said." |
"The US has expressed concern to
Chinese officials about Beijing's attempts to buy up global oil reserves for the long
term. 'We are pursuing intensive dialogue with the Chinese on the subject of energy
security, in which we have raised our concerns about Chinese efforts to lock up oil
reserves with long-term contracts,' David Shear,
deputy assistant secretary of state for East Asian and Pacific affairs, told the House
Armed Services Committee yesterday. 'We will continue to engage them on this subject at
very senior levels,' he told the panel, which was holding a hearing on recent security
developments in China. Shear was responding to questions by Republican Roscoe Bartlett,
who said he was worried that the Chinese were 'aggressively buying up oil all over the
world' and might not share it with other countries in the future. China, the world's
second-largest oil consumer, has been pressing ahead with efforts to secure long-term
access to natural resources such as oil and minerals to help fuel its rapid economic
growth. China has been encouraging state-owned oil companies to expand upstream
investments abroad and to increase crude stockpiles. China's oil companies have been
snapping up energy assets all over the world, including stakes in Canadian oil sands
projects, an oilfield in Iraq, and buying the Swiss oil explore Addax Petroleum, reported
Reuters." |
"The recession has put a dent in
future North Sea oil and gas production, with companies tapping fewer new oil reserves in
2009 than in previous years of operations there. Only eight new oil and gas fields -
expected to produce a combined total of 140m barrels over their lifetime - began
production in 2009, according to Wood Mackenzie, the industry consultants.That compares with an average of 600m barrels of new reserves brought on
stream each year between 2004 and 2008. New start-ups are critical to extending the life
of Britain's oil and gas industry. Production at the North Sea's old fields has been
declining since the start of the last decade, driving companies out of the region,
reducing tax revenues and increasing UK dependence on foreign supplies.... Geoff Gillies,
the author of the research, noted that the decline was not due to a lack of drilling
opportunities in the area. 'Some companies weren't able to drill even if they wanted to,
due to the downturn and subsequent restricted access
to capital funding and tightening of capital budgets,'
he said." |
"British business has had it tough in the big freeze. Consumers have
turned up the thermostat to counter the plunging temperatures and industry has had to
suffer power cuts to make up the shortfall. Angst over national power supplies has rarely
been so severe. Yet the solution for the office, the factory or the depot may lie not in
billion-dollar international energy deals but on its doorstep. IGas, a coal-bed methane group, began a campaign yesterday to
persuade large energy users to allow it to set up mini-gas production facilities on their
sites and supply them directly with a substantial proportion of their gas requirements.
The move comes after National Grid issued four gas-supply warnings in the space of a week.
Last week more than 100 industrial users suffered a temporary cut when supplies were
interrupted because a Norwegian gasfield was shut down. IGas said that it had been granted planning permission for a full
production site at Ellesmere Port, the industrial town in Cheshire that is home to car and
chemicals companies, with a view to selling its gas to one of the businesses based there.
Work on a pilot site at Keele University, which will be taking the gas produced, is
already under way. The group has submitted planning applications for another four sites,
including one next to the Trafford Centre in Manchester. It believes that there could be
as many as 50 by 2014, each producing enough gas to supply the equivalent of 100,000
homes. The production sites, which could be easily located in a car park next to a factory
or office building, will sit above 11 areas, covering 1,754 sq km in the North West, where
coal seams are known to exist....It believes that once planning permission has been
granted on a site, it could be operational within a month. The gas produced would be
cheaper than buying it from the grid. IGas also claims it would be more environmentally
friendly because the gas is not being transported vast distances. The process, along with
other unconventional gas-production techniques, such as extracting from shale, has a very
low profile in Britain and is responsible for less than 0.5 per cent of its gas supplies.
It is common in the United States and Australia and IGas
thinks that the method could provide 10 per cent of the national supply....Jeremy Nicholson, director of the Energy Intensive Users Group, said
that the impact on big gas users would have been much greater if it had not been for the
recession reducing demand. Supply alerts, he added, would become more common. As a result,
any way of securing a dedicated supply was becoming increasingly attractive, he said.
