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NLPWESSEX, natural law publishing |
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| PEAK OIL AND ENERGY CRISIS NEWS | ||
| To Go Direct To Current Energy Crisis News Reports - Click Here | ||
Peak Oil and Energy Crisis News Reports |
'Highlights' 2005 - 2010 "The U.S. needs energy — lots and lots of energy — and
37.1% of it is currently supplied by oil. As the population expands and the policy
decisions and technological innovations needed to make the switch to green, renewable
energy sources lag, thirst for the stuff is only going to grow. Critics have long lamented that when it comes to energy policy,
9/11 was an opportunity for the country to have an honest debate about the choices it
needs to make if it's ever going to break its addiction to oil. 'We need to address the underlying
issue,' says Lisa Margonelli, director of the New America Foundation's Energy Policy
Initiative, 'and that's our dependence on oil.'
Having a national conversation now — an adult one — is the only way
forward." "The world's oil
reserves have been exaggerated by up to a third, according to Sir David King, the
Government's former chief scientist, who has warned of shortages and price spikes within
years. The scientist and researchers from Oxford University argue that official figures
are inflated because member countries of the oil cartel, OPEC, over-reported reserves in
the 1980s when competing for global market share. Their new research argues that
estimates of conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to
between 850bn and 900bn barrels
and claims that demand may outstrip supply as early as 2014. The researchers claim it is an
open secret that OPEC is likely to have inflated its reserves, but that the International
Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take
this into account in their statistics. 'It is necessary to investigate ambiguities and
sources of error that are broadly acknowledged but not taken into account in public data
due to political sensitivities,' the researchers said. The paper also raises concerns that
public statistics have started to incorporate non-conventional reserves such as the
Canadian tar sands, where oil and gas are much more difficult to extract and may never
be economically attractive to develop. Sir David said that although the IEA was doing a
good job of warning that more investment in oil and gas exploration is needed, governments
need to pay more attention to independent research. 'The IEA functions through fees that
are paid into it by member companies and has to keep its clients happy,' he said. 'We're
not operating under that basis. This is objective analysis. We're not sitting on any oil
fields. It's critically important that reserves have been overstated, and if you take this
into account, we're talking supply not meeting demand in 2014-2015.' The concept of 'peak
oil' has gained traction in recent years, although energy companies such as BP and Shell
insist that production will be able to keep pace with growing Asian energy needs. Sir David said he was 'very concerned' that Western governments
were not taking the concept of 'peak oil' – where demand outstrips production –
seriously enough, while China is throwing all its efforts into grabbing as many energy
resources as possible....Dr Oliver Inderwildi, who
co-wrote the paper with Sir David and Nick Owen for Oxford University's Smith School,
believes radical measures such as switching freight transport to airships could become
common in future. 'The belief that alternative fuels such as biofuels could mitigate oil
supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of
relying on those silver bullet solutions, we have to make better use of the remaining
resources by improving efficiency.'" "Bankers
and the financial sector may have displaced energy from the front pages of the newspapers
right now, but Energy Security
remains at the top of the global political and economic
agenda....The need to balance energy security, jobs
and economic development while addressing the problem of climate change all contributed to
the challenge politicians faced in Copenhagen. And
that challenge means that energy security will dominate politics and policy for the next
12 months and considerably beyond.... Reliable and
affordable supplies of hydrocarbon energy were taken for granted through much of the 20th
century and laid the foundation for the world’s extraordinary economic progress. When
concerns arose, it tended to be at times of war or turbulence, notably in the Middle East,
or, closer to home, with industrial action. What’s
different now is that energy security has become a defining issue for the 21st
century, as one element in a complex energy challenge with
strategic, economic and environmental dimensions....
Opening access to a range of potential operators encourages the most efficient solutions,
and often involves partnerships that provide new combinations of skills. Iraq is a very
good example. BP is teaming up there with CNPC of China and Iraq’s South Oil Company
to drive a major investment programme that will nearly triple production from the
super-giant Rumaila field. With this and the other agreements concluded with national and
international oil companies in the last six months, Iraq has the potential to contribute 10mmb/d to global supplies in the next
10-15 years. That’s a big piece of the additional
resource we need....The current debate about
Copenhagen and sustainability add new urgency and importance to the broader discussion of energy security. The
challenge of creating a low-carbon economy is far from easy, requiring
the wholesale re-engineering of the global economy over time." "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 |
"Economic growth here [in
Ireland] could fall by as much as 7.5pc if there is a sudden rise in oil and gas prices,
according to a report published yesterday. Ireland -- which imports more fossil fuels than
almost anywhere else in Europe and which generates less energy from renewable sources --
would suffer more than neighbouring countries if energy prices were to spike, according to
the report by the environmental consultants AP EnvEcon. It was commissioned by engineering giant Siemens. Oil prices are
likely to rise as supplies dwindle and emerging economies consume more, while prices could
spike suddenly following natural disasters, political tension or wars, the report
notes." |
"Reports that France will see a
power shortfall by as soon as 2013 will put greater pressure on the UK’s dwindling
supply and force up prices – that’s according to the UK’s largest energy
consultancy, M&C Energy Group. France is facing a growing dependency on electricity
imports as demand outpaces supply, particularly at peak times. David Hunter, Energy Analyst from M&C Energy Group, believes that
energy will become a scarce commodity resulting in increased prices and real risks of
blackouts." |
"Earlier this week, the
International Energy Agency announced that China was now the world's largest consumer of
energy (oil, coal, natural gas, nuclear power and renewables), surpassing the U.S. for the
first time. With 1.3 billion people, China is
unlikely to reach current U.S. energy consumption per capita for some time, if ever, but
to double energy consumption in the last ten years is still an impressive achievement. But
keep in mind that the average American is still consuming five times as much energy each
year as the average Chinese. China had not been
expected to overtake the US for another five years, but the global recession reduced U.S.
consumption and China's strong economic rebound in the last sent Beijing's consumption
soaring." |
"China overtook the U.S. as the
world’s biggest energy user last year, emphasizing that developing nations are
driving global growth, according to the International Energy Agency. China consumed 2,252 million metric tons of oil equivalent in 2009 in the
form of crude, coal, natural gas, nuclear power and renewable sources, IEA Chief Economist
Fatih
Birol said yesterday. That exceeded the 2,170 million tons used by the U.S. 'It’s one of those major turning points,' Tilak
Doshi, the chief economist at the Energy Studies Institute at the National University
of Singapore, said in a phone interview. 'China is growing by leaps and bounds.
You’ve got OECD countries where you’re talking about oil demand peaking,
meanwhile the emerging countries like China and India will keep growing their energy
demand.' China’s gross domestic product expanded 10.3 percent in the second quarter
even as the government took measures to cool growth. China, with Hong Kong included, was
the biggest energy user in 2009, consuming 2.2 billion tons of oil equivalent, BP Plc said in its annual
Statistical Review of World Energy in June. The U.S. was second and Russia ranked third,
BP said.” |
"An energy demand surge in the
Gulf will be largely met by oil fired generation, removing an estimated 1.5 million
barrels of oil equivalent per day (boepd) otherwise available for export, Wood Mackenzie
said in a report. Energy demand in the Arabian
Peninsula has more than doubled in the past 10 years and is forecast to increase by 85
percent by 2030, compared with 2008 levels, Wood Mackenzie's Energy Markets Service
Insight division said in a report released to the press on Monday. Demand for oil will
increase by about 114 percent during that time, largely because of the commissioning of 39
GW of new oil fired generation in the region. By around 2030, however, fuel
diversification though nuclear energy and coal could help to free up 1.5 mmboepd of oil
for world markets. In the shorter term, oil producing
Gulf nations are being forced to burn oil for power because they do not have enough gas to
cope with rising regional demand. The report said:
'Sustained rapid energy demand growth could mean that oil exports will become a casualty
of the Arabian gas supply crunch.' Ironically, the huge increase in consumption stems from
plans by the countries of the Arabian Peninsula - Saudi Arabia, Kuwait, the UAE, Qatar and
Oman - to curb their over dependence on oil revenues by investing in refining,
petrochemicals and aluminium mining and smelting. The report said: 'The downside of this
diversification is that these new industries are energy intensive.' Qatar holds the
world's third largest gas reserves behind Russia and Iran, but its production is
constrained by the moratorium on new gas developments in the giant North Field until 2014.
The amount of gas available for the Gulf is also limited by the region's gas export
commitments to Asia and Europe. Overall gas production growth in Qatar is expected to
average 15 percent a year to 2014, before slowing to 1 percent per year to 2030, assuming
the moratorium is lifted after 2014, the report said. The development of shale gas in the
US will release liquefied natural gas (LNG) previously destined for other markets, with
the Arabian Peninsula a prime candidate for that gas, the report said." |
"In the 1970s the UK invested
about 0.15% of GDP each year in research and development (R&D) into providing cheaper
and cleaner energy. Britain was putting more
public money into nuclear power and other new sources of electricity than almost any other
economy. From the mid-1980s the amount invested each year has fallen almost continuously.
The figure today is about 0.01%, one 15th of what it was a generation ago. We now sit at the bottom of the international league. The US, for example,
spends three times as much as a percentage of its GDP, Japan nine times as much. The UK
government announced last week that it was cutting yet more money from of the energy
R&D budget. Some £34m
is to be axed, affecting low-carbon technology programmes including offshore wind,
wood fuels, building insulation and geothermal energy. This represents a reduction of just
under 20% of total public expenditure on low-carbon technologies. This figure is on top of
the cancellation
of the £80m loan to Sheffield Forgemasters that would have paid for much of the
installation of a new press to make the huge parts necessary for new nuclear power
stations. As the Department of Energy and Climate Change (DECC)
swung its axe, the government's own Committee on Climate Change was busy today stressing
the need for continued public support for nascent energy technologies." |
"Britain's new generation of
nuclear power stations will not be built if the Government refuses them any more support,
a KPMG report will say this week. The study, commissioned by RWE npower, says it is still
uneconomic for utility companies to invest billions of pounds in nuclear power. The Government has offered to impose a minimum price on carbon permits
– which would raise the cost of fossil fuel generation and make low-carbon nuclear
more attractive. It has made a promise not to offer any direct subsidies. KPMG's report
will say a carbon 'floor price' is not enough for the big utilities to commit large
capital investments to the nuclear sector. It will suggest that the Government ought to
introduce a variable premium tariff for all low-carbon technologies – from nuclear to
renewables – to make sure enough new power generation is built before Britain starts
to run short on capacity in the second half of this decade." |
"While, the U.S. and OECD economies may not be doing so well, the
global demand for oil has recovered nicely. After
taking a two-year 3 percent dip in obeisance to the economic downturn, global oil
consumption is now reported to be back in the vicinity of its 2008 high of 86.6 million
barrels a day (b/d) for 2010. While U.S. demand is down a million barrels a day or so,
demand from China and India are up more than enough to offset what is called 'weak' US and
European consumption. The International Energy Agency (IEA) tells
us that it currently expects world demand to increase by 1.3 million b/d next year to
a new annual high of 87.8 million b/d. As nobody who carefully watches global oil
production expects it to increase in coming years, we are left with 'total productive
capacity' which is currently estimated by the IEA to be 89.7 million b/d. This is about 3
million b/d above what we are currently using - maybe. Most of this spare capacity is supposed to be in Saudi Arabia; a land of
eternal optimism where oil reserves never go down no matter how much is pumped up and
sold. Many are skeptical that all of this 'spare capacity' is really ready-to-go,
reasonable quality, sustainable, production capacity. If not we are in worse shape than we
believe. It does not take much arithmetic ability to figure out that if we are currently
using some 86 million b/d, and that we can go to 89 million at best, and that we are
supposed to be increasing demand at around 1.5 million b/d each year, then something has
got to give in the next 24 months. That something is called price - of barrels of oil or
gallons of gasoline if that is what is the most meaningful to you." |
"Global oil demand growth will slow next year, leaving the market
with comfortable supplies until at least the middle
of next year, the International Energy Agency said
in its monthly Oil Market Report on Tuesday. Global
oil demand will grow by 1.35 million barrels per day (bpd) next year to 87.84 million bpd, the IEA said in its first 2011 demand projection in a monthly
report." |
"Revisions to a U.S. ban on
deep- water drilling will do little to restart Gulf of Mexico operations brought to a
standstill by the worst oil spill in the country’s history, industry groups and
analysts said. The policy announced yesterday may
let some deep-water work resume earlier than the six-month pause ordered by the Obama
administration May 27, according to the Interior Department. A federal judge rejected the
initial moratorium, imposed in response to the BP Plc oil spill in April. Regulations and
congressional opposition after the accident will prevent most new drilling, said Kevin
Book, a managing director at ClearView Energy Partners LLC, a Washington-based policy
analysis firm. Companies have canceled drilling contracts and shut down rigs since the
original ban took effect. 'The de-facto moratorium is the part that the administration is
very clear about,' Book said in an interview. 'Even if there were no moratorium, there
would still be regulations, there would still be Congress. Practically speaking, we expect
nothing to change.' President Barack Obama had halted drilling in waters deeper than 500
feet (152.4 meters) to give a presidential commission time to study improvements in the
safety of offshore operations." |
"The UK is in the 'last chance
saloon' to secure investment in its creaking energy infrastructure, ministers are being
warned by a leading business group. The EEF
manufacturers’ federation is urging the new government to 'show leadership' by
setting out a timetable for action, or risk undermining energy security within five years.
There is only a limited window of opportunity to implement new policies and market reforms
to generate the estimated £200bn of investment the
UK needs in the next decade, the EEF argues in a
report published on Monday. It says the energy industry must make far-reaching investment
decisions as early as 2012 to secure finance and mobilise supply chains." |
"French energy company Total is looking to expand its holdings in oil
sands through a $1 billion deal to tap into Alberta, Canada, recent transactions show.
Total is expanding its portfolio in Alberta's tar sands through a $1 billion bid for UTS
Energy of Calgary, the Financial Times reports. Alberta assets held by UTS Energy are
estimated at more than 3 billion barrels of oil, the report adds. The French energy company has invested in oil sands projects and
plans to expand its work in unconventional resources as conventional reserves run dry. The report said the planned bid for UTS Energy is a sign international
energy companies are interested in oil sand projects despite pressure from lawmakers in
the region. Commercial deliveries of crude oil to the U.S. Midwest from the Keystone
pipeline from Canadian tar sands started during the last week of June. U.S. Rep. Henry
Waxman, D-Calif., the chairman of the House Energy and Commerce Committee, in a letter to
U.S. Secretary of State Hillary Clinton said that while tar sand pipelines could increase
oil deliveries to U.S. markets substantially, the risk was too great. Waxman complains
that extraction methods from tar sands requires more energy and releases more harmful
emissions than conventional deposits." |
"The pebble bed modular reactor (PBMR) technology is unlikely to
solve SA’s energy shortage in a cost- effective way, according to an Institute of
Security Studies paper on the project. The paper pours cold water on the benefits of the
PBMR technology at a time when the future of the PBMR company lies in tatters, following
the government’s decision to drastically cut its funding. Trade unions last month
said the majority of the company’s employees had opted to take voluntary retrenchment
packages. In a paper for the Institute of Security
Studies, environmental policy researcher David Fig said the PBMR technology would provide
'a small amount of expensive' electricity. The
commercial reactors were designed to produce 165MW each. Since the establishment of the
PBMR company in 1999, the government has spent more than R8,5bn on the project. 'Given the
immense cost, the minimal power dividend and the opportunity cost of foregoing smart
development of clean energy resources, why did SA continue to sink huge resources into the
PBMR project until recently?' said Mr Fig. He said nuclear was an expensive source of
electricity which 'crowds public investment out of less environmentally harmful options.
'It is overly costly in terms of harnessing the energies of human and other
resources.'” |
"America must be prepared to re-equip its warships to
venture into the Arctic Ocean as climate change gradually makes the entire region ice-free
for a few weeks a year, the US Navy’s Oceanographer has told The Times. The effect of
retreating ice in the Arctic is going to be so significant, according to Rear-Admiral
David Titley, that the Pentagon will have to make a decision within the next two or three
years on whether to invest billions of dollars to 'ice-harden' ships and submarines to
cope with the changing conditions. Those changes will mean vital new shipping routes
opening up, such as the Northwest Passage and the Bering Strait, which have serious
defence and commercial implications. Admiral Titley said: 'The Bering Strait right now is a strategic backwater. But if what we
have been talking about comes true, with significant trade in the Arctic region in 30 to
40 years, and if the world is still one in which hydrocarbons play a significant role for
power, heating and lighting, energy extraction may be coming southbound through the Bering
Strait.'" |
"The British Government is drawing up contingency plans for
a possible collapse of BP amid mounting fears that the oil giant could be broken up or
taken over in the wake of the Gulf of Mexico oil disaster, The Times has learnt.... BP controls vital strategic assets overseas, including the
Baku-Tbilisi-Ceyhan pipeline that bypasses Russia
and Iran to connect Europe with the rich oil and gas
resources of Azerbaijan and the Caspian region." |
"Norway's oil production is
expected to decline 'rapidly' over the next 10 to 20 years, so the country needs to save its revenue through some form of wealth
fund, the country's central bank governor said today. Norges Bank Governor Svein Gjedrem
gave no details of the expected production decline in comments during a talk in Singapore,
which he is visiting to open an office of the central bank unit that manages Norway's
$425-billion government pension fund." |
"Britain will need up to £1
trillion of investment to replace and decarbonise infrastructure over the next 20 years, according to a report by the Green Investment Bank (GIB) Commission on
behalf of the Government. The report, commissioned by Labour in 2009, sets out how a GIB
might be set up to tackle the low carbon investment needs of Britain. With an estimated
£50bn of investment required every year, the commission, chaired by Yell Group chairman
Bob Wigley, said the work needed was 'on a scale not seen since reconstruction after the
Second World War.'" |
"A recently released BP document shows that before the Deepwater
Horizon explosion, the company was basing its whole future on production from deepwater
wells. There is little doubt that there is a whole
lot of oil deep below the Gulf of Mexico, off the coast of Brazil and the east coast of
Africa. The industry hype says there is at least 100 billion barrels or even more. Keep in
mind that this is only three years of global oil consumption and even in the best of
circumstances; it would take decades to extract. Right
now there are two issues regarding deepwater oil. First is how much can be extracted. If
it turns out that 10 or 20 percent of initial estimates is all that can really be
recovered, then the cost of this oil will be prohibitive. Deepwater wells were running
$100 to in some cases $200 million per well drilled. Platforms that drill and support
multiple wells can easily get into the billions of dollars before they are producing. If
these wells unlimitedly yield only a fraction of what their planners were hoping for,
there are going to be some very broke oil companies, or some very expensive gasoline in
our future. The next question is what the fallout from the Deepwater Horizon disaster will
be for deepwater oil. The U.S. has already imposed a moratorium on further drilling until
the causes of the blowout are fully understood. This moratorium alone is almost certain to
add substantially to the costs of drilling in deepwater. Add to this the new and most
likely tougher drilling regulations and the development and deployment of a new generation
of blowout preventers that work reliably and we are going to see some very high cost oil
coming from offshore wells. All this says that we may not be getting half of our oil from
deepwater wells 10 or 15 years from now. Unless there are some major advances in vehicle
mileage, the oil that we get from offshore just may be too expensive to put in our gas
tanks." |
"A North Sea
oil find believed to be as big as the largest discoveries of the seventies has sent shares
in the project’s stakeholders soaring. Two wells off the east coast of Scotland are
thought to have struck a single reservoir that could hold up to 300 million barrels of
oil. The discovery in an area of seabed
known as Catcher is likely to boost interest in North Sea exploration at a time when oil
operators are turning their attention to high-impact wells in areas such as West Africa,
Brazil and Australia. The discovery is in almost 300 feet of water, far shallower than the
dangerous deep-water drilling that many oil explorers have been undertaking. EnCore Oil,
the operator of the project, which owns a 15 per cent stake, said that further
investigations could add 'very significantly' to the 300 million barrels estimate...The
find may encourage renewed investment in the North Sea, which has been regarded as
depleted after large fields began to run dry in the 1990s." |
"The first of two relief wells is close to puncturing
BP’s ruptured Macondo well, raising hopes that the oil giant is on the way to ending
the Deepwater Horizon crisis in the Gulf of Mexico. Steven Chu, the US Energy Secretary,
is expected to fly to Houston today to help to oversee the final stages of the operation, The
Times has learnt....Mr Chu yesterday emphasised the critical importance of deepwater
drilling in the Gulf of Mexico to future US energy supplies and warned that prices would
inevitably rise higher. He told The Times/Smith School World Forum on Enterprise
and the Environment in Oxford that of the 50.4 billion barrels of oil available for
development off the US coast, 34.4 billion were in the waters more than 200 metres deep in
the Gulf of Mexico. “As demand for oil increases we are being driven into more and
more unconventional sources,” he said, citing the critical role of oil sands,
deepwater and ultra-deepwater drilling. The three-day forum was founded by Sir David King,
former chief scientific adviser to Tony Blair and the founding director of the Smith
School of Enterprise and the Environment. Mikhail Gorbachev, who also spoke at the event,
said that the Deepwater Horizon oil disaster was a tragedy on a global scale that bore
parallels to the Chernobyl accident in 1986, when a nuclear reactor exploded in Ukraine
scattering a cloud of radioactive debris across Northern Europe. Mr Gorbachev, now
president of the Green Cross International environmental group, said the accident would
act as a wake-up call for policymakers and the oil industry in the same way that Chernobyl
was a watershed for the nuclear industry. 'The consequences have to be studied very
carefully,' he said. 'It underlines the need to learn lessons at the earliest stages of
construction and paying particular attention to the issue of security.' Mr Gorbachev also
criticised the rich subsidies enjoyed by the world’s oil industry, which he claimed
stood at $300 billion a year. The communiqué issued after the G20 summit in Toronto was
expected to call for government subsidies for 'inefficient' fossil fuels such as oil to be
phased out. His remarks came as Fatih Birol, chief economist of the International Energy
Agency, said that tighter regulations and higher costs for deepwater drilling were likely
to raise the West’s dependency on Opec.
'Over three quarters of non-Opec oil supplies are expected to come from offshore drilling,
so if there are increased costs and delays this will accelerate the dominance [of Opec],' he said. Mr Birol added that 900,000 barrels of new daily oil
production could be deferred if deepwater drilling becomes more costly." |
"BP
staked its future on expanding offshore drilling a month before the catastrophic explosion
on the Deepwater Horizon triggered the United States' worst environmental
disaster, according to company documents revealed yesterday. The investigative web site ProPublica published
a March 2010 strategy document in which BP named 'expanding deepwater' as its number
one area for long-term growth. But even as the document was drawn up, engineers were
struggling to control the Macondo well in the Gulf of Mexico, which had already gained a
reputation as a risky operation, according to industry sources. The strategy paper claimed
BP now held a global lead over its competitors in deepwater production – even though
its costs were considerably lower. Earlier this month the executives of BP's rivals,
including Exxon and Chevron, told a congressional hearing they would have taken more
safeguards on the doomed Deepwater Horizon rig. The battle over the future of offshore
drilling continued yesterday as the country's biggest business lobby said it would step up
its campaign to force the Obama administration to lift its six-month ban on drilling new
wells in the Gulf of Mexico." |
"I argued in the book that what
really sparked the financial crisis was the fact that the Federal Reserve had to move the
Fed funds rate from 1 to 5.5 percent following in a similar rise in US inflation that came
from the energy component. We’re already beyond
the minus signs in inflation, we’re in the two percent inflation range. If we’re
going to see triple-digit oil prices by 2011, then we’re probably going to see
inflation close to double where it is today. While people are worried about deflation,
history has shown that these huge massive deficits that have arisen have as their dancing
partner inflation and not deflation. The US government has always monetized those
deficits, meaning that they’ve always printed money to pay for them in the past and I
see no reason why they won’t do that in the future, particularly when so much of the
debt is owned abroad." |
"Global oil output could slide
by up to 900,000 barrels a day from projected levels for 2015 if oil producing countries
follow the US lead and impose moratoriums on development of new offshore oil reserves,
International Energy Agency executive director Nobuo Tanaka said Friday. The Paris-based organisation is conducting research on the possible
impact of the US moratorium and its implications worldwide, Tanaka said, Dow Jones
Newswires reported. 'If other countries like Angola, Brazil and the North Sea (countries)
put on hold new offshore development and there is also one or two years of delay, the
impact on global oil output might be 800,000 barrels a day to 900,000 barrels a day by
2015,' Tanaka told Dow Jones.... Although the decline would represent about one percent of
global oil output, 'given that spare oil production capacity is about six million barrels
a day, (a drop of) roughly one million barrels a day can't be ignored,' he said. Oil and
gas companies began shutting down 33 deepwater exploration rigs last month after US
President Barack Obama imposed a six-month moratorium on developing new deepwater wells in
the Gulf of Mexico. 'There is little near-term impact. But for the medium term, if new
offshore oil development in the US is delayed by one or two years, the impact (on
production) would be 100,000 barrels a day to 300,000 barrels a day by 2015,' Tanaka said.
'The ultimate impact is unclear. But it would take time to investigate the causes of the
spill and develop appropriate safety requirements and procedures,' he said." |
"Dimock [Pennsylvania] is now known as the place where, over the past
two years, people’s water started turning brown and making them sick, one
woman’s water well spontaneously combusted, and horses and pets mysteriously began to
lose their hair. Craig and Julie Sautner moved to Dimock from a nearby town in March
2008..... By October 2009, the D.E.P. had taken all the water wells in the Sautners’
neighborhood offline. It acknowledged that a major contamination of the aquifer had
occurred. In addition to methane, dangerously high levels of iron and aluminum were found
in the Sautners’ water. The Sautners now rely on water delivered to them every week
by Cabot. The value of their land has been decimated. Their children no longer take
showers at home. They desperately want to move but cannot afford to buy a new house on top
of their current mortgage. 'Our land is worthless,' says Craig. 'Who is going to buy this
house?'. As drillers seek to commence fracking
operations in the Delaware River basin watershed and in other key watersheds in New York
State—all of which sit atop large repositories of natural gas trapped in shale rock
deep underground—concerned residents, activists, and government officials are
pointing to Dimock as an example of what can go wrong when this form of drilling is
allowed to take place without proper regulation.
Some are pointing to a wave of groundwater-contamination incidents and mysterious health
problems out West, in Colorado, New Mexico, and Wyoming, where hydraulic fracturing has
been going on for years as part of a massive oil-and-gas boom, and saying that fracking
should not be allowed at all in delicate ecosystems like the Delaware River basin.
Damascus and Dimock are both located above a vast rock formation rich in natural gas known
as the Marcellus Shale, which stretches along the Appalachians from West Virginia up to
the western half of the state of New York. The gas in
the Marcellus Shale has been known about for more than 100 years, but it has become
accessible and attractive as a resource only in the past two decades, thanks to
technological innovation, the depletion of easier-to-reach, 'conventional' gas deposits,
and increases in the price of natural gas. Shale-gas deposits are dispersed throughout a
thin horizontal layer of loose rock (the shale), generally more than a mile below ground.
Conventional vertical drilling cannot retrieve shale gas in an economical way, but when
combined with hydraulic fracturing, horizontal drilling—whereby a deeply drilled well
is bent at an angle to run parallel to the surface of the Earth—changes the equation.... Fracking is an energy- and resource-intensive process. Every
shale-gas well that is fracked requires between three and eight million gallons of water.
Fleets of trucks have to make hundreds of trips to carry the fracking fluid to and from
each well site. Due in part to spotty state laws and an absence of federal regulation, the
safety record that hydraulic fracturing has amassed to date is deeply disturbing. As use
of the technique has spread, it has been followed by incidents of water contamination and
environmental degradation, and even devastating health problems. Thousands of complaints
have been lodged with state and federal agencies by people all over the country whose
lives and communities have been transformed by fracking operations..... Shale gas has become a significant part of our energy mix over the
past decade. From 1996 to 2006, shale-gas production went from less than 2 percent to 6
percent of all domestic natural-gas production. Some industry analysts predict shale gas
will represent a full half of total domestic gas production within 10 years.... Although fracking was never regulated by the federal government when
it was a less prevalently used technique, it was granted explicit exemptions—despite
dissent within the E.P.A.—from the Safe Drinking Water Act, the Clean Air Act, and
the Clean Water Act by the Energy Policy Act of 2005, the wide-ranging energy bill crafted
by Dick Cheney in closed-door meetings with oil-and-gas executives. While the average
citizen can receive harsh punishment under federal law for dumping a car battery into a
pond, gas companies, thanks to what has become known as the Halliburton Loophole, are
allowed to pump millions of gallons of fluid containing toxic chemicals into the ground,
right next to our aquifers, without even having to identify them. Claiming that the
information is proprietary, drilling companies have still not come out and fully disclosed
what fracking fluid is made of.... According to Theo Colborn, a noted expert on water
issues and endocrine disruptors, at least half of the chemicals known to be present in
fracking fluid are toxic; many of them are carcinogens, neurotoxins, endocrine disruptors,
and mutagens. But Colborn estimates that a third of the chemicals in fracking fluid remain
unknown to the public. ... Yet the shale-gas
boom, driven by fracking, continues on a global scale. Shale land is already being leased
in Western and Central Europe while foreign companies buy up land in the Marcellus Shale.
A May 25 memorandum of economic and strategic dialogue between the U.S. and China
prominently lists an initiative to help China assess and extract its own shale gas as an
item of agreement. In Australia, where fracking has been sweeping the Queensland
countryside and where landowners have little or no control over their mineral rights, a
furor has been growing over the water contamination happening around drilling locations." |
"Members of Congress yesterday
implored the State Department to scrutinize the 'significant' environmental impacts of a
proposed massive pipeline that would carry Canadian tar sands oil
2,000 miles — from northern Alberta, across U.S. states to refineries in Texas and
tankers off the Gulf coast. In a letter
to Secretary of State Hillary Clinton, nearly 50 members of the House of Representatives
said the agency 'must determine whether the project is in the national interest' in terms
of 'clean energy and climate change priorities' before rubberstamping it." |
"Chris Huhne, the energy and climate change
secretary, warned last night that the threat to gas supplies from the political row
between Russia and Belarus highlighted once again the desperate need for Britain to build
up a low-carbon energy policy and domestic energy security through new wind farms –
and possibly nuclear reactors. Huhne said it was also vital that Britain was better
protected from any 'big shocks' arising from huge increases in the price of oil, as
companies such as BP were forced into increasingly environmentally sensitive areas. The European gas market has been repeatedly disrupted by rows between
Moscow and its former Soviet neighbours, which have led to cuts in Siberian supplies
reaching the continent, triggering a sudden cut in imports to Britain. Yesterday the
latest dispute escalated after Moscow cut more supplies and Belarus threatened to siphon
off Russian gas supplies crossing its territory. Huhne said these stand-offs underlined
the importance of Britain having its own sources of power as UK North Sea gas runs down.
'Energy has always had big geopolitical issues around it and that is why, both in terms of
physical assurance of supply and in terms of guarantees against price volatility, we have
a really strong incentive to develop our renewable sector,' he said." |
"The BP oil
spill in the Gulf of Mexico has been an important political event as well as an economic
and environmental disaster. It has almost
certainly brought to an end Tony Hayward’s career as chief executive officer of BP.
That is no great public issue in itself. However, it has also provided a check to
President Obama’s drive for re-election in 2012.... The President needs to have the
oil if he is to win re-election. He is like the driver of some large limousine. He can set
off down the road, waving cheerfully to the crowds, but, if he has no petrol in the tank,
he will not get far. Since the first oil shock in 1973, I have been writing about the
economic consequences of the depletion of oil resources, the concept that is now called
'Peak Oil'. In June 1990 I wrote that 'by the end of the century the gradual depletion of
the world’s oil resources will again have raised the real price of oil'. It did. The
oil price has previously risen to well above $100 (£67) a barrel, and is now apparently
stable at about $80 a barrel. Low-cost oil has been depleted and high-cost oil has had to
be found to replace it. High-cost oil is risky and environmentally damaging. The Gulf
spill may prove to have been the result of some specific act of negligence by BP. Looked
at another way, this spillage was a natural consequence of US policy, which in turn was
dictated by consumer demand. The President can, if he likes, blame BP, but he should also
blame himself. In any case, he will share the blame as well as the responsibility.The
policy of the US Administration as well as that of the oil companies has been to search
for the last barrel of oil, wherever it may be, whatever it does to the environment and
whatever it costs. The BP blowout is a natural consequence of this 'last barrel' policy. It is also an indicator that the peak of oil has probably
been reached." |
"Afghanistan
is Hell on Earth, a place of ragged rocks
and parched hills in which warlords and drug dealers duck and dive from helicopter
gunships. Nothing good there, you might think, but according to the US government, Afghanistan
is not a wasteland but a treasure trove. A king's ransom of valuable minerals lies beneath
the rubble of war, say people in Washington, copper and iron ore worth hundreds of
billions of dollars, gold, silver and exotic materials: cobalt used as a catalyst in
refineries, niobium and molybdenum used to strengthen steel. Even as President Barack
Obama rages against the US's dependence on crude oil, strategists in Washington are
fashioning geopolitical models of a precarious new world of dependency on strange metals. Afghanistan is now part of
a global jigsaw puzzle of critical resources. A study by the Pentagon and the US Geological Survey reveals the scale of Afghanistan's
mineral wealth, a resource far greater than believed. There are big reserves of lithium, a
metal used in rechargeable batteries. So large are the deposits that a Pentagon
memo concludes that Afghanistan could become 'the Saudi Arabia of lithium'. Out goes oil, in
comes lithium. It could be the critical mineral in an electric world. But not just yet.
