Peak Oil And Energy Crisis News

PEAK OIL AND ENERGY CRISIS NEWSBITES

2008

"When President George Bush went to see Saudi Arabia's King Abdullah in January to plead for higher oil output, he was politely rebuffed. The rematch is likely to be a great deal more strained. If the Saudis deny help once again, they risk incalculable damage to their strategic alliance with Washington. The price of crude has rocketed by over $30 a barrel since that last fruitless meeting, briefly touching the once unthinkable level of $127.... The US-Saudi tango has been on thin ice ever since the terrorist attacks of 9/11. Sixteen of the hijackers were Saudi nationals. The Bush family has cleaved closely to the Saudi monarchy, but strong factions in Washington see Riyadh's Wahabi monarchy as part of the Mid-East problem-- not the solution. Saudi Arabia's one saving grace -- in the eyes of US critics -- is that it has over the years been willing to cap extreme surges in the price of oil, deploying its power as the world's swing producer. This time Riyadh is giving no ground.....The Saudis have let their output fall from 9.5m to 8.5m bpd over the last two years, camouflaging the move behind the accession of Ecuador and Angola to the group (which boosted nominal supply). OPEC failed to compensate for a 330,000 bpd drop in Nigerian production in April, allowing the market to tighten further. Dr Fadhil Chalabi, a former OPEC secretary-general and now director of the Centre for Global Energy Studies, said the Saudis have roughly 2m barrels per day of scare capacity. Three quarters is heavy sulfurous crude that requires special refineries, which are already working flat out. 'They have about half a million barrels a day of good crude that they could put on the market. The puzzle is why they are not doing it. The soaring price is obviously telling us that the world needs more oil,' he said. 'I can't understand why the Saudis would risk their strategic relationship with the US over this. 'They need the US more than ever given the growing influence of Iran in the region,' he said. One clue comes from the March bulletin of OAPEC, the Arab sub-group of the OPEC producers' cartel. It notes sourly that President Bush is aiming to reduce US dependency on oil imports 'particularly from the Middle East', by 75pc by the year 2025. 'This has created some ambiguity in the US position on the future of oil consumption,' it said. Touchee. King Abdullah's retort to the Bush speech was to announce that Saudi Arabia would stop developing big projects after the Khurais field comes on stream in next year with 1.2m bpd, leaving the country's oil in the ground for future generations. Chris Skrebowski, Editor of Petroleum Review, said the awful truth is that Saudi Arabia cannot raise oil output much even if it tries. 'The myth of Saudi spare capacity is convenient for everybody: it gives OPEC leverage, and it gives the West hope. 'But Saudi reserves are secret. They have never been verified,' he said. Mr Skrebowski said oil is soaring because output is falling in Mexico, the US, and the North Sea. Russia stunned the markets with a 1pc fall in first quarter in Russia. 'We are running the system flat out,'h e said....Bulls bet that roaring Chinese demand growth of 400,000 bpd each year will keep going, while fuel subsidies in much of Asia and the Mid-East insulate users from the real cost of crude. But if the downturn spreads from North America to Europe, Japan, and even China, it could upset with the delicately balance forces of supply and demand. The International Energy Agency (IEA) says demand will cool to 86.8m bpd this year, falling below supply for several quarters. It estimates for demand growth in 2008 at just 1m bpd , less than half the level predicted last July."
US-Saudi oil axis faces day of truth
Daily Telegraph, 15 May 2008

"A group of Democratic Senators Tuesday threatened to block a multi-million dollar US arms deal with Saudi Arabia, unless the kingdom ups oil production and helps cut soaring gasoline prices. The senators introduced a resolution of disapproval on the arms sale, as President George W. Bush prepared to head for Saudi Arabia, partly on a mission to contain runaway oil prices. 'We are saying to the Saudis that, if you don't help us, why should we be helping you?' said New York Democratic Senator Chuck Schumer. 'We are saying that we need real relief, and we need it quickly. You need our arms, but we need you to cooperate and not strangle American consumers.' The resolution, expected to be fast-tracked to the senate floor, would prohibit the mammoth arms sale unless Saudi Arabia agrees to increase oil production by one million barrels per day. Schumer, speaking as the price of a barrel of crude oil hit a record 126.98 dollars, said the extra Saudi oil could bring down the price of a gallon of gasoline at the pump by 50 to 75 cents. 'We're losing our wealth. Our economy is heading south. That is the highest priority, not the Saudis getting the top-notch weapons,' Schumer said. The American Automobile Association said the average price of a gallon of gas in the United States hit 3.73 dollars on Tuesday. The United States offered last year to sell Saudi Arabia and Gulf states a 20 billion dollar arms package, as part of a wider regional program aimed at deterring Iran and Syria, Lebanon's Hezbollah and Al-Qaeda."
US Senators threaten Saudi arms deal over oil prices
Agence France Presse, 14 May 2008

"The concentration of carbon dioxide in the atmosphere has reached a record high, according to new figures that renew fears that climate change could begin to slide out of control. Scientists at the Mauna Loa observatory in Hawaii say that CO2 levels in the atmosphere now stand at 387 parts per million (ppm), up almost 40% since the industrial revolution and the highest for at least the last 650,000 years. The figures, published by the US National Oceanic and Atmospheric Administration (NOAA) on its website, also confirm that carbon dioxide, the chief greenhouse gas, is accumulating in the atmosphere faster than expected. The annual mean growth rate for 2007 was 2.14ppm - the fourth year in the past six to see an annual rise greater than 2ppm. From 1970 to 2000, the concentration rose by about 1.5ppm each year, but since 2000 the annual rise has leapt to an average 2.1ppm."
World CO2 levels at record high, scientists warn
Guardian, 13 May 2008

"Two decades from now Americans could get as much electricity from windmills as from nuclear power plants, according to a U.S. government report that lays out a possible plan for wind energy growth. The report, a collaboration between the Energy Department research labs and industry, concludes wind energy could generate 20 percent of the nation's electricity by 2030, about the same share now produced by nuclear reactors. Such growth would pose a number of major challenges, but is achievable without the need of major new technological breakthroughs, said the report released Monday. 'The report indicates that we can do this nationally for less than half a cent per kilowatt hour if we have the vision,' said Andrew Karsner, the Energy Department's assistant secretary for efficiency and renewable energy."
Report says wind can produce a fight of US electricity needs by 2030
Associated Press, 12 May 2008

"A new generation of nuclear power plants is on the drawing boards in the U.S., but the projected cost is causing some sticker shock: $5 billion to $12 billion a plant, double to quadruple earlier rough estimates. Nuclear power is regaining favor as an alternative to other sources of power generation, such as coal-fired plants, which have fallen out of favor because they are major polluters. But the high cost could lead to sharply higher electricity bills for consumers and inevitably reignite debate about the nuclear industry's suitability to meet growing energy needs."
New Wave of Nuclear Plants Faces High Costs
Wall St Journal, 12 May 2008

"BP confirmed yesterday the $2 billion 'hydrogen energy' coal-to-gas plant at Kwinana, south of Perth, would not proceed. The plant was to have been constructed by Hydrogen Energy, a joint venture between BP and Rio Tinto, and was designed to burn coal, converting it into water, hydrogen and carbon dioxide. The hydrogen was intended to be used as fuel for a 500MW power plant supplying electricity for 500,000 homes, while the CO2 was slated to be buried in geological strata between Fremantle and Rottnest Island, Perth's holiday playground. The proposed onshore site was close to BP Kwinana oil refinery and Rio's HISmelt direct iron ore smelting plant. But after more than two years of investigations and several million dollars of research, BP has now admitted that the geological formations off Perth contain gas 'chimneys' that mean it is next to impossible to establish a seal in the strata that could contain the CO2."
Chimneys sweep BP clean coal plan away
The Australian, 10 May 2008