“It’s not the same as being at the end of a long pipe, the risks of which are
becoming quite apparent.” |
"Russia rescued British energy consumers by ensuring a
steady flow of gas into the power network as supplies from Norway
faltered during the cold weather, industry customers users said today. As the National Grid warned of a
'high' possibility
of shortages in the north-east and south-west owing to another cold snap, the Major
Energy Users' Council said Britain had been lucky to survive without shortages. Eddie
Proffitt, chairman of the council's gas group, said: 'The [British] gas industry has coped
very well but we have been lucky. It would have been desperate if we had seen the kind of
disputes between Russia and Ukraine that have reduced gas flows on the continent in the
past two or three Januaries.' Politicians said four 'gas balancing alerts' – warnings
of pending shortages – in the space of a week meant it was time Britain reviewed its
whole energy policy. 'This winter has shown the system we have devised does not have the
resilience it should have. It runs on a 'just-in-time' principle which has economic
benefits when it works but risks ending up in a 'just-too-late' if all goes wrong,' said
John Hemming, MP for Birmingham Yardley. 'If the Russians had hit the kind of problems
with its neighbours seen in previous years then we would have toppled off the knife edge
we have been sitting on with our gas supplies.' The
disruptions to supplies from Norway – normally seen as highly reliable – left
Britain importing gas through the interconnector pipeline which runs from Zeebrugge in
Belgium to Bacton in north Norfolk. In previous years shortages from Siberia have led
German and Dutch suppliers to halt gas exports to Britain. The National Grid admitted that much of the stress in the gas supply
system had been caused by technical problems on Norwegian fields such as Ormen Lange and
Troll but said everything was back to normal. A Grid spokeswoman insisted the gas alerts
had worked as they were expected to: drawing new supplies from other sources, such as
liquefied natural gas on board vessels and the continent. She declined to comment on what
would have happened if Russian gas had not been flowing normally. The Major Energy Users'
Council also had serious concerns that changes to the regulatory regime next year could
make the situation worse. Proffitt said there were 1,250 customers around Britain on
'interruptible' gas contracts, but this number would fall to 27 by October 2011 when new
Ofgem regulations come into force. 'Some of our members are very concerned about this
because they fear a supply shortage could lead to demands that sites lose their gas. Many
of those who choose to have interruptible contracts have back-up power sources such as
diesel-fired generators,' he said. Nearly 100 customers had
their power cut at one stage last week, including the Vauxhall car plant at Ellesmere
Port on Merseyside." |
"The US overtook Russia as the
world’s largest natural-gas producer last year as operators tapped unconventional
resources while demand in Russia plunged amid the country’s worst economic decline on
record. US output advanced 3.9%t in January through October to 18.3 trillion feet (519 billion cubic metres), according to the latest
Department of Energy data. Russian output, about four-fifths of which comes from state-run
Gazprom, plunged 17% in the period to 462 billion cubic metres.....The US growth trend may
indicate that Gazprom will not be able to break into the US market as it had planned,
Mikhail Korchemkin, head of East European Gas Analysis, said in a Bloomberg report.
Gazprom set a target to take as much as 10% of the US market by 2020 through LNG sales
from Arctic plays, Gazprom executive Alexander Medvedev said in June. The surprising boost
shale gas has given US output has closed the world’s biggest energy consumer to some
imports and 'created a huge oversupply of LNG in Europe,' Korchemkin said. In July, Qatari
LNG prices in the UK fell as low as $75 per thousand cubic metres compared with Gazprom
prices of between $210 and $220 per thousand cubic metres for countries in the European
Union under long-term deals, Korchemkin said. Gas deliveries from Norway and Qatar to
Europe in the third quarter outpaced European growth in consumption while Russian exports
lagged behind, according to the International Energy Agency. European imports from Qatar
more than doubled to 4 billion cubic metres in the third quarter from the same period the
previous year. Supplies from Norway rose 27% to 21.1 billion cubic metres while overall
European imports grew 10% to 100.1 billion cubic metres, according to the IEA. Imports
from the former Soviet Union grew 8.6% to 32.6 billion cubic metres. 'There are winners
and losers in the world gas business,' Korchemkin said. 'The losers are Gazprom, Nigerian
National Petroleum Corporation, Turkmengaz' and NAK Naftogaz Ukrainy. European imports
from Nigeria fell 38% to 2.1 billion cubic metres in the period, according to the report.
Turkmenistan’s route to Europe was closed when Gazprom stopped purchases in April of
this year. Gazprom’s share of the European market may fall further as it refuses to
show flexibility by giving a temporary price discount to European buyers, Korchemkin said.
This may result in Gazprom exports to Europe remaining flat at levels just above
contractual minimums over the next five to 10 years while others take advantage of growth,
he said. Russia surpassed the US in gas production in 2002, pumping 539 billion cubic
metres versus America’s 536 billion, according to figures from UK supermajor BP.