Whatever Obama says or the green lobby believes, the US will be sucking at the teat of
OPEC for the next half century, and probably much longer.....The Pentagon papers
suggest that Afghanistan is a trillion-dollar mineral play, a bet on the resources that
will power the new economy, right in the middle of a war zone. A Chinese consortium has already secured a contract to mine copper south
of Kabul, and the Afghan Ministry of Mines is holding an investor roadshow next week in
London, touting its wares to mining prospectors.....Unfortunately, this is not
really about markets; it's about carving up the world into client states and securing
supply routes, with gunboats if necessary.
Oil has always been like this. It is no accident that Shell was originally a shipping
company. Ever since the Rothschild and Nobel families began to buy lamp oil in Baku on
the Caspian Sea, oil has been less about marketplaces than about the control of supply
routes. The battle for access to oil has afflicted so many nations with conflict and
corruption that we pray for oil's demise. We need to wake up, get down and dirty and feel
the grimy ore under our fingernails. These
are the minerals of mass destruction: coal, oil, uranium that stokes nuclear power
stations, lithium for batteries and countless minerals that make the guts of
communications technology." |
"Overwhelmingly, Americans think
the nation needs a fundamental overhaul of its energy policies, and most expect
alternative forms to replace oil
as a major source within 25 years. Yet a majority are unwilling to pay higher gasoline
prices to help develop new fuel sources. Those are
among the findings of the latest nationwide New York Times/CBS News poll. The poll, which
examines the public’s reaction to the oil leak in the Gulf of Mexico, highlights some
of the complex political challenges the Obama administration faces. For instance, despite
intense news coverage and widespread public concern about the economic and ecological
damage from the gulf disaster, most Americans remain far more concerned about jobs and the
nation’s overall economy." |
"The oil that's flooded into the Gulf of Mexico has created big
concerns about the environmental and economic damage. Another
serious outcome has gotten far less attention: peak oil. By prompting President Obama to
suspend deep-water drilling in US offshore waters, the Gulf oil spill is pushing up the
date at which the world's conventional oil production peaks. By itself, the United States suspension would bring forward that date
only a little. But if other nations with offshore oil output or potential also stop risky
offshore exploration and drilling, it could speed the arrival of peak oil at a more
alarming rate. Without alternative supplies of energy to offset it, a decline in oil
production would send shock waves through the world, rattling economies and politics
alike. Competition for resources could be fierce. In a geological sense, the world is
still awash in oil. The US Geological Survey estimates 3,000 billion barrels of
conventional crude are buried in the world, about a 46-year supply if no more oil is
found, according to the National Center for Policy Analysis, a public-policy research firm
in Dallas. The problem is getting oil out of the ground. Much oil is inaccessible –
or so expensive to drill that it's not feasible even if oil prices surged. Sometimes the
environmental risks (think BP's Deepwater Horizon fiasco) may be too high....Typically,
production losses are offset by new finds. The International Energy Agency has calculated
that it would take the discovery of six new fields the size of those in Saudi Arabia to
maintain current world oil output through 2030..." |
"The US special envoy to
Pakistan said Sunday he had warned Islamabad against signing a deal with Iran on a gas
pipeline, saying the US was preparing laws that could affect the project. 'We cautioned the Pakistanis not to over-commit themselves until we know
the legislation,' Richard Holbrooke, US President Barack Obama's special envoy to
Afghanistan as well as Pakistan, told reporters. 'Pakistan has an obvious major energy
problem. We are very sympathetic to it. In regard to the specific project, legislation is
now being prepared which may apply to this project,' said Holbrooke. He declined to give
details, saying he was not involved in drawing up the legislation, but cautioned that it
could be 'comprehensive.' 'This can range from legislation which could be so comprehensive
that something like this could create a major problem for any company or country,'
Holbrooke said. Iran and Pakistan last week formally signed an export deal which commits
Iran to selling natural gas to its eastern neighbour from 2014. Iran has already
constructed 907 kilometres (564 miles) of the pipeline between Asalooyeh, in southern
Iran, and Iranshahr, which will carry natural gas from Iran's giant South Pars field. The
pipeline was originally planned to connect Iran, Pakistan and India, but the latter pulled
out of the project last year. Pakistan plans to use the gas purchased from Iran for its
power sector. The Obama administration on Wednesday added Iranian individuals and firms to
a blacklist as part of US and European efforts to tighten the screws on Iran a week after
UN approved sanctions against its nuclear programme. The new US sanctions target insurance
companies, oil firms and shipping lines linked to Iran's nuclear or missile programmes as
well as the Islamic Revolutionary Guards Corps (IRGC) and Iran's defence minister Ahmad
Vahidi. Pakistani Foreign Minister Shah Mehmood Qureshi told journalists in his hometown
Multan that he hoped the pipeline project would not come under sanctions, the Associated
Press of Pakistan reported." |
"Serious scientific opinion
argues it could stop the Gulf of Mexico oil spill. But the public wouldn’t stand for
it. It is, literally, the nuclear option. As tens of thousands of barrels of oil continue to spill into
the Gulf of Mexico, as Barack Obama plays the hard man and BP’s Tony Hayward plays
the contrite villain, as the greatest environmental disaster the US has ever known
worsens, there is one solution buzzing round the American scientific community. Nuke the
well.... President Obama has never been shy of comparisons with John F. Kennedy. The oil
spill is not far from the stage of his predecessor’s greatest triumph, the Cuban
missile crisis of 1962. It was here that Soviet ships met the US naval blockade of Cuba
and the world teetered on the edge of nuclear annihilation. For the heir of Kennedy to
expose the gulf to even the tiniest doses of radiation is unthinkable...Added to the ghost
of Kennedy is the very real issue of Mr Obama’s own anti-nuclear rhetoric. Detonating
a device in the gulf would run contrary to the terms of the Nuclear Non-Proliferation
Treaty, and be treacherous ground for a President who has been vocal about
disarmament." |
"With up to 60,000 barrels of oil a day gushing out of
BP’s ruptured well in the Gulf of Mexico, it looks as though the company is finished
in its current form. And so should it be. BP has started every day of this crisis hoping
for the best. Its claim that it was losing 5,000 barrels of oil a day has turned out to be
a woeful underestimate. Its statement that this was not the world’s worst oil spill
was foolhardy. The internal e-mails between BP executives, released by Congress, imply a
possible complacency about safety that is a chilling echo of some BP management attitudes
in the run-up to the 2005 Texas City refinery tragedy.But this disaster has revealed
something even more serious than BP’s ineptitude. It has shown the world just how
risky it is to drill under the sea to depths that no human being can withstand. Whatever
the failures by the regulator in this case — and the US Minerals Management Service
was clearly at fault — the realisation that Big Oil has been operating at the very
edge of mankind’s technological capability will lower the value of oil drilling
companies as insurance costs boom, at least in developed countries. The success of Big Oil
in the past half century has been based on a simple bargain: delivering exorbitant profits
to shareholders by drilling holes in the ground. In the next half century the economics
may look very different. Even before this disaster the industry was having to look
in ever more expensive places to find oil. The Gulf spill should serve as a wake-up call
to investors that the bargain is changing. The financial and environmental risks
associated with oil are becoming harder to ignore. BP’s failure to manage the risks
of oil drilling raises profound questions about its ability to handle other risks. Under the leadership of John Browne, BP tried to move
'Beyond Petroleum' towards cleaner, more secure energy supplies. Under Tony Hayward, BP
returned to hydrocarbons, divesting many of its small investments in solar energy, and
tramping on to tar sands. Sadly, the current management is not capable of resurrecting BP
as an energy company of the future.... Desperation to appear in control of a leak that is
out of control has wrong-footed everyone. In declaring war on BP and encouraging the
states to demand that the company create a compensation fund of $20 billion, more than
three times its cash reserves, Barack Obama risks rendering the company unable to afford
to pay all the damages." |
"....despite
all the fuss about global warming, the US Government... halved its energy research
spending in the past decade to just $5 billion a year — one fourteenth of military
research and one sixth of government
spending on medical R&D. The private sector’s research efforts were even more
pathetic — and still are. The entire
global research effort on all forms of non-carbon energy, including nuclear power, in the
past decade was only about double Microsoft’s spending on repeatedly upgrading
Windows and Office. By contrast to the $10 billion spent globally on alternative energy
and nuclear research, $250 billion was spent annually, according to the Stern report, on
subsidising the extraction and burning of fossil fuels. BP’s much -touted $45 million investment in Solarex, the world’s
biggest solar-energy company, was minuscule compared with the $70 billion the company paid
at around the same time to buy the US oil giants Amoco and Arco, making BP the biggest US
oil producer.....It is impossible to say whether President Obama will prove right in the
prediction he made last night that the global energy outlook will be changed for ever by
the Deepwater Horizon oil spill. What he can definitely do is see to it that no oil
company will ever again claim that prospecting for oil is a less financially risky
proposition than installing wind turbines or investing in nuclear power. The Obama
Administration’s strategic objective, beyond sealing the gusher and cleaning up the
mess, should be ensure that drilling for oil becomes prohibitively expensive. The oilmen
and investors must be forced to recognise that the true costs and risks to society of oil
exploration are far greater than the costs and risks of investing in alternative energy or
nuclear power. Whether or not BP is found by the courts to have been negligently culpable,
the company now faces catastrophic financial losses. If these losses threaten BP’s
survival as an independent company, then oil drilling in technically challenging or
environmentally sensitive locations may be recognised as too expensive by oil company
managements..... A panic among shareholders after the Gulf of Mexico blowout could put an
end to the world’s dependence on fossil fuels much faster than any amount of
regulation or protest, just as the Three Mile Island and Chernobyl accidents almost
immediately halted worldwide activity in nuclear power." |
"Over the past three years, geology has become a hot topic of
conversation in Brazilian homes. Most people have learnt, through the news, that buried
deep under the sea bed, hundreds of kilometres off the Brazilian coast, is a thick layer
of salt. And beneath the salt - in an area that has become known as the 'pre-salt'- lies a
gigantic oil reservoir that President Luiz Inacio Lula da Silva has referred to as 'a gift
of God' and 'the second independence of Brazil'. The actual wealth remains 7km (4.3
miles) beneath the ocean and a long way off from being exploited, but the federal
government has already made grandiose plans for Brazilian education based on these
resources. And local governments are involved in bitter disputes over the sharing of the
expected profits and royalties. There is no shortage of pride and enthusiasm in Brazil
over the potential of the pre-salt reservoir, and apparently no intention of slowing down
deepwater exploration - as other countries like the United States and Norway have done -
because of the oil spill in the Gulf of Mexico. 'With the development of the pre-salt
reservoir, we believe Brazil will gain its place among the top 10 oil producers in the
world. We have already even been formally invited to join Opec [Organization of
Petroleum-Exporting Countries],' says the director general of the federal National Oil
Agency (ANP in Portuguese), Haroldo Lima..... if
Brazil wants to produce more oil, its only option is to go deeper and deeper. More than
90% of the country's reservoirs are located in deep (over 400m; 1,300ft) or ultradeep
(over 1,000m; 3,300ft) waters, and about 80% of the oil currently produced in Brazil
already comes from these types of fields. Petrobras is the largest producer of oil in
deepwater provinces in the world and is highly respected in the industry. But drilling in
the pre-salt fields will pose challenges greater than Petrobras - or indeed any other oil
company - has ever faced before. 'We are talking about a complex and aggressive
environment: there's salt, there's corrosion, extreme pressures, weather can change, waves
of 10m (33ft) can appear from nowhere... There's no engineering solution that could be
100% safe,' says Claudio Sampaio, architect for the
naval engineering department at the University of Sao Paulo." |
"For decades, we have known the
days of cheap and easily accessible oil were numbered. For decades, we have talked
and talked about the need to end America’s century-long addiction to fossil fuels.
And for decades, we have failed to act with the sense of urgency that this challenge
requires. Time and again, the path forward has been blocked – not only by oil
industry lobbyists, but also by a lack of political courage and candor. The consequences
of our inaction are now in plain sight.
Countries like China are investing in clean energy jobs and industries that should be here
in America. Each day, we send nearly $1 billion of our wealth to foreign countries
for their oil. And today, as we look to the Gulf, we see an entire way of life being
threatened by a menacing cloud of black crude. We cannot consign our children to this
future. The tragedy unfolding on our coast is the most painful and powerful reminder
yet that the time to embrace a clean energy future is now. Now is the moment for
this generation to embark on a national mission to unleash American innovation and seize
control of our own destiny. This is not some distant vision for America. The
transition away from fossil fuels will take some time, but over the last year and a half,
we have already taken unprecedented action to jumpstart the clean energy industry. As
we speak, old factories are reopening to produce wind turbines, people are going back to
work installing energy-efficient windows, and small businesses are making solar
panels. Consumers are buying more efficient cars and trucks, and families are making
their homes more energy-efficient. Scientists and researchers are discovering clean
energy technologies that will someday lead to entire new industries. ... Now, there are
costs associated with this transition. And some believe we can’t afford those
costs right now. I say we can’t afford not to change how we produce and use
energy – because the long-term costs to our economy, our national security, and our
environment are far greater..... The one answer I will not settle for is the idea that
this challenge is too big and too difficult to meet. You see, the same thing was
said about our ability to produce enough planes and tanks in World War II. The same
thing was said about our ability to harness the science and technology to land a man
safely on the surface of the moon. And yet, time and again, we have refused to settle
for the paltry limits of conventional wisdom. " |
"President Obama likened the impact of the oil spill
disaster on the nation’s psyche to the September 11 terrorist attacks as he made his
first multi-state tour yesterday of the Gulf of Mexico. Facing questions about his
leadership amid rising public anger 56 days after the Deepwater Horizon drilling rig
exploded, he sought to reassert his authority by visiting Mississippi, Alabama and
Florida, the states left out of three previous trips to the region....'One of the biggest
leadership challenges for me going forward is going to be to make sure that we draw the
right lessons from this disaster,' Mr Obama said in an interview with The Politico news
website before he set off. Vowing to move forward 'in a bold way' with a clean energy
policy that would help America to reduce its oil dependency, he added: 'In the same way that our view of our vulnerabilities and
our foreign policy was shaped profoundly by 9/11, I think this disaster is going to shape
how we think about the environment and energy for many years to come.' Mr Obama will address the nation from the Oval Office tonight,
when he will announce new measures to help to restore the Gulf’s ecosystem. Tomorrow
he meets BP executives for what the White House was keen to portray as showdown
talks." |
"When I interviewed Mr Hayward two weeks into the crisis he
said that the Macondo well, a mile below the surface, was not pushing any envelopes in
engineering terms. He has since admitted BP
lacks the tools to cope with this 40,000 barrel-a-day spill, let alone the 250,000
barrel-a-day spill that it promised it could handle as a condition of its permit. The
engineering envelope is shot. The industry is in over its head. This week’s spectacle in Washington is BP paying for
it." |
"Plans are under way to extend the
life of the UK's oldest nuclear reactors, which would ease the government's need to
find an extra £4bn for clean-up funding, the Guardian has learned. The Wylfa reactor on Anglesey, due to close at the end of the
year, would remain open until at least 2012 if safety regulators agree. The extra electricity generated by the reactor, which began operations in
1971, would earn its parent, the Nuclear Decommissioning Authority (NDA), up to an extra
£500m in revenue. EnergySolutions, the US company which operates the old Magnox reactor
sites for the NDA, is also looking for a further life extension of the Oldbury reactor. It
is the UK's oldest
operating nuclear plant, opened in 1968, and recently regulators gave it approval to
remain open until mid 2011. EnergySolutions is preparing to begin work on another
extension soon." |
"The disaster caused by the Gulf of Mexico oil spill has cast doubts over the future of deep water exploration
and is likely to have the long-term effect of raising oil prices, analysts say. British
oil giant BP has struggled to stem the crude gushing from a ruptured underwater pipe after
the Deepwater Horizon rig it leased exploded before sinking
into the sea on April 22, causing a major environmental disaster. 'The benefits of being
able to drill and produce in deep and ultra-deep waters are brought into question now it
has become clear that basic remediation of problems is extremely difficult in deep water,'
said analysts at Barclays Capital. BP chief executive Tony Hayward
concurred, saying: 'What is taking place is an issue
which will impact the global oil and gas industry and will necessarily have a very broad
impact not only in the United States but around the world.' The first direct consequence for the industry was the US administration's
declaration of a six-month moratorium on new deep-water drilling and delays on planned
exploration off the Alaska coast. According to a study by Wood Mackenzie energy consultants, these restrictions would cut
global production by 80,000 barrels a day in 2011 -- just under one percent of the total.
The moratorium also raises questions about equipment already in the Gulf of Mexico. 'If
rigs leave the region, restoration in drilling activity will take time as equipment needs
to be brought back in,' Barclays Capital said. The oil spill fall-out could also have the
more far-reaching effect of deterring oil companies from going
ahead with similar deep water projects. 'There is now
considerable uncertainty over the future of deep water exploration, both in the US and
elsewhere,' said Helen Henton, an analyst at
Standard Chartered Bank. In the United States, this could have a serious impact. The Gulf
of Mexico represents 19 percent of US oil reserves, of which 80
percent are found in deep water, and 29 percent of national production, she said. Washington believes the region is crucial to future global energy
supplies -- between 2008 and 2014, production is expected to increase by half a million
barrels a day compared to current levels. The crisis could also deter those firms hoping
to take advantage of Brazil's vast offshore reserves -- as many as 50 billion barrels of crude are thought to lie under a vast salt layer deep in
the ocean. And in the North Sea, where the big oil fields are exhausted, the future of
exploration also lies deep under the sea, east of Britain's Shetland Islands. Despite the risks, oil firms have little choice.
Locked out of the 'easy' oil fields in the Middle East -- with the exception of Iraq --
they are forced to turn to increasingly difficult areas. 'In
the future, it is inevitable that technology and risk will increase, not diminish, as
'easy' sources of oil are depleted and as the exploration effort moves into new and ever
more challenging frontiers,' said Tim Morgan, global
head of research at Tullett Prebon. Delayed projects, tighter legislation and more and
more expensive technology all point towards the same conclusion -- the price of oil will go up. 'We
think the long end of the market will gradually price in more of the oil spill effect,'
said Torbjorn Kjus, oil market analyst at DNB Nor." |
"Oil futures for delivery in 2018 at less than $100 are 'undervalued'
as BP Plc’s spill in the Gulf of Mexico will raise the costs of exploration and lead
to drilling restrictions, Barclays Capital said. 'Oil
will be slower onstream, more expensive to produce, it will be more politicized and there
will be less of it,' Barclays analysts including
Paul Horsnell said in a report today. 'All of those are factors that make us look at the
current back of the oil curve and see it as undervalued at current levels of a shade below
$100.'.... President Barack Obama has extended a ban on new deepwater permits and
exploration in the Alaskan Arctic for six months following the accident. Stricter
regulation may add $5 a barrel to long-term oil contracts, according to Deutsche Bank AG,
while a one-year worldwide delay in deepwater drilling may cut as much as 500,000 barrels
a day from 2013 supply, according to Sanford C. Bernstein analysts. The number of rigs
drilling in the Gulf of Mexico plunged 50 percent last week to the lowest level in 16
years, Baker Hughes Inc. reported June 4. U.S. output may be cut by 150,000 to 200,000
barrels a day next year because of new limits, Deutsche Bank said. 'We see the
consequences as being more severe than the postponement of Gulf Coast volumes,' Barclays
said in the report today. 'It looks likely to become an iconic event, a touchstone and
rallying flag for opposition to the oil industry across a wide series of fronts and issues
for years to come.'" |
"GLOBAL oil demand will peak
within six years, says an influential energy analyst.
Forecasts of relentless consumption growth in China are wrong, claims Peter Tertzakian,
head of Arc Financial, an energy-focused private-equity firm and an
authority on global energy markets. And oil's dominance of the transportation market will
be eroded by the growth of alternative energy sources. It is a combination that should
shock companies and countries that assume GDP growth will always equate to rising oil
demand. As oil consumption has tapered off in the rich West, producers have increasingly
focused on the expanding economies of Asia and the Middle East, where consumption
continues to surge. But even Chinese demand will reach a plateau within three to five
years, Tertzakian says." |
"BP has revealed that more new
oil was produced in the Gulf of Mexico last year than any other region in the world, as the company seeks to persuade the US government that its giant spill
should not halt deepwater drilling. At its annual economic review, the energy major made
the case for pushing ahead with exploration of 'difficult' – harder to extract –
oil, saying global demand will now rise after last year's sharp reduction in consumption.
Oil fields in the Gulf of Mexico, where BP is currently fighting to plug a leaking well,
are some of the most productive and profitable in the world..... Oil consumption in
developed countries has fallen back to 1995 levels, as heavy industry suffered during the
downturn and governments turn away from fossil fuels blamed for causing climate change. The report found that world demand dropped by 1.2m barrels per day, causing Opec to rein back production to sustain prices. However, demand
for oil rose in China, India and Saudi Arabia, where usage even outstripped the growth of
their economies. Dr Ruhl believes consumption will rise again this year on demand from
developing economies, which will push companies towards increasingly difficult oil
exploration, such as deepwater drilling. 'Global oil demand is no longer declining and
appears to be on the rising path in 2010,' he added." |
"World oil
consumption fell by 1.2m barrels per day (bpd) in 2009, the second consecutive annual
decline and the largest volume since 1982, BP said
in its annual Statistical Review of World Energy today. The world's oil production dropped
by 2m bpd, or 2.6%, which was also the largest decline since 1982, the review said. It
said global oil refining capacity additions totalled 2m bpd, with the Asia-Pacific region
accounting for 80% of the increase. The world's proven oil reserves stood at 1.33 trillion
barrels last year, an increase of 700,000m barrels from 2008. The world's gas reserves
grew by 2.21tn cubic metres last year, while production fell by 2.1%, marking the first
decline on record, BP said." |
"In Pipelineistan, Russia and Turkey are now brothers in arms. Russia will build a crucial Samsun-Ceyhan pipeline to bring
Russian oil from the Black Sea to the Mediterranean.
Moreover, Turkey is about to join the Russian South Stream gas pipeline - and that means a
direct blow to the troubled US/EU-supported Nabucco." |
"Britain's former chief
scientist has attacked politicians and industry experts who have their 'heads in the sand'
over dwindling oil supplies. Sir David King said governments, including the UK's, were too eager to
believe the optimistic predictions of economists who tell them that 'oil will be squeezed
out of the ground pretty much forever'. King, the government's chief scientific adviser
from 2000 to 2007, is now director of the Smith
School of Enterprise and the Environment in Oxford. He said: 'That's what governments
want to hear and that's what they do hear, and I think the British government as much as
many others.' He added that those with a 'vested interest' repeatedly overstated
how much accessible oil remains in the ground. Conventional
oil reserves are about 30% lower than widely reported, he said. Established oil sources were becoming harder to exploit, he said, leading
to wider use of unconventional sources such as deepwater drilling, with environmental
impacts including those seen with the
Deepwater Horizon spill in the Gulf of Mexico. He
said oil demand would overtake production capacity as soon as 2015, which would drive up the price further." |
"Azerbaijan and Turkey yesterday
(7 June) signed a deal to ship 11 billion cubic metres of Azeri gas per year to Turkey.
Shipments would start in 2017 and some of the gas may be pumped into the EU's planned
Nabucco pipeline. Meanwhile, Northern Iraq declared
in Turkey that it stands ready to provide gas supplies 'to make Nabucco work'. The
agreement was signed in Istanbul by Azerbaijan's minister of industry and energy, Natig
Aliyev, and Turkey's minister of energy and natural resources, Taner Yildiz, EurActiv
Turkey reported. The ceremony took place in the framework of a visit to Turkey by Azeri
President Ilham Aliyev. The agreement covers gas supplies from Azerbaijan's Shah Deniz 1
and Shah Deniz 2 developments in the south-west Caspian Sea. Turkey currently buys about
6.6 billion cubic metres of Azeri gas per year but does not always use it in full. Aliyev
said in mid-May that if it were to receive attractive offers, Azerbaijan might join new
gas projects, including Nabucco, according to news channel CNN Turk....Meanwhile, Russia signed a deal in Athens on 7 June to found a
joint company for building a section of Gazprom's planned South Stream gas pipeline on
Greek territory. South Stream is the
Gazprom-favoured rival of Nabucco. The new company, called South Stream Greece S.A., will
be headquartered in Athens, with each side holding an equal 50% stake in the joint
venture. Russia had already secured intergovernmental agreements to build South Stream
with Hungary, Austria, Bulgaria, Greece and Croatia." |
"Shale gas cannot be seen yet as
a game changer in Europe as it is in the United States, where roughly 50% of the country's
needs are met by developing unconventional gas. The conclusion was reached by
international experts at a public event held in Brussels yesterday (7 June). To illustrate the possible impact of developing shale gas in Europe, Don
Gauthier of the US Geological Survey said that in an area the size of the Benelux
countries, there would have to be up to 6,000 wells, an impact that would probably attract
environmental opposition. Speaking at a conference organised by IFRI, the French Institute
for Foreign Relations, Gauthier explained that the reason for such concentration was that
unlike natural gas, unconventional gas needs a high
density of wells, including horizontal wells. Conventional gas costs less, as it is
extracted at much higher volumes from only a few vertical wells. Citing the US experience, Gauthier further explained that operators need
to reach agreements with land owners. This, he said, was an easy task in Texas, but much
more difficult in the New York area, where in his words 'a lot of debate' on water issues
had been taking place.... The development of shale gas, which sees chemicals added to the
water to facilitate the underground fracturing process that releases natural gas, is a
concern to environmentalists. Fracturing fluids,
designed to free gas trapped between layers of shale, are developed by companies to suit
the geologic characteristics of each individual site. The wide variety of rock types,
experts explained, means that a chemical developed for a site in the US would have little
if any application elsewhere. They were answering a
question from EurActiv. The countries where shale gas is presumed to exist in the EU are
Germany, Poland, Sweden, France, Austria, Hungary and the UK.... According to estimates,
Poland's shale gas reserves stand at 1.4 to three trillion cubic metres, enough to satisfy
the country's needs for the next 100-200 years, Zalevska said. However, she was quick to
add that there was not yet enough evidence to prove this. Indeed, no shale gas fields have
been documented in Poland yet, she revealed. The first estimation, she said, was due in
4-5 years and the first potential production in 10-15 years. Hans
Van Der Loo of Royal Dutch Schell concurred that unconventional gas reserves in Europe had
yet to be proven and warned that it was not certain to prove commercially successful. Some
firms might end up losing money, he cautioned." |
"Estonia’s greenhouse gas emissions have been halved since 1990,
which surpasses by many times the goals set in the international Convention on Climate
Change. But this is not enough. Estonia’s period
of transition agreed with the European Union with regard to the Narva power plants comes
to an end in 2016. By then the production units dating back to the Soviet era
will have been partly modernised and partly replaced with new equipment. The Narva power
plants utilise oil shale, which is a fossil fuel, to produce electricity for the use of
Estonia, the Baltic States, and the Nordic Countries.
'This EUR 100 million investment is one of the largest in recent years. It enables the
significant reduction of the environmental impact of the old units while the present
electricity production capacity is ensured in the future as well', says Tõnu Aas, CEO of the Narva Power
Plants." |
"Gains in oil sands production
is expected to outstrip increases in Alberta's processing capacity over the next decade as
oil companies go slow on building new facilities to protect profit margins and guard
against the return of surging construction costs. The
province's energy regulator said on Monday that this trend will prevail despite government
efforts to foster construction of upgrading plants to bolster economic activity and job
creation from the vast oil sands resources of northern Alberta, the largest crude source
outside the Middle East. In its annual report, the
Energy Resources Conservation Board (ERCB) predicted production of raw bitumen from the
oil sands would more than double to 3.2 million barrels a day by 2019 from 1.49 million in
2009. The figure for last year was up 14 percent from 2008. Output of upgraded synthetic
oil, meanwhile, is expected to hit 1.3 million barrels a day, a 77 percent increase in 10
years, the ERCB said." |
"We have recently been discovering some of the limits of Man's power
over Nature, first in terms of volcanic ash, and now oil. The
Gulf of Mexico spillage reflects the risk of pushing oil exploration to the limit of
technology 5,000ft below the sea's surface....Nobody would be looking for oil at 5,000ft
if there were new supplies in shallower waters. The
oil market registers the scarcity of oil. Last week oil was $74 a barrel for Brent Crude.
The progressive rise in the price over the past 30 years has been a measure of the growth
in demand and the failure of supply to meet that demand. If the oil companies are to
satisfy their markets, they have no choice but to develop high-cost sources which in
earlier decades would have been regarded as hopelessly uneconomic. Indeed, President
Barack Obama's administration started with a pledge to make the United States nearer
self-sufficient in oil by encouraging development projects offshore. The BP spillage in
the Gulf of Mexico has done considerable damage to that policy. There are three facts which have to be recognised. The first - and
most important - is that the age of readily available petroleum is over. For some time
there has been a theory that the world had already reached 'peak oil': the point at which
the growth of demand for oil exceeds the growth in supply. The BP disaster goes beyond the
doctrine of peak oil. We are now at the point of 'peak technology', where the risks of
drilling technology have become greater than society is willing to support. In the United
States, the oil risk has become a political risk....After
the setbacks for President Obama and America's energy policy, the greatest damage, of
course, has been done to the environment of the Gulf and to BP itself. It is the largest
British company, and the most important in terms of British pension funds and their
investments. Britain has therefore suffered-hard financial damage as well as damage to its
reputation in the United States. Not surprisingly, there is a widespread American anger
against BP." |
"Canada's Cameco Corp. (CCJ) and Kazakhstan's Kazatomprom aim to
launch a uranium-conversion plant in the Central Asian state in 2016-2017, Cameco's Chief
Operating Officer Bob Steane said Friday. 'We absolutely believe...there will be a
need for new conversion in 2016-2017,' Steane told Dow Jones Newswires on the sidelines of
an international investment conference in Almaty. 'We are targeting to be in a position to
capture that demand when it is coming in." Cameco and Kazatomprom plan to have a
feasibility study done for the facility 'in the next couple of years,' Steane said, adding
'conversion only makes sense when you get 12,000 or more [metric] tons capacity,'
referring to the size of the proposed plant. He also said there was an oversupply of
uranium currently in the market but he didn't think 'oversupply is going to stay for a
long time.' Part of the oversupply is 'because people
allowed their inventories to go down. 'In terms of oversupply at the reactors, pretty
quickly they are going to have to start buying and restoring their inventories and that
supply will disappear,' Steane said." |
"The oil spill in the Gulf of Mexico has already been described as
the biggest environmental crisis in US history. The efforts to stop the leak, repair the
damage to the ecosystem and compensate those whose livelihoods depend on clean waters will
come at a tremendous cost to BP. We still don’t know what the final bill will be
— or how BP and its reputation will manage. Tough
questions are rightly being asked of the oil industry, but the disaster raises wider
issues than the culpability of a few companies. It poses a fundamental question about
whether our dependency on oil and other fossil fuels is sustainable. Oil, coal, gas and
uranium make up 90 per cent of the world’s traded energy. As these supplies deplete
and demand increases, energy companies are taking greater risks to find new reserves. I fear, as we are pushed into more difficult terrain, that this means
more danger and risk. We have already encountered kidnap attempts on gas workers in
Africa, piracy attacks on oil tankers, coalmines collapsing at extreme depths and now we
have an oil spill 5,000ft under the sea. And energy companies are considering exploring
the even riskier and remote territory of the Arctic. Insurance companies, such as
Lloyd’s, have the dual role of paying claims when these risks become real and
advising business on how to manage those risks so that their enterprises don’t become
uninsurable. For example, in the 1870s it was an insurance company that promoted the
development of fire sprinklers in factories. Energy risks now account for just over 6 per
cent of Lloyd’s business at £1.4 billion. We have already paid out on claims for the
loss of the Deepwater Horizon rig and our total claims from this tragic incident could
amount to $600 million. We need to ask: what can be done to reduce the chances of this
happening again? And are the environmental and economic costs of continuing our quest to
meet the demand for finite and hard-to-reach fossil fuels proving too much? If the slick in the Gulf is the first indicator of the potential
economic chaos we face as demand pushes us into ever riskier places, then securing our
energy supply means investing in clean and renewable energy technology.... Just as the Gulf of Mexico disaster hit thousands of businesses, these
energy shocks could reverberate across company balance sheets everywhere in the coming
years. But there is a worrying lack of awareness
among all businesses of how inextricably linked their futures are to stable access to
energy. A transition to a more resilient energy
system could transform the economy, just as coal did two centuries ago. We have already
taken the first steps: renewable energy made up two-thirds of new energy installations in
Europe last year and China became the world’s largest manufacturer of wind-power
generators and the second largest installer. And several insurers, including Lloyd’s
syndicates, now have units dedicated to insuring the renewable energy market. Nations are recognising that green energy is no longer just a
friendly optional extra; it’s an increasingly essential aspect of protecting energy
security and an economic opportunity. The Obama
Administration’s response to the oil leak leaves little doubt that environmental
regulations will be strengthened. This regulation by political force, sweeping across
several industries, will only add to the pressures that the energy sector faces." |
"A year ago, the Kremlin issued
a stark warning: that growing competition for control of global energy resources could
spark wars on Russia's borders, including those in Central Asia. 'Problems that involve the use of military force cannot be excluded, that
would destroy the balance of forces close to the borders of the Russian Federation and her
allies,' said a key Kremlin strategy document assessing the main security threats of the
coming decade. Just 20 years ago, Russia and the
energy-rich countries of Central Asia, such as Kazakhstan and Turkmenistan,
and Azerbaijan in the South
Caucasus, were all united, as parts of the Soviet Union. Moscow would have had unfettered
access to their oil and gas reserves. But the Central Asian states realise one of their
greatest strategic strengths as independent countries is playing off the big global powers
now scrambling to buy their precious energy supplies. So, Moscow now finds itself in
fierce competition with the big players: China, the US and
Europe. 'Russia's
overall position in Central Asia is shrinking,' says Mikhail Kroutikhin, editor-in-chief
of the Russian Energy Weekly. 'Russia is in retreat and the Chinese are jumping on the big opportunities.' Rivalry in the region is often
compared with the 19th Century British-Russian imperial rivalry nicknamed the 'Great
Game'. The past year has seen some key moments in the
new energy 'Great Game' in Central Asia, with the first pipelines being commissioned that
take oil and gas east to China, instead of north and west. From Kazakhstan, 200,000
barrels of oil are now being pumped every day across the border into the western Chinese
province of Xinjiang, and there are plans to double this pipeline's capacity. From
Turkmenistan, a pipeline carrying gas to China via Uzbekistan and Kazakhstan was opened
last December by the Chinese President Hu Jintao. It
could satisfy around half of China's current demand by the time it reaches full capacity
in 2013. Turkmenistan's President Kurbanguly Berdymukhamedov called the deal 'political'
as well as commercial and heaped praise on China's 'wise policy', saying it had become
'one of the key guarantors of global security'. With this agreement, Russia's stranglehold
on supplies from Turkmenistan, which has the fourth-largest reserves of gas in the world,
was broken. And while China and its new Central Asian energy partners were locking
themselves in an ever-warmer embrace, Moscow found itself at loggerheads with its
erstwhile client state. Having agreed two years ago to pay a much higher price for Turkmen
gas, to ensure it remained a loyal supplier, the Russians suddenly shut the taps 12 months
ago, causing the pipeline to explode. Analysts believe Moscow had decided it did not need
the gas because of the downturn in global demand and prices during the economic crisis.