"If anyone had any doubt that Iraq was a lot about oil, they shouldn't after the recent Capitol Hill appearance by our ambassador to Baghdad, Ryan Crocker. In a closed House hearing, Crocker put the fear of god in Congress. His message: If we leave Iraq, Iraq will destabilize the Gulf, and a destabilized Gulf equals unstable oil prices.... There was a time when we could count on Saudi Arabia to make up a shortfall in oil when something like Iraq came up. During the Gulf War Saudi Arabia boosted its production by 3.1 million barrels a day to make up for the 5.1 million barrels a day of Kuwaiti and Iraqi production that was taken off markets. Oil prices rose relatively little. Today, Saudi Arabia either refuses or can't increase its production. The peak oil Cassandras are convinced the Saudis can't. Saudi Arabia's mega fields like Ghawar are depleted, they say. And we'd better get used to gasoline at $4 a gallon and up. But Crocker wasn't all bad news. He said that if we were to stabilize Iraq, and attract investors to the oil sector, Iraq could become the largest producer in the world, surpassing Saudi Arabia. Crocker didn't put it in terms this baldly, but he might as well have said: We keep an army in Iraq, and we go back to the days of cheap oil. Anyone can afford to drive an SUV if they want one."
Playing the Iraq Oil Card
TIME, 9 May 2008

"Over the past seven years, according to Citibank, Russia accounted for 80% of the growth in oil production outside the Organisation of the Petroleum Exporting Countries. The increase in its output in the early part of the decade matched the growth in demand from China and India almost barrel for barrel. Yet in April, production fell for the fourth month in a row. It is now over 2% below the peak of 9.9m barrels a day (b/d) reached in October last year. Before that, the growth in Russia's output had been slowing steadily, suggesting that the drop is not a blip. Leonid Fedun, a vice-president of Lukoil, a local oil firm, says Russia's production will never top 10m b/d. The discovery that Russia can no longer be relied upon to cater to the world's ever-increasing appetite for oil is naturally helping to propel prices to record levels.... Mr Fedun says the western Siberian fields have reached their natural limit. To keep production at today's levels requires ever more investment. To get Russia's output growing again, firms must make huge investments to develop new fields in remote provinces such as eastern Siberia and the Sakhalin region."
Trouble in the pipeline
Economist, 8 May 2008

"Russia on Tuesday signed off on a series of steep price rises for domestic gas, power and railway services for the next four years on the eve of Dmitry Medvedev's inauguration as the country's new president. Mr Medvedev, who will be sworn in as Russia's president on Wednesday, will inherit a potentially poisoned chalice of increasing economic and political risks as inflation surges to as much as 14.3 per cent. Thousands of people across the country took to the streets on May Day in rare demonstrations against rising food prices and living costs, the same day as a pre-election price freeze on basic foodstuffs expired. The Russian government, however, on Tuesday added to the pressure when it agreed annual increases on state-capped prices of 25 per cent a year for household electricity sales and of 28 per cent a year for the wholesale gas market, rising eventually to a jump of 40 per cent in 2011...Andrei Klepach, Russia's deputy economy minister, said the increases in tariffs, which had been heavily subsidised for years, had been designed to keep 'significant' inflationary effect to a minimum. The government also stepped back from a plan to liberalise gas prices to bring them level with European ones because of inflationary fears."
Russia agrees 40% rise in energy prices
Financial Times, 6 May 2008

"...unusual is that oil has maintained its upward momentum in the face of sharply diminished U.S. demand, which fell in February to 19.7 million barrels a day. That was down a million barrels a day from the 2007 average. The main factors that could send prices down, analysts say, would be a sharp downturn in global oil demand or some sudden flight from commodities among international investors. 'It's not that the genie is out of the bottle -- it's that 100 genies are out of the bottle,' said Daniel Yergin, chairman of Cambridge Energy Research Associates. Normally known for optimistic forecasts of lowering oil prices, Mr. Yergin's firm now says the price could rise to $150 a barrel this year. The world's diminished spare production capacity remains the strongest single catalyst for high prices, Mr. Yergin says. The world's safety cushion -- the amount of readily available oil that could be pumped in a moment of crisis -- is now around two million barrels a day, according to most estimates. That's just 2.3% of daily demand, and nearly all of the safety cushion is in one country, Saudi Arabia. Everyone else is pretty much pumping all they can, which makes the world vulnerable to political or other shocks.... Non-OPEC production may grow this year by about 1%, below many analysts' expectations. The Paris-based International Energy Agency, funded by consuming nations, in April again cut its 2008 non-OPEC supply outlook for the year, this time by 85,000 barrels a day to 50.5 million barrels a day....Saudi Arabia, the cartel's largest supplier by far, has sent strong signals recently that it doesn't see adding additional production capacity beyond 2009....Many analysts now contend that oil prices will fall only following a sharp and sustained drop in demand in the U.S. and other large consuming countries. So far, demand declines in the world's largest oil consumer, the U.S., have been more than made up for by increased consumption in China, Russia, the Middle East and elsewhere. The IEA says Chinese oil demand will rise almost 5% this year and once again play the biggest role in driving global consumption growth."
Some See Oil At $150 a Barrel This Year
Wall St Journal, 7 May 2008

"The oil and gas industry will need to invest $50-100 trillion to rebuild its ageing infrastructure within the next 7 years and stave off a serious drop in oil and gas production, Matt Simmons, chairman of Simmons & Co. International, told OGJ May 5 at the Offshore Technology Conference in Houston. In a worst-case scenario, Simmons said, oil and gas output could fall by 10-20% by 2013 if industry does not replace its rusting, corroded assets. Spare capacity also has run out because formerly cheap prices for oil and gas precluded upgrading and construction of new facilities. The average age of offshore rigs is 25 years, and oil companies have ignored the problem for the past few decades because of the low energy prices, which meant that maintenance has been expensive. However, the upward trend in prices can help pay for the rebuilding of the energy system, Simmons stated. 'There is no blueprint in place, and this is a global problem. The longer the blueprint is postponed, the more acute the crisis will get,' he said. The reconstruction problem is compounded by the shortage of skilled engineers to carry out the work and the scarcity of raw materials."
OTC: $100 trillion needed to rebuild energy infrastructure
Oil and Gas Journal, 5 May 2008

"For more than a decade, English petroleum geologist Colin Campbell has been sounding the warning bell about the coming of peak oil and its disturbing ramifications for the world. Since 2005 Dr. Robert Hirsch has been giving specific warnings for the United States through a series of Department of Energy-sponsored reports outlining the dangers to America if the peak finds us unprepared. And in the past year, the GAO, the National Petroleum Council, and scores of other organizations and governments around the world have reported on the severe consequences the world might incur once the peak has been achieved..... Facts on the ground demand urgent, robust and sustained action at the highest levels of government. The America public gets it, as an April 20 poll by WorldPublicOpinion.org found that 76 percent of Americans 'believe that their government should make long term plans to replace oil as a primary source of energy.' With such a high percentage of the population agreeing with such a necessity, where are our national leaders on this issue? While our presidential candidates continue to be satisfied discussing such critical issues as what someone's pastor said, (who is bitter and who gets angry a lot), there has been not one substantive exchange regarding the most pressing issue facing our country. Someone must step up and lead before a crisis of global proportions is thrust upon us and our only option is the implementation of draconian damage-control measures. Pray such a leader surfaces soon."
The coming crisis
Washington Times, 5 May 2008

"Bloomberg reported last week that investment house Macquarie was forecasting an average price of $65,10/lb this year and $60/lb next year, which was a reduction from its previous forecast of $89,90/lb this year and $82,50/lb next year. Macquarie said after a uranium surplus this year and next year, there would be a 'gradual but significant tightening in the market' by 2012 as uranium would be ordered for new nuclear reactors being commissioned between 2013 and 2016.... Uranium companies are scrambling to bring new projects on stream to meet future demand but have been hit by implementation problems ranging from flooding at Cameco’s Cigar Lake project to shortages of sulphuric acid at Uranium One’s Kazakhstan mines and technical issues at its Dominion Mine in SA, as well as permit delays in various countries.... Bloomberg also reported that Russian state-owned mining company Uranium Holding ARMZ would treble output to 10 300 tons of uranium a year at a cost of $8,6bn with assistance from Russian billionaire Oleg Deripaska, Canada’s Cameco Corporation and Japan’s Mitsui."
Lower uranium price fails to deter miners
Business Day, 5 May 2008