Russia, which has the world’s largest reserves and a quarter of Europe’s market,
led the world in output from 1986 to 1996 and again in 1999, the year after the government
defaulted on $40 billion of domestic debt and devalued the ruble. The EIA said full-year
US output probably increased 3.7% to the equivalent of 624 billion cubic metres. The
agency is slated to release November data on 29 January. Russia’s annual output fell
12% to 582 billion cubic metres. Demand for gas in Russia, the world’s largest user
of the fuel after the US, contracted last year along with the economy. Prime Minister
Vladimir Putin said 30 December that annual gross domestic product declined 8.5%, the most
since the collapse of the Soviet Union in 1991." |
"All the recent panic about UK gas supplies hasn’t developed
into any kind of lights-off crisis. If anything, it has shown that the eminently sensible National
Grid has a good warning system in place to make sure industry is flexible about
switching from gas to other forms of generation when there are exceptional weather
conditions or production problems. But what the
current situation does highlight is some of the cracks in the UK’s energy planning
pipeline that could develop into real shortages in future. One of the most worrying
examples is our dependence on coal as a back-up fuel when there is abnormal demand for gas
in cold weather. At the moment, our emergency coal-fired stations are hurtling along at
full capacity to help warm and power homes and businesses. However, a European Union
directive from two years ago says 10 of the dirtiest stations must close by 2015 or after
20,000 hours of generation. We are currently planning for these to come off the system in
2015. But if you look at the latest figures for their progress, some have already used up
almost half of their allotted hours after just two out of eight years. If they carry on
burning up coal at this rate, they could come off the system as early as 2012 – only
two out of the 10 plants are generating power in keeping with the shutdown timetable. This is worrying analysts at Inenco. 'Alternative forms of generation will
need to be online way before the these plants reach their 2015 deadline or the
‘generation gap’ could occur at some point after 2012,' says Nick Campbell. 'If
we continue down the line of gas fired generation and not a diverse generation portfolio,
then the impact of extraordinary cold weather or supply side issues on gas could have a
major impact on the power market. 'The situation means the government needs to bring new
storage facilities and renewable energy projects online more quickly, amid fears that the
plants may have to stop power generation way before they are due to be decommissioned in
six years time.'”Both gas and wind power need back-up in cold weather. If the coal
stations are going to burn out sooner than we thought, the need for extra gas storage and
import capacity becomes even more pressing." |
"There have been few worse years for
the US motor industry than 2009. Sales plunged, two of the big three — General Motors
and Chrysler — went into bankruptcy and now it emerges that the US market was
outstripped by China for the first time. The China
Association of Automobile Manufacturers revealed yesterday that a record 13.6 million
light vehicles were sold in China in 2009, compared to around 10.4 million in the United
States. Small wonder then that carmakers gathered in
Detroit for the city’s Motor Show — widely considered the most important on the
world circuit — are increasingly looking to China for sales growth." |
"The U.S. Energy Information Administration on Tuesday slightly raised
its estimate for domestic natural gas production in 2010 but still expected output this
year to be down 3 percent from 2009 levels. In its January Short-Term Energy Outlook, EIA
said it expected marketed natural gas production to be down 1.8 billion
cubic feet per day, or 3 percent, this year, primarily due to steep
declines from initial production at newly drilled wells and
the lagged effect of reduced drilling activity. EIA
also forecast U.S. natural gas consumption this year would average about 62.44 bcf per
day, little changed from 2009 demand of 62.45 bcf daily, as growth in residential,
commercial and industrial use is offset by declining demand from the electric power
sector." |
"World oil demand will rise to
86.65 million barrels per day in 2011, up 1.47 million bpd from a year earlier, the U.S. Energy Information Administration said on Tuesday. In its new
monthly energy forecast, the agency also projected 2011 U.S. oil demand would rise to
19.11 million bpd, up 216,000 bpd from 2010. This report offered traders their first
glimpse at the agency's supply and demand forecasts for 2011. At the same time, the EIA
cut its forecast for global growth in petroleum consumption this year to an increase of
1.08 million bpd from 2009. Last month the agency
projected a 1.1 million bpd rise in world oil demand in 2010. The EIA also lowered its outlook for U.S. oil consumption in 2010. The
agency said it now expects a 211,000 bpd rise in demand, down from the 270,000 bpd
increase predicted in the previous report. Although the rebound in oil demand will be led
by developing countries in 2010, richer nations should 'begin to show significant oil
demand growth in 2011 in response to improving economic conditions,' the EIA said." |
"Britain's electricity network
is not ready to cope with a plan announced today to massively expand offshore wind
generation, experts have claimed. A 'Super Grid', the first stage of which would cost
£10-15bn to build, would be needed before the country's electricity network could deal