Even now it is only taking a third of what it was expected to buy, angering the Turkmen
government and pushing it further into the arms of the Chinese. 'As regards Russia's role
in the region, it has taken a step back in energy,' says Chris Weafer, chief strategist at
Uralsib Bank in Moscow. He believes it was not just
the global economic crisis that prompted this. It was also, he says, because Europeans searching for gas supplies for their planned Nabucco pipeline
were offering much higher prices for Central Asian gas. 'The
game changed because of Nabucco. Up to 2006, Russia could buy cheap gas from Turkmenistan,
Uzbekistan and Kazakhstan - $50 for 1,000 cubic metres and then sell it to Europe for
$250. 'But from the start of 2008, Russia had to agree to pay European prices - $300 per
1,000 cubic metres.' 'Gazprom was not making any money out of it. So the political will to
be involved has abated. Russia has let the Chinese into Central Asia.' And that is something Moscow may ultimately come to regret, because it
also wants to be a major supplier of oil and gas to China. With China already heavily
investing in the two most important Central Asian energy suppliers, Turkmenistan and
Kazakhstan, Russia may struggle to compete. Moscow has had agreements with Beijing to
build a gas pipeline into China since 2002, but the two sides have been haggling ever
since over the price of the gas supplies. Analysts say a deal may finally have been done -
on the condition that the gas comes from a field and pipeline that are exclusively for
Chinese use. Officials also hope the first oil pipeline between the two countries will be
completed by the end of this year. But some analysts
question whether Russia will have sufficient reserves to supply the gas pipeline, given
the expected decline in its production over the next 20 years and the lack of investment
in new fields since the collapse of the Soviet Union in 1991. 'It [the pipeline to China]
will have to tap reserves already going to Europe,' says Mikhail Kroutikhin. 'It is
not economic, but Prime Minister Putin wants it to be built.' Another project which Mr
Putin is determined should go ahead is Russia's South Stream gas pipeline, across the
Black Sea and into the heart of the European Union. The
rivalry between this and Europe's alternative plan - the Nabucco pipeline - is one of the
most intense in the Caspian Sea region. The Europeans, who want to break free from their growing dependence on Russian energy
supplies, desperately need supplies from the region to make the Nabucco pipeline viable.
And the Russians are trying to thwart this. One key battleground is Azerbaijan, which has yet to declare whether
it will feed Nabucco with its gas. Its decision is critical." |
"The financial crisis and the global recession had limited effect on
efforts to lower production costs for Canadian oil sands, companies including Statoil
ASA and Canadian Oil Sands Trust said. 'Both
operating expenditures and maintenance capital have been on a rising trend and when oil
prices accelerate, that trend accelerates along with it and we got a very good taste of
that in the last five years,' Marcel
Coutu, chief executive officer of Canadian
Oil Sands said today at an Oslo conference. 'When oil prices crash, those operating
costs unfortunately lag and it takes some time for them to come down.' Labor costs have
led an across-the-board increase, Coutu said in an interview. Weekly earnings in
Alberta’s oil and gas industry have climbed 50 percent from 2002 to about C$1,800
($1,700), according to the Canadian Association of Petroleum Products. For new projects,
the capital costs per daily barrel of oil have climbed to $35,000 from $12,000 to $15,000
at the start of the decade, Robert Skinner, senior vice president at Statoil said in an
interview. The Norwegian company estimates break-even
prices for projects using steam assisted gravity drainage technology at $65 to $75 a
barrel, Skinner said. Cost for new supply is at $60 to $80 a barrel, depending on whether
it’s from drilling or mining, Greg
Stringham, vice president for oil sands at the petroleum association, said at the
conference." |
"Controversial plans for the first coal-fired power station to be
built since the 1970s have been formally lodged. The
plant, at Hunterston in Ayrshire, would use experimental carbon capture storage (CCS)
technology, which removes carbon dioxide emissions
and stores them underground. The £3 billion proposal is the first of its kind in the UK
but faces strong opposition from local people and environmental groups, who argue that it
will damage local wildlife." |
"Inch by inch, Iraq is crawling out from beneath the rubble of a
warzone and building an energy colossus. Increasingly, too, there is help at hand to turn
its oil and gas resources into gold. A clutch of big oil multinationals has entered into
service contracts with the country to develop several huge oilfields, including Rumaila, a
monster that already delivers 1.1 million barrels per day, almost half of Iraq’s
current output. BP is charged with raising the bar at Rumaila and by 2016 it expects
output to reach a plateau of 2.8 million bpd, a level greater than the present output of
every Opec state except Iran and Saudi Arabia. Others have joined the drilling frenzy.
Shell, ExxonMobil, Italy’s Eni and Statoil of Norway are working alongside
Russia’s Lukoil and Petronas, the Malaysian company, and this month CNOOC, the
Chinese state oil company, put its shoulders behind Iraq’s oil reconstruction. The total potential is about 12
million bpd by 2016, equal to existing estimates of Saudi Arabia at maximum throttle. But Iraq is a huge headache for Opec, the oil cartel of which it is a
passive member. Iraq has not had an oil output quota since 1998 because of the sanctions
against Saddam Hussein’s regime. Its quota was almost equal to Iran, at 3.9 million
bpd, reflecting the rivalry of the two countries, but war and neglect took their toll on
Iraq’s oil industry and output is now 2.4 million bpd. The question is how Opec will
bring Iraq back into the fold. Unless global demand for crude soars over the next five
years, big cuts in the output of Saudi Arabia and the other Gulf states will be needed to
accommodate it." |
"Britain is facing a £4bn black
hole in unavoidable nuclear decommissioning and waste costs, Chris Huhne, the energy and climate change
secretary disclosed tonight. The decommissioning costs over the next four years revealed
by officials to Huhne are so serious that he has already flagged the crisis up to the
cabinet.' The revelation places an unexpected burden
on his department's £3bn annual budget ahead of difficult spending negotiations this
summer. 'As you can imagine, this is a fairly existential problem. The costs are such that
my department is not so much the department of energy and climate change, as the
department of nuclear legacy and bits of other things,' Huhne told the Guardian. The
additional costs derive from slowly rising expenditure on nuclear decommissioning, and
falling income due to the closure of ageing power plants, Huhne said. Huhne disclosed that
in current financial year the Nuclear Decommissioning Authority's budget is expected to be
in balance.From 2011-12, the deficit suddenly rises to £850m, in 2012-13 the gap
increases further to £950m and then to £1.1bn in the two subsequent years. The black
hole is equivalent to wiping out one-sixth of the overall cuts in public spending
identified by the Treasury with such fanfare last week. But Huhne insisted: 'I do not
think it is possible for anyone responsibly to stand aside and say we are not going to
deal with it. We just have to, but what we are effectively paying for here is decades of
cheap nuclear electricity for which we have suddenly got a massive postdated bill.' The
revelation will also hand further ammunition to those who say a new generation of nuclear power stations in
Britain will end up being more expensive than the industry claims." |
"Some of the world’s biggest energy companies are stockpiling
the nuclear fuel used to power reactors as they try to capitalise on rock-bottom uranium
prices. An oversupply of nuclear fuel on international commodity markets has followed five
successive years of rapid growth in uranium ore production in Kazakhstan, which has nearly
quadrupled its output since 2004. Raw uranium prices have tumbled to around $40 per pound
— almost one quarter of the levels of $140 in 2007. Ed Sterck, uranium analyst at
Bank of Montreal, said that the low price was encouraging nuclear power station operators
such as Exelon, of the United States, Germany’s E.ON and EDF, of France, to boost
their stocks of nuclear fuel.... Nik Stanojevic, mining analyst at Brewin Dolphin, said
that prices had fallen sharply after output from
Kazakhstan increased. It has risen to 13,665 tonnes in 2009, up from 3,719 tonnes in 2004,
and the country now supplies about 27 per cent of the world’s total mined uranium
production — 50,338 tonnes in 2009. About one third of the world’s total supply
of nuclear fuel comes from Russian nuclear weapons that have been decommissioned as part
of a disarmament agreement struck with the United States at the end of the Cold War. These
supplies are being gradually depleted and are expected to fall away steadily in the next
few years." |
"The fact that BP was drilling
for Macondo – a tiny field under a mile of water containing less than 12 hours'
global consumption – tells us all we need to know about the state of oil depletion. Deepwater production – anything under more than 500 metres of sea
water, far too deep for divers to work should anything go wrong – has quadrupled from
less than 2 million barrels per day (mb/d) in 2000 to 8 mb/d today, precisely because
onshore and shallow offshore supplies are running down. The
industry only drills at such extreme depths because there are very few alternatives –
the Canadian tar sands and Iraq are equally unpalatable – and it is a clear sign of
impending peak oil. Ironically one impact of the BP
spill, the US moratorium on deepwater drilling, is likely to hasten and worsen the effects
of the global production peak. One analyst forecasts the ban could deprive the world of an
additional one million barrels per day from 2016." |
"Ministers have ordered a review
of looming global shortages of resources, from fish and timber to water and precious metals, amid
mounting concern that the problem could hit every sector of the economy. The study has been commissioned following sharp rises in many commodity
prices on the world markets and recent riots in some countries over food
shortages. There is also evidence that some nations are stockpiling important materials,
buying up key producers and land and restricting exports in an attempt to protect their
own businesses from increasingly fierce global competition. Several research projects have
also warned of a pending crisis in natural resources, such as water and wildlife, which
have suffered dramatic losses due to over-use, pollution, habitat loss, and,
increasingly, changes caused by global warming. Professor Bob Watson, the chief scientist
for the Department for Food, Environment and Rural Affairs, the leading department in the
initiative, said every sector of the British economy was directly or indirectly vulnerable
to future shortages. These could be caused either by resources running out or becoming
harder to access because of geopolitical factors from war to tighter environmental
regulation on resources such as timber and palm oil – the latter being found in an
estimated one in 10 products, from chocolate to cosmetics, sold in Britain." |
"Turkmenistan has launched work
on a new gas pipeline that will connect the hydrocarbon-rich Central Asian country with
western markets and decrease its reliance on Russia's delivery network.The pipeline --
dubbed East-West -- will stretch 620 miles (1,000 kilometers) from the Southern
Yolotan-Osman field near Afghanistan and carry up to 30 billion cubic meters of natural gas annually to the
Caspian Sea. President Gurbanguli Berdymukhamedov
said Monday that the $2 billion pipeline will give both economic and political clout to
the country and help secure global energy security after its scheduled completion in 2015.
The new Turkmen pipeline could become a crucial move
in Europe's drive to reduce its dependence on Russian gas." |
"... according to Nigerian academics, writers and environment groups,
oil companies have acted with such impunity and recklessness that much of the region has
been devastated by leaks. In fact, more oil is
spilled from the delta's network of terminals, pipes, pumping stations and oil platforms
every year than has been lost in the Gulf of Mexico, the site of a major ecological
catastrophe caused by oil that has poured from a leak triggered by the explosion that
wrecked BP's Deepwater Horizon rig last month. That disaster, which claimed the lives of 11 rig workers, has made
headlines round the world. By contrast, little information has emerged about the damage
inflicted on the Niger delta. Yet the destruction there provides us with a far more
accurate picture of the price we have to pay for drilling oil today." |
"A major oil pipeline between Canada and the U.S. seemed like a
pretty good idea five years ago. Crude oil prices were rising as global demand increased
dramatically. The entire oil market was stretched to near capacity. A proposal by
Calgary-based TransCanada to build a pipeline linking Canada's vast oil fields to the
Midwest seemed like the right play. Then Hurricane Katrina hit the Gulf Coast, crippling
more than 25 percent of America's crude oil production and roughly 15 percent of its
refining capacity. Suddenly, that pipeline idea skyrocketed to celebrity status among oil
producers. Within months of Katrina's wrath, TransCanada had locked up contracts for 83
percent of the pipeline's capacity for an average of 18 years. Today, the Keystone pipeline stretches 2,151 miles at a cost of
$5.2 billion, proving to be one of the longest and most expensive pipelines ever built in
North America. It starts at Alberta's Athabasca tar sands and passes through the St. Louis
area at the ConocoPhillips' Wood River refinery in Roxana. And the oil is expected to
begin flowing next month — moving about a half-million barrels a day, enough to
supply about 2 percent of the country's daily demand.
'We're trying to link the free world's largest source of crude oil with the largest
refining market in the world — and that's the U.S. market,' said TransCanada Vice
President Robert Jones, who heads the Keystone project. 'It's just a natural marriage.'
Just not exactly the best timing. Much has changed since the project broke ground and oil
approached $150 a barrel. The global economic slump slashed demand, and oil prices
plummeted. Energy firms focused more on renewable energy. And, most recently, the BP spill
has raised serious concerns over U.S. oil dependency and the environmental risks involved
in extracting and delivering it. 'The tar sands and the gulf spill are symptoms of the
same thing: We're running out of easy oil, and the oil industry is forced to go to extreme
measures to meet the need,' said Simon Dyer, oil sands program director with the Pembina
Institute, a Calgary-based sustainable energy think tank. 'There's a lot of recognition
that we need to move to a clean energy future. The oil sands is leading us in the opposite
direction. There's a real disconnect there.'" |
"Royal Dutch Shell, the energy
major, has almost doubled its reserves of shale gas with the $4.7bn (£3.2bn) acquisition
of East Resources. Shell is now the owner of three of the most attractive shale
gas prospects in North America – in Texas, Canada and now the Marcellus shales in the
northeast US. US gas reserves have increased 10-fold since the discovery of shale gas over
the last few years. Now oil majors are rushing to buy shale fields, where gas can be
extracted from rock by fracturing the ground." |
"The amount of oil consumed in the world is unbelievable—85
million barrels a day. And we are not making more of it. People throw around the term
'peak oil,' but that doesn't mean the system will run out of oil. It means the amount of
oil you're gaining by finding new oil fields—and bringing them onstream—is equal
to the losses you're taking as other fields run down. The U.S. was the first country to
peak in 1970, but that was a seamless transition since the oil companies just brought in
more oil on tankers. Now the U.S. is importing about
67 percent of its oil. The business of peaking is now usual: There are 30 non-OPEC
countries with significant production. Thirteen of these have peaked or are about to peak,
and they contribute some 52 percent of the oil volume outside OPEC. World oil production
will peak sometime between 2015 and 2020. The plateau should last for three to five years.
The price will go up, since the supply isn't rising
and demand will be strong. That will scare people. Wall Street hasn't accepted yet that
the oil reserves are so limited." |
| "Thanks to a drilling boom in
new fields extending from Texas to New York, natural gas has become as an environmentally
friendly competitor to wind. Big new discoveries in shale deposits have brought down the
price of natural gas by 60 percent from two years ago. Michael O'Sullivan of NextEra
Energy, Iowa's second-largest producer of wind power, told the American Wind Energy
Association meeting in Dallas this week: 'Our product is too expensive relative to other
options. Our competitive advantage has largely evaporated.' The sudden rise of natural gas is credited with throwing wind energy into
another of its periodic slowdowns. Iowa, with 3,670 megawatts of wind electricity
generation, trails only Texas among the 50 states in wind capacity. Iowa is seeing the
herky-jerky path of wind. The state has gained about 2,300 jobs making towers, turbines,
blades and gearboxes at plants in Cedar Rapids, Fort Madison, Newton and West
Branch." Natural gas takes breeze from wind energy's sails Des Moines Register, 27 May 2010 |
"The planned ITER fusion reactor
in France is supposed to replicate conditions inside the Sun to produce limitless clean
energy. But skyrocketing costs are putting the international project at risk. Now Germany's research minister has said Berlin will not write a blank
check for the technology.....Originally, the futuristic reactor was supposed to cost
around €5 billion ($6.15 billion). That was the figure given in 2006 when the
participating partners -- the European Union member states, China, India, Japan, Russia,
South Korea and the United States -- agreed to fund the project. The Europeans were
supposed to shoulder 40 percent of the costs, with the remaining partners taking on 9
percent each. But a recent estimate by the European Commission has revealed that the total
costs have already tripled to €15 billion, as a result of higher raw material prices
and new safety requirements, among other expenses." |
"The rising
costs of extracting oil are propping up New York futures for the years ahead, even as
prices sink for crude that will be delivered over the rest of this year. The futures contract closest to delivery on the New York
Mercantile Exchange tumbled 13 percent in the past three months to below $70 a barrel as
investors fled riskier assets and the December 2015 contract lost 5 percent. At the same
time December 2018 futures remain above $90 a barrel,
suggesting analysts are less pessimistic about the long term. The U.S. Labor
Department’s index for oil- and gas-field machinery costs rose in April for the first
time in six months. 'The price is holding at decent levels' for delivery in later years,
said Paul
Tossetti, an analyst in Dallas with consultants PFC Energy. 'You need a certain level for all these high-priced resources that
are coming on-stream, deepwater Gulf of Mexico, deepwater Brazil and the Canadian oil
sands. That’s the dynamic part of the non-OPEC oil supply.'” |
"Europe’s sovereign debt crisis is likely to translate into a
slowdown in global demand for oil this year – and lower prices, says Francisco
Blanch, head of commodities research at Bank of America-Merrill Lynch." |
"The Royal Academy of
Engineering said that to convert the countries fleet of 30 million vehicles would increase
current demand by 16 per cent or an extra 10 gigawatts of power. With the 70 GW grid currently running at near full capacity that would
mean building the equivalent of six large nuclear power stations or 2,000 wind turbines to
meet demand. It would also mean that it will have to be controlled by a 'smart grid' of
millions of charging points in order to deal with increase and wild fluctuations in
demand. The findings came from the academy's latest report titled Electric Vehicles:
charged with potential which outlines what needs to be done if our cars are to go green.
The organisation said that in order to reduce our carbon footprint then the sources for
the National Grid will have to change to sustainable supplies. Professor Phil Blythe,
professor of intelligent transport systems at Newcastle University, said: 'It is do-able
but if we want to have electric transport you have to ensure that you have the overall
supply strategy in place.' Professor Roger Kemp of Lancaster University, chair of the
Electric Vehicles working group, said that unless we moved away from coal and gas fired
power stations then there would be no point. 'Swapping gas guzzlers for electric vehicles
will not solve our carbon emissions problem on its own,' said the professor of engineering
at Lancaster University. 'When most electricity in Britain is still generated by
burning gas and coal, the difference between an electric car and a small low emission
petrol or diesel car is negligible.' However the
report concluded that by converting to low emission power generation such as nuclear, wind
and water then it could be a great contributor to targets of reducing the country's carbon
footprint by 80 per cent by 2050. The report
believes that conversion to green cars will be gradual with many people preferring hybrid
cars at first until the electric infrastructure is in place." |
"Uranium supply will supposedly
grow by an average of 5% annually until 2015, but dropping thereafter as reserves are
exhausted. Uranium demand is projected to be growing
by an average of 4.4% per year during the next 20 years. The increase in demand is caused
mostly by China – over the next two decades it will be the world leader in new
reactors building." |
"Cameco Corporation, the world's
largest producer of uranium, plans to double its production from the current 20 million
pounds to 40 million pounds by 2018. In addition to a plan to start operation of the Cigar
Lake uranium mine in Saskatchewan, Canada in mid-2013, the company aims to expand the
production capacity of mines in the United States and Kazakhstan in which it owns
interests. Cameco will also consider purchasing
interests in other new mines. Tim Gitzel, who took office as the new president of Cameco
on May 13, explained, 'Nuclear energy will generate a great demand for uranium in the
future. We will prepare ourselves to ensure a sufficient supply to meet the demand.' He
described the Cigar Lake mine development project, in which the company holds a 50% stake,
as 'the most important project in our production expansion plans.' Spelling out the
company's prospects for the Millennium uranium deposit situated also in the province of
Saskatchewan, Gitzel said, 'We will complete the feasibility study by the end of next
year, and the result is expected to be positive. We are hopeful of being able to start the
first production between 2017 and 2018.' Cameco is also planning to increase output from
existing mines it owns in the U.S. and Kazakhstan, and is considering acquiring interests
in other new mines, he said." |
"UK offshore wind, wave and
tidal power could generate an amount of electricity equivalent to a billion barrels of oil
per year, according to the first comprehensive valuation of the country's offshore energy
resource, published today. ‘The Offshore
Valuation' report by the Offshore Valuation Group, an informal collaboration of government
and industry organisations, found that in order for the UK to become a net exporter of
offshore renewable electricity it would need to exploit just under a third of its total
offshore wind, wave and tidal resource by 2050. In doing so it would create 145,000 new
jobs, provide the Treasury with £28 billion in tax receipts and reduce carbon emissions
relative to 1990 levels by 30%, according to the group, which includes the UK, Scottish
and Welsh Governments, The Crown Estate and eight companies across the energy sector. The
net value of Scotland's seas alone, calculated as reaching 68GW by 2050, is estimated at
£14 billion in terms of electricity sales. The group, which also received funding from
the Committee on Climate Change, said that if offshore resources were developed still
further to tap their full practical potential, offshore renewables would allow the UK to
power itself six times over at current levels of demand....Tim Helweg-Larsen, director of
researchers Public Interest Research Centre (PIRC), a member of the group, said: 'To
discover that we own a resource with the potential to return the UK to being a net power
exporter, and on a sustainable basis, is genuinely exciting, and a wake-up call to those
in a position to foster the further development of this industry.'" |
"China has extended an $8
billion lunge into to Canada's oilsands - the rich, hugely controversial tar deposits that
are second only to Saudi Arabia in proven oil reserves and lie at the centre of a bitter
legal dispute over 1,600 dead ducks. The rights acquisition deal, led by China's sovereign
wealth fund, comes as rising resource prices, BP's catastrophic oil spill in the Gulf of
Mexico and a new Beijing-led era of 'great game' oil diplomacy has brought Canada's
bitumen deposits into global focus. Analysts believe
that BP's accident may be actively pushing up the notional value of the oilsands. The
resource once universally known as 'bad oil', analysts say, suddenly seems less
threatening than offshore drilling. But as the world follows China's lead and turns its
attention to the oilsands of Alberta, it will find the industry battling an old demon. The
extraction process is dirty and the big players involved stand accused of environmental
high-handedness. Syncrude, the world's largest producer of fuel from oilsands, is
defending itself against accusations that toxic waste from its plants killed a large
number of ducks that alighted on a tailings pond. The company's lawyers -
melodramatically, say environmentalists - have said that they face the choice of 'breaking
the law every hour of every day' or shutting down....Market interest in exploiting
oilsands - massive bitumen deposits from which oil products may be extracted - blows hot
and cold. Extracting fuels from the tar produces huge quantities of greenhouse gasses and
the process is viable only when the prevailing price of crude oil climbs above a
relatively high value. At present, post-crisis prices
of about $75 per barrel, some projects only barely make financial sense. BP, which is struggling to limit the environmental and reputational damage
of its vast spill in the Gulf of Mexico, is among a number of oil majors that have begun
to re-assess oil sands projects as crude prices have risen. It is in talks to secure the
product of a $2.5 billion oilsand project in Alberta and has opened talks on two other
deals this year. The Chinese sovereign wealth fund is also understood to be planning a
pipeline that would carry refined oilsand petroleum product to Canada's west coast, from
where it could easily be shipped to China. Environmental groups, which have long been
opposed to the exploitation of Canadian oilsands, have redoubled their protests since
recent BP's rig accident." |
"Massachusettsbased Cambridge
Energy Research Associates finds 2010 will mark the first time oilsands production will
account for the lion's share of U.S. imports of petroleum and refined products....Canada has long been a top oil supplier to its southern neighbour, but
2010 will mark the first time oilsands production will account for the lion's share of
U.S. imports of petroleum and refined products, according to the report prepared by
Massachusettsbased Cambridge Energy Research Associates. Oilsands could eventually account
for 20 to 36 per cent of U.S. supply by 2030, the report notes....Oil demand in the U.S.
peaked in 2005, but it will remain the world's largest consumer over the next two decades,
the report notes. That in turn will allow oilsands to assume a larger portion of the
country's energy mix. The oilsands would offset reduced supplies from traditional
suppliers like Venezuela, Mexico and Saudi Arabia....The
CERA report suggested the total 'wells-to-wheels' emissions from oilsands-derived crude
are about five to 15 per cent higher than the average of oils produced in the U.S., but said comparisons can be misleading. In addition to greenhouse
emissions, the report noted concerns with land reclamation and water use as potential
stumbling blocks to further development." |
"It has been nearly a month since the tragic events aboard BP's
drilling rig, Deepwater Horizon, which suffered a blowout, caught fire, and sank in the
Gulf of Mexico releasing prodigious amounts of oil into the sea. So far there has been
little damage to the coastline; however, this could change quickly as oil is still pouring
from the damaged well pipe and it could be months before the blowout is brought under
control. The possible damage to the environment ranges anywhere from minor, which is
doubtful, to wiping out the seafood and tourist industries along the Gulf coast for many
years....Yet another serious problem for the
prospects of future oil production is starting to emerge. The deepwater wells, on which we
are basing much of our energy future, may not be as productive as previously thought.
Until recently the poster child for deepwater oil production was BP's Thunderhorse
platform that, after years of delay, started producing in 2008 and was supposed to produce
a billion barrels of oil at the rate of 250,000 barrels a day (b/d). At first all
seemingly went well with production reaching 172,000 b/d in January of 2009, but then
production started falling rapidly to a low of 61,000 b/d last December. BP refuses to comment publicly on what is happening at Thunderhorse, but
outside observers are growing increasingly skeptical that the platform will ever produce
the planned billion barrels. At least 25 other deepwater projects are said to be facing
problems of falling production, raising the question of just how much oil these very
expensive deepwater projects will ever produce. Pressure for regulatory reforms is likely
to be based on just how much environmental and economic damage the Deepwater Horizon
blowout ultimately causes." |
“The Barnett remains important as the only shale play that has been
developed to maturity. We believe that the Barnett largely dispels the belief that modern
shale production is a 'manufacturing process,' or that shales constitute 'gas factories.'
That belief is premised on the idea that shales have large cores that are uniform, that
each well is similar, and that over time wells get better. Our
data from the Barnett shows that all three of these premises are wrong. The core areas are
small, wells vary considerably even in close proximity, and over times wells have gotten
worse, not better.” |
"...there is a much more
imminent and worrying tide affecting the oil price: the overwhelming ocean of public debt
becoming evident in Europe’s over-leveraged economies. According to the International
Energy Agency 'downside risks remain a clear and present danger' for the oil price,
despite a raft of analyst forecasts that it will hit $100 per barrel this year. Warning of
a growing supply amid the threat of European economic troubles, the Paris-based body cut
its projections for this year. Worldwide oil demand
is projected at 86.4m barrels a day this year, up 2pc from last year, but this is still
220,000 barrels a day below the previous IEA estimate. Over the past two weeks, oil prices
have been dropping on general worries about the global economy, tracking the depression in
the equity markets..... It seems that the tumbling
oil price is another sign that investors believe it is possible that a contagious debt
crisis is enveloping European nations in a spreading slick. Any return to lower oil prices
will signal even worse news from the energy industry, compounding political pressure
following the Gulf of Mexico spill. Even if the oil price slumps, the US administration is
likely to remain nervous about cosying up to the agents of an environmental disaster. But
the IEA warned world leaders this week not to over-react to the BP crisis by restricting
drilling at a time when prices are dropping. 'A knee-jerk reaction by regulators, banning
new offshore licensing altogether, as some are proposing, risks pushing companies to
ever-more precarious locations in search of hydrocarbons,' it said. 'The law of unintended
consequences may apply.' In other words, this could create the very same conditions of
asset neglect, under- investment in exploration and depressed production that leads to oil
price spikes and further volatility." |
"Price pressures in Britain are
intensifying with annual inflation expected to rise further above the 2pc target when the
latest figures are published on Tuesday. Economists predict that higher petrol prices
helped to drive the consumer prices index (CPI)
– the official measure of inflation – up to 3.5pc in April, from 3.4pc in March.
The Office for National Statistics data would prompt the first letter of explanation from
Mervyn King, Bank of England governor, to George Osborne, the new Chancellor, outlining
why CPI was more than one percentage point above target. The retail prices index, which
includes housing costs, is expected to have risen even more sharply to 4.9pc from 4.4pc.
Consumer price inflation was above 3pc throughout the first quarter, and the Bank was
forced to concede last week that it had underestimated the short-term threat of inflation
in previous forecasts. It has updated its forecasts to reflect above-target inflation
throughout 2010." |
"The oil leak in the Gulf of Mexico and resulting uncertainty about
future offshore supply won't likely send oil prices soaring anytime soon, finds a new
report from CIBC World Markets Inc. CIBC's latest Global Positioning Strategy report also
notes that even a successful containment of Europe's debt crisis is unlikely to lift oil
prices much higher. Instead, several countering forces are 'at play' in the oil market
that should see prices stay below triple-digit territory over the next 18 months,
averaging US$80 a barrel this year and US$85 in 2011. The forecast [is] by Peter Buchanan,
senior economist.... Mr. Buchanan ... notes that oil prices are cyclical and that there
has historically been four to five years on average between price peaks. 'That would
suggest 2012 or 2013 as the next high water mark for prices, although the exact timing
obviously depends on the pace of demand and capacity growth,' he says. 'Surging demand historically has amplified price shocks, leading
to recession or slower growth, which in turn has begat lower prices. Those have helped to
grease the wheels of economic recovery,' adds Mr.