"On the eve of the Offshore Technology Conference here, the latest production figures for non-OPEC sources, 60 percent of global supply, indicate output has stalled at about 50 million barrels a day. The flat production is particularly worrisome, because it comes at a time of record-high prices that ordinarily would stimulate production growth. As that has not occurred, the world's capacity to produce oil from conventional sources might have been reached. The obstacles to increased production are many: Drilling costs have climbed. Trained workers are scarce. Production from older fields in the North Sea and Alaska is at 40 percent to 60 percent below their peaks. Most of the world's oil reserves are controlled by national oil companies and are out of the multinationals' reach. Mexico's national oil company, Pemex, is incapable of developing new fields, but most Mexicans oppose any foreign investment in Mexico's energy sector. In Venezuela, President Chavez has made a hash of his country's oil industry, nationalizing some assets and mismanaging others. The challenge for the multinationals can be seen in Exxon Mobil's latest production figures. Despite the incentive of oil selling for more than $100 a barrel, the company's production of crude fell sharply, sparking a tumble in its stock price. If the world's largest private oil company can't maintain, much less expand, its production in a climate of growing demand and high prices, the world is almost certainly courting a production shortfall in the arena that has been a consistent source of growth."
Plateau
Houston Chronicle, 3 May 2008

"In Nigeria, Africa's biggest oil producer, output has already fallen 20% because of repeated attacks by militants in the Niger delta. But now a recent report by the government's energy advisers has concluded that even if investment is maintained at current levels 'total oil and gas production will decline by 30 per cent from its current level by 2015'."
Oil is expensive because oil is scarce
Daily Telegraph, 3 May 2008

"The US and its allies are worried that the sanctions regime against Tehran is under threat from a possible new wave of European investment in Iran's strategically important gas sector. Tehran has already concluded gas deals with Chinese and Malaysian companies - ending a protracted lull in investment in its energy sector - and has alarmed Washington by reaching an agreement with a Swiss group. The dilemma threatens to expose the limited US influence over foreign companies strategic decisions....the US fears that a 25-year supply agreement concluded in March between Elektrizit�ts-Gesellschaft Laufenburg (EGL) of Switzerland and Iran could encourage other deals, particularly in the gas sector, despite American calls for tougher sanctions against Tehran over its controversial nuclear programme. The Swiss government says the deal could be worth up to €27bn ($42bn, �21bn).... Flynt Leverett, a former US National Security Council adviser on the Middle East, says pressure is growing on non-US companies to conclude supply contracts with Iran in the wake of the deals already signed between Tehran and Sinopec of China and SKS of Malaysia. So angry is Washington about the Swiss deal that it has suggested that Switzerland's role as the US representative in Cuba and Iran could be at risk. Swiss officials reply that no international sanctions prohibit investment in the Iranian energy sector, and that the gas supply contract signed by EGL is intended to alleviate energy shortages in Italy....Flynt Leverett, a former US National Security Council adviser on the Middle East, says pressure is growing on non-US companies to conclude supply contracts with Iran in the wake of the deals already signed between Tehran and Sinopec of China and SKS of Malaysia. So angry is Washington about the Swiss deal that it has suggested that Switzerland's role as the US representative in Cuba and Iran could be at risk. Swiss officials reply that no international sanctions prohibit investment in the Iranian energy sector, and that the gas supply contract signed by EGL is intended to alleviate energy shortages in Italy."
Iran-Europe gas deals anger Washington
Financial Times, 30 April 2008

"In my official mandate I don't often speak about wars and such. But what I can tell you is, that energy issues and geopolitics are interwoven too much. The energy supply is becoming less and less an economic enterprise, but instead an economic enterprise plus geopolitics! That's bad news, and I don't like that at all. We need a dialogue between the producers and consumers."
IEA Chief Economist
Fatih Birol interview: 'Leave oil before it leaves us'
International Politik, April 2008

"Soaring oil prices have not slowed China's consumption of oil as statistics show that China's apparent consumption of crude oil and refined oil products both hit record highs in the first quarter of the year. According to statistics released Tuesday by the China Petroleum and Chemical Industry Association (CPCIA), China's apparent consumption of oil products composed of gasoline, diesel and kerosene rose by 16.5 percent year on year to 52.73 million tonnes in the first three months, and crude oil, rose by eight percent to 91.8 million tonnes.... The growth of oil products consumption was a record high and much higher than the same period of last year, which was only 3.6 percent, said Shu Zhaoxia, professor of the Economics and Development Research Institute of China Petrochemical Corporation (Sinopec Group). Sinopec Group is China's top oil refiner. The growth of crude oil consumption was 2.5 percentage points higher than a year ago."
China's oil consumption hits record high in Q1
Xinhua, 29 April 2008

"Royal Dutch Shell Plc, Europe's largest oil company, said it's examining a carbon capture project at its Scotford refinery and upgrader in the Canadian province of Alberta.....Alberta, Canada's biggest carbon dioxide-emitting province, passed regulations last year forcing companies like Shell to cut greenhouse emissions per unit of output. Shell, Exxon Mobil Corp. and the rest of the oil industry may face higher costs to exploit Canada's tar sands, the biggest deposit outside of Saudi Arabia, because of efforts to curb climate change."
Shell Examines Carbon Capture Project at Its Canadian Refinery
Bloomberg, 29 April 2008

"Members of the Rockefeller family are calling on Exxon Mobil Corp to make governance changes and increase spending on alternative fuels, sharpening the focus on the company's practices as oil soars close to $120. John D. Rockefeller founded the Standard Oil Co in 1870 and it became a precursor to Exxon Mobil. Exxon Mobil is the world's largest publicly traded oil company based on market capitalization and is a favorite target of consumer advocate groups and politicians unhappy with record prices for oil and gas and their effect on the environment. Fifteen descendants of the oil baron are involved in four shareholder resolutions seeking changes at Exxon, including dividing the CEO and chairmanship positions held by Rex Tillerson. Peter O'Neill, great-great-grandson of Rockefeller, said 66 of the 78 adult Rockefellers currently supported their stance. Exxon posted the largest ever annual profit by a U.S. company last year and its first-quarter results, scheduled for Thursday morning, are expected to be at or near record levels.But the Rockefeller's said the company was too focused on short-term windfalls. They said the company's reluctance to invest in alternative energy could result in lost profits down the road. Neva Rockefeller Goodwin, great granddaughter of John D. Rockefeller and a Tufts University economist, called on Exxon to reconnect with the forward-looking vision of her great grandfather."
Rockefellers call for change at Exxon Mobil
Reuters, 30 April 2008

"A multi-billion-dollar gas pipeline project linking Iran, Pakistan and India that is bitterly opposed by Washington is set to go ahead after Iran's President Mahmoud Ahmadinejad made a historic first visit to meet leaders of the new coalition government in Islamabad. Mr Ahmadinejad's arrival to finalise the ambitious Iran-Pakistan-India project, known as the 'Peace Pipeline', came just days after India's Petroleum and Natural Gas Minister Murli Deora affirmed New Delhi's support for the pipeline during a visit to Pakistan. Indian participation in the IPI project is seen as a major snub to Washington and a measure of New Delhi's and Islamabad's unwillingness to allow the US todictate the terms of relations with Iran. Pakistan, both under the former dictatorship of President Pervez Musharraf and its new democratic Government, has made plain that it intends to maintain close relations with Tehran.....The pipeline, estimated to cost $7.8 billion and to be completed by 2011, is to traverse 2775km stretching from Iran to Pakistan and then into India. It was first proposed in 1989 by Indian economist and environmental scientist Rajendra Pachauri....Last week, as part of its overall drive for energy security, India signed an agreement covering the US-backed, $3.5 billion Turkmen-istan-Afghanistan-Pakistan-India gas pipeline project to be financed by the Asian Development Bank. US assurances that gas delivered through that 1680km pipeline would fulfil India's needs have fallen on deaf ears."
India and Pakistan snub US
The Australian, 29 April 2008