with the huge peaks associated with wind power. The
Crown Estate today announced nine sites around Britain for wind power generation with the
aim of producing up to 32 gigawatts - enough to power 20 million homes - from 6,400
offshore turbines. But those close to the project warned that generating capacity was
leaping ahead of plans to distribute the power....The 'Super Grid' would work by linking
the electricity networks of Britain, Germany, Norway and Denmark to allow the power
generated on windy days to be distributed across the countries. On days when there is
excess capacity the energy could stored or used to pump water at hydroelectric sites to
create generating capacity when the wind drops....It is unclear how the super grid will be
financed and how much each country would contribute to what would eventually be a
pan-European network of undersea cables. The companies building the new wind farms would
contribute a substantial proportion of the cost but they themselves will be supported by
public subsidies for wind power paid for by homes and businesses through higher energy
bills." |
"The inauguration of the
Dauletabad-Sarakhs-Khangiran pipeline on Wednesday connecting Iran's northern Caspian
region with Turkmenistan's vast gas field may go unnoticed amid the Western media
cacophony that it is 'apocalypse now' for the Islamic regime in Tehran. The event sends
strong messages for regional security. Within the space of three weeks, Turkmenistan has
committed its entire gas exports to China, Russia and Iran. It has no urgent need of the
pipelines that the United States and the European Union have been advancing....The 182-kilometer Turkmen-Iranian pipeline starts modestly with the
pumping of 8 billion cubic meters (bcm) of Turkmen gas. But its annual capacity is 20bcm,
and that would meet the energy requirements of Iran's Caspian region and enable Tehran to
free its own gas production in the southern fields for export. The mutual interest is
perfect: Ashgabat gets an assured market next door; northern Iran can consume without fear
of winter shortages; Tehran can generate more surplus for exports; Turkmenistan can seek
transportation routes to the world market via Iran; and Iran can aspire to take advantage
of its excellent geographical location as a hub for the Turkmen exports. We are witnessing
a new pattern of energy cooperation at the regional level that dispenses with Big Oil.
Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and
Turkmenistan hold respectively the world's largest, second-largest and fourth-largest gas
reserves. And China will be consumer par excellence in this century. The matter is of
profound consequence to the US global strategy....What matters most to Russia is that its
dominant role as Europe's No 1 energy provider is not eroded. So long as the Central Asian
countries have no pressing need for new US-backed trans-Caspian pipelines, Russia is
satisfied. During his recent visit to Ashgabat, Russian President Dmitry Medvedev
normalized Russian-Turkmen energy ties. The restoration of ties with Turkmenistan is a
major breakthrough for both countries....Moscow has chosen to pay a high price, that is
primarily because of its resolve not to leave gas that could be used in alternative
pipelines, above all in the US-backed Nabucco project.....The United States' pipeline
diplomacy in the Caspian, which strove to bypass Russia, elbow out China and isolate Iran,
has foundered. Russia is now planning to double its intake of Azerbaijani gas, which
further cuts into the Western efforts to engage Baku as a supplier for Nabucco. In tandem
with Russia, Iran is also emerging as a consumer of Azerbaijani gas. In December,
Azerbaijan inked an agreement to deliver gas to Iran through the 1,400km
Kazi-Magomed-Astara pipeline. The 'big picture' is that Russia's South Stream and North
Stream, which will supply gas to northern and southern Europe, have gained irreversible
momentum. The stumbling blocks for North Stream have been cleared as Denmark (in October),
Finland and Sweden (in November) and Germany (in December) approved the project from the
environmental angle. The pipeline's construction will commence in the spring." |
"Nine giant new wind farms in the seas around Britain will be
announced today, but few of the 6,000 turbines needed are likely to be built here. Ed
Miliband, the Energy and Climate Change Secretary, will say that the world’s biggest
expansion of offshore wind power, costing £75 billion, will create 70,000 jobs in Britain
by 2020. However, the Government has failed to persuade any of the major wind turbine
manufacturers to open a factory in Britain. The companies granted licences today to build
the farms will not be obliged to source any parts from domestic manufacturers and most are
expected to buy turbines made in Denmark or Germany....The
nine farms announced will generate enough electricity to power more than half of
Britain’s homes, but only when the wind blows. The
turbines will be twice as large as those on land, typically rising 170m (557ft) from sea
level to the tip of the blade. They will stand in up to 70m of water, compared with only
10-25m for existing offshore turbines. They will also be much farther away from the coast,
with the biggest, Dogger Bank, starting 130 miles off the North East coast. Residential
platforms will be built near the turbines to accommodate hundreds of workers who will
carry out servicing and repairs.....The timetable for
the construction will depend on how quickly the finance can be raised and what happens to
the price of the fossil fuels with which wind energy competes. None of the farms is likely
to be generating electricity before 2015." |