Buchanan." |
"The Obama White House is taking a tough line on big oil. At least,
that is how it appeared as pictures of the first oil-soaked birds in the Gulf of Mexico
filled TV screens. Ken Salazar, the US Interior Secretary, said he would 'keep the boot on
the neck of BP' over the Deepwater Horizon oil spill. But he needs to be careful. If he
treads too hard, his other boot will land on the neck of Joe Plumber and every American
who objects to $3 gasoline. Until the market mayhem
over Greece took the shine off the oil price, American petrol prices were hovering at that
critical $3 a gallon number, which causes blue-collar rage. Oil analysts are seeing demand
destruction, the point at which the price begins to alter motorist behaviour. Between
January and March, consumption of road fuel began to decline much as it did in 2008 when
American eyeballs were popping at $4 gallons. When prices are too high, Americans drive
fewer miles, not helpful when the world is on a cliff-edge of debt, insolvency and
possibly a new recession....America imports about 12
million barrels a day, 57 per cent of US demand for liquid fuels, according to the US
Energy Information Administration. There was a time in the mid-1980s when American oil
companies were pumping nine million daily barrels but the output is in decline, reaching a
nadir of 4.2 million a day in 2005. BP’s big discoveries in Alaska helped to rescue
American necks from Opec boots in the 1980s. At one stage, the Prudhoe Bay oilfields on
Alaska’s north shore were producing close to two million daily barrels but this has
dwindled to 600,000. Meanwhile, the old prospects onshore in Texas and Oklahoma are waning
rapidly. There is an alternative to explosions and oil-soaked birds. Canada provides a
fifth of America’s oil imports, but Canadian crude is controversial — oil sands
bitumen, a poisoned environmental soup of blighted landscapes, tainted rivers and carbon
emissions. Who else might supply? One option is the other Gulf: there is President
Bush’s Iraqi battleground, where American multinationals are trying to develop
oilfields. Beyond that is the oily carrot of political settlement with Iran....Who cares
to guess the price in dollars per gallon if the Deepwater Horizon and its sister ships had
not drilled the Gulf into a pin cushion? It’s all horribly dangerous and
America’s safety record is poor. Every year lives are lost offshore in the Gulf,
since 2001 more than 50 deaths, perhaps a reflection of the gung-ho mentality of American
oil workers or just sloppy enforcement of rules. Still, the big issue for Mr Obama is not
safety but energy." |
"Energy companies in the UK, as the latest ENDS report shows, are now beginning to deploy a
technology that will greatly increase available reserves. Government figures suggest that underground coal gasification
– injecting oxygen into coal seams and extracting the hydrogen and methane they
release – can boost the UK's land-based coal reserves 70-fold; and it opens up even
more under the seabed. There are vast untapped reserves of other fossil fuels –
bitumen, oil shale, methane clathrates – that energy companies will turn to if the
price is right." |
"Even as the first oil from BP's stricken Macondo well in the US Gulf
of Mexico washed ashore this weekend, and as the clamour mounts, experts claim the slick
will be nothing like as catastrophic as forecast – for either the environment or the
oil industry. However, some analysts warn the accident could still seriously hurt global
oil supply later this decade....The rising backlash against deepwater drilling –
anything over 500 meters, far too deep for divers to work should anything go wrong –
is unlikely to damage the industry as much as the noise on Capitol Hill would suggest,
because it is too vital to the oil supply. According to analysts Douglas Westwood,
deepwater oil production has soared from under two million barrels per day in 2000 to
eight mb/d in 2010, almost 10 per cent of global consumption, and must rise further as
onshore and shallow offshore production declines. 'They can't ban deepwater because the
industry has nowhere else to go', says chairman John Westwood. Last year, 500 deepwater
wells were drilled, costing up to $100m each, and Douglas Westwood predicts $167bn will be
spent on deepwater development to 2014. Deepwater drilling has provided substantial
discoveries recently, such as BP's Tiber field off Brazil, thought to contain some three
billion barrels of oil. But such is the industry's desperation it will also chase tiny
fields at depths unheard of a decade ago. The Macondo field probably contains less than 50
million barrels – an oilfield minnow. A BP spokesman admitted "the easy stuff is
done first. We're now on to the stuff that is technically, politically or economically
difficult.' If a ban is unlikely, deepwater drilling will be far more tightly regulated,
as happened after the Piper Alpha disaster in 1988. Then British North Sea production
slumped for several years as safety equipment and procedures were upgraded, before
recovering. The difference is that many forecasters
now predict a global oil supply crunch by the middle of this decade, so any pause in US
deepwater drilling could have magnified consequences. The analysts Newedge USA say if the
moratorium on new drilling, announced by President Barack Obama after the accident drags
on, oil supply could suffer a shortfall of up to one mb/d by 2016 to 2018. Another analyst
said: 'They wouldn't be able to offset depletion with new drilling'. With forecasters
predicting peak oil in 2015, this could only make matters worse." |
"Oil fell $2 a barrel on Friday and posted its biggest weekly loss in
almost a year and a half following the sharp sell-off on Wall Street and on worries that the euro zone's debt crisis
will derail the global economic recovery. Better-than-expected U.S. jobs data for April
failed to calm fears in oil markets that the Greek's debt crisis could spread to other
euro-zone countries. U.S. crude oil futures fell for a fourth day in a row and settled
down $2, or 2.6 percent, at $75.11 a barrel, after falling further to $74.51, its lowest
since February 16." |
| "For Tony Hayward, it was a moment to savour. Two years after his
appointment as chief executive, his decision to push BP to the outer limits of deepwater
oil exploration had borne fruit — in spectacular style. The discovery last September
of the giant Tiber field in the Gulf of Mexico was the kind of achievement that makes
oilmen quiver. Containing in excess of 4 billion barrels of oil — more than all the
proven reserves left in the North Sea — it was found after months of drilling beneath
a mile of water and five miles of rock, salt and sand under the seabed, smashing industry
records as the deepest well drilled. At the time, Tiber seemed the ultimate symbol of
BP’s prowess, and Mr Hayward seemed to have reversed the woes that had plagued his
predecessor, Lord Browne of Madingley. But just eight months later, the state-of-the-art
rig that made the discovery, Deepwater Horizon, lay wrecked on the seabed — a watery
tomb for 11 workers and the source of a torrent of raw crude that threatens an
environmental catastrophe. It is an accident that has left Mr Hayward’s reputation in
the balance and raised questions about the wisdom of his aggressive push into deep
water....As supplies of easy oil — the kind that
gushes from vast fields in the Middle East — have become scarce, so the industry has
pressed further into more challenging environments. It has developed new technology to
produce oil in the Arctic, from fields rich in poison gas in Central Asia and from the
bitumen-rich sands of northern Canada. Few motorists consider where the hydrocarbon
molecules that power their cars actually come from — but it is a journey that every
year becomes longer and more tortuous. For BP, which
led the way in the North Sea in the 1960s and 1970s, the push to produce oil from ever
deeper and more treacherous ocean depths had become a driving obsession. It was in the
Gulf of Mexico and off Angola and Egypt, that Mr Hayward felt BP could excel and trump its
rivals." BP’s name is stained by its barrels of hubris London Times, 7 May 2010 |
"Iraq on Thursday invited international energy firms to submit bids
in a September 1 auction of three gas fields, in a third major tender aimed at developing
the war-torn state's oil and gas sectors. Oil
Minister Hussein al-Shahristani also announced that a long-running row between Iraq and
the autonomous northern region of Kurdistan over oil revenues had been resolved, in a
further boost to the government's energy sector. The
planned gas field auction follows the signing of contracts last year with foreign firms to
develop 10 oil fields across Iraq, aimed at raising crude output, currently 2.4 million
barrels per day, to between 10 to 12 million bpd.... Iraq produces a negligible quantity
of gas compared with the size of its reserves, and currently flares off most of what it
produces as it lacks the capture technology needed to use the gas for electricity
production. 'The reason behind offering these fields
is Iraq's increasing need to feed the electricity stations, because Iraq is suffering from
a chronic lack of electricity,' Shahristani added.
The three gas fields on offer contain total estimated reserves of 11.2 trillion cubic feet
(317 billion cubic metres). The biggest field, Akkaz, which is 50 kilometres (30 miles)
long and 18 kilometres wide, is west of Baghdad in Anbar province and contains 5.6 tcf.
The second field, Mansuriyah, is located in Diyala province northeast of Baghdad, and has
reserves of 4.5 tcf." |
"The U.S. needs energy — lots and lots of energy — and
37.1% of it is currently supplied by oil. As the population expands and the policy
decisions and technological innovations needed to make the switch to green, renewable
energy sources lag, thirst for the stuff is only going to grow. Critics have long lamented that when it comes to energy policy,
9/11 was an opportunity for the country to have an honest debate about the choices it
needs to make if it's ever going to break its addiction to oil. 'We need to address the underlying
issue,' says Lisa Margonelli, director of the New America Foundation's Energy Policy
Initiative, 'and that's our dependence on oil.'
Having a national conversation now — an adult one — is the only way
forward." |
"China vowed to use an 'iron
hand' – and an extra $12 billion – to reach efficiency targets after revealing
energy intensity rose 3.2% in the first quarter compared to last year, reversing a steady decline in the amount of energy used to produce each
dollar of gross domestic product. The increase in the amount of power China’s economy
is using relative to how much it’s producing is a major setback in the push to cut
energy intensity by 20% by the end of 2010 from 2006. Up until last year, China was doing
pretty well, lowering the relative use of energy by 14.38%, according to a statement by
Premier Wen Jiabao." |
"Britain's most polluting power
stations due for closure in 2014 are likely to be granted a reprieve by the European
Union, giving the UK another four years to tackle its looming energy shortage. Experts had warned that taking this back-up generation off the system
before nuclear power plants are built would risk an 'energy gap' and potential black-outs.
But furious lobbying by UK energy companies forced the EU to back down on its directive on
Tuesday, with MEPs on the body's environmental committee voting to recommend that the
power stations another four years of life. The EU parliament will take a final decision in
July, but is likely to follow the committee's guidance. One regulatory source said British
lobbyists had put by far the most pressure on the EU to re-think its rules, warning that
the UK would simply have to flout the law if no changes were made. Ian Parrett, an energy
consultant at Inenco, welcomed the decision, saying that the previous timescale 'simply
wasn't realistic and threatened the UK's energy security. But he warned against
complacency about the UK's energy needs, with around £200bn of investment in new
generation and networks needed by 2020. 'A postponement will at least provide breathing
time,' he said. 'But even with the delay, any new Government will face energy as one of
its top priorities to avoid a looming energy gap casting a shadow over any economic
recovery'." |
"Will the unfolding environmental catastrophe from the ruptured
Deepwater Horizon well in the Gulf of Mexico become deep-water oil’s equivalent to
the Three Mile Island [nuclear] accident? ....President Barack Obama has suspended his
recent decision to open new offshore areas for oil development and has declared a
moratorium on new drilling. You can imagine what the regulatory environment will be like
after three months of the spill, just as you can imagine what those satellite photos of
the Gulf of Mexico will look like. But what you might not imagine are the implications for
world oil supply. Conventional oil supply has not
grown since 2005. Without a steady stream of oil from fields below the ocean floor, not
only can’t world oil production grow, it can’t even stand still, since we rely
on oil from new deep-water fields to replace the bulk of the four million barrels per day
of global production we lose every year to depletion (out of a total of roughly 86 million
barrels per day). If the Deepwater Horizon disaster
is the offshore energy industry’s Three Mile Island, then not only has world oil
production already peaked, but it will also very soon start to shrink." |
"China has been self-sufficient
in coal until recently (importing some coal but exporting just as much or more), but
supply problems over the last couple of years have led to burgeoning imports and shrinking
exports. If Chinese coal mines can no longer cover the nation's demand, why not just
expand imports still further to make up the difference? China will import 150 million tons
(Mt) of coal this year, twice what it imported last year. That's not much, if we think of
it as a percentage of the nation's total coal consumption. But that 150 Mt represents over
60 percent of the total exports of Australia, the world's top coal exporter. This means if
Chinese imports double again next year—not an unrealistic scenario—China will
need to import more coal than Australia can currently provide. One more doubling of import demand and China will be wanting to import 600
million tons per year, about the total amount of coal exported by all exporting nations
last year. Can Australia expand its coal production? Yes, it can and no doubt will.
Likewise Indonesia and South Africa. But will any or
all of these countries be able to grow exports fast enough to keep up with Chinese demand? Again, expansion will be limited by infrastructure
requirements—ships, ports, trains, and rails. It takes time to build all of
these." |
"It is as if the Orange
Revolution never happened. In a breathless few weeks since he came to power, President
Yanukovych has undone almost all of the pro-Western policies of his predecessor, Viktor
Yushchenko. The pro-Russian leader has been
love-bombed by President Medvedev and Vladimir Putin, the Prime Minister, as the Kremlin
has taken advantage of American indifference and European Union ineptitude to restore its
dominance in Kiev. Mr Yanukovych had ditched aspirations to join Nato before handing
Russia’s Black Sea Fleet a 30-year extension on its lease that leaves it secure in
Sevastopol until 2047. As opposition wrath filled Ukraine’s parliament with smoke and
smashed eggs, he was at the Council of Europe in Strasbourg renouncing another key
Yushchenko policy. He declared that the famine that killed millions of Ukrainians in the
1930s was not genocide perpetrated by the Soviet Union but a 'shared tragedy' with Russia,
Belarus and Kazakhstan at the hands of Joseph Stalin. Ukraine depends entirely on Russia
for its gas, which it will now get at a discount, and Mr Putin has proposed a merger of
their nuclear industries into a shared company as well as joint ventures in shipbuilding
and aircraft construction. This is music to the ears of supporters of Mr Yanukovych’s
Party of Regions in his Russian-speaking strongholds in the east and south of Ukraine. But
it confirms the worst fears of nationalists in western Ukraine, who voted overwhelmingly
against him in February’s presidential election. Opposition moves against Mr
Yanukovych’s policies threaten to deepen a geographical divide that could mean that
western Ukraine rejects him as its president. The
EU’s vaunted new foreign policy 'reach' is proving illusory in the rush by individual
member states to cut energy deals with Mr Putin. He
told a press conference with the Italian Prime Minister Silvio Berlusconi on Monday that
Italian companies had received $2 billion in contracts to build the Nord Stream gas pipeline
from Russia to Germany, while France’s EDF would have a 20 per cent stake in the South Stream project that
will carry energy to Europe under the Black Sea. Both
bypass Ukraine’s pipelines, crushing earnings from transit fees and making the
country even more dependent on Moscow." |
"For Big Oil the timing could not have been worse. Less than a month
ago President Obama announced a significant expansion of offshore oil drilling in the US.
His decision to open up new parts of the Gulf of Mexico, the East Coast and Alaska’s
Beaufort and Chukchi seas was met with delight by the supermajors — companies such as
BP, Chevron, ExxonMobil, Total and Shell that had been arguing that new technology and
safer processes had mainly done away with the threat of major oil spills such as the 1989
Exxon Valdez disaster. At a stroke, however, last
week’s deadly accident on board the Deepwater Horizon rig has reopened questions
about safety while galvanising opposition from environmentalists. Although Mr Obama is unlikely to reverse the decision on offshore
drilling much hinges on how quickly BP, which had leased the rig, and Transocean, its
owner, can contain the spill." |
"One of the Federal Government's top infrastructure advisers is
warning of an oil crunch that could send the global economy spiralling back toward
recession. Curtin University Professor Peter Newman sits on the Government's
Infrastructure Australia Council and says peak oil - when demand outstrips dwindling
supply - has already hit but that the global downturn has kept prices low. Professor
Newman even blames oil for causing the global recession in the first place, and he is not
alone.... Professor Newman says the world reached peak oil in 2008 when it spiked at about
$140 a barrel and sent petrol prices soaring. 'Peak oil did happen I believe in 2008 and
it didn't happen because some oil exporting country had a revolution or something. It just
happened because we couldn't produce enough to meet the demand,' he said. Professor Newman largely blames the global financial crisis on oil
prices. 'Subprime mortgages were mostly out on the urban fringes miles away from work.
People had to drive and when the price of fuel tripled in American cities they couldn't
pay their mortgages,' he said. As the global economy
has strengthened in recent months so has the oil price, and Professor Newman says it does
not bode well for recovery. 'As the demand increases again the supply crunch will happen
and the price will go up,' he said." |
"Saudi Arabia’s
long-standing status as a swing producer of crude oil could be drawing to a close
according to the head of national oil company Saudi Aramco. Global oil exports from Saudi
Arabia, the world's largest oil producer alongside Russia, will start to wane in the
coming years as domestic demand surges and spare capacity drops, warned Khalid al-Falih,
chief executive officer of Saudi Aramco in a speech published on the company's website. Domestic energy demand is expected to increase by almost 250%, from about
3.4 million barrels per day (b/d) in 2009 to about 8.3 million b/d by 2028, which will
eventually affect the country's ability to export oil, he said. 'Along with China and
India, we do expect Saudi Arabia to be one of the largest sources of global oil demand,'
says Amrita Sen, oil analyst at Barclays Capital.'"And given Saudi's importance in
the oil market as the swing producer, in the longer term, this can impact their ability to
control the market at the margin. However, this is unlikely to have a significant impact
this year, given the substantial spare capacity it is sitting on, though that buffer could
get eroded sooner rather than later in the coming few years.'" |
"John Watson, chief executive of
Chevron, is refusing to join rival international oil majors in the rush for US shale gas,
warning that the 'price tag is too high' to justify the investments required. Mr Watson, who has only been in the top job at the US’s
second-biggest oil company for three months, is confident his decision not to follow the
pack into US shale gas is the right one. 'We haven’t seen the returns,' he told the
Financial Times. The Chevron chief’s comments come against a backdrop of US gas
producers struggling with low prices brought on by oversupply. Many in the industry
believe governments worldwide, under pressure to lower their dependence on carbon fuels,
will increasingly turn to natural gas until the technology is available to enable
renewables to produce a substantial portion of electricity demand. Shale gas is about 30
per cent less carbon intensive than oil and 50 per cent less than coal." |
"Global demand for gas is set to rise constantly over the next 20
years amid plentiful reserves and its increasing use to produce power, a senior executive
at Royal Dutch Shell (RDSa.L) said on
Thursday. 'We see global gas demand growing by at
least 2 percent a year over some decades, so by 2030 we look at gas demand hitting 4.5
trillion cubic meters of gas per year,' Malcom Brinded told an oil conference. 'That's 50
percent up from today's level.' Brinded was equally
bullish on prospects for liquefied natural gas, which he saw growing 'a lot faster' than
overall gas demand, driven by China's economic growth and higher demand in Europe and
countries such as Malaysia, Thailand, Singapore, Pakistan, Kuwait, the United Arab
Emirates and Bahrain. 'Despite the difficult market we've had in the last year in the
recession, we... expect global LNG demand to double this decade,' said Brinded, who
expects China's gas demand to 'double or treble' by 2020 from around 100 billion cubic
meters today. This boom in LNG demand will need to be matched by a similarly rapid
increase in supply, which is currently growing by at least 6 to 8 percent a year, he said.
Brinded said he was confident this was possible. 'There is enough gas around, this is
increasingly clear' he said, citing data from the International Energy Agency showing
recoverable gas reserves worth 250 years of current production. Some $5 trillion (3.24 trillion pounds) would be needed over the
next 20 years -- or $20 billion per year -- to extract this gas. 'These figures are
staggering,' he said. 'The gas is there, it is going
to take investments and it needs a lot of new
technology... This is truly an energy revolution.'
'People are looking for certainty around three key issues: availability, affordability and
environmental acceptability of gas. I think gas wins on all points.'" |
"The world's second-largest oilfield contains more oil than
previously estimated, Kuwait's state news agency reported a top official as saying on
Thursday. OPEC-member Kuwait is the world's fourth-largest oil exporter, and sits on
around 8 percent of global reserves. The Greater Burgan area is second only to Saudi
Arabia's Ghawar oilfield in size, according to U.S. government data. 'Oil reserves in the
Burgan field are much greater than what had been circulated,' agency KUNA said, citing
Sheikh Ahmad al-Fahad al-Sabah, the Gulf Arab state's deputy prime minister for economic
affairs. Sheikh Ahmad gave no details on how much oil
the field could hold." |
"Oil use will probably peak in emerging markets by early next decade,
a senior adviser to Saudi Arabia's oil minister said on Thursday in a further sign the
concept of peak demand has crept into the industry mainstream. Interest in the view oil
demand may soon reach a high point and then fall back has grown following a drop in global
oil use last year caused by the economic crisis, as well as efforts to combat climate
change and use fuel more efficiently. 'I think that peak demand will come before peak of
supply,' said Ibrahim Al-Muhanna, advisor to Saudi Oil Minister Ali al-Naimi, in answer to
questions at a conference in Paris.... Muhammed al-Sabban, head of the Saudi delegation to
U.N. talks on climate change, said in January the possibility oil demand might peak this
decade was a 'serious problem' for Saudi Arabia. The kingdom depends on oil income for
nearly 90 percent of state revenue and exports make up 60 percent of its gross domestic
product....The IEA has, however, not put a timeframe on when oil demand might peak in
emerging markets and forecasts economies such as China and India will drive global
increases in demand for the foreseeable future. A
six-year oil price rally that ended in 2008 had led to increased interest in the theory
world oil supply may be nearing its peak as easily accessible reserves dwindle. That issue
faded as economic slowdown eroded demand, resulting in abundant supply. One leading
proponent of the peak supply theory stands by his view conventional oil supply has peaked,
but has also turned his attention to peak prices and peak demand. 'We're sort of at peak
demand right now,' retired petroleum geologist Colin Campbell, who has long been
associated with the belief the world's oil supplies are dwindling, told Reuters earlier
this month." |
"The European Union, including the UK, has set a goal of obtaining 10
per cent of its road fuels from renewable sources by 2020. But a new report commissioned in Brussels found some biofuels can lead
to four times more carbon dioxide polluting the atmosphere than equivalent fossil fuels.
Biofuels have already been criticised for causing food shortages in countries where land
for rice or wheat has been displaced by fields of soy beans or sugarcane for fuel. Environmental campaigners say the latest report proves the renewable
energy source is also bad for climate change, since carbon dioxide is a greenhouse gas
that causes global warming. The report for the European Commission, released under Freedom
of Information rules, looked into the 'indirect emissions' from biofuels caused by land
use change. The worse example is soy beans in America. Because the land that
used to grow soy beans for animal feed is now being used for biofuels, it means that more soy beans must be grown
in the rainforests of Brazil to
make up for the loss in the domestic market. Soybeans grown in America therefore have an
indirect carbon footprint of 340kg of CO2 per gigajoule, compared to just 85kg for
conventional diesel or gasoline. Biodiesel from
European rapeseed has an indirect carbon footprint of 150kg of CO2 per gigajoule, while
bioethanol from European sugar beet is calculated at 100kg – both much higher than
conventional diesel because of indirect use of land in other countries to replace the food
crops that are no longer grown in Europe. By contrast, imports of bioethanol from Latin
American sugar cane and palm oil from southeast Asia have relatively low indirect
emissions at 82kg and 73kg per gigajoule respectively. But these biofuels have high direct
emissions because although no land for food is being displaced, rainforest it being cut
down to grow the crops in the first place." |
"For most people the waste they eject from their bodies is something
they don't bother thinking about once they've shut the toilet door behind them. But there
are some who think human waste could be a major part of a stable gas supply.... The UK
produces 1.73 million tonnes of sewage sludge every year, which the Department for
Environment, Food and Rural Affairs says could potentially be used to produce biogas....
And, this summer British Gas, in partnership with Thames Water and Scotia Gas Networks,
plan to be the first to start piping biomethane, derived from faecal matter, into the
national network and straight back to the homes of 130 customers in Didcot in Oxfordshire.
Anaerobic digesters - carefully managed bacteria - are already used to turn faeces into a
means of generating electricity, but the additional plant that British Gas will install
will clean up the spare biogas and turn it into biomethane which can be used on household
hobs and in gas central heating....A 2009
paper by the National Grid said with the 'right government policies in place,
renewable gas could meet up to 50% of the UK's residential demand for gas' but admitted
this would not be easy. It said that by 2020, a more
feasible projection could see sewage and waste water providing up to 270 million cubic
metres (0.28%) of the estimated 97,000 million cubic metres total demand for gas. In an
ideal scenario, by that same date, it could provide 629 million cubic metres (0.65%) of
the total UK gas demand." |
"Henry Groppe was a lonely voice when he forecast the right oil
price. He’s now going against the grain on another fuel.... When it comes to
predicting the price of oil, Henry Groppe has made a long career out of zigging when
others were zagging. So why should he be any different when talking about natural gas? Mr. Groppe – the octogenarian patriarch of Texas petroleum
industry analysts Groppe Long & Littell – doesn't buy the prevailing wisdom that
New York Mercantile Exchange natural gas prices are dead in the water, stuck around $4 to
$5 (U.S.) per million British thermal units even as demand recovers, awash in supplies and
with much more on the way. No, his analysis (and more than 50 years of experience) tells
him that gas inventories are about to get a lot tighter, that new supplies are overstated,
and that prices are headed north of $8 by the end of summer. Why is he so sure he's got it
right and most everyone else has it wrong? Because, he contends, shale gas – the
previously unattainable source of vast gas supplies that has been unlocked by new
high-tech horizontal drilling advancements – is not the holy grail it's been cracked
up to be. Not even close." |
"...the U.S. Joint Forces
command recently issued a Joint Operating Environment report warning that surplus oil
production capacity could vanish as soon as 2012, leading to serious oil shortages by
2015. Dire consequences, they predict, could follow quickly. What they are essentially
predicting is the onset of 'peak oil'—the point at which the demand for oil will
always be higher than the actual supply. While it
will be hard to predict exactly what will happen in the face of such a drastic sea change
in the world’s energy supply, the report says 'it surely would reduce the prospects
for growth in both the developing and developed worlds.' It may cause fragile states to
become failing states and failing states to collapse, while also causing major problems
for overpopulated oil-guzzling states such as China and India. Here in the U.S., the
possibility of at least a difficult recession is very strong. The report notes, 'One
should not forget that the Great Depression spawned a number of totalitarian regimes that
sought economic prosperity for their nations by ruthless conquest.' If this were one study, it would be scary enough, but the
report’s conclusion aligns with a peak oil study from Kuwait as
well as an estimate done by billionaire Richard Branson’s energy
taskforce." |
"Rising oil prices pose a grave threat to global economic recovery, according to some
economists. Thus it was sobering this week to read that the US military has warned the
world faces a 'severe energy crunch' and looming oil shortages. According to a Joint Operating Environment report from the US Joint Forces Command, 'a
severe energy crunch is inevitable without a massive expansion of production and refining
capacity'. .... More ominously, the military predicts
a 'Peak Oil' scenario - where
demand outstrips the world's supply capacity - as soon as 2012. 'By 2012, surplus oil
production capacity could entirely disappear, and as early as 2015, the shortfall in
output could reach nearly 10 million barrels a day.' Current oil demand is about 86
million barrels a day. The repercussions of Peak Oil have potentially grave consequences
both economically and militarily. On the military
front the USFC notes that already Chinese 'civilians' are in the Sudan guarding oil
pipelines to protect supply, and that this 'could portend a future in which other states
intervene in Africa to protect scarce resources. The implications for future conflict are
ominous, if energy supplies cannot keep up with demand and should states see the need to
militarily secure dwindling energy resources,' the report says. 'While it is difficult to
predict precisely what economic, political and strategic effects such a shortfall might
produce, it surely would reduce the prospects for growth in the developing and developed
worlds. 'Such an economic slowdown would exacerbate other unresolved tensions, push
fragile and failing states further down the path toward collapse, and perhaps have serious
economic impact on both China and India. At best, it would lead to periods of harsh
economic adjustment." |
"Demand for oil will hit an all-time high this year, the
International Energy Agency has forecast. The agency also warned that increased global
consumption, fuelled by a near-20 per cent leap in demand in China, could choke off
economic recovery in the UK and continental Europe. The
energy adviser estimated that oil demand worldwide would hit 86.6 million barrels of oil
per day this year — 2 per cent higher than last year and an increase of 1.67 million
barrels a day. Demand is expected to just exceed the
86.5 million barrels a day consumed in 2007, the last full year before the onset of the
global economic crisis. The forecast is an upward revision by 100,000 barrels a day
compared with the agency’s estimates last month. The agency said that resurgent
demand showed the two-speed nature of the global economic recovery from recession and
highlighted the effect on the oil price, which hit an 18-month high of more than $87 a
barrel last week. The agency said in its report: 'Ultimately things might turn messy for
producers if $80-$100 per barrel is merely seen as the new $60-$80, stunting economic
recovery while prompting resurgent non-oil and non-Opec supply investment. A recovery in
oil demand is moving apace. The return of economic growth and hence oil demand growth is
fuelling the increase.' Higher prices allied with
still-tight credit conditions 'could stall OECD economic recovery' the agency said, adding that recent higher prices could be 'sustained, raising anew
concerns about the impact on the global economy'. It continued: 'Underlying concerns in
some quarters that oil markets are overheated remain, setting the stage for a sudden
reversal of fortune.'” |
"Oil major BP Plc (BP.L) on Thursday
easily beat off challenges to a Canadian oil sands project and to its executive pay
policy. Europe's largest oil company by market value
said 94 percent of shareholders who voted in advance of the annual meeting rejected a call
to review its Sunrise project to squeeze crude from Alberta's bitumen-drenched soil. A
group of shareholders including California Public Employees' Retirement System (CalPERS),
ethical investor Co-operative Investments and a raft of environmental groups tabled the
resolution." |
"The International Energy Agency
bolstered its 2010 supply outlook for countries outside the Organization of Petroleum
Exporting Countries as production rose in Canada, the U.K. and Russia. Non-OPEC producers,
accounting for about 60 percent of the world’s supplies, will raise output by 600,000
barrels per day this year to average 52 million barrels a day, the IEA said in its monthly market report today.
That’s 220,000 barrels a day more than estimated last month. The agency left its
forecast for global oil demand in 2010 little changed, 30,000 barrels a day higher than in
last month’s report. 'Non-OPEC prospects are looking brighter,' the Paris- based
adviser to 28 countries said in the report. 'Upstream investment decisions made before
both 2008’s price surge and slump are starting to bear fruit. New upstream projects
are coming online and ramping-up production.'” |
"Saudi Arabia has emerged as the
second-biggest source of global oil demand growth after China. Higher oil consumption in
the Arab world’s biggest economy is forecast to account for 11.7 per cent of global
expansion this year, the International Energy Agency (IEA) said. While that is still well
behind China’s projected 26 per cent share of worldwide growth in oil consumption
this year, the rising demand for crude and oil products in Saudi Arabia is outstripping
increases in the major developing economies of Russia, Brazil and India.... Riyadh had publicly acknowledged for the first time that direct crude
burning allowed the kingdom to increase light crude production while sticking to its OPEC
commitment to curb exports, meet stricter environmental standards and reduce or eliminate
fuel oil imports during summer, when demand for electricity peaks in the Gulf. Previously,
Saudi Arabia had been importing significant volumes of heavy fuel oil to burn in power
plants. That led to more carbon emissions and air pollution than if it had burnt Arabian
light crude..... Globally, the IEA said oil demand
might set a record this year, wiping out the big contraction of the previous two years
thanks to economies in Asia, the Middle East and North America recovering faster than
expected. It projects oil demand this year of 86.6
million barrels per day (bpd), up 30,000 bpd from last month’s forecast. The previous
annual peak was in 2007, when the world consumed 86.51 million bpd of oil. Oil demand
shrank to 86.21 million bpd in 2008 and 84.93 million bpd last year, for a total 1.8 per
cent decline, according to IEA data. That was the first contraction over two successive
years since the 1980s." |
"The US military has warned that surplus
oil
production capacity could disappear within two years and there could be serious shortages
by 2015 with a significant economic and political impact. The energy crisis outlined in a
Joint Operating Environment report from the US Joint Forces Command, comes as the price of
petrol in Britain reaches record levels and the cost of crude is predicted to soon top
$100 a barrel. 'By 2012, surplus oil production capacity could entirely disappear, and as
early as 2015, the shortfall in output could reach nearly 10 million barrels per day,'
says the report, which has a foreword by a senior commander, General James N Mattis. It adds: 'While it is difficult to predict precisely what economic,
political, and strategic effects such a shortfall might produce, it surely would reduce
the prospects for growth in both the developing and developed worlds. Such an economic
slowdown would exacerbate other unresolved tensions, push fragile and failing states
further down the path toward collapse, and perhaps have serious economic impact on both China
and India.' The US military says its views
cannot be taken as US government policy but admits they are meant to provide the Joint
Forces with 'an intellectual foundation upon which we will construct the concept to guide
out future force developments.' The warning is the latest in a series from around the
world that has turned peak oil – the moment when demand exceeds supply – from a
distant threat to a more immediate risk....But there are signs that the US Department of
Energy might also be changing its stance on peak oil. In
a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the
Obama administration, admitted that 'a chance exists that we may experience a decline' of
world liquid fuels production between 2011 and 2015 if the investment was not forthcoming. Lionel Badal, a post-graduate student at Kings College, London, who has
been researching peak oil theories, said the review by the American military moves the
debate on. 'It's surprising to see that the US Army, unlike the US Department of Energy,
publicly warns of major oil shortages in the near-term. Now it could be interesting to
know on which study the information is based on,' he said....The Joint Operating
Environment report paints a bleak picture of what can happen on occasions when there is
serious economic upheaval. "One should not forget that the Great Depression spawned a
number of totalitarian regimes that sought economic prosperity for their nations by
ruthless conquest,' it points out." |
"The Gas Exporting Countries Forum (GECF), made up of nations
controlling 70 per cent of the world’s gas reserves, has dropped an Algerian proposal
to cut gas exports, thereby proving it is no 'Gas OPEC'. Instead, ministers from its
11-member states resolved yesterday to push for gas prices to be linked to market prices
for crude. 'All ministers agreed and supported that we continue our efforts to achieve
indexing gas to oil,' the Russian energy minister, Sergei Schmatko, said on Monday after
the group’s latest meeting in Oran, Algeria. The Algerian energy minister, Chakib
Khelil, who headed the meeting, said he hoped the decision would 'mark a new era' for the
organisation. Hopes are one thing, results are another; and Mr Khelil, who may already be
frustrated by the group’s lack of enthusiasm for his proposal to limit gas supplies,
is likely to be disappointed. Gas producers worldwide
have been dismayed by a roughly 50 per cent drop in the past two years in gas prices on
spot markets that are becoming increasingly international as improved technology for
liquefying gas, as well as larger tankers, has made it economical to transport the fuel
across oceans. The price decline has been blamed on the recession, which lowered global
gas demand, combined with an unexpected surge in US gas output just as other gas producers
were ramping up export capacity. The US emerged last
year as the world’s biggest gas producer, narrowly eclipsing Russia, although –
unlike Russia – it still consumes more gas than it pumps. The increased output was
due to a parallel round of technological improvements in a field so esoteric that it went
unnoticed by most market watchers. Little by little, the drilling engineers and fluid
mechanics who dabble in the down-and-dirty details of drilling-mud composition achieved
breakthroughs in 'hydraulic fracturing'. Through their efforts, it became possible to use
specifically formulated mixtures of pressurised fluids containing suspended solids to
crack open gas-bearing open rock formations that were reluctant to give up their payloads,
and keep the fissures propped open so that the gas could flow. In 2008, an enterprising analyst at the US Energy Information
Administration noticed that gas production in the country, which had been trending
downwards for a decade, was suddenly on the rise. Producers were tapping previously
uneconomic onshore shale gas deposits. Fortuitously, several of those not only held
abundant quantities of gas but were also close to the surface and to major US cities. The genie of abundant, affordable gas supplies was out of the bottle, at
least in North America. That ruined most gas exporters’ expectations that the US
would become a significant market for liquefied natural gas (LNG), and put the economics
of capital intensive gas liquefaction projects in jeopardy." |
"Construction of the
controversial Nord Stream pipeline from Russia to western Europe under the Baltic Sea has
been officially launched. Gazprom holds 51% of Nord
Stream, which will run from the Russian port of Vyborg to Germany's Greifswald. Russian
President Dmitry Medvedev and German Chancellor Angela Merkel attended the ceremony near
Vyborg. The project was given the go-ahead only in February amid fears that the pipeline
could damage the Baltic Sea. President Medvedev said at the ceremony that the pipeline
'for the first time - which may be one of its main achievements - will ensure direct
supplies of Russian gas to western Europe, bypassing transit territories'. The existing
pipelines run from Russia to EU countries via Ukraine, Belarus and Moldova. Russia
provides up to 30% of the gas consumed in Europe, and many European countries have been
keen to secure alternative energy supplies....Apart from the Nord Stream, Russia has been
planning another pipeline, the South Stream, which will run from southern Russia to
Bulgaria under the Black Sea. Meanwhile, Turkey, Romania, Bulgaria, Hungary and Austria
last July signed an agreement to construct the long-planned 3,300km Nabucco natural gas
pipeline. It is expected to pump up to 31bn cubic metres of gas annually from the Caspian
and the Middle East across Turkey and into Europe." |
"A collection of influential
international investors have added their support to a shareholder rebellion over BP's
plans to invest in the controversial Canadian oil sands. Pension funds from the US and Australia say they will back a resolution
at BP's annual general meeting next week that calls for the oil group to publish a report
on the financial and environmental risks involved in developing oil sands. Jack Ehnes,
chief executive of CalStrs, said: 'The environmental risks associated with oil sands
development comes with long-term financial risk for the CalStrs portfolio.' The investors
that have committed to the resolution hold stakes of less than 0.5pc in BP, but CalStrs
and CalPers are among the top ten largest pension funds in the world and their support is
a blow to BP. Oil sands, or tar sands as they are also know, are controversial because
extracting the oil requires significant amounts of energy – giving off more carbon
dioxide and costing more than conventional methods, as well as potentially scarring the
landscape. BP does not have any oil sands production at present but expects to approve the
development of its Sunrise site in Canada later this year. The $10bn (£6.6bn) venture is
shared with US group Husky and covers an area in Alberta roughly the size of
England." |
"Cameco’s McArthur River mine, in Canada, was, in 2008, the
biggest single uranium mine in the world, with an output of 6 383 t of uranium, or 15% of
world mine production. The Ranger mine, in Australia, owned 68% by Rio Tinto, came second
at 4 527 t, or 10%, with Namibia’s Rössing (69%-owned by Rio Tinto) third at 3 449
t, or 8%, followed closely by BHP Billiton’s Olympic Dam mine, in Australia, at 3 344
t, or also about 8%. The WNA forecasts world uranium demand at 74 000 t by 2015, and
states that most of this will have to come directly from mines. In 2007, the world’s
known recoverable (‘reasonably assured and inferred’) resources of uranium
(assuming a uranium price of $130/kg) amounted to 5 469 000 t. Of this total, 1 243 000 t
was in Australia (23% of the total), 817 000 t in Kazakhstan (15%), 546 000 t in Russia
(10%), 435 000 t in South Africa (8%), 423 000 t in Canada (8%), 342 000 t in the US (6%),
278 000 t in Brazil (5%), 275 000 t in Namibia (also 5%) and 274 000 t in Niger (5% as
well). It should be noted that the current long-term contract price for uranium is about
$132/kg ($60/lb), while the spot price is in the $88/kg ($40/lb) to $99/kg ($45/lb) range.