"As oil prices soared to record levels in recent years, basic economics suggested that consumption would fall and supplies would rise as producers drilled for more oil. But as prices flirt with $120 a barrel, many energy experts are becoming worried that neither seems to be happening. Higher prices have done little to suppress global demand or attract new production, and the resulting mismatch has sent oil prices ever higher. A central reason that oil supplies are not rising much is that major producers outside the OPEC cartel, like Russia, Mexico and Norway, are showing troubling signs of sluggishness. Unlike OPEC, whose explicit goal is to regulate the supply of oil to keep prices up, these countries are the free traders of the oil market, with every incentive to produce flat-out at a time of high prices....' According to normal economic theory, and the history of oil, rising prices have two major effects,' said Fatih Birol, the chief economist at the International Energy Agency in Paris. 'They reduce demand and they induce oil supplies. Not this time.'....Countries outside the Organization of the Petroleum Exporting Countries have been the main source of production growth in the past three decades, as new fields were discovered in Alaska, the North Sea and the Caspian region. But analysts at Barclays Capital said last week that non-OPEC supplies were 'seemingly dead in the water.' Goldman Sachs raised similar concerns last month, saying that growth in non-OPEC supplies 'can no longer be taken for granted.'....'What is disturbing here is that things seem to get worse, not better,' said David Greely, an analyst at Goldman Sachs. 'These high prices are not attracting meaningful new supplies.' The outlook for oil supplies 'signals a period of unprecedented scarcity,' Jeff Rubin, an analyst at CIBC World Markets, said last week. Oil prices might exceed $200 a barrel by 2012, he said, a level that would very likely mean $7-a-gallon gasoline in the United States. Some regions are simply running out of reserves. Norway’s production has slumped by 25 percent since its peak in 2001, and in Britain, output has dropped 43 percent in eight years. Production from the giant Prudhoe Bay field in Alaska has dropped by 65 percent from its peak two decades ago. At the same time, oil consumption keeps expanding. Global consumption is forecast to increase by 1.2 million barrels a day this year, to 87.2 million barrels a day, with much of the growth in demand coming from China, India and the Middle East, according to the International Energy Agency, a group that advises industrialized countries....Mexico, the second-biggest exporter to the United States, seems increasingly helpless to find new supplies to offset the collapse of its largest oil field, Cantarell. A combination of falling production and rising domestic consumption could wipe out Mexico’s exports within five years..... Russian energy officials warned recently that the days of stunning growth that followed the collapse of the Soviet Union were over, as the country focuses on stabilizing its output. Russia today produces about 10 million barrels of oil a day, up from a low of 6 million barrels in 1996....As countries like Russia slow output, analysts say OPEC will have to pick up the slack. The oil cartel accounts for 40 percent of the world’s oil exports and owns more than 75 percent of global reserves. But there are serious concerns that OPEC will also find it tough to increase production. Saudi Arabia, the world’s top oil exporter, is completing a $50 billion plan to increase capacity to 12.5 million barrels a day, but it signaled recently that it would not go beyond that. That means Saudi Arabia could fall short of the 15 million barrels a day that most experts had expected it to produce in the long run. OPEC’s 13 members plan to spend $150 billion to expand their capacity by five million barrels a day by 2012. But OPEC will need to pump 60 million barrels a day by 2030, up from around 36 million barrels a day today, to meet the projected growth in demand. Analysts say that without Iran and Iraq — where nearly 30 years of wars and sanctions have crippled oil production — reaching that level will be impossible."
Oil Price Rise Fails to Open Tap
New York Times, 29 April 2008

"Brazil's plan to become one of the world's biggest oil exporters hinges on exploiting crude 6 miles below the ocean surface in deposits so hot they can melt the metal used to carry uranium to nuclear plants. Tapping what may be the biggest oil finds in the Western Hemisphere in three decades will require equipment that can withstand 18,000 pounds per square inch of pressure, enough to crush a pickup truck, pipes that can carry oil at temperatures above 500 degrees Fahrenheit (260 Celsius) and drill bits that can penetrate layers of salt more than one mile thick. Petroleo Brasileiro SA, the state-controlled oil company, is betting on the Tupi and Carioca fields to become one of the world's seven biggest crude exporters. Until the tools needed to exploit the reservoirs are invented, the crude will remain locked under the sea, said Matt Cline, a U.S. Energy Department economist.... Brazil's oil will be harder to develop than the Gulf of Mexico, where the deepest wells are now in production, Cline said. Exxon Mobil Corp. and Chevron Corp., the two biggest U.S. oil companies, saw diamond-crusted drill bits disintegrate and steel pipes crumple when they attempted to tap deposits beneath the Gulf's seafloor two years ago.... Pumping oil from the Brazilian finds, parts of which are 32,000 feet (10,000 meters) below the ocean's surface, will require boring almost twice as far down as the world's deepest producing offshore well.... 'A big find might not be a good find if it costs so much to develop that it's not commercially viable,' S&P's Vital said. 'We don't have any idea at all yet of all the costs that are going to be involved. Those costs are going to set the floor for oil prices.'.....Chevron, which has the deepest Gulf of Mexico exploration well, including distance below the seafloor, destroyed as many as a dozen $50,000 drill bits at each of the 14 wells in its $4.7 billion Tahiti project. Exxon Mobil abandoned a Gulf project that would have been the deepest well after pressure and heat shut down the venture in August 2006.....'These challenges in the Brazilian offshore area are too great for any one company or even country to be able to digest themselves,' Vital said."
Brazil Oil Trapped by 500-Degree Heat, Salt Barrier
Bloomberg, 28 April 2008

"Last summer, as Americans focused on the surge in Iraq, most ignored a military exercise with a potentially more far-reaching impact. In a remote location in the Ural Mountains, Russia, China, and several Central Asian nations gathered for a massive war game, ironically dubbed 'Peace Mission 2007.'.... the exercise highlighted an alarming new reality. With much less fanfare than the early days of the Cold War, the world is entering a new arms race, and with it, a dangerous new web of military relationships. According to the Stockholm International Peace Research Institute, which tracks international armed forces spending, between 1997 and 2006 global military expenditures jumped by nearly 40 percent. Driven mainly by anxiety over oil and natural resources, countries are building their arsenals of conventional weapons at a rate not seen in decades, beefing up their armies and navies, and forging potential new alliances that could divide up the world in unpredictable ways....As easily accessible global stocks of oil dwindle, the world supply of oil and gas has been concentrated in a smaller and smaller number of hands over just the past decade. Some 80 percent of all reserves now are concentrated in fewer than 10 nations. The biggest consumers desperately want to protect their secure flows of oil and gas from this handful of key suppliers, while simultaneously preventing their rivals from inking deals with resource-rich nations....The biggest of these nations is China, which will surpass the United States in its petroleum use within the next two decades. And, fittingly, it is China that is driving a great deal of the current arms race....the United States is building its own military-energy ties."
Rearming the world
Boston Globe, 27 April 2008

"Energy will be a leading priority when France assumes its half-year turn to preside over the European Union, beginning July 1. French Prime Minister Francois Fillon recently asked Claude Mandil, former executive director of the International Energy Agency, what France should do to enhance EU energy security....Mandil said relations with Russia remain too confrontational, with the EU giving the impression of 'having its back to the wall.' Instead of trying to 'reform' Russia, and insisting that it join the Energy Charter, 'which it will never do,' he said, the EU should reduce its dependence on Russia through energy efficiency, LNG development, renewables, and nuclear power. Heavy gas users such as Germany and the Baltic countries should develop LNG import capability to lessen their reliance on piped gas from Russia, although Mandil insists Russia has always been a reliable supplier to them. The Nabucco gasline is the typical example of how confrontation with Russia can be counterproductive, explained Mandil. The project was to carry Caspian Sea gas through Turkey to EU countries as an alternative to gas transported from Russia and was described as a means of countering Russia's 'domination' over the gas market. The result was contrary to expectations as Russia reacted swiftly, depriving Nabucco of its gas by setting up its own long-term contracts with East Caspian gas producers, and launching the South Stream gasline, thus dividing Nabucco supporters. Mandil's conclusion is that Nabucco will now only be built if it is supplied with either Russian or Iranian gas or both. Iranian gas is out of the question until international tensions over its nuclear program are eased. But Mandil suggests that one day Nabucco could benefit from Iranian exports and should stand by to take advantage of such a possibility. He also advises that if Nabucco is built, Russian gas must be accepted, and the gasline must be built not against Gazprom but with Gazprom."
France's EU presidency to highlight energy
Oil and Gas Journal, 25 April 2008

"A top foreign affairs official with the Russian government says the country needs investment in new oil fields amid recent reports that Russian oil production has peaked.... The latest data on Russian oil production showed that for the first time in a decade, output fell in the first three months of this year. Merrill Lynch analyst Francisco Blanch said in a recent report to investors that Russia surpassed Saudi Arabia as the world's largest oil producer in 2007 with an average daily output of 9.84 million barrels. But first-quarter production this year fell to an average 9.75 million barrels per day.... Barring change, Blanch said, Russian oil and gas production growth likely will slow dramatically over the next several years."
Russian calls for boost in oil field investment
Houston Chronicle, 24 April 2008