"The shutdown of a giant gas
field offshore of Norway has pushed Britain's gas infrastructure into emergency mode,
forcing the closure of industrial companies in the north of England in order to preserve
supplies to homes, shops and offices. National Grid, which operates Britain's gas network,
issued a warning this morning that the system would run short of gas when pressure dropped
in Langeled, a pipeline that brings gas from Norway to a terminal at Easington on the East
coast of England. With demand for fuel at record levels, some gas companies cut off
supplies to some industrial customers on interruptible contracts....Statoil, the Norwegian state energy company, said that Troll, a giant
offshore gasfield suffered a minor technical problem which forced it to shut down
production for one hour. The brief stoppage caused pressure to plunge in Langeled,
prompting National Grid to issue a National Balancing Alert. Statoil said that production
had since resumed to normal levels but a spokesman for National Grid said the alert would
remain until 6am tomorrow pending a review of the pipeline pressure in Langeled. The
Norwegian pipeline which commenced operations two years ago has become a lifeline for
Britain's energy network, supplying about a fifth of the gas consumed in Britain. Demand
for fuel has soared during the recent weeks of exceptional cold. Gas consumption has
reached record levels with demand in recent days as much as 28 per cent above seasonal
norms. Today's alert follows an alert on Monday when Troll ceased production due to gas
leak. Statoil said that the second shutdown was unrelated to Monday's incident. The
cut-off of supplies to customers is the first time for six years, said National Grid that
it has been forced to take such measures. Industrial companies called today for more gas
storage facilities to be built in Britain. EEF, the
engineering employers’ organisation said calls by industry for investment in storage
had been ignored and inadequate incentives were available for investment to bring
Britain's gas storage up to levels that exist on the Continent. 'The longstanding vulnerability in our energy system has today been
exposed and as a nation we now need to take security of our energy supply more seriously,'
said Roger Salomone, EEF’s energy adviser." |
"McKinnon & Clarke, the UK's largest independent energy
consultancy, has called on the Government to take tough decisions and invest in the UK's
energy industry or face the reality of running low on energy. The move comes as the
National Grid today issued the second Gas Balancing Alert this week - unprecedented in
recent times. With low gas reserves and record demand, further concern was raised today as
Norway's largest gas producer, Statoil, announced that production is down at their Kroll A
field - causing a dramatic fall in pipeline supplies to the UK from our biggest import
source. M&C's energy analyst, David Hunter, believes this latest warning throws
a spotlight on the UK's precarious energy position. Mr Hunter said: 'We are seeing
unprecedented levels of demand for gas and as we've heard Norwegian pipeline imports have
just fallen dramatically. This sent the gas system from surplus to deficit very quickly at
a time of very high demand. Outages are not uncommon but occurring during a time of
sustained record demand is making traders and industry very nervous. 'It has been almost
four years since the National Grid last issued a balancing alert - to have two in one week
is unprecedented. This is an urgent call to action for suppliers to find extra gas from
somewhere, and for power generators to reduce demand. 'Although the Norwegian problems are
short-term, the markets and grid operator will be very nervous until supplies return and
this could lead to further price volatility. The UK
has lagged behind other European countries in building gas storage capacity for winter, despite exporting gas to other countries when demand is lower. The
reality is we are the ones who are relying on our European neighbours to keep our lights
on and homes heated." |
| "Canada and China have signed a
deal that will see PetroChina, the market arm of the state-owned China National Petroleum
Corp., investing $1.7 billion in two Canadian tar-sands deposits in Alberta. Canadian Industry Minister Tony Clement said the government gave
PetroChina the go-ahead for the acquisition. Industry sources said the deal was agreed
about two months ago but only finalized before Clement's announcement before the new year.
If successfully exploited, the tar-sands development will secure for China's energy-hungry
economy a substantial resource from about 5 billion barrels equivalent of 'best case'
bitumen. Canada is the world leader in oil produced from tar sands, followed in a smaller
measure by Venezuela. The Canadian tar-sands
industry, centered in Alberta, produces more than 1 million barrels a day of synthetic oil
-- about 40 percent of Canada's oil production -- from the sands currently under
exploitation." China buys into Canadian tar sands exploitation project United Press International, 5 January 2010 |
"Moves made to address carbon emissions are varied, but many
governments seem to be prioritizing low-carbon energy programs as an alternative to fossil
fuels. Fatih Birol [IEA Chief Economist] recently
told the US Council on Foreign Relations of his certainty that developing states are
interested in climate negotiations – and in reducing emissions – far more for energy security reasons than for climate
ones. Diplomatically, he did not suggest that major
industrial states might be acting for much the same reasons." |
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