However, there was relatively little exploration for
uranium, worldwide, between 1985 and 2003. (The Chernobyl disaster was in 1986). The
restarting of exploration soon brought results: in just the two years, 2005 and 2006,
global uranium resources were increased by 15%. Moreover,
large parts of the world have not yet been explored for uranium. The Brazilian Ministry of
Mines and Energy points out that only 25% of that country has so far been prospected for
the energy metal. Yet, that limited exploration is still enough to rank Brazil seventh in
the world in terms of uranium resources. New uranium exploration and mining projects are
reportedly currently taking place, or planned, in 90 countries." |
"Are we heading for another oil price shock? I ask the question
because the price of a litre of unleaded petrol at the UK pumps has today reached a new
all time high, marginally surpassing the previous record set in July 2008. Back then, the
price of crude had reached a bubble inspired record of $147 a barrel. Then came the crash,
and the price collapsed, but never did it fall back to the sort of level that
traditionally would have been associated with such a severe recession, and it has been
rising steadily now for the last year. Today it stands at around $86 a barrel. What makes
the position in Britain feel much worse is the weakness of the pound. Oil is priced in
dollars, so when converted into sterling, the price of a barrel is not so far off what it
was back at the 2008 peak. The Bank of England may have to adjust its inflation forecasts,
and therefore its approach to monetary policy, accordingly. That’s just what the
policymakers don’t want to do right now. They want to keep policy loose for as long
as possible to underpin the recovery. Yet even in the US, prices at the pumps have been
rising steeply....everyone thinks it was the shock of
the Lehman collapse that really did the mischief and no doubt this is partly true. But if
you look at the charts tracking consumer and business confidence, they were falling off a
cliff from about a month before Lehman’s went down, and one of the prime reasons for
it was high gasolene prices. Gas prices are a much bigger driver of consumer behaviour in
the US than almost anywhere else, for the obvious reason that people drive everywhere.
American consumers took one look at rocketing gas prices and decided to stop spending en
masse. Tim Geithner, the US Treasury Secretary,
expressed confidence earlier this week that the US recovery was moving into
self-sustaining territory. If petrol prices continue to rise like this, he may have to eat
his words." |
"One of the factoids trotted out from time to time by proponents of
nuclear power is that conventional coal-burning power stations release more radioactivity
into the environment than nuclear stations do. The reason is that the ash left over when
coal is burned contains radioactive elements, notably uranium and thorium. Turn that logic
on its head and it suggests that such ash is worth investigating as a source of nuclear
fuel. And that is exactly what Sparton Resources, a firm based in Toronto, is doing. It
has signed a deal with the China National Nuclear Corporation (CNNC), the authority that
runs the country’s nuclear-power stations, to recover uranium from coal ash at a site
in Lincang, in Yunnan province. Uranium is usually extracted from ore that contains 1,000
or more parts per million (ppm) of the element. The
Lincang coal ash holds much less, about 300ppm. That said, it does not need to be
mined—which brings costs down. Sparton says it can extract a kilogram of uranium for
$77 or less. Uranium’s spot price is now near $90 a kilo. That is not a huge margin, but it is a profit nonetheless. To extract the
uranium, Sparton adds sulphuric and hydrochloric acids to the ash, along with water, to
make a slurry. With some sorts of ash, nitric acid is also used. The acids dissolve the
uranium, and various other things, leaching them from the ash. The trick is to get the
dissolved uranium out of the resulting solution....China is developing ash-mining for
reasons of energy security more than economics, according to Wang Hongfang, a marketing
manager at CNNC. The country wants to get uranium from 'every possible channel', Mr Wang
says. These include stripping it out of the tailings from gold and copper mines, and also
from phosphoric acid produced during the manufacture of fertiliser. Nor is CNNC alone in
this aspiration. NUKEM, a German-American company that enriches and sells nuclear fuel,
hopes soon to begin 'mining' fertiliser in Florida. Some
people are even turning to seawater as a source of uranium, in an eerie recapitulation of Fritz Haber’s attempt to pay off
Germany’s first-world-war debts by extracting gold from the ocean. Though seawater
contains only three parts per billion of uranium, mostly in the form of uranyl
tricarbonate, the element can be sucked out of it by ion exchange....Several
organisations, including Japan’s Atomic Energy Agency and the Bhabha Atomic Research
Centre in India, are attempting to do so. Their methods include the use of strips of
ion-exchanging plastic, braided with polystyrene to toughen them up. These are placed in
wire cages and anchored in a current of seawater. After a month or two, the plastic is
removed and soaked in acid to dissolve the uranyl tricarbonate. The solution is then
treated to precipitate uranium oxide. At the moment, this process costs more
than ten times as much as conventional mining, but some countries might regard
that as a small price to pay for security of supply. Perish the thought that the supply is
for anything other than providing fuel for civilian nuclear-power stations." |
"The economic shock of global recession has led a prime exponent of
the theory conventional oil output has peaked to shift his view of the consequences, but
he still thinks the world has to go green. Retired petroleum geologist Colin Campbell, who
worked for major oil companies as well as smaller firms, has long been associated with the
belief the world's oil supplies are dwindling. He does not waver from that and dismisses
the argument of the so-called optimists that technology will manage to keep eking out more
and more oil to keep pace with rising demand. What
has changed is his opinion of the price impact and implications for fuel consumption after
the spike of July 2008 to nearly $150 a barrel was followed by world economic recession, a
deep drop in fuel use and a crash in oil futures to just above $30 in December 2008. 'I have changed my point of view about future prices,' said Campbell, who
used to think the peak in conventional oil production, which he believes happened in 2005,
would lead to a relentless price surge. Instead, the
record rally led to a peak in demand in the developed world. 'Peak oil drives prices up in the first place. It has its own mechanism.
We're sort of at peak demand right now,' Campbell told Reuters from his home in the
village of Ballydehob, West Cork. 'I think presently the price limit is about $100.' For
those who have painted alarming pictures of civil unrest as the world economy is forced to
move away from conventional fuel and pay high prices for it in the interim, an inbuilt
price mechanism to limit demand and move the world to other forms of energy should be a
good thing. 'We have no alternative but to go green,' Campbell said. But he does not think
reduced demand is enough to offset the gravity of peaking supply. He still sees a
possibility of social anger as millions are forced to change their lifestyles in a
too-sudden structural shift from economic growth driven by cheap conventional fuel." |
"Oil hit an 18-month high of $86.70 a barrel in New York yesterday,
adding to expectations that petrol prices will today pass the record levels of the summer
of 2008. Fadel Gheil, an energy analyst at Oppenheimer & Co, thought prices could hit
$100 in the second quarter on the back of positive economic data such as car sales
figures. However, he said that such levels were not sustainable. He thought the 'real'
price for crude should be about $60 per barrel. 'Demand
will never return to 2007 levels,' he said, not
least because of restrictions on carbon emissions. 'The market is being driven by
financial players. The same speculators that pushed prices up to $150 [in mid-2008] will
keep pushing the envelope until they reach a point at which they all jump.'
Yesterday’s increase was driven by better-than-expected US unemployment figures that
were released on Friday, when markets were closed. The momentum continued with the release
of statistics indicating an unexpected rise in home sales and a surge in activity in US
service industries, suggesting that the recovery was no longer confined to the
manufacturing sector." |
| "American technology to produce shale gas is unleashing a scramble
for drilling rights in Poland, where experts believe vast reserves of unconventional gas
exist that could help to weaken Russia’s grip on Europe’s energy supplies.
ConocoPhillips is poised to launch Poland’s first shale gas drilling programme next
month near Gdansk on the Baltic coast. Two other American oil groups — Exxon-Mobil
and Marathon — and Talisman Energy, of Canada, are set to follow. The technology has
transformed America’s energy industry and driven gas prices to their lowest level in
years. Wood Mackenzie, the oil and gas research group, estimates that there could be as
much as 48 trillion cubic feet (1,36 trillion cubic metres) of unconventional gas
stretching across northern and central Poland. The gas, which does not lie in conventional
reservoirs but inside tight rock formations, has become accessible only recently through
the use of new hydraulic fracturing technology developed in the United States. If confirmed, Wood Mackenzie’s estimate would boost the
European Union’s proven reserves of natural gas, which stand at 101 trillion cubic
feet, by 47 per cent and be enough to make Poland, which imports 72 per cent of its gas,
self-sufficient for the foreseeable future....
Poland consumes about 14 billion cubic metres of gas per year and has been heavily
dependent on Russian imports. Mr Fanning said that the shale gas in Poland was of high
quality and relatively shallow. It is similar to gas found in the Montney shale deposits
in British Columbia and Alberta, Canada. He said that the licence areas were also thinly
populated — an advantage, because shale gas
production involves the drilling of dozens of wells across a relatively small area. Water
and sand are pumped in at high pressure to fracture rocks and create reservoirs from which
the gas can be extracted.... Some have been sceptical that unconventional gas production will
take off as quickly in Europe as it has in America, where output has grown fourfold since
1990 to more than 50 per cent of total production. One reason is a shortage of land-based
drilling rigs in Europe. The number of rigs in the
US stands at 949, according to figures from Baker Hughes, an oil services company based in
Houston. In Europe it is thought there are about 100 rigs. European Union gas demand is
expected to rise by 2 per cent this year to 554.1 billion cubic metres, with domestic
output meeting about half of that total, according to Wood Mackenzie. Russia supplies
about 25 per cent of the EU’s gas needs." Dash for Poland’s gas could end Russian stranglehold London Times, 5 April 2010 |
"BP is lobbying on Capitol Hill against a
federal US environmental agency being given jurisdiction over the use of a controversial
method of extracting gas from shale deposits, ahead of an important meeting this week. The
London-based oil company wants decisions on drilling techniques such as hydraulic
fracturing – which uses high-pressure liquids to force fissures – to be taken at
state level, rather than being left to the Environmental Protection Agency (EPA), whose
specialist committee meets on Wednesday to discuss its concerns. BP is also opposed to the
public disclosure of the chemicals used in fracturing, on the basis that the information
is commercially sensitive – something that will anger environmentalists, who are
highly suspicious of the process." |
"Large shareholders will be
pitted against each other this week in a row over oil
giant BP's involvement with tar sands in a
battle that is set to dominate this year's round of company annual meetings. A special
resolution has been filed by 143 shareholders for BP's annual meeting on 15 April,
demanding the company provide a full report by next year about the risks of its planned tar
sands development in Canada. The Local Authority
Pension Fund Forum (LAPFF) has sparked conflict in the normally torpid world of
institutional investors by calling on the 52 schemes it advises to vote with BP's
management, saying talks with the company suggested its approach to oil sands was
'well-grounded'. But the Merseyside Pension Fund, which holds the deputy chair position of
the LAPFF and is one of the largest in the UK, has decided to abstain, as has the London
Borough of Camden Fund. The Environment Agency Pension Fund, also a member of the LAPFF,
has said it supports the campaigners. International investors including some large
Australian pension funds, the Swiss Ethos Foundation and dozens of large pension funds and
ethical fund managers in the US are expected to come out in support. Mercer Investment
Consulting, one of the world's leading pension fund advisers, has taken the unusual step
of writing to 120 big investors asking how they intend to vote at the BP and Shell
AGMs." |
"In a coup that achieves
something President Clinton promised but never delivered, President Obama has forced the
big three US carmakers, and their unions, to accept tough mileage rules for cars and SUVs.
The rules will cut emissions from vehicles by more than a third over the next four years. Whether the new rules end America’s love affair with huge cars
remains to be seen. But they are being introduced at a time when SUV sales are at a
fraction of their peak level five years ago. Their demise coincides with the
country’s first mass-produced 'plug-in' electric car, which finally rolled off a
Michigan production line this week. From 2016, new cars and SUVs will have to deliver an
average of 35.5 miles per gallon (42.6 miles per British gallon), comparable for the first
time with European and Japanese requirements. SUV
mileage under the new regime is expected to average 28.8mpg (34.5mpg in Britain), or
nearly three times that of the Hummer H1 that Arnold Schwarzenegger once drove into Times
Square in New York to begin the vehicle’s transition from armoured personnel carrier
into celebrity runabout. The new rules end a
notorious loophole in US law by which SUVs were exempt from emissions standards that
applied to cars. This made them so much more profitable that at the peak of the sport
utility boom, a single Ford plant was generating up to $15 million (£9.8 million) a day
in pre-tax profits.....General Motors’ new management has famously 'bet the company'
on the Chevy Volt, an electric super-mini with a small petrol engine designed only to
recharge its batteries on long journeys. Its 40-mile range on batteries alone means that
commuters living less than 20 miles from work would almost never have to fill their tank.
GM has high hopes, despite its price tag of $40,000 before federal tax rebates. Its main
competitor at the New York International Auto Show is the allbattery Nissan Leaf, which
will cost $32,000 with a range of 100 miles and no petrol-powered back-up. US motorists
have shown repeatedly that their affection for big cars rebounds as petrol prices fall,
but the new regulations reflect a long-term trend. On average, Ford sold 412,000 Explorer
SUVs each year from 1995 to 2003. By 2008 sales had slumped to 78,000. GM has sold the
Hummer brand to a Chinese rival and SUV sales fell overall by 52 per cent last year alone.
The new standards are based on a 2007 Supreme Court Ruling that reclassified carbon
dioxide as a pollutant. They will be enforced by the Environmental Protection Agency,
whether Congress approves or not." |
"Only hours after President Obama opened up vast tracts of
America’s coastline to exploration, Royal Dutch Shell said yesterday that it plans to
start drilling for oil in the Arctic Sea, north of Alaska, within weeks. However, Shell
said it had received a government permit yesterday allowing it to drill in Chukchi, the sea between northwest Alaska and northeastern Siberia. It is
believed to hold 15 billion barrels of oil and 76 trillion cu ft of gas, according to US government figures. Shell cautioned that an appeal could
still be made against the permit within 30 days. The group said it was waiting for a final
permit for the Beaufort Sea, which is also thought to be rich in oil. Mr Odum said that
Shell was 'absolutely' interested in bidding for new exploration licences in the eastern
Gulf of Mexico, which had previously been off-limits. He said: 'We have made discoveries
right up to the area where leasing had been stopped. We know a lot about that trend and
think those discoveries will continue. It’s a very good fit for us.' He said that the
opening of large parts of the American East Coast to oil exploration presented big
opportunities but that the impact would be long-term. Years of seismic investigations
would be necessary before drilling or production would begin. Mr
Odum was speaking as Shell announced the start-up of its Perdido floating production
facility in the Gulf of Mexico, producing 100,000 barrels a day. It is the world’s
deepest offshore production platform and stands in water as deep as five Empire State
Buildings. The decision to open up new areas of the
American coastline to oil and gas development is part of a calculated political move by
the Obama Administration to win Republican support for proposed climate change
legislation. The decision has upset environmental groups, but was welcomed yesterday by
other oil companies....Under Mr Obama’s proposals, oil companies will not be able to
drill on the West Coast or New England, but will be able to explore off the Atlantic Coast
from Delaware to Florida and 125 miles beyond Florida’s shore in the eastern Gulf of
Mexico. The plans also permit development in Alaska, but not in the sensitive Bristol Bay
area, which includes Alaska’s richest fishing grounds. The
Gulf of Mexico is thought to contain up to 40 billion barrels of oil and up to 200
trillion cu ft of natural gas, according to the Minerals Management Service. As much as 63
billion barrels of oil and 294 trillion cu ft of natural gas could lie within eight leases
in the Arctic and Atlantic oceans set to be awarded between 2012 and 2017." |
"President Obama took a gamble with the environment and his political
base yesterday, opening up 167 million acres (67 million hectares) of coastal waters to
oil drilling, in an attempt to limit America’s dependence on foreign energy and to
win Republican backing for a stalled climate change Bill. In a reversal of policies that
have protected American shorelines since the Exxon Valdez disaster in 1989, Mr Obama paved
the way for a new energy rush off the US Atlantic and Gulf coasts by allowing exploratory
drilling for trillions of cubic feet of natural gas and oil reserves that could exceed
eight billion barrels. Speaking at Andrews Air Force
Base in front of an F16 fighter modified to fly on biomass jet fuel, Mr Obama presented his plan as part of a broad shift to clean energy by
an economy that consumes a fifth of the world’s oil. He concluded: 'The bottom line
is this: given our energy needs, in order to sustain economic growth, produce jobs and
keep our businesses competitive, we’re going to need to harness traditional sources
of fuel.' The spectacle of a Democratic President conceding a long-running battle to the
oil and gas industry was condemned by some environmentalists as an echo of Sarah
Palin’s 'drill, baby, drill' slogan from the 2008 campaign trail — but welcomed
as brilliant politics by others who see a deal with the energy lobby as vital for progress
towards climate change legislation. 'This is the best-timed policy announcement this
President has yet accomplished,' Paul Bledsoe, of the National Commission on Energy
Policy, said. 'At a time of rising oil prices and on the heels of healthcare, he has
triangulated the Republicans on energy security. It’s very difficult for them now to
say with a straight face that his energy policies lack balance.' Under the proposals vast
areas of ocean off the coasts of Alabama, Florida and eastern states from Delaware to
Georgia will be opened to exploration by the sale of drilling leases starting next year.
The Pacific Coast from Canada to Mexico will remain off-limits, but 130 million acres of
Alaskan waters will be studied to see if the potential economic benefit of drilling
outweighs the ecological risk.... Known oil reserves
in the newly opened areas are modest: fields under the East Coast’s outer continental
shelf and the single largest new parcel of the Gulf of Mexico would provide barely four
years’ supply — proof that yesterday’s announcement was more about politics
than long-term energy supply." |
"Experts attribute much of the recent rise in prices to flows of
speculative money into oil markets. These bets are fueled by investor expectations that
the U.S. and global economies are poised to return to growth and thus spark increased use
of oil. Strong growth in China supports the narrative of rising oil consumption and
tightening supplies....While there are signs of U.S. economic recovery, such as a slight
uptick in consumption and strong manufacturing data, there are plenty of ho-hum signs too,
including dismal construction spending and continued high unemployment....On the last day
of July, oil traded at $67.50 a barrel and gasoline sold at a nationwide average of $2.52
a gallon for regular unleaded. On Thursday, oil prices settled at $84.87 on the New York
Mercantile Exchange, and regular unleaded gasoline averaged $2.80 a gallon and more than
$3 on the West Coast, according to the AAA.... What's
different about today's price run-up from two or three years ago is that oil is now in
ample supply.... Perhaps the only argument that would justify rising prices is that global
consumption is expected to grow by 1.6 million bpd to 86.6 million bpd this year,
according to the Paris-based International Energy Agency. Even so, there's 6 million bpd
of oil that's shut-in, a technical way of saying that recoverable oil is being left in the
ground by the world's oil producers.... The
Organization of Petroleum Exporting Countries signaled this week its concerns about rising
prices by not calling for hard enforcement of production quotas by its members. That
suggested the cartel will tolerate an open-spigot policy by its 12 members as needed to
stabilize prices." |
"Iraq's current 'highly
ambitious plans' to expand oil production are unlikely to be fully realized given
political, security, operational and infrastructure challenges, according to a new report,
Fields of Dreams: The Great Iraqi Oil Rush -- Its Potential, Challenges, and Limits by IHS
Cambridge Energy Research Associates (IHS CERA). Iraq currently plans to expand production
to as much as 12 million barrels per day (bpd) in the next six to seven years. Achieving
levels around half that in the next decade would be more likely and would still constitute
'a significant expansion,' the report emphasizes.
IHS CERA's current outlook for Iraq is 4.3 mbd in 2015 and 6.5 mbd in 2020 -- still big
growth numbers. The report points out that Iraq starts out with rich oil resources that
have suffered from 'underinvestment and underdevelopment for decades.' 'But Iraq's new
expansion timetable would dwarf the most rapid buildups that we have recently seen in
places such as Russia and Saudi Arabia,' said IHS CERA Senior Middle East Director,
Bhushan Bahree. 'The political, security, operational and infrastructure challenges in the
country, along with a likely shortage of skilled personnel, are likely to hamper progress
towards such an unprecedented achievement.'...The report identifies infrastructure and
logistics as 'major challenges.' Iraq is responsible for providing the infrastructure
needed to receive the extra oil but its plans for providing a 'complex network of
capital-intensive infrastructure' -- from ports and roads to power and water crucial for
operations -- in synchronization with the development oil fields are not known,
representing a major potential bottleneck. 'Iraq's expansion timetable appears
extraordinarily ambitious in comparison to the recently completed capacity increase in
Saudi Arabia,' said Bahree. 'Saudi Arabia has significant security and infrastructure
advantages yet it took Saudi Arabia between four and five years to expand its net output
capacity by some 2 million barrels per day. Iraq will certainly be challenged to match
this pace, much less exceed it.' Though Iraq is
unlikely to meet its 'very stretch target' of elevating its capacity to 12mbd in six to
seven years, the expansion of its production capacity still represents a significant
increase with strong implications for OPEC and the regional balance, the report finds. Iraq is not currently a party to OPEC's production quota system. A
significant ramp-up in Iraqi production would put the issue of bringing Iraq back into the
quota system back on the agenda. Any issue within OPEC is likely years away, however, as
it is widely assumed that the major producers will wait until Iraqi output begins to
approach its OPEC share negotiated in 1988, which is at parity with Iran." |
"The head of the International
Energy Agency, the developed world’s energy watchdog, has called for China to join
the agency and warned that the institution risked losing relevance as energy demand
shifted eastward away from its current members. Nobuo
Tanaka, executive director of the IEA, told the Financial Times: 'Our relevance is under
question because half of the energy consumption already is in non-Organisation of Economic
Cooperation and Development countries. And for oil it is soon coming that the majority of
consumption is happening in non-OECD countries.' He added: 'In many ways they [the
Chinese] are already working closely with us. But eventually we wish they would join us.'
Beijing has been wary of joining multilateral organisations it sees as being controlled by
rich developed countries, particularly the US. IEA officials do not expect Chinese
membership overnight, but do believe it could be possible within the next five
years." |
"Hopes that the Falkland Islands would emerge as a significant oil
producer were dealt a significant blow yesterday when it emerged that the first well to be
drilled in the region for more than 12 years had yielded only small traces of oil and gas.
The announcement from Desire Petroleum sent its shares plunging 48 per cent to 50½p,
wiping about £160 million off the company’s market value to £163 million. Two other
companies exploring for oil in the same region — Rockhopper Exploration and Falkland
Oil & Gas — were also struck sharply lower. Rockhopper closed at 45p, down 8½p,
and Falkland was off 15¼p at 121p.However, the news may help to deflate a simmering
territorial dispute with Argentina over the legal rights to oil production in the
Falklands....Richard Rose, oil and gas analyst at Oriel Securities, said the announcement
had “diminished the prospectivity” of all the other wells due to be drilled in
the North Falkland Basin that he described as 'very high risk'. No drilling has been
carried out in the Falklands since 1998, when Shell and Lasmo drilled six wells in a
nearby area. Oil was discovered in all but one of them — where gas was found instead
— but the following year the global price of crude collapsed, undermining the
commercial logic of developing oilfields in such a remote area. If any commercial finds
were made, it would cost billions of pounds to build pipelines and other infrastructure
needed to develop them. While diplomats may be quietly relieved that the failure of the
Liz well to find oil has taken some of the heat out of the dispute with Argentina,
yesterday the South American nation appeared to be in no mood to abandon its claims....It
was the oil well that triggered a war of words — and a flurry of South Atlantic
sabre-rattling not seen since the 1980s. But in the end Desire Petroleum’s decision
to drill for oil at its Liz prospect turned up little more than mud and oily sand. This
should come as no great surprise. Even at the best of times, wildcat oil exploration is a
high-stakes business. With the hire of a drilling rig costing upwards of $200,000 per day,
success depends on a shrewd understanding of geology, technical excellence with the
drillbit — and more than bit of luck. But in a remote corner of the South Atlantic,
where only a handful of wells have ever been drilled, the risks are about as high as they
get. Of course, this failure is not the end of the story. With five more still left to
drill by Desire and three other companies, yesterday's news does not rule out the
possibility that commercial quantities of oil may yet be found in the Falklands. However, if a discovery is made, it will have to be very large to
justify the cost of development. The Falklands are so remote that it would cost billions
of dollars to build the necessary pipelines and infrastructure to allow for export. And,
with big uncertainties hanging over the political future of the islands, many big oil
companies might be reluctant to get stuck in." |
"Britain will this week rule out
stockpiling national reserves of gas, despite concerns about the country's lack of storage
and over-reliance on foreign imports, according to industry sources. It is understood that
the Government has decided against keeping national stocks of gas, which is the practice
in some European countries such as Holland. The decision will be contained in a paper
examining Britain's security of gas supply. The decision flies in the face of a
recommendation from its own adviser, Malcolm Wicks MP, who published a paper last August
urging the Government to consider reserving storage space in offshore gas facilities owned
by energy companies for UK needs. This would stop
companies diverting gas supplies to other countries in the event of shortfall – which
happened during the dispute between Russia and the Ukraine just over a year ago. Greg
Clark, the Tory shadow Energy Secretary has repeatedly warned that the UK's gas storage
facilities are inadequate, calling for the Government to 'ensure that we always have a
prudent security margin of gas supply'. However, energy companies that own gas storage
plants insisted that the market can provide all the necessary facilities, if tax
incentives and lower land rental fees are provided by the government. A spokesman for the Department of Energy and Climate Change
declined to comment, but added that it had been reluctant to sanction national storage in
the past for fear of discouraging commercial investment. The news comes as a group of influential MPs condemned the Crown Estate, the
state-owned body responsible for Britain's seabed, for taking advantage of its monopoly
position to charge too much rent for gas storage sites projects." |
"Saudi Arabian Oil Minister Ali al- Naimi said he 'hopes' prices
remain in the $70-a-barrel to $80-a-barrel range, signaling the world’s largest
producer may be willing to boost output if crude accelerates further. The country could
boost production by as much as 4.5 million barrels a day and is 'waiting' for demand to
rise after increasing capacity to 12.5 million barrels, Al-Naimi told reporters yesterday in Cancun, Mexico. Prices in the
$70-to $80- range are 'as close to perfect as possible,' he said, adding today that he
'hopes' prices remain in that range. Oil surged 78 percent last year as the Organization
of Petroleum Exporting Countries implemented cuts to output quotas of 4.2 million barrels
a day and the global economy emerged from its worst slump since World War II. Saudi
Arabia, the group’s largest producer, made the biggest cut. Oil has remained within a
$68- to $84-a-barrel range since October and prices gained about 3.8 percent this quarter.
The kingdom pumped 8.25 million barrels a day in February, according to Bloomberg
estimates. Its output target is 8.051 million barrels a day. Crude for May delivery rose
20 cents to settle at $82.37 a barrel on the New York Mercantile Exchange. OPEC kept its
production ceiling unchanged at 24.845 million barrels a day at a meeting March 17 in
Vienna. It also didn’t change individual allocations. OPEC set the quotas at the end
of 2008, amid the onset of the global economic recession. The group’s next scheduled
meeting is Oct. 14. OPEC plans to add 12 million
barrels to its daily production capacity by 2015, equal to Saudi Arabia’s capacity.
The gains would exceed the expected growth in demand, according to the International
Energy Agency. 'The need for additional supply has
nothing to do with price,' al-Naimi said. 'When we see an imbalance in fundamentals, we
try to restore it'....Global oil demand is expected to advance 1 percent a year to 105
million barrels a day by 2030 from 85 million barrels a day in 2008, the IEA said in
November in its annual World Energy Outlook. The group is the adviser to 28 nations. 'Most
of the increase in output would need to come from OPEC countries, which hold the bulk of
remaining recoverable conventional oil resources,' the IEA said.” |
"Britain faces the worst energy
crisis in Europe, according to the boss of one of the biggest power companies. 'The
country has to build two large plants or more every single year,' said Volker Beckers in
his first interview since becoming chief executive of RWE Npower two months ago. 'This has
never happened in Britain’s history, so there’s no time to lose.' Homeowners
will end up footing much of the estimated £200 billion bill for the new plants through
higher energy prices. 'The government faces the
biggest challenge in Europe,' said Beckers, whose company supplies power to 6.4m British
homes. 'In a world where capital is scarce and the economic case is unclear, it’s not
an easy sell to my board. Right now, I can’t do it.' Within the next decade. a
quarter of Britain’s fossil-fuel plants will be retired, to be replaced by more
costly low-carbon alternatives. Offshore wind and nuclear are the government’s
favoured options. The £200 billion bill for pipes, plants and turbines predicted by
Ofgem, the regulator, translates to a cost of £8,000 for each of Britain’s 25m
households. Both Labour and the Conservatives have said the state needs to take a more
active role in guiding the makeover. They expect the industry to bear virtually all the
upfront costs. However, the uncertainty over future energy prices and how much of the
additional cost, such as for waste clean-up, will have to be shouldered makes it hard to
proceed with big investments such as nuclear reactors, said Beckers. 'At the moment nobody
really knows the rules of the game. If the uncertainty prevails, investors will simply do
what they understand best in this market and that is gas generation. That is exactly what
we as a company have done in the past few years, but as a country it’s not what gets
the UK to the [carbon reduction] targets we have for 2020.'" |
"Gazprom, Russia’s
state-owned gas giant, is preparing an audacious bid to become one of the biggest fuel
suppliers in Britain. The company is expected to lodge an offer this week for a network of
800 petrol stations and the Lindsey oil refinery at Killingholme, Lincolnshire. The assets have been put up for sale by Total, the French oil group. It
has hired JP Morgan, the investment bank, to sell its UK business, which employs 5,000
people. The business is expected to fetch more than £1 billion. The prospect of the
Kremlincontrolled giant owning key parts of the UK oil infrastructure could worry the
government. When Gazprom was rumoured to be looking at a bid for Centrica, owner of
British Gas, in 2006, ministers met to examine the 'possible consequences resulting from
any takeover of a major UK energy supplier'. The auction is part of a remarkable shake-up
of Britain’s oil refining and distribution industry. Half of the refining capacity,
built up in the 1960s and 1970s to take production from a booming North Sea, is up for
sale as energy giants look to sever ties with the low-margin, low-growth British
market." |
"Tesco will start selling solar
panels this week, leading a stampede of retailers aiming to cash in on a controversial new
subsidy scheme. The rush has been triggered by the launch of the government’s new
feed-in tariff (Fit) programme. Taking effect on
Thursday, this pays homeowners and small firms for generating electricity from
photovoltaic solar panels and wind turbines, either for their own use or to be sold back
to the grid. The payments are guaranteed for up to 25 years to ensure payback on the
costly technologies. The government claims the scheme can generate up to £950 in cash
payments and energy savings annually. Philip Wolfe, a director at the Renewable Energy
Association, the trade body, said: 'All sorts of new companies will be coming up with
offers. Tesco is just one of them.' Some campaigners are less enamoured with the idea of
low-carbon power for the masses, labelling the Fit scheme the “great green
rip-off”. They warn it will hurt the poor by pushing up household bills artificially
and the billions the government will pay out over the life of the programme would be
better spent on proven measures like insulation." |
"The UK government’s tax take from oil and gas production in the
North Sea fell to its lowest ever level, under the current fiscal regime, in the year
ended March 31, 2010, according to government data published on Wednesday 24th March 2010.