".....the Saudis, who after spending $100 billion or so on new oil wells in recent years, say they will soon have the capacity to produce 12.5 million barrels a day. However, the King of Saudi Arabia announced last week that he has decided to leave some of their oil in the ground for the grandchildren. Somebody passed the word the Saudi production was going down to 9 million barrels a day from 9.2 million ...The most important factor, however, may be the Chinese who insist on growing their economy at 10 or 11 percent a year. Chinese oil imports are up 14 percent over last year in the first quarter and by almost 25 percent in March as domestic production stagnates and Beijing prepares for the Olympics. Chinese imports for May are already looking to be above normal.....Despite the weakening U.S. economy, the Department of Energy still shows U.S. oil and gasoline consumption up by nearly one percent over last year. Thus far in 2008 our crude imports are down 1.7 percent over last year and our net imports of refined products are down by 5.2 percent."
The Peak Oil Crisis: The Case for 2008
Falls Church News-Press, 24 April 2008

"As in the Seventies, a driving force behind the inflation threat is soaring oil prices. But just as four decades ago, a drastic surge in energy costs is coupled with huge increases in prices for an even more basic necessity: food. The fallout has been as startling as the upward spike in the prices of oil and foodstuffs. Across the world, a popular backlash has erupted....Western efforts to promote biofuels have meant tracts of land once used for food being given over to crops for this purpose. Droughts in Australia and other disruptions have exacerbated food shortages. Worldwide stocks of wheat and rice have dropped from about 30 per cent of annual consumption in 2000 to only 15 per cent. Oil prices are, meantime, kept at record levels by a combination of scant spare capacity for extracting and refining crude, strong global demand and Middle Eastern unrest, as well as speculation. A growing number of economists believe that the fundamental forces now at work will keep food and fuel prices high for years to come."
Inflation: vengeful return of the dragon that we thought had died
London Times, 24 April 2008

"The United States hopes to sign a cooperation agreement with Estonia on oil shale in the summer, a top U.S. official said. 'High oil prices have raised the interest of countries having oil shale deposits toward the exploitation of these deposits,' said Jeff Kupfer, deputy secretary at the U.S. Department of Energy. 'Estonia's longtime experience in this field makes us a good partner for cooperation in research and business alike.' The comments, which came after a meeting with Estonian Minister of Economy and Communications Juhan Parts on Friday, were reported by BNS. According to the report, the United States could and should be involved in the work of the Estonian center for oil shale research. Kupfer said he promised to support Estonia's aspiration to join the 21 countries that are members of the Global Nuclear Energy Partnership."
Estonia, U.S. to research oil shale
UPI Energy Watch, 23 April 2008

"Oil output in Russia, the world's biggest supplier after Saudi Arabia, has 'peaked'' and may decline in the coming years, said billionaire Viktor Vekselberg, an owner of BP Plc's venture TNK-BP. Russian companies need tax breaks to spur exploration and development of new fields to revive growth, Vekselberg told an American Chamber of Commerce conference in Moscow today. Oil output is falling for the first time in a decade as Soviet-era wells dry up and the costs of developing harder-to- reach deposits surge. Russia pumped 9.76 million barrels a day in March, down from 9.83 million in December, according to CDU TEK, the Energy Ministry's central dispatch unit. 'The output level we have today is a plateau, stagnation,' Energy Minister Viktor Khristenko said in an interview April 10...The sector that has helped us all these years now deserves support,' Finance Minister Alexei Kudrin told Economy Ministry officials on March 25. Kudrin said one proposal, a cut in the crude-extraction tax, would save companies a combined 100 billion rubles ($4.3 billion) a year. That's not enough to spur development in the Arctic and other remote areas, Vekselberg said today."
Russian Oil Has `Peaked,' Billionaire Vekselberg Says
Bloomberg, 23 April 2008

"The era of natural gas selling at a discount to oil in North America in terms of relative heat content is about to end, an energy industry consulting firm predicted Tuesday. In a study released at the American Association of Petroleum Geologists convention, Wood Mackenzie forecasts gas returning to its historic one to seven price relationship with oil by about 2012, a shift the firm calls price re-linkage. 'Under current market conditions, with oil pricing over $100 a barrel, a re-linkage would mean gas prices of as much as $13 or $14,' Ed Kelly, Wood Mackenzie's vice president of North American gas and power, said in a news release.....Gas has been knocked out of its historic relationship to oil by soaring oil prices coupled with pressure on natural gas prices due to increased North American supply, due largely to the success of recent shale gas plays, Wood Mackenzie said. More equivalent pricing will come when demand for natural gas exceeds domestic supply in about 2012 and the gap has to be closed by importing liquefied natural gas (LNG), which much of the world prices in relationship to oil, experts said. 'Relying on LNG will tie gas prices more tightly to oil. Hence, in the long term, if oil prices remain high, we could see gas prices following suit,' Kelly said in the release."
Natgas headed back to price parity with oil - firm
Reuters, 22 April 2008

"Navy Adm. Mike Mullen told noncommissioned officers here today that this is the most dangerous period he has seen in his more than 40 years in uniform. Mullen, the chairman of the Joint Chiefs of Staff, said the threats of extremism and changes happening around the world associated with energy and resources make the present day 'the most uncertain and potentially the most dangerous time since I’ve been serving,' he said at a noncommissioned officer quarterly breakfast."
NCOs’ Service Vital to Nation During Dangerous Time, Mullen Says
American Forces, 22 April 2008

"Looking out to the year 2050, Shell strategist Jeremy Bentham says demand will go up, while oil supplies will be harder to find. But how nations and companies react is harder to predict. 'We anticipate that you'll begin to see a plateauing of easily accessible conventional oil and gas around about the 2015, 2020 type of period,' Bentham tells Steve Inskeep."
Oil Has Two Potential Futures, Shell Strategist Says
National Public Radio (US), 22 April 2008

"Most people believe oil is running out and governments need to find another fuel, but Americans are alone in thinking their leaders are out of touch with reality on this issue, an international poll said on Sunday. On average, 70 percent of respondents in 15 countries and the Palestinian territories said they thought oil supplies had peaked. Only 22 percent of the nearly 15,000 respondents in nations ranging from China to Mexico believed enough new oil would be found to keep it a primary fuel source. 'What's most striking is there's such a widespread consensus around the world that oil is running out and governments need to make a real effort to find new sources of energy,' said Steven Kull, director of WorldPublicOpinion.org, a global research organization that conducted the poll....The current tightening of the oil market is not temporary but will continue and the price of oil will rise substantially, most respondents said. 'They think it's just going to keep going higher and a fundamental adaptation is necessary,' Kull said in a telephone interview. In the United States, the world's biggest oil consumer and among the biggest emitters of climate-warming pollution from fossil fuel use, 76 percent of respondents said oil is running out, but most believed the U.S. government mistakenly assumes there would be enough to keep oil a main source of fuel. 'Americans perceive that the government is not facing reality,' Kull said.... Only in Nigeria did a majority - 53 percent - believe enough new oil would be found to keep it a primary energy source, a reflection of its status as a major oil exporter and member of OPEC. The poll was conducted in China, India, the United States, Indonesia, Nigeria, Russia, Mexico, Britain, France, Iran, Azerbaijan, Ukraine, Egypt, Turkey, South Korea and the Palestinian territories. The margin of error varied from country to country, ranging from plus or minus 3 percentage points to plus or minus 4.5 percentage points, Kull said. WorldPublicOpinion.org involves research centers around the world, and the locations of these centers determined which countries were included in the poll. Kull noted that the poll included countries that make up 58 percent of the global population. The project is managed by the Program on International Policy Attitudes at the University of Maryland."
Oil Running Out as Prime Energy Source: World Poll
Reuters, 21 April 2008

"Saudi Arabia, the world’s biggest oil producer, has put on hold plans to increase long-term production capacity from its vast oil fields beyond existing proposals, its most powerful policymakers have said. In a series of statements, including one by the king himself, the kingdom has warned consumers it does not reckon there is a need for further expansion beyond 12.5m barrels a day, an assumption disputed by the world’s biggest developed countries."
Saudis put off longer-term oil capacity rise
Financial Times, 20 April 2008