The UK treasury expects to take £6.4 billion (GBP) in corporation tax and petroleum
revenue tax from companies producing oil and gas in the UK over the year. This is less
than half the tax take in the previous year, during which oil prices hit their record
high. It is the lowest level since then Chancellor of the Exchequer Gordon Brown doubled
the supplemental tax on oil companies in late 2005. The fall in revenue is due to both a
lower average oil price in 2009 and the rapid decline in output from aging UK oil fields. Total oil and gas output in 2009 fell 5.2% on the year. The average price of North Sea benchmark Brent crude oil futures was 37%
down on the year. The UK government expects North Sea revenues to rise in the 2010 and
2011 tax years to £8.5 billion (GBP), but the outlook for UK oil industry is weak." |
"Jim Mulva, the 63-year-old chairman and chief executive, spent a
decade building the Houston-based company into a global energy giant, buying assets and
companies around the world, often at steep prices. But on Wednesday, Mr. Mulva said
Conoco, the third-largest U.S. oil company by revenue and market capitalization, must now
make do with what it has. Finding it increasingly
difficult to win access to new sources of oil and facing stiff competition for the oil
that is available, the company will pull back from its strategy of rapid growth and
instead focus on producing the oil and gas it already controls." |
"The fact that corn-ethanol production has continued to grow, despite
the failure of a number of firms in late 2008 and early 2009, points to the efficacy of
the various protections and subsidies it enjoys (falling maize prices helped too), though it says nothing about
their efficiency or wisdom. Ethanol, which is used
mainly as an additive to petrol, is not a particularly good fuel: it offers only about
two-thirds as much energy as petrol and can corrode pipelines and car engines. By 2014 or
earlier, ethanol production is expected to reach 10% of America’s total fuel demand,
and thus to hit a 'blend wall', since the EPA does
not at present allow blends of more than 10% for mainstream use. Even as producers have
urged the EPA to lift this bar, it has challenged them to move beyond corn and make ethanol from cellulose, the
abundant, inedible portion of most crops. Using inedible inputs avoids fights about
diverting food crops for fuel, and frees the industry from reliance on a single commodity.
Despite ample investment, however, production costs
remain high and commercialisation elusive. Since
2007 one company, Range Fuels, has received more than $150m in federal grants and
guarantees for a large cellulosic-ethanol plant, but has yet to produce any. Still, it and
others are gamely pushing ahead. A boost came last month, when Novozymes and Danisco, two
Danish firms, unveiled new, cheaper enzymes which are needed to break down cellulose. Even
if cellulosic ethanol were to get cheaper, though, it would still be ethanol, a poor fuel.
The alternative is to produce something better, such as an advanced biodiesel. According
to Lux Research, based in Boston, venture capitalists invested $208m in algae technologies
with this sort of thing in mind during 2008, six times as much as they spent in 2007. But building vast pools for algae and turning them into fuel remains
tremendously expensive. Solazyme, a Californian
firm, is a promising anomaly, using algae to make fuel from sugars in dark industrial vats
rather than pools. Such strategies may work, but have yet to be scaled up. Solazyme,
tellingly, has developed other sources of revenue." |
"The first detailed study of onshore wind farms has found that 20 of
the sites produce less than 20 per cent of their maximum output with some producing less
than 10 per cent. Blyth Harbour in Northumberland is thought to be the least efficient
wind farm producing just 7.9 per cent of its maximum capacity while Chelker reservoir in
North Yorkshire operates at 8.7 per cent of its capacity. The figures were compiled by
lobby group Clowd using data collected by energy regulators Ofgem. The best wind farms operate at about 50 per cent of their
predicted maximum capacity while the majority produce around 25 per cent to 30 per cent." |
"The world's oil reserves have
been exaggerated by up to a third, according to Sir David King, the Government's former
chief scientist, who has warned of shortages and price spikes within years. The scientist
and researchers from Oxford University argue that official figures are inflated because
member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when
competing for global market share. Their new research argues that estimates of
conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that
demand may outstrip supply as early as 2014. The researchers claim it is an
open secret that OPEC is likely to have inflated its reserves, but that the International
Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take
this into account in their statistics. 'It is necessary to investigate ambiguities and
sources of error that are broadly acknowledged but not taken into account in public data
due to political sensitivities,' the researchers said. The paper also raises concerns that
public statistics have started to incorporate non-conventional reserves such as the
Canadian tar sands, where oil and gas are much more difficult to extract and may never
be economically attractive to develop. Sir David said that although the IEA was doing a
good job of warning that more investment in oil and gas exploration is needed, governments
need to pay more attention to independent research. 'The IEA functions through fees that
are paid into it by member companies and has to keep its clients happy,' he said. 'We're
not operating under that basis. This is objective analysis. We're not sitting on any oil
fields. It's critically important that reserves have been overstated, and if you take this
into account, we're talking supply not meeting demand in 2014-2015.' The concept of 'peak
oil' has gained traction in recent years, although energy companies such as BP and Shell
insist that production will be able to keep pace with growing Asian energy needs. Sir David said he was 'very concerned' that Western governments
were not taking the concept of 'peak oil' – where demand outstrips production –
seriously enough, while China is throwing all its efforts into grabbing as many energy
resources as possible....Dr Oliver Inderwildi, who
co-wrote the paper with Sir David and Nick Owen for Oxford University's Smith School,
believes radical measures such as switching freight transport to airships could become
common in future. 'The belief that alternative fuels such as biofuels could mitigate oil
supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of
relying on those silver bullet solutions, we have to make better use of the remaining
resources by improving efficiency.'" |
"The status of world oil reserves is a contentious issue, polarised
between advocates of peak oil who believe production will soon decline, and major oil
companies that say there is enough oil to last for decades. In reality, much of the
disagreement can be resolved through clear defnition of the grade, type, and reporting
framework used to estimate oil reserve volumes. While there is certainly vast amounts of
fossil fuel resources left in the ground, the volume of oil that can be commercially
exploited at prices the global economy has become accustomed to is limited and will soon
decline. The result is that oil may soon shift from a demand-led market to a supply
constrained market. The capacity to meet the services provided by future liquid fuel
demand is contingent upon the rapid and immediate diversifcation of the liquid fuel mix,
the transition to alternative energy carriers where appropriate, and demand side measures
such as behavioural change and adaptation. The successful transition to a poly-fuel
economy will also be judged on the adequate mitigation of environmental and social
costs....This paper supports the contention held by
many independent institutions that conventional oil
production may soon go into decline (Alekkett, 2007; Campbell
and Laherrere, 1998; IEA, 2008; Laherrere, 2009a; Robelius, 2007; Sperling and Gordon,
2007; USGAO, 2007) and it is likely that the ‘era of plentiful, low cost petroleum is
coming to an end’ (Hirsch, 2005). Significant supply challenges in the near future
are compounded against a backdrop of rising demand and strengthening environmental policy.
Key conclusions include: • The age of cheap
liquid fuels is over. A condition of meeting additional demand is to develop
unconventional resources, which translates to an increase in the price of petroleum
products. • Oil reserve data that is available in the public domain is often
contradictory in nature and should be interpreted with caution. • World oil reserve estimates are best described by 2P reporting. This means
public reserve figures should be revised down-wards from 1150–1350 Gb to 850–900 Gb. • Supply and
demand is likely to diverge between 2010 and 2015, unless demand falls in parallel with
supply constrained induced recession. • Reserves that provide liquid fuels today will
only have the capacity to service just over half of BAU demand by 2023. • The
capacity to meet liquid fuel demand is contingent upon the rapid and immediate
diversi?cation of the liquid fuel mix, the transition to alternative energy carriers where
appropriate, and demand side measures such as behavioural change and adaptation. •
The negative effect of oil price on the macro-economy is signi?cant, and should be used to
build the business case to invest in alternative energy carriers. Many alternative fuel
carriers also present the double dividend of improving energy security (i.e. utilize local
resources) and reducing emissions (i.e. electricity, hydrogen)." |
"Buried deep underground in Merseyside could be a solution to
Britain’s energy woes. Canary-killing methane gas – one of the biggest dangers
coal miners faced – offers great potential as our North sea output shrinks. But the
technology needs to catch up. Management at Royal Dutch Shell and PetroChina are not
chumps – they understand what’s going on in the global energy business very
well. The two companies have teamed up to launch a A$3.3bn (£2bn) bid for
Australia’s Arrow Energy, one of the largest coal-bed methane (CBM) groups in the
country. They understand the future potential of this game-changing source of energy. The
long-abandoned coal seams that stretch from the Pennines to the Irish Sea are also rich in
methane gas and this could be tapped to produce electricity for the national grid. CBM is rapidly being developed all over the world as countries
attempt to cut reliance on Middle Eastern oil and Russian gas. The UK needs to catch up – and all eyes are on Liverpool as it leads
the way in the UK’s newest source of energy. A number of companies are developing CBM
sites across the country. Two acres of land in Ellesmere Port – adjacent to the
Vauxhall plant now owned by General Motors – could be the UK’s first site
producing electricity generated by CBM.... CBM technology in the US is much further ahead
and UK players could learn much from their more experienced counterparts. With UK production falling at a rate of 7pc a year and with the
country having minimal gas storage facilities, security of future supply will be a major
problem until new nuclear kicks in. Developing CBM
appears essential." |
"Lord Hunt, the energy minister, is to meet
industrialists in London tomorrow in a bid to calm mounting fears about the disruption
that could follow a sudden shortage of oil supplies. In a significant policy
shift, the government has agreed to undertake more work on whether the UK needs to take
action to avoid the massive dislocation that could be caused by the early onset of 'peak
oil' – the point that marks the start of terminal decline in global oil production. Jeremy Leggett, the executive chairman of the renewable power company
Solar Century and a leading figure in the UK industry taskforce on peak oil and energy
security, said the meeting, to be held at the Energy Institute, showed a welcome new sense
of urgency. 'Government has gone from the BP position – '40 years of supply left, the
price mechanism works, no need to worry' – to 'crikey',' he said. 'BP and others are
telling us that, but you lot, Virgin, Scottish and Southern, and others are telling us
something completely different. We do not know who to believe. Let's do a proper risk
assessment with industry,' he said. The meeting is expected to include executives from the
taskforce members including Virgin, Arap, Stagecoach, Scottish and Southern Energy, and
Solar Century as well as other industrialists. The decision to hold the talks came after
the UK industry taskforce on peak oil and energy security last month issued a provocative
report, The Oil
Crunch: a Wake-up Call for the UK Economy, in which it warned of the dangers of
complacency.... A spokeswoman for the Department of Energy and Climate Change confirmed
last night that Hunt and a range of energy-policy civil servants would be holding 'private
and behind-doors' talks at the Energy Institute. But she played down the significance of
the session, saying the government had always taken supply issues seriously and met
different parts of industry on a regular basis. 'We do this all the time; it is just a
normal stakeholder meeting,' she insisted, adding that there was no 'marked' change in
ministerial policy. The issue of peak oil arose last
November when whistleblowers inside the International Energy Agency alleged the problem
had been deliberately downplayed over a long period.
BP and other oil companies insist that there is little danger of the world running out of
oil because new areas such as Brazil, and more recently Uganda, are always opening up to
development. BP chief executive, Tony Hayward, believes demand will fall as prices move
up., pushing back any major peak-oil dislocation. But booming demand in China, India and
the Middle East has pushed up the price of crude to more than $80 a barrel and UK petrol
prices are close to record levels. Amrita Sen, an oil analyst at Barclays Capital,
believes the price of crude could pass $100 this year and reach nearly $140 by 2015.
Francisco Blanch, of Bank of America Merrill Lynch, has speculated it could hit $150
within four years." |
"A Conservative government would
allow a new nuclear power station to be opened every 18 months to address the threat of a
power shortage according to Greg Clark, the shadow energy spokesman. Mr Clark said the Tories would allow energy companies to open at least one
new nuclear facility every year and a half to boost the country's power supply. Mr Clark
added there would be 'no limit' on the growth of nuclear power in Britain under a
Conservative administration. He told the Daily Mail: 'In the past we haven't been entirely
clear - this is a very clear statement that we are in favour of nuclear power.' Under Tory
proposals, a national energy plan would be submitted to Parliament to restrict the
possibility of legal objections by environmental campaigners. In a bid to promote
renewable energy, communities which allowed wind farms to be built would be rewarded with
a reduction on electricity bills and would be allowed to retain business rates of around
£70,000 a year for local projects. Mr Clark, who was due on Friday to announce the
Conservatives' policy on energy alongside David Cameron, accused Labour of not ensuring
that Britain had a secure and varied energy supply. The government has previously accepted
that the first power cuts since the 1970s are likely to take place at peak times due to a
shortage of energy. Nuclear power stations currently
produce 13 per cent of the country's electricity - half the level when Labour won the
general election in 1997. All but one - Sizewell, in Suffolk - are scheduled to be
obsolete by 2023, by which time new green regulations will in effect make a third of
Britain's coal and gas facilities illegal. Mr Clark
also promised the Conservatives would increase Britain's gas storage capacity, which is
currently just 15 days, compared with 99 days in Germany and 122 days in France. He said
Britain would become more reliant on gas reserves for the three years before new nuclear
power stations begin to be opened in 2018." |
"Huge offshore wind parks and
new nuclear reactors to be financed by a state-backed Green Investment Bank would be built
under plans to reform energy policy and meet tough emission reduction targets to be
announced by the Conservatives today. In a package
of measures with far-reaching implications for industry and consumers, David Cameron is
also expected to call for a floor price for carbon to be set as a way of stimulating
investment in cleaner forms of energy. The policy will punish coal and gas-fired power
generation while benefiting producers of wind and nuclear electricity. Greg Clark, Shadow
Energy Secretary, did not reveal details, but said: 'We believe that the time has come to
establish new financial mechanisms to make it easier for people to invest. At the moment
it is too difficult.' The policies will also include a measure that marks a return to the
same principle used to defeat Nazi Germany in the 1940s. Mr Cameron will for the first
time set out plans for government-backed green 'war bonds' to help to finance energy
projects of up to £200 billion that are considered critical for Britain to meet its goal
of cutting carbon emissions by 34 per cent by 2020. The scheme will allow money to be put
into clean energy through the purchase of Treasury-backed 'Green ISAs' linked to renewable
projects including tidal, solar and wind farms. The Conservatives also announced the
creation of a working group to examine how to create a public-private funded Green
Investment Bank to provide additional financial support. Loosely modelled on
Germany’s KfW bank, which invested nearly €20 billion in environmental projects
last year, it would form a key plank of a Tory push to make Britain a global centre for
environmental finance and green manufacturing of everything from wind turbines to
components for nuclear plants. The Tories said the bank would consolidate existing sources
of funding for green energy, such as the Carbon Trust and the Marine Renewables Deployment
Fund. It would act as an intermediary to help to attract and package green energy
investment opportunities." |
"Energy policy is 'nowhere near'
having the right framework in place to deliver the investment and job creation that will
be needed to hit government targets for cutting greenhouse gas emissions, a group of
leading academics backed by the Royal Academy of Engineering warns. The academy on Thursday publishes the group’s report on the
prospects for the energy system to 2050, saying 'fundamental restructuring' will be needed
to prevent blackouts while delivering the government’s objective of an 80 per cent
reduction in emissions. Sue Ion of Imperial College London, who led the group, said
spending on low-carbon technologies could be very important
for job creation. However, she warned that market mechanisms alone would not push
Britain’s fragmented energy industry into making the necessary investment. 'It’s
a fantastic industrial opportunity for us in the UK,' she said. 'But we are nowhere close
to having a sensible plan or framework for how it would be implemented or financed. The
academy’s report sets out scenarios for how the 80 per cent emissions reduction can
be achieved, all of which demand massive investment in renewable energy. For example, the
academics argue Britain will need 38 wind farms the size of the London Array – the
world’s largest windfarm, now under construction in the Thames estuary – and
9,600 onshore turbines, which would mean erecting one a day for 25 years. On top of that,
there will probably have to be huge
investment in nuclear power and coal or gas-fired power stations that capture and
store their carbon dioxide emissions. If demand can be cut by improving energy efficiency
– for example with better home insulation – the number of those new nuclear and
carbon capture plants could be kept to 30-40: already a stretch given that the government
is planning about 10 new nuclear plants and four carbon capture pilots. If demand cannot
be cut, there would have to be 80 of those new plants, the engineers say, and 'building
new power stations on this scale is probably only achievable by monopolising most of the
national wealth and resources'. There is likely to have to be widespread deployment of
electric cars, and electric heat pumps to replace gas boilers in homes. Roger Kemp of Lancaster University, a member of the group, said
restructuring the energy system 'needs the same political enthusiasm as was applied to the
War on Terror after 9/11'. Ms Ion said: 'We have to
create the right framework for investment. These things are going to be around for two or
three generations, and are not going to have an investment payback of five or 10 years. So
the market is not going to deliver.' She said the private sector had to be given certainty
over returns for longer terms than the five-year life of a parliament to encourage
investment in energy infrastructure, and warned that energy prices were bound to rise.
'The changes required to the UK energy system to meet the 2050 emissions reduction targets
are so substantial that they will inevitably involve significant rises in energy costs to
end users.'" |
"Drivers will be hit by the
scrapping of a subsidy the Government has been paying to the producers of 'environmentally
friendly' biofuels, which account for 3 per cent of
each litre of petrol and diesel. This subsidy will end on April 1, raising the cost
of biofuels for petrol producers - an increase which will be passed onto consumers.
According to industry sources, this could add as much as 1.5 pence to the pump price a
litre of petrol or diesel." |
"The key remaining question of the peak oil crisis is just when world
production is going to start on an unstoppable decline. A few years ago those analysts who
were deeply enmeshed in the problem were saying that 2011 or 2012 looked like the fateful
year. But then the unexpected happened -- a great recession came along and the demand for
oil plunged. Although global oil production set a nominal high during the great price
run-up back in the summer of 2008, production soon fell away as the deepening recession
cut demand by some 4 million barrels a day. As prices collapsed in the winter of
2008-2009, OPEC got its act together and cut production dramatically, leaving the world,
or at least a few OPEC countries with what is known as spare productive capacity --- oil
wells that are ready to produce, but have been shut down because there is no market for
their product. Keep in mind when you have to shut down some of your oil wells, you usually
stop those with the heaviest most sulfur-laden oil first as this oil does not bring as
good a price as better grades. World oil production, including about 10 million barrels a
day (b/d) of various forms of combustible liquids such as biofuels that are usually
counted as 'oil,' currently stands at about 86 million b/d. This number got as high as 87
or 88 million (depending on whose numbers you like) back in the summer of 2008, fell to 83
or 84 million b/d in the winter of 2009, and then has been climbing back slowly as China,
India, and the oil exporting countries step up their demand. Behind
these numbers however are two forces, the inexorable depletion of existing fields which is
currently running about 4 million b/d each year and new oil fields coming into production
which for 2009 and 2010 is expected to add about 6 million b/d of new productive capacity
each year. As long as the completion of new oil production projects exceeds 4 million b/d
-- all is well. Indeed for the last few years the capacity to produce more oil has been
growing ahead of the demand so spare capacity to produce more oil is now in the vicinity
of 5 or 6 million b/d. This means that if there were sufficient demand, global oil
production could be cranked up to 91 or even 92 million b/d - for awhile. As even the Chinese don't seem to need an additional 5 billion b/d, at
least not right away (their current consumption is about 8-9 million b/d), those 5 or 6
million b/d seem destined to remain spare for a while. Now
if the world's oil producers could add another 5 or 6 million b/d of oil production each
year indefinitely, there would not be a problem and you would not be reading this article.
Unfortunately, however, they can't. People who follow these matters, and it is rather
straight forward to do, say that for the next few years we will only be adding about 3-4
million b/d of new capacity to produce oil and by 2015 this will be down to about 2
million b/d. This, of course, is well below the annual drop of 4 million barrels per day
from the existing fields due to depletion. As long as the additions to our capacity to
produce oil do not get too far below the pace of depletion, there would seem to be no
reason for wild spikes in oil prices - in the near term. If the world continues to bump
along in its current state for the next 3 or 4 years, it would seem that the availability
and price of oil will not upset the apple cart with shortages or unaffordable gasoline
prices. After 2013, however, all bets are off as there does not seem to be enough new
production starting up to balance depletion. These days, new oil production capacity, on
the scale of millions of barrels a day, does not appear overnight from the drill of a
lucky wild catter. Large new oil production projects take five, six, or seven years before
the first oil can be shipped and cost billions of dollars. If a major project is not
already well along, we are unlikely to see any oil from it until the latter half of the
decade. For the next five years we are stuck with those projects that are already
underway. This train of thought seems to say that somewhere around 2014, world oil
production, which has been on a rough plateau since 2005, will start to decline, perhaps
rapidly.There are a number of forces already in motion which could interrupt this rather
tidy schedule of four more good years and then 'le deluge.' Believe it or not the only good news in sight could come from Iraq which
seems to be the last remaining place on earth where lots of cheap and easy-to-produce oil
is still available. The Iraqis recently let contracts to increase their oil production by
7 or 8 million b/d in order to become the world's biggest and richest oil producer.
However, anyone familiar with the history of Iraq over the last century has reason to be
skeptical that the Iraqis, even with the help of nearly all the world's major oil
companies, can save the world by stopping the decline in oil production for very
long." |
"The problem with wind power is that is cannot always be relied upon.
The wind—and other transient, environmental energy sources such as solar—must
either be used when it is harvested or stored expensively in batteries or specially
designed hydroelectric schemes that use the resulting energy to pump water uphill.
Alternatives would be extremely welcome. Alexander
Slocum, of the Massachusetts Institute of Technology, thinks he has one. Observing
that the fashion among wind-power fans is to build turbines out at sea, where the wind
blows strongest, he proposes a pumped-storage system
that uses seawater. Dr Slocum’s scheme involves
anchoring a hexagonal array of hollow, 31-metre-diameter concrete spheres to the ocean
floor at a depth of approximately 350 metres. Floating turbines would be tethered to these
spheres and surplus power from these turbines, generated during periods of high wind and
low electrical demand, would be used to pump water out of the spheres, evacuating the
central chamber. When the wind faltered or the lights went back on, water forced into the
central chamber by the pressure of the surrounding ocean would pass through a turbine and
generate electricity. Each sphere would provide a
five megawatt turbine with four hours of storage capacity." |
"There needs to be a 'radical overhaul' of road travel in the UK to
avoid future gridlock, the CBI business organisation has warned. It said measures that
need to be explored include staggered work commutes, increased car sharing, and more
working from home. The CBI estimates road congestion now costs the UK economy up to £8bn
a year. It warned this could more than double by 2025
unless more action is taken to tackle the problem." |
"Predicting the
end of oil has proven tricky and often controversial, but Kuwaiti scientists now say
that global oil production will peak in 2014. Their work represents an updated
version of the famous Hubbert model, which correctly predicted in 1956 that U.S. oil reserves would peak
within 20 years. Many researchers have since tried using the model to predict when
worldwide oil production might peak. Some have said production already peaked. One earlier
model by Swedish researchers suggested that oil would peak
sometime between 2008 and 2018. And other researchers have argued there are decades to go
before oil production goes into irreversible decline. The only thing they all agree on:
Oil is a finite and very valuable resource. The issue's profile was raised today with a
new report projecting increased demand. After peaking above $130 a barrel in mid-2008,
crude oil prices dipped to below $40 in early 2009 as global demand tanked amid the
recession. Prices have been rising ever since and are above $80 now. Today, the
International Energy Agency said it expects demand to resume the sort of growth that was
common in recent years. Much of that growth has involved the modernizing economies of
China and India. The scientists from Kuwait University and the Kuwait Oil Company adopted
a newer approach by including many Hubbert production cycles, or bell-shaped curves
showing the rise and fall of a non-recyclable resource. Earlier models typically assumed
just one production cycle, despite the fact that most oil-producing nations have
historically experienced more of a roller coaster ride in production. Such production
cycles reflect the influence of new technological innovations in the oil industry,
government regulations, economic conditions and political events. The factors include the
discovery of new
oil deposits, the recent economic recession and the rise of renewable energy. Take
Mexico as just one example. The nation that has long represented a top oil exporter has
experienced plummeting oil production and might even begin importing oil within the
decade, the New York Times reports. Its troubles have arisen from a lack of technology to
explore more inaccessible oil deposits, and a conundrum stemming from a 1938 law that
banned foreign oil companies. Caltech physicist David Goodstein has argued for a practical
approach that focuses on preparing for the end of oil,
regardless of when it happens. He noted that the latest prediction seems to represent a
serious, thoughtful estimate. 'Of course there are large uncertainties in estimates of
this kind, but this one is as good as any I've seen,' Goodstein told LiveScience. Some oil
companies and consultancy firms such as Cambridge Energy Research Associates have
speculated that oil will peak sometime after 2020, but a number of oil geologists and
executives predict it will happen much sooner. The
Kuwaiti study created its world model for peak oil based on 47 individual models for each
major oil-producing nation. It also took a separate
look at the Organization of the Petroleum Exporting Countries (OPEC), which includes
nations that control about 35 percent of the world's oil reserves. More complications may
still change the ultimate end date for peak oil. OPEC's latest projection suggests that
world oil demand will grow by 900,000 barrels per day in 2010, according to an Associated
Press story this week. That follows a period of low oil demand during the height of the
worldwide recession in 2009." |
"The International Energy Agency
raised its forecast for global oil demand this year for a second month as fuel consumption
in Asia rises more than expected. The IEA increased its estimate for world demand in 2010
by 70,000 barrels a day to 86.6 million barrels a day. That would mean a gain of 1.6 million barrels a day, or 1.8 percent, from
2009 levels, it said. Economies outside the Organization for Economic Cooperation and
Development continue to lead the recovery in consumption, the IEA said. 'Global oil demand
resumed growth on a yearly basis in the fourth quarter of 2009 after five consecutive
quarters of decline,' the Paris-based agency said in its monthly oil market report today.
'This year’s global oil demand growth will be driven entirely by non-OECD countries,
with non-OECD Asia alone representing over half of total growth.'....Oil consumption in
non-OECD countries is forecast to average 41.2 million barrels a day in 2010, an increase
from last year of 1.7 million barrels a day, or 4.3 percent, according to the IEA. That is
190,000 barrels a day more than the agency estimated last month..... Preliminary data
indicate Chinese apparent demand surged by an 'astonishing,' 28 percent year-on-year in
January, with the biggest increase in naphtha demand, according to the IEA. The agency
raised its 2010 demand forecast for China by 130,000 barrels a day to 9 million barrels a
day, representing an increase of 6.2 percent from 2009. In contrast, the IEA cut its
forecast for oil consumption in OECD countries by 120,000 barrels a day from last month to
45.4 million barrels a day. That means it now expects demand in those economies to shrink
0.3 percent this year. Even as consumption rises globally, the IEA also cut the estimate
for the amount of crude OPEC will need to pump to balance demand and supply as production
estimates from outside the group rise. The agency estimates that the Organization of
Petroleum exporting countries will have to produce 29.3 million barrels a day this year,
100,000 barrels a day fewer than it estimated last month. OPEC, which accounts for more
than a third of global supply, will meet in Vienna next week to decide on production
quotas. Members pumped the most in 14 months in February, according to the IEA, with Iraq accounting for more than half the monthly increase.
OPEC’s compliance with record supply cuts announced in 2008 slipped to 56 percent in
February, from 58 percent the previous month, the IEA said. The group’s 11 members
bound by production quotas raised output by 80,000 barrels a day to 26.70 million a day
last month. That means OPEC exceeded its collective target by about 1.9 million barrels a
day. Non-OPEC production is now estimated at 51.8
million barrels a day in 2010, an increase of 330,000 barrels a day from 2009, a stronger
outlook from the North Sea, Egypt, Russia, Thailand and Colombia, as well as revisions to
Canada’s production data, the IEA said. That is 205,000 barrels a day more than it
forecast last month." |
"BP was preparing last night for
a possible legal battle over a giant oilfield in the Caspian Sea as it announced a $7 billion (£4.6 billion) deal designed to bolster its
position in three of the world’s most promising oil provinces. The purchase of a
string of offshore assets in Brazil, the Gulf of Mexico and Azerbaijan from Devon Energy,
of the United States, represents BP’s biggest acquisition since 2003, when the oil
giant invested $8 billion in its Russian joint venture TNK-BP. It also marks a turning
point for Tony Hayward, the chief executive, who has made a strategic bet on BP’s
ability to discover deepwater fields in the Campos Basin off Brazil. The basin is close to
an area where a spate of recent discoveries have been made that promise to transform
Brazil into one of the world’s top oil exporters. However, it emerged last night that
a key plank of the deal — the acquisition of Devon’s 5.6 per cent stake in a
giant offshore field in Azerbaijan’s Caspian Sea, could be vetoed by Devon’s
partners in the project, triggering a potential legal battle." |
"Some time in 2014 natural gas
will be condensed into liquid and loaded onto a tanker docked in Kitimat, on Canada’s
Pacific coast, about 650km (400 miles) north-west of Vancouver. The ship will probably
take its cargo to Asia. This proposed liquefied natural gas (LNG) plant, to be built by
Apache Corporation, an American energy company, will not be North America’s first.
Gas has been shipped from Alaska to Japan since 1969. But if it makes it past the planning
stages, Kitimat LNG will be one of the continent’s most significant energy
developments in decades. Five years ago Kitimat was intended to be a point of import, not
export, one of many terminals that would dot the coast of North America. There was good economic sense behind the rush. Local production of
natural gas was waning, prices were surging and an energy-hungry America was worried about
the lights going out. Now North America has an unforeseen surfeit of natural gas. The
United States’ purchases of LNG have dwindled. It has enough gas under its soil to
inspire dreams of self-sufficiency. Other parts of the world may also be sitting on lots
of gas. Those in the vanguard of this global gas revolution say it will transform the
battle against carbon, threaten coal’s domination of electricity generation and, by
dramatically reducing the power of exporters of oil and conventional gas, turn the
geopolitics of energy on its head. The source of America’s transformation lies in the
Barnett Shale, an underground geological structure near Fort Worth, Texas. It was there
that a small firm of wildcat drillers, Mitchell Energy, pioneered the application of two
oilfield techniques, hydraulic fracturing (“fracing”, pronounced 'fracking') and
horizontal drilling, to release natural gas trapped in hardy shale-rock formations.
Fracing involves blasting a cocktail of chemicals and other materials into the rock to
shatter it into thousands of pieces, creating cracks that allow the gas to seep to the
well for extraction. A 'proppant', such as sand, stops the gas from escaping. Horizontal
drilling allows the drill bit to penetrate the earth vertically before moving sideways for
hundreds or thousands of metres. These techniques have unlocked vast tracts of gas-bearing
shale in America. Geologists had always known of it, and Mitchell had been working on
exploiting it since the early 1990s. But only as prices surged in recent years did such
drilling become commercially viable. Since then, economies of scale and improvements in
techniques have halved the production costs of shale gas, making it cheaper even than some
conventional sources. The Barnett Shale alone
accounts for 7% of American gas supplies. Shale and
other reservoirs once considered unexploitable (coal-bed methane and 'tight gas') now meet
half the country’s demand. New shale prospects are sprinkled across North America,
from Texas to British Columbia. One authority says supplies will last 100 years; many
think that is conservative. In 2008 Russia was the world’s biggest gas producer (see
chart 1); last year, with output of more than 600 billion cubic metres, America probably
overhauled it. North American gas prices have slumped from more than $13 per million
British thermal units in mid-2008 to less than $5.... Shale is almost ubiquitous, so in
theory North America’s success can be repeated elsewhere. How plentiful
unconventional resources might be in other regions, however, is far from established. The
International Energy Agency (IEA) estimates the global total to be 921 trillion cubic
metres (see chart 2), more than five times proven conventional reserves. Some think there
is far more. No one will really know until companies explore and drill. The drillers are
already arriving in Europe and China, which are both expected to import increasing amounts
of gas—and are therefore keen to produce their own. China has set its companies a
target of producing 30 billion cubic metres a year from shale, equivalent to almost half
the country’s demand in 2008. Several foreign firms, including Shell, are already
scouring Chinese shales. After a meeting between the American and Chinese presidents last
November, the White House announced a 'US-China shale gas initiative': American knowledge
in exchange for investment opportunities. The IEA says China and India could have 'large'
reserves, far greater than the conventional resource. Exploration
is also under way in Austria, Germany, Hungary, Poland and other European countries. The oil industry’s minnows led this scramble, but now the big firms
are arriving too. Austria’s OMV is working on a promising basin near Vienna. Exxon
Mobil is drilling in Germany. Talisman recently signed a deal to explore for shale in
Poland. ConocoPhillips is already there. The first results from wells being drilled in
Poland, in what some analysts believe is a shale formation similar to Barnett, should be
released this year. No one expects production of
shale gas in Europe to make a material difference to the continent’s supply for at
least a decade. But the explorers in China and
Europe present a long-term worry for those who have bet on exporting to these markets.
Gazprom, Russia’s gas giant, is the company most exposed to this threat, because its
strategy relies on developing large—and costly—gasfields in inhospitable places.
But Australia, Qatar and other exporters also face a shift in the basics of their
business. These producers are already getting a taste of the global gas glut. Almost in tandem with the surge in American production, recession
brought a slump in world demand. The IEA says
consumption in 2009 fell by 3%. In Europe, the drop was 7%. Consumption in the European
Union will grow marginally if at all this year and will not be sufficient to clear an
overhang of supplies, contracted through take-or-pay agreements signed in the dash for gas
of the past decade. IHS Global Insight, a consultancy, reckons that the excess could
amount to 110 billion cubic metres this year, almost a quarter of the EU’s demand in
2008. The glut has been exacerbated by the suddenly greater availability of LNG. Importers
with the infrastructure to receive and regasify LNG can now easily tap the global market
for spot cargoes. This is partly a product of the recession, which dampened demand from
Japan and South Korea, the leading LNG buyers. But another cause is that many exporters,
not least Qatar, the world’s LNG powerhouse, spent the past decade ramping up
supplies aimed at the American market. That now looks like a blunder.... Qatar’s low
production costs mean it can still make money, even in North America. Others cannot. In February, for example, Gazprom postponed its Shtokman gasfield
project by three years because of the change in the market. Some of the gas from that field, in the Barents Sea, was to be exported
to America. But Shtokman’s gas will be costly, because the field is complex and its
location makes it one of the world’s most difficult energy projects to execute. Some
analysts now wonder whether gas will ever flow from Shtokman.... In 2007 Gazprom talked of increasing its annual exports to the EU
to 250 billion cubic metres. Now, says Jonathan Stern, of the Oxford Institute for Energy
Studies, Gazprom will probably only ever supply the EU with 200 billion cubic metres a
year (it shipped about 130 billion in 2008). The company forecast in 2008 that its gas
prices in Europe would triple, to around $1,500 per 1,000 cubic metres, on the back of
rising oil prices, which help set prices in long-term contracts. But the price dropped to
about $350 last year and is expected to fall again in 2010. The weak market could last for
another five years, believes Wood Mackenzie. Gazprom
has been renegotiating with leading customers, injecting elements of spot pricing into
contracts to make them more attractive.... Even
without recession or European shale, the assumption that Europe’s consumption will
keep growing is looking shaky, because the EU’s efforts to boost efficiency and
reduce carbon emissions are making gradual headway. Edward Christie, an economist at the
Vienna Institute for International Economic Studies, says the EU could be importing a
third less natural gas in 2030 than the European Commission forecast in 2005. That makes
the case for additional supply lines much less compelling. The IEA expects rich European
countries’ demand to grow by only 0.8% a year in the next two decades, against 1.5%
for the world as a whole. An age of plenty for
gas consumers and of worry for conventional-gas producers thus seems to be dawning. But two factors could reverse the picture again. The first
surrounds the uncertainty about how fruitful shale exploration will be outside North
America. A clearer understanding of the geology will emerge from pilot wells in the coming
months. Second, there are reasons for caution above ground, too. Despite natural
gas’s greener credentials than oil’s or coal’s, shale drilling has critics
among environmentalists, who worry that water sources will be poisoned and landscapes
despoiled. The industry says cement casing of wells and the depth to which they are
drilled make the practice safe and relatively unobtrusive. But so far it has been drilling
mainly in North America, where land is plentiful and people are accustomed to the sight of
oilmen’s detritus. In densely populated Europe, the rapacious rate at which shale
plays must be drilled to sustain production is less likely to be tolerated....A more radical idea, and one that
would have ramifications for the global oil sector, is to gasify transport. T. Boone
Pickens, a corporate raider turned energy speculator, has launched a campaign to promote
this, and has support from the gas industry. By
converting North America’s fleet of 18-wheeled trucks to natural gas, says Randy
Eresman, boss of EnCana, a Canadian gas company, America could halve its imports of Middle
Eastern oil. EnCana is promoting 'natural gas transportation corridors': highways served
by filling stations offering natural gas. All this is some way off. The coal industry will
not surrender the power sector without a fight. The
gasification of transport, if it happens, could also take a less direct form, with cars
fuelled by electricity generated from gas. A
gasified American economy would have profound effects on both international politics and
the battle against climate change. Displacement of oil by natural gas would strengthen a
trend away from crude in rich countries, where the IEA believes demand has already peaked
as a result of the recent spike in oil prices. Another consequence of the energy
market’s bull run, the unearthing of vast new supplies of gas, could bring further
upheaval. If the past decade was characterised by the energy-security concerns of
consumers, the coming years could give even the world’s powerful oil producers reason
to worry, as a subterranean revolution shifts the geopolitics of global energy supply
again." |
"New forecasts suggest the
European Union will exceed its target of getting 20 percent of its energy from renewable
sources in 2020, the European Commission said Thursday. The latest national projections submitted by governments to the EU
executive suggest the 27-nation bloc could reach an overall renewable share of 20.3
percent by the end of the decade." |
"Tullow said that a huge new oilfield in Ghana contains at least 60
per cent more crude than previously thought. Tullow raised its reserve estimate for the
offshore Tweneboa discovery from 250 million to 400 million barrels of oil, increasing its
total reserves in the country to 4.5 billion barrels." |
"Iranian President Mahmoud
Ahmadinejad warned Gulf countries on Thursday against the U.S. presence in the region,
saying Washington aimed to dominate their energy resources in the name of fighting
terrorism. Iran opposes the U.S. military presence
on its borders in Iraq, Afghanistan and the Gulf, saying western military intervention is
the root of insecurity in the region. 'We warn the countries in the region over the
presence of bullying powers ... they have not come here to restore security or to counter
drug trafficking,' Ahmadinejad said in a speech during a visit to the southern province of
Hormuzgan. The hardline president accused the West of planning to dominate energy
resources in the Gulf and said: 'People in the region will cut off their hands from the
Persian Gulf's oil.'" |
"Some of the nation's biggest
oil companies are looking at permanently reducing how much gasoline and diesel fuel they
make, a move that analysts say would almost certainly trigger higher prices for drivers.
Energy companies are suffering huge losses from refining because of slumping gasoline use
-- a product of the economic downturn and changing consumer habits and preferences. Energy experts say refining cutbacks have begun and will accelerate as
corporations strive for profits..... Major refiners have been circumspect about their
plans, saying that they are considering options that could include closing refineries,
selling parts of their operations, laying off workers and slashing spending. 'Refineries
will have to be closed,' said Fadel Gheit, senior energy analyst with Oppenheimer &
Co. 'Unless this excess capacity is permanently shuttered, a recovery in refining margins
is unsustainable.' This week Chevron Corp. launched an overhaul of its fuel-making and
retailing business with a plan to cut at least 2,000 jobs, put a refinery in Wales up for
sale and take a hard look at its Hawaii refinery. Royal Dutch Shell said it was reviewing
its refinery operations with the idea of keeping only those with the best growth
potential. Sunoco Inc. has sold one plant and said last month that its previously idled
Eagle Point, N.J., refinery was being shut down permanently. Valero Energy Corp., the
nation's largest refiner, last year closed a Delaware refinery, laying off 500 workers,
and mothballed a plant in Aruba. 'We're actually assessing the entire East Coast, whether
we should be there or not,' Valero Chief Executive William R. Klesse told executives at a
recent energy conference. Energy industry executives say they are facing up to what was
previously inconceivable: that the nation's appetite for petroleum products may never
return to levels seen earlier in the decade, even if a strong economic recovery takes
hold. 'None of us will sell more gasoline than we did in 2007,' Tony Heyward, group CEO
for oil giant BP, said during a recent earnings teleconference. For motorists, talk of
refinery cuts promises to be anything but cheap. It's feared that leaner supplies will
translate into higher pump prices punctuated by expensive spikes when operations are
disrupted by weather or other events." |
"In a finding that may speed
efforts to conserve oil and intensify the search for alternative fuel sources, scientists
in Kuwait predict that world conventional crude oil production will peak in 2014 — almost a decade earlier than some other predictions. Their study
is in ACS' Energy & Fuels, a bi-monthly journal." |
"Ambitious plans to build a new
generation of nuclear power stations across Britain will fail because of a lack of skills
and funding, engineers have warned. The Institution
of Mechanical Engineers (IMech) said the UK needs to have the first new nuclear power
stations up and running by the end of this decade to avoid the lights going out. However a
lack of skilled engineers, delays in the planning process and a shortage in funds mean the
building programme is in danger of stalling." |
"When will we reach the peak of global oil production? It’s a
question of crucial importance as governments around the world prepare for a world of declining oil resources,
in which we will be much more reliant on alternative sources of energy. The body on which
the UK and others rely heavily to make that assessment is the International Energy Agency (IEA) based in
Paris and set up in the aftermath of the oil crisis between 1973 and 1974. For years, IEA reports have been reiterating the conclusion that
peak oil was not a problem. Behind the scenes however, it is now clear that senior staff
thought otherwise. It was only through the work of 22-year-old Lionel Badal, a politics
student at Exeter University, that the truth about this cover-up finally emerged. It
started innocently enough, as Lionel, working on his undergraduate dissertation on peak
oil, set about trying to arrange interviews with politicians and figures working inside
and outside the oil industry. He was surprised when the IEA agreed to allow him to
interview one of their top officials. In the end the first official pulled out of the
interview but he was replaced by one of his colleagues, a senior economist at the
organisation. The new interviewee turned out to be far more forthcoming than his superiors
might have wanted.... Most of the interview was
‘interesting but nothing revelatory’, remembers Lionel, but that changed towards
the end when the official was asked for his opinion on predictions for peak oil.The IEA
has repeatedly said oil output can increase until at least 2030 as long as 'adequate
investments are made in exploration and development'. Other analysts, including those
behind the UK Energy Research Centre report on peak oil, say this is 'wildly
optimistic' and that the IEA does not have the evidence to back up this prediction. Far
from sticking to the IEA line, the official said he was actually very worried about peak
oil and shared some of the more pessimistic concerns.? ‘From that meeting I
understood there was a problem,’ says Lionel, ‘as publicly the IEA did not say
this type of thing.’ Over the next few months Lionel continued his research and met
with politicians in France....By July, Lionel had managed to arrange a meeting between
himself, the IEA official and the MEP Corrine Lepage, a former French environment minister
and well-known figure in French politics. ??Clearly pleased to meet such a respected
figure, the IEA official became much more open about the downplaying of peak oil concerns
at the agency. ‘He told her reports had been modified and that there were pressures
on the IEA from the US not to make too pessimistic predictions,' Lionel remembers. 'He
said just as peak oil theorists claimed, there was a big problem with oil.’ By the
end of the meeting the IEA official had agreed to write a briefing note for the MEP on the
issue. But by then Lionel thought the issue needed to be made public.... Having been given
the green light, Lionel contacted two journalists at the Economist and the Independent.
The Independent was slow to respond and did not seem convinced by the story, remembers
Lionel, but the Economist journalist agreed to meet the following month when he was in
London. However, at the meeting he said he could not immediately write about the issue as
he was working on other stories. ‘I also got the feeling his position was isolated at
the Economist and that the magazine would not want to take a stance by running such a
story on peak oil,’ says Lionel. Soon after these first attempts to make the issue
public, the respected NGO Global Witness released a report on peak oil, Heads in the Sand. ??Reading Guardian journalist Ashley Seager's
article on this report, Lionel decided to contact him and sent information about his IEA
whistleblower to both Seager and the paper’s environment columnist, George Monbiot.
Seager forwarded it onto the Guardian’s energy editor, Terry Macalister. ??By
coincidence the IEA was preparing to publish its latest annual report on oil supply and
demand in early November. With the launch scheduled to take place in London, the Guardian
had the perfect opportunity to maximise exposure of the story. Macalister spoke to
Lionel’s IEA official, and on November 10th, 2009 - the same day that the IEA’s
chief economist Dr Fatih Birol was launching the agency’s major annual report - the story appeared on the Guardian’s frontpage. As expected, the
reaction was huge. ‘Peak oil whistleblower’ stories were splashed across the
media." |
"Big Oil is bent on making natural gas the core of its business,
arguing that its abundance, cheapness and environmental friendliness will change the
energy landscape forever. The fuel seems bound to reshape an industry known for its booms
and busts into a more predictable, staid creature. Companies
such as Exxon Mobil Corp. (XOM), Royal Dutch Shell PLC (RDSB, RDSA, RDSB.LN) and
ConocoPhillips (COP) are making the transition from dealing mostly in oil, a commodity
that's increasingly scarce and difficult to produce, to natural gas, a fuel that's
suddenly become ubiquitous. Their profits, which can
reach unfathomably high levels during good times, are likely to go down accordingly,
executives and analysts say. So will the companies' adventurous ventures in the deep
waters and in dangerous regions of the globe. The industry now needs to learn the shale
gas business, which has played a major role in spurring the transition and which can only
be profitable if it runs like an assembly line. 'It's a manufacturing industry, and it's
not at all what we're doing at Total,' said Patrick Pouyanne, senior vice president for
strategy business development at Total S.A. (TOT, FP.FR), which recently entered into a
shale gas joint venture in the U.S. and is acquiring shale positions in France, Denmark,
Argentina and North Africa. Until now, Total's focus has been on projects such as wells in
deep waters in Africa and in the North Sea, each worth $50 million and each project
unique. 'Here in this (shale) business you have to be more like a Ford (Motor Co.). ...
This is what we want to understand and obviously we do not have these types for oil, but
it's maybe the future of the industry,' he said in an interview on the sidelines of the
IHS Cambridge Energy Research Associates conference in Houston. The unexpected bounty of
natural gas became evident in recent years as independent U.S. energy companies found
profitable ways to tap tight rock formations known as shales. U.S. gas reserves, once in
seemingly permanent decline, doubled in the past few years, according to IHS CERA. Since
2008, several Big Oil companies have plunged into North American shale gas - culminating
with the announcement last December of Exxon Mobil's agreement to buy energy independent
XTO Energy Inc. (XTO) for $31 billion. Exxon's move 'signals that gas is the way to go,'
said Fadel Gheit, a New York-based analyst with Oppenheimer & Co. In a way,
international oil companies are changing their business model 'because they have no
choice,' Gheit said. National oil companies such as Brazil's Petroleo Brasileiro S.A.
(PBR, PETR4.BR), or Petrobras, and Saudi Aramco, which control access to some of the best
crude oil deposits, increasingly call the shots there, relegating Western companies to a
minor role. In the gas business, which requires big
investments in infrastructure while returning more moderate profits, the larger companies
can use their size and deep pockets to gain an edge." |
"Saudi Arabia’s 4 million barrels a day of spare capacity can
easily be absorbed into the market when global energy demand recovers after the recession,
the head of the kingdom’s state owned oil company said today. In a speech at a
Cambridge Energy Research Associates confernce in Houson, Khalid al Falih, chief executive
officer, Saudi Arabian Oil Co, said: 'Oil supply will
decline if there is no investment, so that 4 million could be absorbed by demand alone.' The kingdom, the world’s largest producer, raised output by 100,000
barrels a day to 8.25 million in February, the highest level since December 2008, a
Bloomberg survey of oil companies, producers and analysts showed last month." |
"Taking up more than a week of your life, the train journey from
London to Beijing is not one most people would currently consider. But fast forward a few
years and you could find yourself stepping off in the Chinese capital in a mere two
days. The prospect of the incredible journey
came closer to reality yesterday with China's ambitious plans to build a high-speed rail
network to Europe....The new service will not be
arriving in Britain just yet, but the Chinese are hopeful it could be here within ten to
15 years. China already has its own high-speed railway network, and is negotiating to
extend this to up to 17 countries. Mr Wang said most of the countries already at the
negotiating table are in south-east and central Asia. The talks involve a trade of
resources for technology. Many of the countries are under-developed but mineral
rich." |
"Taking up more than a week of your life, the train journey from
London to Beijing is not one most people would currently consider. But fast forward a few
years and you could find yourself stepping off in the Chinese capital in a mere two
days. The prospect of the incredible journey
came closer to reality yesterday with China's ambitious plans to build a high-speed rail
network to Europe....The new service will not be
arriving in Britain just yet, but the Chinese are hopeful it could be here within ten to
15 years. China already has its own high-speed railway network, and is negotiating to
extend this to up to 17 countries. Mr Wang said most of the countries already at the
negotiating table are in south-east and central Asia. The talks involve a trade of
resources for technology. Many of the countries are under-developed but mineral
rich." |
"The top U.S. environmental
regulator said she was 'very concerned' about fluids blamed by some for polluting water
supplies near sites where drillers use them to extract natural gas from shale deposits. U.S. Environmental Protection Agency chief Lisa Jackson said she hopes
her agency will launch a study this year into the nature of fluids used in the hydraulic
fracturing process of natural gas drilling. 'We are going to look at what the fluids are,
what's in them. We are very concerned about that,' she told Reuters after a speech at the
National Press Club. Exploitation of the cleaner-burning fuel could allow the United
States to reduce greenhouse gas emissions and cut its dependence on coal and petroleum
imports. When burned, natural gas emits only half of the carbon dioxide per unit as does
coal, which generates about half of the electricity in the United States. Critics,
however, say the chemicals used in fracturing can contaminate water supplies. Hydraulic
fracturing injects millions of gallons of water, sand, and a proprietary mix of chemicals
up to two miles underground where it breaks open fissures in the gas-bearing shale.
Drilling companies are scrambling to develop vast shale deposits that are estimated to
contain enough natural gas to meet U.S. needs for up to a century. Industry maintains its
processes are safe. Energy companies say fracking chemicals are injected into the ground
thousands of feet below drinking water aquifers and that well shafts are encased in layers
of steel and concrete, preventing any escape of chemicals into groundwater. But some
residents who live near gas-drilling rigs say their water has become foul-tasting,
discolored or even flammable because methane from gas wells has seeped into domestic water
supplies. Industry spokespeople say there has never been a proven case of groundwater
contamination from fracking. A bill in Congress would require gas companies to disclose
the chemicals used in fracking and give the EPA oversight of the industry, which is now
regulated by the states." |
"Britain £9.5 billion plan to bury power station pollution under the
seabed will move a step closer this week. Ed Miliband, the Energy Secretary, is ready to
give tens of millions of pounds to E.ON and ScottishPower, the utility groups, to finish
designs for carbon capture and storage equipment that would be fitted to coal-fired power stations. CCS catches
carbon dioxide generated by burning fossil fuels, liquefies it and pumps it into
underground storage caverns. The Government sees it as a key element of its plans to cut
Britain’s greenhouse gas emissions. Last year, it introduced a carbon levy to raise
£9.5 billion to fund up to four of the experimental plants. Mr Miliband will also supply
fresh details of the Government’s vision to build 'carbon clusters' in regions where
heavy industry and power plants are located. Moving millions of tonnes of carbon from
plants to spent oil and gasfields in the North Sea will require a large new pipeline
network." |
"Ethiopia is only one of 20 or more African countries where land is
being bought or leased for intensive agriculture on an immense scale in what may be the
greatest change of ownership since the colonial era. An Observer investigation estimates
that up to 50m hectares of land – an area more than double the size of the UK –
has been acquired in the last few years or is in the process of being negotiated by
governments and wealthy investors working with state subsidies. The data used was
collected by Grain, the International Institute for Environment and Development, the
International Land Coalition, ActionAid and other non-governmental groups. The land rush,
which is still accelerating, has been triggered by the
worldwide food shortages which followed the sharp oil price rises in 2008, growing water shortages and the European Union's insistence that 10% of
all transport fuel must come from plant-based biofuels by 2015. In many areas the deals
have led to evictions, civil unrest and complaints of 'land grabbing'. The experience of
Nyikaw Ochalla, an indigenous Anuak from the Gambella region of Ethiopia now living in
Britain but who is in regular contact with farmers in his region, is typical. He said:
'All of the land in the Gambella region is utilised. Each community has and looks after
its own territory and the rivers and farmlands within it. It is a myth propagated by the
government and investors to say that there is waste land or land that is not utilised in
Gambella. 'The foreign companies are arriving in large numbers, depriving people of land
they have used for centuries. There is no consultation with the indigenous population. The
deals are done secretly. The only thing the local people see is people coming with lots of
tractors to invade their lands. 'All the land round my family village of Illia has been
taken over and is being cleared. People now have to work for an Indian company. Their land
has been compulsorily taken and they have been given no compensation. People cannot
believe what is happening. Thousands of people will be affected and people will go
hungry.' It is not known if the acquisitions will improve or worsen food security in
Africa, or if they will stimulate separatist conflicts, but a major World Bank report due
to be published this month is expected to warn of both the potential benefits and the
immense dangers they represent to people and nature. Leading the rush are international
agribusinesses, investment banks, hedge funds, commodity traders, sovereign wealth funds
as well as UK pension funds, foundations and individuals attracted by some of the world's
cheapest land. Saudi Arabia, along with other
Middle Eastern emirate states such as Qatar, Kuwait and Abu Dhabi, is thought to be the
biggest buyer. Together they are scouring Sudan, Kenya,
Nigeria, Tanzania, Malawi, Ethiopia, Congo, Zambia, Uganda,
Madagascar, Zimbabwe, Mali, Sierra Leone, Ghana
and elsewhere. Ethiopia alone has approved 815 foreign-financed agricultural projects
since 2007. Any land there, which investors have not been able to buy, is being leased for
approximately $1 per year per hectare. Saudi Arabia, along with other
Middle Eastern emirate states such as Qatar, Kuwait and Abu Dhabi, is thought to be the
biggest buyer.... Some of the African deals lined up are eye-wateringly large: China has
signed a contract with the Democratic Republic of Congo to grow 2.8m hectares of palm oil
for biofuels. Before it fell apart after riots, a proposed 1.2m hectares deal between
Madagascar and the South Korean company Daewoo would have included nearly half of the
country's arable land. Land to grow biofuel crops is
also in demand. 'European biofuel companies have acquired or requested about 3.9m hectares
in Africa. This has led to displacement of people, lack of consultation and compensation,
broken promises about wages and job opportunities,' said Tim Rice, author of an ActionAid
report which estimates that the EU needs to grow crops on 17.5m hectares, well over half
the size of Italy, if it is to meet its 10% biofuel target by 2015. 'The biofuel land grab in Africa is
already displacing farmers and food production. The number of people going hungry will
increase,' he said. British firms have secured
tracts of land in Angola, Ethiopia, Mozambique, Nigeria and Tanzania to grow flowers and
vegetables. Indian companies, backed by government loans, have bought or leased hundreds
of thousands of hectares in Ethiopia, Kenya, Madagascar, Senegal and Mozambique, where
they are growing rice, sugar cane, maize and lentils to feed their domestic market.
Nowhere is now out of bounds. Sudan, emerging from civil war and mostly bereft of
development for a generation, is one of the new hot spots. South Korean companies last
year bought 700,000 hectares of northern Sudan for wheat cultivation; the United Arab
Emirates have acquired 750,000 hectares and Saudi Arabia last month concluded a
42,000-hectare deal in Nile province." |
"China's western Qinghai
Province, containing major deposits of the country's 'combustible ice,' will see increased
explorations for this emerging clean energy, Provincial Governor Luo Huining said on
Saturday. The plateau province plans to allow large energy companies along with
researchers to tap this new source of energy while minimizing environmental threats, Luo
said on the sidelines of the annual session of the National People's Congress (NPC),
China's top legislature. 'Combustible ice,' or natural gas hydrate, is mainly found in
deep seas and atop plateaus. Approximately one cubic meter of 'combustible ice' equals 164
cubic meters of regular natural gas. At a time of energy bottlenecks, the new energy
resource has drawn interest from many countries.
Additional attention has focused on the 'ice' having a low proportion of impurities,
resulting in it generating almost no pollutants when burned. More than 100 countries
around the world have found deposits of 'combustible ice.' The deposits in Qinghai
Province, home to one-quarter of China's total reserve on the Qinghai-Tibet Plateau, were
discovered in September 2009. 'Combustible ice' reserves on the Qinghai-Tibet Plateau are
estimated to equal at least 35 billion tonnes of oil, which could supply energy to China
for 90 years. Luo said tapping this new energy resource should be given high priority in
China's energy strategy." |
"2010 is a big year for nuclear
fusion but experts fear that a lack of fuel could push the dream of cheap, safe, clean and
limitless energy far into the future. As fossil
fuels run dry and increasingly desperate attempts are made to control carbon emissions,
the seductive promise of fusion energy has attracted billions of pounds of international
funding. Later this year the payback on this investment should begin. A laser at the
National Ignition Facility in California will fuse together pairs of hydrogen nuclei,
releasing high energy neutrons that should, for the first time, produce more power than
the laser itself has put in. As Professor Mike Dunne, head of Europe's laser fusion
project says, 'The first credible attempt is now just a few months away after 50 years of
trying. Incredibly exciting times.' Rumbling voices of discontent may, however, be audible
beneath the Californian back-slapping. At Greenpeace International, Jan Beranek worries
about the safety and security of the radioactive tritium used in the reactor. 'There is
always a risk that either the technology or the nuclear materials can fall into the wrong
hands... Some of the materials can be used for hydrogen bombs.'... Dr Marc Beurskens at
the Culham Centre for Fusion Energy in Oxfordshire says that nuclear waste is not a
serious problem as tritium decays relatively quickly. There is, he says, 'a proliferation
issue with tritium because it is used in weapons and obviously decent security has to be
set up, but it's much easier to control than stocks of uranium.' That still leaves the fundamental problem with fusion - the fuel
supply. Professor Steve Cowley, director of the fusion programme at the United Kingdom
Atomic Energy Authority explains that the fuel is derived from two different forms of
hydrogen. 'Deuterium is in sea water. The oceans of the world contain sixty billion year's
worth of deuterium. Tritium comes from lithium, lithium salts are in sea water.' Things,
sadly, aren't quite as simple as that sounds. There are only around 20 kilograms of
tritium in the world. Supplies come principally from nuclear reactors, specifically
Canadian heavy water reactors. They can produce enough tritium to supply current
experimental fusion plants but not enough for commercial production. Jan Beranek of
Greenpeace claims that, 'to sustain a reaction for a year for just one reactor it would
need to burn 50 kgs of tritium... at the moment we are able to get one kg for about $30
million (£20 million)'. And that price is expected to rise. So where could affordable
fuel come from? Professor Cowley admits: 'That's part of the problem that we haven't done
yet but we do know how to do it because it's been done with nuclear reactors.' Cowley and
his colleagues expect fusion reactors to become self-sustaining, 'breeding' their own fuel
supply. 'The principles are right, but there's a lot
of difference between principles and practice and that's where we have to do our work,' he
says. Dr Michael Dittmar, a physicist at CERN working
for the Swiss Federal Institute of Technology thinks this is a comforting folly, a process
fraught with problems in physics, mathematics and engineering. 'You put 20 kgs of this tritium in and then you start to operate a kind
of chain reaction. Even to come to the chain reaction there are so many fundamental
problems that cannot be addressed at a single place in the world.' He says the vast
expenditure on experimental reactors should be halted until that basic problem is
resolved. Some $3.5 billion (£2.1 billion) is being spent on America's National Ignition
Facility and, at least 10 billion euros (£9 billion) on the ITER reactor under
construction in France. 'If this doesn't work we can forget the entire rest of the
project,' he says." |
"Today’s biofuels targets
risk causing another oil supply crunch in the middle of this decade, a key report for the
international energy ministers’ meeting in Mexico this month has warned. The report,
which will be a central topic for discussion at the summit, says there is an 'urgent need'
to review existing biofuel policies. It says targets
to boost the use of biofuels create uncertainty over future oil demand, and so ran the
risk of prompting oil-producing countries to cut investments in projects needed to ensure
sufficient oil supply once the world emerges from recession. 'Oil-producing countries ...
are justified in being cautious in making new investments in new production capacity if
there is a risk that energy security and climate change policies in consuming countries
could destroy the corresponding demand,' says the report, which was written by a former
head of Opec, the oil producers’ cartel, and a former head of the International
Energy Agency, the oil-consuming countries’ watchdog. New targets for more advanced
forms of biofuel should be considered only after careful evaluation of their long-term
sustainability, the report states. 'Setting strong and ambitious targets before ensuring
sustainability, as has been the case for most first-generation biofuels, adds to
uncertainty of supply, which could increase market volatility in the medium term. This in
turn would increase energy security risk rather than improve it,' it says. The main
opposition to biofuels targets, such as the European Union’s goal of their comprising
10 per cent of all transport fuel by 2020, has come from those who argue biofuel
production pushes food prices higher. However, such opposition generally does not
encompass second-generation biofuels, which have smaller carbon footprints and use sources such as algae that
do not compete with food." |
"Russia crude production neared
a post-Soviet record in February as TNK-BP, the
venture owned by BP Plc and a group of billionaires, raised output at new fields in both
western and eastern Siberia. Crude production reached almost 10.08 million barrels a day,
a gain of 3.3 percent from a year earlier and 0.2 percent from the previous month,
according to preliminary data from the Energy Ministry’s CDU-TEK unit. Output, which has exceeded 10 million barrels a day for six months in a
row, was slightly below November’s record. Oil exports
slumped to 5.21 million barrels a day, down 1.3 percent from
January and 5.7 percent on the year, as the export
tax climbed following the price of Urals, Russia’s benchmark blend. TNK-BP boosted output to 1.42 million barrels day after ramping up new
projects, such as the Uvat and Kamennoye fields in western Siberia and Verkhnechonsk in
the east. Production advanced 4.5 percent from a year earlier and 0.5 percent from the
previous month, not including its OAO Slavneft venture." |
"Capturing heat from power
plants could help reduce Britain’s future generation capacity, projected to exceed
150 gigawatts by 2050, by 13 percent, according to a
Combined Heat and Power Association report. Diversifying the ways heat is supplied and
using combined heat and power, or CHP, plants would reduce peak demand, making it easier
to manage electricity usage, the report said. Heat represented 41 percent of
Britain’s total final energy consumption in 2007." |
"Asian buyers are taking record
volumes of West African crude oil this year as fuel consumption rises in India, China and
other East Asian countries, a Reuters survey of
trade sources showed on Monday. Imports of cargoes of unrefined oil from Nigeria, Angola
and other African producers via Atlantic ports averaged around 1.79 million barrels per
day (bpd) in the first quarter, up from about 1.53 million bpd in the fourth quarter and
close to 1.1 million bpd a year ago. In the first three months of this year, Asia consumed
about 40 percent of all the West African crude produced, up from around 25 percent in Q1
2009, the Reuters survey shows. Asian buyers have so far taken 52 cargoes of West African
crude oil due to load in March, compared with around 50 in February and at least 59
cargoes loading in January." |
"The oil supply challenge is often summarized in terms of the
production volume equivalent of Saudi-Arabia’s that needs to be replaced. This
popular metric is based on in-depth studies of global
decline rates that show a decline range between 4.5 and 6 percent over the current 73
million barrels of crude oil produced per day. By
using such literature values for all types of production, it can be shown that: |
"Using fossil fuel in vehicles is better for the environment than
so-called green fuels made from crops, according to a government study seen by The Times.
The findings show that the Department for Transport’s target for raising the level of
biofuel in all fuel sold in Britain will result in millions of acres of forest being
logged or burnt down and converted to plantations. The study, likely to force a review of
the target, concludes that some of the most commonly-used biofuel crops fail to meet the
minimum sustainability standard set by the European Commission. Under the standard, each
litre of biofuel should reduce emissions by at least 35 per cent compared with burning a
litre of fossil fuel. Yet the study shows that palm
oil increases emissions by 31 per cent because of the carbon released when forest and
grassland is turned into plantations. Rape seed and soy also fail to meet the standard. The Renewable Transport Fuels Obligation this year requires 3¼ per cent
of all fuel sold to come from crops. The proportion is due to increase each year and by
2020 is required to be 13 per cent. The DfT commissioned E4tech, a consultancy, to
investigate the overall impact of its biofuel target on forests and other undeveloped
land. The EC has conducted its own research, but is refusing to publish the results. A
leaked internal memo from the EC’s agriculture directorate reveals its concern that
Europe’s entire biofuels industry, which receives almost £3 billion a year in
subsidies, would be jeopardised if indirect changes in land use were included in
sustainability standards....Last year, 127 million litres of palm oil was added to diesel
sold to motorists in Britain, including 64 million litres from Malaysia and 27 million
litres from Indonesia. Kenneth Richter, biofuels campaigner for Friends of the Earth,
said: 'The billions of subsidy for biofuels would be better spent on greener cars and
improved public transport.'" |
"The Canadian Oil Sands Trust
has announced it will increase synthetic crude oil production capacity at its Syncrude
project near Fort McMurray, Alberta. The
company said that, based on preliminary scoping and design work by Syncrude and
ExxonMobil, the existing Mildred Lake upgrading facility has latent capacity that can be
'unlocked' through a series of steps, allowing
synthetic crude oil production to grow to approximately 425,000 barrels per day (bpd) by the end of the decade. The projects include accessing excess
coking capacity, modifying facilities, and potentially adding new ancillary units. Alberta
tar sands project will increase production." |
"Shell Oil Co. said Tuesday it is abandoning its quest for water
rights from the Yampa River in northwest Colorado to develop oil shale production, citing
delays in the project due to the global economic downturn. The Yampa is the last
free-flowing river in Colorado, uninterrupted by dams or other diversions. It winds
through Dinosaur National Monument and is a popular rafting spot for the region's boaters.
Colorado, Wyoming and Utah are thought to hold 800 billion barrels of recoverable oil in
shale. But critics of a federal management plan for developing oil shale on public lands
say the process would use too much of the region's scarce water. Though Shell dropped its
bid for Yampa water this week, the company left open the possibility of pursuing the
oil-shale project in the future. 'The exact scale and timing for development will depend
on a number of factors, including progress on our technology development, the outcome of
regulatory processes, market conditions, project economics and consultations with key
stakeholders'” the company said in a statement. Shell was seeking a conditional water
right to take up to 375 cubic feet per second, about 8 percent of the Yampa's average
April-to-June flow. The company would have pumped the water into a new reservoir covering
1,000 acres and holding 45,000 acre-feet of water, or about 15 billion gallons." |
"A survey of 70 active companies by industry body Oil & Gas UK
shows that there are more projects under consideration than at this time last year.