"Oil players like Royal Dutch Shell and Exxon Mobil may have to spend more- between $2 and $13 a barrel- to exploit Canada's tar sands. The increase in costs follows a requirement by the government for oil producers to store carbon dioxide underground, Bloomberg reported yesterday. The report said the anti-climate change initiative the additional cost would have to be passed on to consumers through higher energy bills."
Oil Production In Canada's Tar Sands To Cost More
AHN, 20 April 2008

"Fifty years ago the decolonisation of Africa began. The next half-century may see the continent recolonised. But the new imperialism will be less benign. Great powers aren't interested in administering wild places any more, still less in settling them: just raping them. Black gangster governments sponsored by self-interested Asian or Western powers could become the central story in 21st-century African history..... Zimbabwe is not Iraq. Any great power could pick a leader in Zimbabwe today, send in a modest military support force to sustain him in power, and follow this up with ten jumbo jets filled with economic, technical and political advisers and half-a-billion-pound's-worth of reconstruction aid. Within a couple of years the intervening power would be sponsoring something tantamount to a puppet government there. In modern management-speak, there exist bunches of low-hanging fruit, overlooked, on the African continent....Meanwhile, China's support for a vicious Sudanese regime in Khartoum has been too widely commented on to need rehearsing. Hydrocarbons are the prize.... The American neocons were unlucky in the pilot projects they chose. For those seeking the creation of biddable states, Iraq and Afghanistan proved among the least amenable places to pick....Why then did the great (and lesser) powers of the day turn their backs on empire in Africa in the 20th century, and why in the 21st might their successors return to an interest in acquiring political grip? European imperial powers lost the will rather than the capacity to own and govern overseas resources. A world in which all could buy and sell on the global market was arriving. It is a world, however, which is now feeling the pinch in the natural resources with which Africa is richly endowed.... it is when China, then America, and perhaps even Russia or India follow, that the scramble for Africa will truly be resumed. Hypocrisy, they say, is the homage that vice pays to virtue. During the last scramble for Africa, colonial administration was the homage greed paid to responsibility. But greed may be less sentimental during the next. From a resource-starved industrialised world in the 21st Century, reponsibility for Africa will get no more than a passing nod."
The new scramble for Africa begins
London Times, 19 April 2008

"Russia has agreed to cancel $4.5bn (�2.3bn) of Libyan debt in exchange for major contracts for Russian firms. The announcement came during a visit to Tripoli on Thursday by the Russian President, Vladimir Putin. The two countries signed deals on energy co-operation, military assistance and construction of a 500km (310-mile) railway line in Libya. Libya was a big importer of Soviet weaponry during the Cold War, when it accumulated large debts. Russia's state gas monopoly Gazprom plans large-scale exploration and production projects with Libya's national energy company. They will include liquefied natural gas installations and gas-fired electricity plants in Libya."
Russia swaps Libya debt for deals
BBC Online, 18 April 2008

"A group of American and British shareholders in BP joined forces yesterday to protest over the oil company's decision to start extracting oil from Canadian tar sands. Eleven fund managers, which together manage total assets worth more than $10 billion (�5 billion), said that BP's move into tar sands last year was 'deeply disappointing' and represented a 'disturbing step backwards' for the company. In a reversal of the group's former stance on oil sands, BP entered the business last December when it announced a joint venture with Canada's Husky Energy to co-develop the Sunrise project in Alberta, with a joint investment worth $3 billion. The first oil is expected to be produced in 2012, with output likely to rise to 200,000 barrels per day within a decade. The fund managers, who together hold about $40 million of BP stock, include Boston Common Asset Management, Trillium Asset Management, Rathbone Greenbank Investments and NorthStar Asset Management, and used BP's annual meeting in London yesterday to issue a joint declaration emphasising the environmental damage caused by extracting oil from the bitumen-rich sands. Miles Litvinoff, of the Ecumenical Council for Social Responsibility, said: 'Oil sands development offers some of the worst life-cycle environmental impacts of any fossil fuel - emitting nearly triple the greenhouse gas emissions of traditional oil extraction. He said: 'Prior to BP's announcement in December, we had understood that our company would not pursue tar sands development due to the heavy carbon footprint of both the operations and the end product. We fear the implication that BP is retreating from an excellent strategic position designed to exploit the long-term shift away from high-carbon fuel sources and question whether this may undermine BP's future competitiveness.' Sir Peter Sutherland, BP's chairman, responded by saying that BP was taking steps to mitigate the negative environmental impacts of the project and remained committed to renewable energy. Mr Hayward also expressed optimism that the company would exceed the production goals it promised to deliver through to 2020."
Fund managers attack BP over tar sands plan
London Times, 18 April 2008

"Russia's vast oil and gas reserves were seen not so long ago as the best hope of meeting growing world energy demand. No more. This week a top Russian oil executive echoed earlier official warnings that oil production could fall for the first time in a decade....Much can be done in the short term to stabilise falling output and ensure that a managed decline does not become a precipitous one."
Preparing for the age of peak oil
Financial Times, 16 April 2008

"Brazil's Carioca prospect may have 98 percent less crude than a figure cited by the country's oil agency, Credit Suisse Group said, challenging claims that the field is the biggest-ever discovery outside the Middle East. Haroldo Lima, director of Brazil's National Oil Agency, sent shares of Petroleo Brasileiro SA and other Carioca stakeholders higher when he said April 14 that the offshore field may hold 33 billion barrels of oil. That figure is 'way off the mark,' Mark Flannery, a Credit Suisse analyst in New York, said today on a conference call with clients. An estimate of about 600 million barrels 'sounds reasonable,' Flannery said, adding that the firm isn't yet giving an official assessment of its own. The estimate cited by Lima was probably intended for the entire subsea geological formation known as Sugar Loaf, which encompasses multiple fields, Credit Suisse said....Flannery and other Credit Suisse analysts convened today's call in response to Lima's comment after returning from a trip to Brazil. The analysts met with Petroleo Brasileiro executives during their visit.... Lima told Brazilian lawmakers yesterday that he obtained the estimate of 33 billion barrels from a publication called World Oil. Petrobras, as state-controlled Petroleo Brasileiro is known, said it needs at least three months to determine how much oil can be recovered from Carioca. Brazilian prosecutors said they will investigate Lima's comments and whether other officials had information about the oil field, Globo newswire reported yesterday. Lima and Gabrielli face a hearing over Lima's claims in Brazil's lower house, Agencia Estado said today."
Brazil Field Smaller Than Claimed, Credit Suisse Says
Bloomberg, 16 April 2008

"The EU has struggled over recent years to break free from its heavy reliance on Russian oil and gas supplies. Iraq and former Soviet republics like Turkmenistan have been aggressively courted in recent months with the aim of securing energy supply pacts. Last week, Turkmen authorities promised EU officials to supply 353 billion cubic feet of gas starting next year. Early this year, the Iraqi Oil Ministry said it was negotiating with Royal Dutch Shell PLC to conduct output tests on Akkas gas field, a prized natural gas field in western Iraq. The field, located in the former Sunni insurgent stronghold of Anbar province, has estimated reserves of more than 2.15 trillion cubic feet. The European Commission added that Iraq was also committed to increasing its oil production to reach 3 million barrels per day by the end of this year and that it aimed for 4.5 million by 2012. 'This should be a favorable contribution toward decreasing oil prices,' the commission statement said. 'Iraq confirms it is exploring new areas for production.'"
EU: Iraq offers to increase gas supplies to Europe
Associated Press, 16 April 2008

"The European Union said on Wednesday it was close to clinching a preliminary energy pact with Iraq as part of the bloc's efforts to reduce its heavy dependence on Russian oil and gas. European Commission President Jose Manuel Barroso said after talks with Iraqi Prime Minister Nuri al-Maliki he hoped a memorandum of understanding could be signed within weeks, and that the country's oil minister had been invited back to Brussels in May with the aim of concluding negotiations.....Separately, a Commission statement issued after talks between European Energy Commissioner Andris Piebalgs and Oil Minister Hussain al-Shahristani in Brussels said Iraq had pledged an initial 5 billion cubic metres (bcm) of gas to the EU per year, with the likelihood of more in the future. Earlier, the Iraqi prime minister said the two-day visit by an Iraqi delegation to the headquarters of the EU and NATO was aimed at deepening ties, and held out the prospect of enhanced energy cooperation and business openings for European companies....EU officials said ahead of al-Maliki's visit they hoped to reach an outline agreement with Iraq to import Iraqi gas via the planned Nabucco pipeline across Turkey to central Europe...The EU wants to diversify gas supplies away from Russia, which provides a quarter of its needs. Connecting fields in western Iraq to a planned Arab Gas Pipeline would enable Baghdad to supply gas to Nabucco, which is due to come on line in 2013. 'Iraq made a political gesture of goodwill from Iraq to the EU and promised at least 5 bcm of gas in a first stage from the Akkas field, and indicated that probably there would be more in the future for the European Union,' the Commission said. 'Iraq confirmed that part of their gas will flow to Europe through various routes and potentially from various fields.' A Commission official said that of the 35 companies granted access to the Akkas field near the Syrian border, 11 were from the EU. Gas was due to flow from the field in two to three years, the official added. The European Commission said on Monday it had secured a guarantee last week of 10 billion cubic metres a year of natural gas from Turkmenistan from 2009 as part of the drive to ensure sufficient supplies to make Nabucco commercially viable....Earlier, al-Maliki gave a European Parliament committee an upbeat assessment of Iraq's efforts to get its war-ravaged society and economy back on track. He said Iraq was 'close to agreeing a final version' of a long-awaited oil and gas law, delay over which has held back investment in the sector."
EU says close to Iraq energy pact, wins gas pledge
Reuters, 16 April 2008

"A deal to supply the EU with 10bn cubic metres of Turkmen gas per year from 2009 has been hailed by officials as 'an important step'. The agreement will boost the EU-backed Nabucco pipeline - planned to reduce reliance on Russian gas, which accounts for a quarter of EU supplies. The Turkmen gas will only make up a small percentage of EU demands and it is not clear how it will reach Europe. Nabucco is due to be built in 2010 and the first gas will flow in 2013."
EU secures Turkmenistan gas deal
BBC Online, 14 April 2008

"Namibia's electricity supplier asked consumers whether they wanted higher rates or less power — and the result, based on responses sent by cell phone text message: rates will rise by 18.3 percent. The Electricity Control Board and power utility NamPower announced the increase Tuesday. The country has been grappling with shortfalls from South Africa, from which it imports the bulk of its supplies. Namibia, Africa's second-biggest uranium producer, imports about 50 percent of its electricity, mainly from neighboring South Africa, which has been experiencing a shortage of power due to increased demand."
Namibia hikes electricity prices by nearly 20 percent
Associated Press, 15 April 2008

"The future supply of Russian oil is threatened by a likely decline in production levels, one of the country's top oil executives has warned. Lukoil's Leonid Fedun said $1 trillion would have to be spent on developing new reserves if current output levels were to be maintained. Recent figures show Russian output fell 1% in the first quarter of 2008. The possibility of less oil from one of the world's key suppliers will add more pressure to prices now at record highs. The surprise fall in Russian oil output in the first part of the year has raised fears about the ability of global supply to keep pace with demand over the next decade. Russian production averaged 10 million barrels a day in the first three months of 2008, according to the International Energy Agency, down 1% on the same period last year. Blamed on supply problems in western Siberia and weather conditions making it harder to move drilling equipment, the fall contrasts with substantial output rises in recent years. Once highly-productive fields in Siberia are slowly being exhausted and the huge cost of searching for oil in the untapped but remote region of eastern Siberia has deterred firms. 'When the well's productivity falls, you have to keep drilling more and more,' Mr Fedun said, referring to the steady depletion of older fields. 'You have seen it in Alaska and the Gulf of Mexico and now you are seeing it in Siberia.' Analysts at Citigroup recently said annual increases in Russian output could 'no longer be taken for granted' but argued that production was expected to rise until 2012. One energy expert said the Russian industry was now acknowledging a crisis which had been evident to independent observers for several years. 'We now see production peaked last year,' Mikhail Kroutikhin, editor in chief of the Russian Petroleum Investor told the BBC. 'I believe the decline will continue for quite a number of years.'... Russian worries underline longstanding concerns about whether there is enough oil to meet the needs of the global economy, particularly fast-growing China and India. They are also a particular cause of concern for several of Europe's largest economies, such as Germany, which buy a large share of their oil from Russia. 'Russia is not going to be a very reliable supplier of energy in a few years,' Mr Kroutikhin warned."
'Threat' to future of Russia oil
BBC, 15 April 2008

"Russian oil production, for years a vital source of new supplies for world markets, is showing signs of a slump, adding to uncertainties that have helped push oil prices to record highs. Russian output fell for the first time in a decade in the first three months of this year, according to the International Energy Agency, which represents industrialized oil-consuming countries. It said Russian production averaged about 10 million barrels a day, a 1% drop from the first-quarter of 2007. Declining production from the world's largest oil producer and one of its largest exporters puts further pressures on an already strained market and adds to the potential for higher prices for a global economy coping with a slowdown. Global production constraints -- along with surging demand, rising oil-field expenses and political instability in petroleum-rich regions -- already have sent oil to more than $110 a barrel from $30 in about four years. In New York futures markets Monday, oil reached another new high on the falling dollar and other supply constraints. It settled at $111.76 a barrel, up $1.62, or 1.5%. Industry watchers and Russian officials generally blame the country's production slowdown on a combination of weather and tight electricity supplies in some parts of the country. In a longer-term worry, they also point to aging Siberian fields that once fueled its production growth. Many Russian oil officials say the industry could still resume growth. Some Western analysts point to more optimistic data and forecasts. Citigroup said in a report late last month that it expects Russian oil volumes to increase by 1.5 million barrels a day between now and 2012, largely thanks to new projects in eastern Siberia. Still, it cautioned: 'Russian oil production growth is no longer to be taken for granted.' The IEA predicts Russian oil production will resume growth this year. But it estimates an annual increase of only 0.8% over 2007, compared with an average 2.5% in the past three years and much faster growth before that. Russia's energy ministry expects a rise of 1.8%. But earlier this month, Yuri Trutnev, the nation's natural-resources minister, said on Russian television that the country's full-year production may be lower than last year's. Russia's stumbling production growth highlights a troubling reality: Despite soaring oil prices in the past five years, crude output from nations outside the Organization for Petroleum Exporting Countries has remained essentially flat since 2005, defying the normal link between high prices and increased production....Russia's rising affluence, leading to greater domestic consumption, is also reducing the amount it can export to the rest of the world. Driven by Russia, demand from the former Soviet Union is expected to rise 1.6% this year to 4.2 million barrels a day. In an interview, Leonid Fedun, vice president of OAO Lukoil, one of Russia's biggest oil companies, said a mild winter and higher temperatures mean Siberia's icy ground is less stable, making it harder to move drilling rigs between oil wells. He acknowledged that the fall also reflects a longer-term trend -- the depletion of Siberia's older fields. 'Western Siberia is repeating the fate of Prudhoe Bay, with a time lag of five to six years,' he said. 'When the well's productivity falls, you have to keep drilling more and more. You've seen it in Alaska and the Gulf of Mexico, and now you're seeing it in Siberia.'...Most forecasts predict that liquid-fuel demand world-wide will hit 100 million barrels a day by 2015. To meet that, producers will first have to make up for steep declines in existing fields. That decline rate now subtracts an estimated 4.5 million barrels a day from annual output. Former big producers like the U.K., Norway and Mexico are also fighting to squeeze oil from once mighty but now increasingly old and tired fields. In Canada, where output is increasing thanks to massive investments in Alberta's oil sands, production costs now top $65 a barrel by some estimates. Mexico last week pushed a plan to allow its state oil company to enter into service agreements with foreign oil companies, but observers said it may not be enough to attract big investment."
Russian Oil Slump Stirs Supply Jitters
Wall St Journal, 15 April 2008

"ARC Energy Trust said on Monday it's backing a plan to capture and store carbon-dioxide emissions from the burgeoning oil sands upgrading hub near Edmonton, Alberta, that could boost output at its nearby oil field. ARC, Canada's fourth-biggest energy trust, will study injecting carbon dioxide from upgraders, facilities that convert tar-like bitumen from the oil sands into refinery-ready crude, into its Redwater oil field. ARC, which has partnered with the Alberta Research Council, said the Redwater area could store one billion tonnes of carbon dioxide, or 20 years of output of gas from the Heartland upgrading hub, and boost production from the field. 'We think the potential for enhanced oil recovery (from the field) is upwards of 15,000 barrels per day,' John Dielwart, ARC's chief executive, told reporters."
ARC Energy Trust to study oil sands CO2 burial
Reuters, 14 April 2008

"A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil's reserves and make the offshore bloc the world's third-largest known oil reserve, a top oil official said Monday.....National Petroleum Agency President Haroldo Lima cautioned that his information on the field off the coast of Rio de Janeiro is unofficial and needs to be confirmed. While the potential Brazil find could add significant supplies to a global oil market many see as tight, it would likely take the better part of a decade before any of oil finds its way to market. The site will need to be studied further, and drilling platforms must be designed, built and transported before it can start producing oil."
Brazil oil field could be huge find
Associated Press, 14 April 2008

"Proximity and possession of energy may even better than access to cheap capital in coming years. Energy is a kind of capital, isn't it? If that's the case, Australia has a huge capital base, with its reserves of coal, natural gas, and uranium. Thermal coal prices are set to double from US$55 to US$125. That's based on the agreement between Japan's Chubu electric power and Xstrata which should be come the benchmark for 2000-09 contract prices. Spot prices for thermal coal have tripled in the last year. Spot coking coal (steel marking) prices have quadrupled in the last 12 months, and in the last two months they've doubled. Notice a pattern? 'The value of announced cross-border acquisitions by China so far this calendar year is now US$24.5 billion from 56 deals according to Thomson Financial-already almost equaling the record of $US29.8 billion for all of 2007,' according to Colleen Ryan in the Financial Review. As usual in the financial world, the easiest way to find where asset prices are headed is to follow the money. 'China's acquisitions of foreign targets reached US$15 billion in the mining sector-the most active sector, largely comprising companies engaged in metals, mining, and chemicals-rising from just US$243 million in the same period last year,' Ryan writes."
Chinese Foreign Mining Acquisition Equal to All of 2007
Daily Reckoning (Australia), 14 April 2008

"Saudi Arabia's King Abdullah said he had ordered some new oil discoveries left untapped to preserve oil wealth in the world's top exporter for future generations, the official Saudi Press Agency (SPA) reported. 'I keep no secret from you that when there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it',' King Abdullah said in remarks made late on Saturday, SPA said. The U.S. President George W. Bush in January urged the Saudi king to help tame soaring prices by encouraging OPEC to pump more oil. On separate trips to Saudi Arabia this year, the U.S. energy secretary also asked for more oil, while the vice president discussed high prices with the king. The kingdom has spent billions on building over 2 million bpd of spare crude capacity and is the only country in the world able to bring online large volumes of crude supply quickly to deal with unexpected supply shortages.... Saudi Arabia has trimmed its output to around 9 million bpd to reflect lower customer demand, a Saudi oil source said on Friday. The kingdom had in previous months pumped around 9.2 million bpd. Crude demand traditionally dips at this time of year after the end of winter as refiners carry out maintenance and prepare to meet summer demand. Saudi production capacity stands at around 11.3 million bpd, and is scheduled to rise to 12. 5 million bpd next year."
Saudi King says keeping some oil finds for future
Reuters, 13 April 2008

"World oil demand will rise much less than expected in 2008 because of slower economic growth in the United States and elsewhere, the International Energy Agency (IEA) said on Friday. The cut to demand growth is the IEA's biggest since 2001 and follows the release of lower economic growth forecasts by the International Monetary Fund (IMF) this week, and the impact of high oil prices above $110 a barrel....The cut in demand growth brings the IEA's view closer to that of OPEC, which expects an expansion of 1.2 million bpd this year and has rebuffed calls from consumer countries for more oil to lower prices.....The IEA said weaker demand might not translate into lower oil prices given supply risks in countries such as Nigeria and Iraq. Oil rose in the second half of 2007 even though inventories were also climbing, it noted. 'That perhaps explains why, in the face of weakening economic growth, prices continue to remain high: there is concern that projected stockbuilds may not materialise, or may not be high enough.'"
IEA cuts world oil demand growth by most in 7 years
Reuters, 11 April 2008

"Russia will cut taxes on oil companies to overcome production 'stagnation' after a decade of growth, Energy and Industry Minister Viktor Khristenko said. 'The output level we have today is a plateau, stagnation,' Khristenko said in an interview with Bloomberg Television in Moscow.'... Output may fall for the first time in a decade this year as producers struggle with soaring costs and aging fields. Finance Minister Alexei Kudrin said last month that the government may cut its crude-extraction tax by 100 billion rubles to spur development of harder-to-reach deposits.....Production in Russia, the largest oil supplier after Saudi Arabia, declined 1.3 percent in March to 9.76 million barrels a day, compared with the same month last year. Natural Resources Minister Yuri Trutnev warned last month that there may be a drop in output this year for the first time since 1998."
Russia to Cut Oil Taxes as Production 'Stagnates'
Bloomberg, 10 April 2008

"Tough environmental regulations that will increase significantly the costs faced by two British companies, BP and Royal Dutch Shell, in exploiting Canada's huge oil sands reserves were yesterday backed by Malcolm Wicks, the energy minister....Speaking during a visit to Canada, the minister lauded the 'very far-sighted' move by Canada’s federal government to force new oil sands projects to capture and store their carbon dioxide emissions after 2012. 'Canada’s oils sands could provide up to 5 per cent of global supply ... [but] I understand the concerns about the environmental impact,' he said. Canada’s stringent carbon capture requirements will add to the costs of the projects planned by BP and Shell in the sands, an environmentally sensitive reserve that is the largest outside Saudi Arabia. Mr Wicks admitted the regulations had commercial consequences, saying: 'if you look at it very narrowly, it will impact on the costs of the co

	PEAK OIL AND ENERGY CRISIS NEWSBITES
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Peak Oil and Energy Crisis News Archives 2008 2007 2006/5/4/3/2	"If you speak to people in the industry, they will conceed that whatever my company may say publicly, we understand that we are facing decline in our own production and worldwide, we are not going to be able to produce more fuel liquids or crude oil in the near future... I was recently at a conference in New Mexico, sitting next to one of the recent CEOs of a major oil company and he, in response to a question from the audience, said 'of course I am a peakist, it is just a question of when it is coming' and I think that that is illustrative of once one is retired as a CEO, one is freer than one was in position to say I am a peakist. And what you hear privately from almost all people is we are coming to it.... I think that many of these politicians will ultimately find that the public blames them for its failure to warn them. Of course in a sense the public is responsible because it is the present public attitude to which politicians play up, and tell them what they want to hear but when the view of the world changes, what the public wanted to hear some time ago is no longer what they want to hear in the future." James Schlesinger, former US Energy Secretary Interview with David Strahan, ASPO 6, September 2007 "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." Lord William Rees-Mogg Are these the last days of the Oil Age? 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." Fatir Birol, Chief Economist, International Energy Agency Le Monde, 27 June 2007 "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. " World oil production to peak in 15-25 years, AAPG told Oil And Gas Journal, 4 April 2007 "The world lacks the means to produce enough oil to meet rising projections of demand for fuel over the next decade, according to Christophe de Margerie, head of exploration for Total and heir presumptive to the leadership of the French energy multinational. The world is mistakenly focusing on oil reserves when the problem is capacity to produce oil, M de Margerie said in an interview with The Times. Forecasters, such as the International Energy Agency (IEA), have failed to consider the speed at which new resources can be brought into production, he believes. 'Numbers like 120 million barrels per day will never be reached, never,' he said." World 'cannot meet oil demand' London Times, 8 April 2006 ".... a series of crises in oil supply is likely over the coming decades. The first, related to the peak and decline of non-OPEC production, is practically upon us and underpins the currently high oil prices...... The imminent inability of non-OPEC production to meet incremental demand and its decline after 2010 precipitates the second crisis as OPEC’s diminishing spare capacity (even with Iraq’s production back to preinvasion levels) becomes less and less able to accommodate short-term fluctuations.....The third crisis, due to OPEC’s incremental supply being unable to meet incremental demand, follows in the first half of the next decade. This assumes that OPEC’s reserves are as published. .....These crises will have global economic and geopolitical significance: The oil price will be high and volatile, and demand growth will have to be curtailed..." Oil Supply Challenges - 2: What Can OPEC Deliver? Oil and Gas Journal, 7 March 2005
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