However, difficulties raising finance and the fact
that the easiest – and therefore cheapest – reserves to extract have already
been exploited means fewer projects are actually being developed. This will lead to a fall
in the UK's domestic oil production and increase the need for imports. There are 11bn barrels of oil and gas in existing projects, up 15pc from
the previous year – enough to meet half the UK's demand in 2020. However, companies
will need to raise £60bn of capital expenditure to extract this oil. Oil companies are
planning to extract only 5.25bn barrels from approved projects, up from a target of 6bn
barrels at this time last year. Mike Tholen, the industry group's economics director and
author of the report, said confidence had improved, but the investment climate was still
not good." |
| "Five years ago, when oil prices were climbing steadily and
economists were stoking fears about peak oil and gas, it seemed that major energy
producers like Russia were holding all the cards. Then-president Vladimir Putin spoke of
his country as an 'energy superpower' and used energy supplies as a blunt instrument of
Kremlin foreign policy. Gas cutoffs to Ukraine caused panic in Europe, while Western
energy companies fell over each other to get a slice of Russia's oil and gas fields. But
all that is over. Today, the super-giant Shtockmann
natural-gas field under the Arctic sea—Russia's only big hydrocarbon discovery since
Soviet times—has just been mothballed due to the towering cost of extracting the
undersea gas. At the same time, worldwide demand for Russia's gas has plummeted. And
meanwhile, the government has punctured investor confidence by pressuring BP, one of the
few major foreign investors left in Russia's energy sector, to hand over a giant Siberian
gas field to a government-owned rival. It's time for Moscow to kiss goodbye those dreams
of energy hegemony. One problem is that the recession has eviscerated European demand for
Russian natural gas (consumption dipped by 7 percent in 2009). Another is that demand in
the United States for imported natural gas has fallen off too. Thanks to shale gas and
other unconventional sources like tar sands, the U.S. is now close to self-sufficient in
natural gas. It's a nightmare for Shtockmann, where
the business plan hinged on freezing the product into liquified natural gas, or LNG, for
export to the United States....The $20 billion cost of extracting the deep-buried gas in
the harsh conditions of the Arctic has proved prohibitive for Gazprom and its minority
partners, Total of France and Statoil of Norway....Now the European market seems
oversupplied. More worrying still, Gazprom's traditional suppliers (gas fields in the
Central Asian nations of Turkmenistan and Kazakhstan) have begun opening their own direct
pipelines to China, where gas consumption has a future. And though Gazprom still controls
about 17 percent of the world's proven natural-gas reserves, many of its existing fields
are beginning to run dry. Getting at the remainder—for instance at the Bovanenkovo
field in the remote Yamal Peninsula in Siberia—will need massive investment of cash
and know-how. Who wants to sink in that kind of money with no guarantee of returns?....Russia remains the largest exporter of oil and gas in the
world—bigger even than Saudi Arabia. But unlike the Gulf nations, Russia is fast
pumping its existing wells of both oil and gas dry.
To tap its reserves—and to maintain Russia's status as an 'energy
superpower'—Russia needs to stop ripping off its investors just because a demand
falloff has hurt its bottom line. Gas consumption will come back. But Russia's superpower
aspirations won't also rise if Russia has alienated its partners. Without them, its new
reserves—like the Shtockmann field—will remain buried in the ground." So Long, Salad Days Newsweek, 24 February 2010 |
"Forget global warming – the more pressing problem is that the
lights are about to go out. Look at the projections, and you will see why Ed Miliband, the
Cabinet minister responsible for energy (there have been eight since 1997), should be up
at night worrying. Over the next seven years, all the assumptions about where our power
comes from will be overturned. Five years ago,
Britain became a net importer of fossil fuels. The depletion of North Sea oil and gas
means that we are depending increasingly on foreign supplies. In 2000, we imported just
one per cent of our natural gas supplies; now it's nearly half, and the National Grid
expects it will reach 70 per cent by 2018. On Tuesday, Oil & Gas UK, which represents
the industry, issued a warning that without more investment in the North Sea, its
contribution towards our energy needs will continue to dwindle. At the same time,
generating capacity is set to drop off sharply, as ageing coal, gas and nuclear power
stations are taken out of service. As so often,
Europe is playing its part, in the shape of the EU Large Combustion Plant directive, which
says that they should be cleaned up at vast cost or closed. The
Government admits that by 2020 the lost capacity will be vast – 22.5 gigawatts, or
almost a third of our total requirements....the
present Government has done to address the looming blackout. It has stuck to a policy
designed for an age of plenty, when what is needed is one to deal with the insecurities of
the 21st century. How, for example, should we protect
ourselves against the prospect of rising oil prices at a time when economic growth
elsewhere will drive up demand for ever scarcer supplies? How do we insure against political instability abroad? When Russia
tightened the tap on its natural gas pipelines last year in a dispute with Ukraine,
Britain suffered, because we are at the other end of that network and have far smaller
stockpiles than our European counterparts. Argentina's sabre-rattling over oil exploration
in the Falklands may be comical today, but what about a nuclear-armed Iran blockading the
Strait of Hormuz, through which much of the world's oil supplies must pass? Last year, the
Government admitted that by 2017, demand will at times exceed supply, and that we could
expect the first power outages since the rationing of the 1970s. That would mean up to 16
million households sitting in the dark for an hour. Charts from Mr Miliband's own
department show that the situation will be even worse a decade later....Energy security – or our lack of it – is where those on
either side of the [climate change] debate can find common ground....We face a looming
crisis that has inescapable parallels with the banking disaster that nearly brought the
world's money system to a halt." |
"Spare capacity, the market term for difference in supply and demand
of crude, has remained constrained despite recession and a massive reduction in oil demand
in 2009, Francisco Blanch, Global Head of commodities research at Bank of America Merrill
Lynch, said in his latest report. Blanch cited the decline in supply from non-Opec
suppliers for the reduction in spare capacity without giving a figure. He warned
geopolitics and protectionism may play spoilsport for the oil markets. 'Last year, we
estimated that global non-Opec production decline rates averaged 4.8 per cent for fields
producing between 2003 and 2008. When adding 2009, we find non-Opec
decline rates have increased from 4.8 per cent to 4.9 per cent. This step up shaves one
million barrels a day by 2015 from our non-Opec supply projections,' Blanch wrote in his report. The global demand for oil will rise two
million barrels a day this year with emerging economies accounting for three-fourth of
this rise, Blanch had told Emirates Business earlier. 'While the demand in emerging
economies will rise by 1.5 million barrels a day, it will rise by 0.5 million barrels a
day in the OECD economies.' Oil will average at $85 a barrel this year, Blanch said. 'It
will potentially get close to $90 a barrel by the third quarter. It will break into a
hundred in the first quarter of the next year,' the analyst credited for forecasting $147
a barrel price for oil almost on the nose in 2008 had told this newspaper earlier. For
most industries around the world the crisis was exceptional, but not for oil, Blanch's new
report said adding that the commodity has fared the crisis with strength. Oil had already
suffered two back-to-back recessions in the 80s and 90s, where utilisation rates dropped
to very low levels. The first recession in oil occurred in the early 80s as increased
North Sea crude production and a major switch in OECD oil demand towards natural gas and
nuclear power forced Saudi Arabia to cut output by 6.7 million barrels a day. In the early
90s, the oil industry suffered a second large recession, as the economic collapse of the
Soviet Union left five million barrels a day of spare capacity. Blanch has predicted that the non-Opec supply will peak by 2011. 'We conclude that non-Opec supply,
including non-conventional oil, NGLs and biofuels, will likely peak by 2011 at around 52.3
million barrels a day. Thereafter we see steady declines in production, reaching 51
million barrels a day by 2015. The world will thus become more reliant on Opec and we see
utilisation rates reaching 95 per cent by 2014,' he
said.... Reliance on Opec crude will only grow from
now to 2015, Blanch said. 'We see Opec utilisation
rates reaching 94 per cent by 2014 despite large investments in Saudi Arabia, Angola and
Algeria.' Blanch reiterated his opinion that the emerging markets (EMs) will drive the
demand for oil until 2015....With Opec capacity utilisation rates now running at around 81
per cent, any return to the recent demand growth path will likely eat into spare capacity
sooner rather than later, Blanch said.....As a result, large fluctuations in prices will
likely remain the norm to bring medium-term supply and demand trends into balance. 'In
line with this view, we see the band for oil prices widening from $70-$85 per barrel at
present, to $65-105 barrel the next year. By 2014, the range could expand again to the
$50-150 barrel band observed in 2008,' Blanch wrote in his report..... Following two decades of exceptionally high spare productive
capacity in the 80s and 90s, the global oil market tightened at a very rapid pace in the
2000s as robust demand from emerging economies stumbled against limited supply growth, said Blanch. However, the recession brought about a substantial
contraction in OECD oil demand, forcing Opec cartel members to cut supply by 3.1 million
barrels a day in early 2009 and late 2008. 'While oil demand has started to recover again,
the medium-term outlook for oil and the global economy remains extremely uncertain. What
does oil have in store for the 2010s. A potential four-fold surge in Iraqi production,
dramatic increases in oil efficiency and substitution or a demand bubble in the emerging
economies could all create large swings in global oil supply and demand balances. But the
departure point matters, suggesting that oil the oil markets could be very tight again by
2014,' said Blanch. He sees large fluctuations in oil prices after 2014....Taking the Iraqi government's announcement of raising its oil
production capacity from 2.5 million barrels a day to 10-12 million barrels a day over the
next decade with a pinch of salt, blanch said that
such a development would keep oil prices below $100 a barrel. 'While we remain sceptical that these large increases in volumes can be
achieved, a four-fold increase in Iraqi production
over the coming years could be sufficient to keep oil prices from rising above $100 a
barrel for much of this decade,' said Blanch." |
"BP Plc and Royal Dutch Shell Plc may falter in their campaigns to save billions in
oil and gas project costs as a resurgence in drilling and demand for engineers threaten to
revive inflation in the industry. Crude prices doubled to near $80 a barrel in the past
year, prompting producers to resume projects put on hold during the recession. Oil and gas
industry spending will rise 11 percent this year to $439 billion, according to Barclays
Capital. 'Oil price inflation and cost inflation are highly correlated, albeit with some
delay,' said Paul Wheeler, a London-based managing director in the oil and gas group at
investment bank Jefferies International Ltd. 'The oil
industry is always people constrained. It’s one of the biggest challenges: a lack of
young engineers and geologists.'” |
"When world oil producers and consumers convened in Jeddah for an
emergency summit in June 2008, Samuel Bodman, then US energy secretary, had a simple
message for Saudi Arabia: pump more oil now. As Steven Chu, his successor, flies to the
kingdom this week, the agenda instead has a heavy focus on research and technology. The
different messages underscore the fact that crude prices have fallen from $130 a barrel in
June 2008 to $80 a barrel. They also reflect a further tilt in the balance of demand
growth from west to east. While the US's thirst for
oil still leads the world, demand fell in 2008-09 and most analysts expect that efficiency
measures and bad memories of the recent price spike will keep a lid on any rebound. The US
has also been diversifying its sources of oil. Canada has overtaken Saudi Arabia as the
top supplier amid aggressive investment in its tar sands region. Angola, Nigeria and Brazil have also contributed. More important, these
producers are competing for a smaller market. US crude imports peaked above 10m barrels a
day in 2005, and in the past two years have fallen 9 per cent as recession thinned traffic
and pared industrial activity. China's crude imports, meanwhile, rose about 14 per cent
last year. Purchases from Saudi Arabia, its largest supplier, rose faster and reached a
record 1.2m b/d in December. Saudi imports averaged 843,000 b/d last year, still lower
than the US average in the first 11 months for which data are available. Jim Burkhard,
managing director of global oil at IHS Cambridge Energy Research Associates, the
consultant, said: 'This is a reflection of the global economy. China has been growing. The
US hasn't. We've seen that reflected in oil demand figures.' For Saudi Arabia, in need of
stable markets for 264bn barrels in oil reserves, China promises reliable demand as slower
economic growth and efficiency measures take hold in the west. Analysts do not expect the
shift in oil flows to undermine the strong political relationship between the US and the
kingdom. Mr Chu's office said his visit is meant to strengthen US partnerships in the
region. Greg Priddy, global oil analyst at Eurasia Group, a political risk consultancy,
said the US was 'actually encouraging the Saudis to export more to China as an offset to
Iran', which faces increasing international pressure over its nuclear programme. Saudi
Aramco, the state oil company, owns half of Motiva Enterprises, a US refinery joint
venture that it helps to supply. Still, there are
signs the world's top crude producer is shifting attention east. Saudi Arabia is ending a
lease for some of the vast storage facilities in the Caribbean it used to dispatch cargoes
to US refineries. Ali Naimi, Saudi oil minister, recently said the kingdom was leasing new
storage in Okinawa, Japan, from which to ship oil to the booming Asian market. 'Asia will
be a huge market,' Mr Naimi said. Saudi Arabia has shouldered the bulk of the output cuts
announced by Opec, the oil cartel. Analysts say it shut in cheaper, heavier crudes in
order to preserve profit margins. This has squeezed
operations at US refineries that specialise in the heavier grades, further damping US
demand for Saudi oil. Amy Myers Jaffe, a research fellow at Rice University in Houston,
said that while market forces had redirected Saudi exports, US energy policy was also a
factor. 'Everything in oil is geopolitical,' she said. 'For sure, the Saudis have commercial reasons . . But oil is
never 100 per cent commercial.'" |
"BP Plc and Royal Dutch Shell Plc may falter in their campaigns to
save billions in oil and gas project costs as a resurgence in drilling and demand for
engineers threaten to revive inflation in the industry. Crude prices doubled to near $80 a
barrel in the past year, prompting producers to resume projects put on hold during the
recession. Oil and gas industry spending will rise 11 percent this year to $439 billion,
according to Barclays Capital. 'Oil price inflation and cost inflation are highly
correlated, albeit with some delay,' said Paul Wheeler, a London-based managing director
in the oil and gas group at investment bank Jefferies International Ltd. “The oil
industry is always people constrained. It’s one of the biggest challenges: a lack of
young engineers and geologists.” |
"The API reported that total US oil consumption is now at the lowest
level, 18.4 million b/d, in 12 years despite the fact that gasoline rose steadily in
January. US gasoline consumption is now about 8.7
million b/d as opposed to a high of 9.6 million reached in July 2007. Consumption of low sulfur diesel fuel, used in heavy trucks is down by
11.5 percent, a bad sign for the US economy." |
"The world’s most powerful investors have been advised to buy
farmland, stock up on gold and prepare for a 'dirty war' by Marc Faber, the notoriously
bearish market pundit, who predicted the 1987 stock market crash. The bleak warning of
social and financial meltdown, delivered today in Tokyo at a gathering of 700 pension and
sovereign wealth fund managers. Dr Faber, who advised his audience to pull out of American
stocks one week before the 1987 crash and was among a handful who predicted the more
recent financial crisis, vies with the Nouriel Roubini, the economist, as a rival claimant
for the nickname Dr Doom. Speaking today, Dr Faber said that investors, who control
billions of dollars of assets, should start considering the effects of more disruptive
events than mere market volatility. 'The next war will be a dirty war,' he told fund
managers: 'What are you going to do when your mobile phone gets shut down or the internet
stops working or the city water supplies get poisoned?' His investment advice, which was
the first keynote speech of CLSA’s annual investment forum in Tokyo, included a
suggestion that fund managers buy houses in the countryside because it was more likely
that violence, biological attack and other acts of a 'dirty war' would happen in
cities....One of Dr Faber’s darker scenarios
involves growing military tension between China and the United States over access to
limited oil resources. Today the US has a
considerable advantage over China because it has free access to oceans on both coasts, and
has potential energy suppliers to the north and south in Canada and Mexico. It also
commands an 11-strong fleet of aircraft carriers that could, if necessary, secure supply
routes in a conflict situation. China and emerging Asia, meanwhile, face the uncertainty
of supplies that must travel from the Middle East through winding sea lanes and the
Malacca bottleneck. American military presence in Central Asia, Dr Faber said, may add to
the level of concern in Beijing. 'When I tell people to prepare themselves for a dirty
war, they ask me: 'America against whom?' I tell them that for sure they will find
someone.' At the heart of Dr Faber’s argument is a fundamentally gloomy view on the
US economy and its capacity to service a growing mountain of debt. His belief, fund
managers were told, is that the US is going to go bankrupt. Under President Obama, he
said, the country’s annual fiscal deficit will not drop below $1 trillion and could
rise beyond that figure." |
"Bank of America and Barclays
Capital, two leading oil traders, have told clients to brace for crude above $100 (£64) a
barrel by next year, before it pushes relentlessly higher over the decade. This is a stark
contrast from recessions in the 1980s and 1990s, when it took years to work off excess
drilling capacity built in the boom. 'Oil has the
potential to flirt with $100 this year. We forecast an average price of $137 by 2015,'
said Amrita Sen, an oil expert at BarCap. The price has doubled to $78 in the last year.
'The groundwork for the next sustained step up
in oil prices is now almost complete. Global spare capacity is likely to be reduced to low
levels within a relatively short time. The global economic crisis has postponed, but not
cancelled, a crunch which would otherwise be starting to bite now,' said Barclays. Francisco Blanch, from Bank of America Merrill Lynch, said crude may touch
$105 next year, with $150 in sight by 2014. 'Approximately 1.7bn consumers in emerging
markets with a per capita income of $5,000 to $20,000 are eagerly waiting to buy cars,
air-conditioning units, or white goods,' he said. China has overtaken the US as the
world's top car market. Mr Blanch expects oil demand to rise by a further 2.8m barrels per
day (bpd) in China and 2.5m bpd in India by 2015, when two giants will be absorbing the
lion's share of Gulf output. Consumption in the West
has already peaked and will fall each year as populations shrink and we waste less, but
the West no longer sets the price. Global use will increase by 8.8m bpd to 95m bpd....Mr Blanch said output from
non-OPEC states is falling by 4.9pc each year, despite Russia's reserves. Saudi Arabia and
the Emirates can plug a quarter of the gap, but global spare capacity must soon drop to
wafer-thin levels – leaving us vulnerable to the sort of 'super-spike' seen in 2008.
The wildcard is whether Iraq can quadruple output to Saudi levels this decade, a target
dismissed by most analysts as pie-in-the-sky. Painfully high prices are needed to unlock
fresh supplies as reserves are depleted in the North Sea and the Gulf of Mexico.
Deep-water rigs off Brazil are costly and require drilling far below the seabed. Canadian
oil sands and US biofuels have break-even costs near $70. While the US, UK, and the Far East are turning to nuclear power, it takes
a decade to build reactors. 'peak uranium' lurks in any case. The oil spike brought the
global economy to a shuddering halt in 2008. This time the crunch may hit before the West
has fully recovered. Whatever happens, the US, Europe and Japan will soon transfer a chunk
of their wealth to the petro-powers. It is a new world order." |
"Billions of barrels of oil may lie trapped in the rocks deep beneath
the ocean floor of the South Atlantic, but finding them and bringing them to market is
likely to be a big struggle — vastly expensive and fraught with political
complications. A study by the British Geological Society suggested that the region could
contain up to 60 billion barrels of oil — a similar-sized deposit to the North Sea.
But such figures may give little sense of how much is recoverable using existing
technology. No drilling has been carried out in the Falklands since 1998, when Shell and
Lasmo drilled six wells in an area to the north of the islands, not far from where the
current drilling programme is set to start next week. Traces of crude were discovered in
all but one of the wells — where gas was found instead — but the following year
the global price of oil fell to $10 per barrel, ending the commercial logic of further
exploration....The drilling site lies in relatively shallow waters about 400 metres
(1,300ft) deep and between 30 and 60 miles north of the islands. Two of the other
companies, Falkland Oil and Gas and Borders & Southern, are prospecting in another
region that lies to the south of the islands in deeper and more challenging waters up to
1,200m (3,900ft) deep. There is a reasonable chance
that at least one of the companies will find oil — but whether it is found in
commercial quantities is less clear. The Falklands are so remote that any oil discovery
would need to be large to justify the multibillion- pound costs of building pipelines,
export terminals and other infrastructure. Then there are the political obstacles with
Argentina, which are likely to deter industry giants such as BP, Shell and Exxon. Until a
resolution with Argentina can be reached over who owns the oil, they are likely to remain
sceptical." |
"With oil majors given the
cold shoulder in many developing countries, it is no mean feat that Exxon
Mobil managed to replace 100 percent of last year’s production with new reserves.
Even so, not all energy is equal. The stuff Exxon
is using to fill its pipeline will be harder to extract and of lower value to
investors....clearing the crucial 100 percent hurdle by S.E.C. standards should be
child’s play in 2010. With reserves of more than two billion barrels of oil
equivalent, Exxon’s latest acquisition, XTO Energy, will replace more than a year of
Exxon’s output at a stroke. The bigger concern for Exxon will be the nature of these
new reserves. On the bright side Exxon is steering away from capricious developing
nations, meaning fewer political headaches. Recent reserve additions have been in
politically placid areas, notably Canada and Australia. But economic risks may offset
fewer political ones. Discoveries of oil that is easy
to extract and refine are failing to keep pace with output. The barrels taking their place
may be tougher or more costly to reach, and therefore less profitable. Hopes are high that cleaner-burning natural gas will
grow in popularity. The trouble is that gas still trades at a discount to its liquid
cousin crude, especially in the United States, where it is worth about half the price of a
barrel of oil. Liquids, about 57 percent of Exxon’s
reserves 10 years ago, are now just half, according to IHS Herold. And squeezing energy
from oil
sands, an increasingly important source for Exxon, is often economical only when oil
trades above $60 a barrel. Conventional wells are generally profitable at just half that
level." |
"EDF could face 'massive' new investment to extend the life of its
French nuclear reactors beyond 40 years, the country’s safety authority has warned.
Extending the life of its French reactors is crucial to EDF,
which is hoping to secure 60-year life-cycles for its plants – a term that is already common in the US. The move comes as the
French state-owned utility faces the prospect of greater competition in its home market
and struggles to
cope with record debt. André-Claude Lacoste, president of the French nuclear safety
authority, said on Tuesday that the watchdog was 'beginning to treat' the question of the
conditions EDF would have to meet to extend the life of its reactors beyond 40 years. 'To
go beyond that without doubt would require massive investment,' he warned. The warning
came as the regulator revealed that EDF has already been forced to commit hundreds of
millions of euros to replacing the ageing steam generators on 34 of its 58 reactors." |
"Two of Britain’s biggest
energy companies are lobbying the Conservative Party to keep some of the nation’s
most polluting power stations operating beyond a deadline set by the European Union, The
Times has learnt. RWE npower and E.ON, the two German-owned companies, have held private
talks with senior Conservative politicians about the legal position of nine coal and
oil-fired power plants due to close by the end of 2015 under new EU pollution rules.
Together, the six coal and three oil-fired plants generate 12.3 gigawatts of electricity,
about 15 per cent of total UK electricity supplies. E.ON and RWE are pressing for at least
some of the plants to be exempted from the EU rules on the grounds that, without them,
Britain could face blackouts by 2015 because not enough replacement stations are being
built." |
"EU companies have taken
millions of acres of land out of food production in Africa, central
America and Asia to grow biofuels for transport,
according to development campaigners. The consequences of European biofuel targets, said
the report by ActionAid, could be up to 100 million more hungry people, increased food
prices and landlessness. The report says the 2008
decision by EU countries to obtain 10% of all transport fuels from biofuels by 2020 is
proving disastrous for poor countries. Developing countries are expected to grow nearly
two-thirds of the jatropha, sugar cane and palm oil crops that are mostly used for
biofuels. 'To meet the EU 10% target, the total land area directly required to grow
industrial biofuels in developing countries could reach 17.5m hectares, over half the size
of Italy. Additional land will also be required in
developed nations, displacing food and animal feed crops onto land in new areas, often in
developing countries,' says the report. Biofuels are estimated by the
IMF to have been responsible for 20-30% of the global food price spike in 2008 when
125m tonnes of cereals were diverted into biofuel production. The amount of biofuels in
Europe's car fuels is expected to quadruple in the next decade. The report attributes the
massive growth in biofuel production to generous subsidies. It estimates that the EU biofuel industry has already received
€4.4bn (£3.82bn) in incentives, subsidies and tax relief and that this could triple
to over €13.7bn if the EU meets its 2020 target. The greatest support to the industry
is exemption from excise duties. Duty at the pump is 20 pence less per litre compared to
conventional fuels although this exemption due to end in 2010, a change which supermarket
Morrisons cited last week as the reason for dropping one of its biodiesel blends. In
2009, the duty on low- sulphur petrol and diesel in the UK was 54.19 pence per litre; for
biodiesel and ethanol it was 34.19 pence per litre." |
"A 'miracle' plant, once thought to be as the answer to producing
renewable biofuels on a vast scale, is driving thousands of farmers in the developing
world into food poverty, a damning report concludes today. Five years ago jatropha was
hailed by investors and scientists as a breakthrough in the battle to find a biofuel
alternative to fossil fuels that would not further impoverish developing countries by
diverting resources away from food production. Jatropha was said to be resistant to
drought and pests and able could grow on land that was unsuitable for food production. But
researchers have found that it has increased poverty in countries including India and
Tanzania. Seeds of discontent: the 'miracle' crop that has failed to deliver... Millions
of the plants have been grown in anticipation of rich returns, only for growers to be hit
by poor yields, conflict over land and a lack of infrastructure to process the oil-rich
seeds. Oil giant BP, which planned to spend almost £32m on a joint venture to set up
jatropha plantations, has now pulled out and the charity ActionAid today warns that
jatropha needs to be cultivated on prime food-growing land to produce significant yields.
According to one estimate, up to one million hectares of jatropha – an area
equivalent to Devon and Cornwall combined – are being cultivated around the globe,
despite little evidence that it can produce enough oil to make the crop commercially
sustainable....despite jatropha's much-lauded ability
to grow where food crops cannot flourish, campaigners say there is evidence that
commercially viable yields can only be obtained in fertile soil. In India, forecasted
annual yields of three to five tonnes of seeds per hectare have been scaled back to 1.8 to
two tonnes. The Overseas Development Institute, a leading international development
think-tank, has stated that 'as the mainstay of people's livelihoods, jatropha looks
distinctly marginal'." |
"Saudi Arabia must be 'very serious' about any possible peak in oil
demand, which is an 'alarm' for OPEC’s biggest exporter to diversify its economy, a
Saudi Oil Ministry adviser said. Saudi Arabia is making a push into renewable energy and
is starting its first carbon-capture project, Oil Ministry adviser Mohammad al-Sabban said today at the
Jeddah Economic Forum. The country will start
injecting carbon dioxide into Ghawar, the world’s largest oilfield, in 2012, he said. 'Talk of oil demand peaking is an alarm to speed up the economic
diversification process,' al-Sabban said. 'The challenges facing Saudi Arabia are huge: we
need to develop Saudis in order to be innovative, creative, to catch up with the rest of
the world.' The world’s largest oil producer is investing in new industries such as
aluminum and steel and pushing for more science and technology in education as it seeks to
diversify away from dependence on income from exporting crude oil. More than 25 percent of
the kingdom’s youth are unemployed. Oil demand in some developed industrialized
nations is contracting, partly as a result of the economic slowdown. Those concerns are
different from 'peak oil' theorists who say oil production has already reached maximum
levels and will inevitably decline." |
"Britain's gas storage capacity
will increase by a third after the Government today officially licenced a new development
but the £600m investment will only be capable of meeting five days' average demand. The Gateway Project, 15 miles offshore, south west of Barrow-in-Furness
will store 1.5bn cubic meters of gas in 20 salt caverns 750 meters below the seabed. It
will be linked by pipeline to the national gas transmission system but will not be in
service until 2014. Britain currently has only one offshore gas storage facility,
Centrica's Rough field in the North Sea, and is vulnerable to winter surges in demand when
supplies are stretched. Total gas storage is equivalent to 16 days demand compared with 88
in France and 77 in Germany." |
"After attacking America's efforts to develop shale gas last week as
'dangerous to drinking water', it seems Russia has decided that not all unconventional
supplies are bad news. Gazprom, the Russian state
energy monopoly and world's largest gas producer, has decided to dip its toe into coal bed
methane. It wants 1.5bn cubic metres of output a year by 2012 from a field in Siberia's
coal-rich Kuzbass area. Russia may have 87 trillion cubic metres of coal-bed methane,
which is the size of 'two Gazproms', says President Dmitry Medvedev. And it's even more
than the 57 trillion cubic metres that has changed the face of US gas production." |
"Canada,
faced with growing political pressure over the extraction of oil
from its highly
polluting tar sands, has begun courting China and other Asian countries to
exploit the resource. The move comes as American firms are turning away from tar sands
because of its heavy
carbon footprint and damage to the landscape.
Whole Foods, the high-end organic grocery chain, and retailer Bed Bath & Beyond last
week both signed up to a campaign by ForestEthics
to stop US firms using oil from Canadian tar sands. The Pentagon is also scaling down its
use of tar sands oil to meet a 2007 law requiring the US government to source fuels with
lower greenhouse gas emissions. Major oil companies such as Shell are also coming under
shareholder pressure to pull out of the Canadian projects. Earlier this year, Shell
announced it was scaling back its expansion plans for the tar sands after a revolt
by shareholders. Producing oil from the Alberta tar
sands causes up to five times more greenhouse gas emissions than conventional crude
oil, according to the campaign group Greenpeace. In
the most significant deal to date, the Canadian government recently approved a C$1.9bn
(£1.5bn) investment giving the Chinese state-owned oil company PetroChina a majority
share in two projects. Prime minister Stephen Harper said: 'Expect more Chinese investment
in the resource and energy sectors … there will
definitely be more.' China's growing investment in the tar sands is seen in Canada as a
useful counter to waning demand for tar sands oil from the US, its biggest customer. The
moves, which have largely gone unnoticed outside north America, could add further tension
to efforts to try to reach a global action plan on climate change." |
"The brains trust of the
Pentagon says it is just months away from producing a jet fuel from algae for the same
cost as its fossil-fuel equivalent. The claim, which comes from the Defense Advanced
Research Projects Agency (Darpa) that helped to develop the internet and satellite
navigation systems, has taken industry insiders by surprise. A cheap, low-carbon fuel
would not only help the US military, the nation's single
largest consumer of energy, to wean itself off its oil addiction, but would also hold the
promise of low-carbon driving and flying for all. Darpa's research projects have already
extracted oil from algal ponds at a cost of $2 per gallon. It is now on track to begin large-scale refining of that oil into jet
fuel, at a cost of less than $3 a gallon, according to Barbara McQuiston, special
assistant for energy at Darpa. That could turn a promising technology into a
market-ready one. Researchers have cracked the problem of turning pond scum and seaweed
into fuel, but finding a cost-effective method of mass production could be a game-changer.
"Everyone is well aware that a lot of things were started in the military,"
McQuiston said. The work is part of a broader Pentagon effort to reduce the military's
thirst for oil, which runs at between 60 and 75 million barrels of oil a year. Much of
that is used to keep the US Air Force in flight. Commercial airlines – such as
Continental and Virgin Atlantic – have also been looking at the viability of an
algae-based jet fuel, as
has the Chinese government. 'Darpa has achieved the base goal to date,' she said. 'Oil
from algae is projected at $2 per gallon, headed towards $1 per gallon.' McQuiston said a
larger-scale refining operation, producing 50 million gallons a year, would come on line
in 2011 and she was hopeful the costs would drop still further – ensuring that the
algae-based fuel would be competitive with fossil fuels. She said the projects, run by
private firms SAIC and General Atomics, expected to yield 1,000 gallons of oil per acre
from the algal farm. McQuiston's projections took several industry insiders by surprise.
'It's a little farther out in time,' said Mary Rosenthal, director of the Algal Biomass
Association. 'I am not saying it is going to happen in the next three months, but it could
happen in the next two years.' But the possibilities have set off a scramble to discover
the cheapest way of mass-producing an algae-based fuel. Even Exxon
– which once notoriously dismissed biofuels as moonshine – invested $600m in
research last July. Unlike corn-based ethanol, algal farms do not threaten food
supplies. Some strains are being grown on household waste and in brackish water. Algae
draw carbon dioxide from the atmosphere when growing; when the derived fuel is burned, the
same CO2 is released, making the fuel theoretically zero-carbon, although processing and
transporting the fuel requires some energy. The industry received a further boost earlier
this month, when the Environmental Protection Agency declared that algae-based diesel
reduced greenhouse gas emissions by more than 50% compared with conventional diesel. The
Obama administration had earlier awarded $80m in research grants to a new generation of
algae and biomass fuels. For Darpa, the support for algae is part of a broader mission for
the US military to obtain half of its fuel from renewable energy sources by 2016." |
| "Britain’s relations with Argentina fell last night to their
lowest point since the Falklands conflict in a row over an oil platform that is due to
arrive north of Port Stanley next week. The Ocean Guardian is expected to complete its
journey to the disputed waters 100 miles off the Falklands coast from the Scottish
Highlands as part of a campaign that Britain hopes will bring a black-gold rush to the
windswept, sparsely populated islands. But, almost three decades after Britain and
Argentina fought a bloody 72-day conflict over the islands, its impending arrival has
stoked fury in a country that is still intent on claiming the territory as its own....The
British Foreign Office denied that the oil operations were illegal. 'We are absolutely
clear this is legitimate business in Falkland Islands waters and we will continue to
reiterate our position that we have no doubt about our sovereignty over the Falkland
Islands and the surrounding maritime areas,' a spokesman said. Analysts say that as many as 60 billion barrels of high-grade oil
could be found in a 200 sq mile zone surrounding the islands, which is to be developed by
Desire, AGR and Diamond Offshore Drilling. That could make the Falklands one of the
world’s largest oil reserves, comparable with the North Sea, which so far has
produced about 40 billion barrels." British drilling for Falklands oil threatens Argentine relations London Times, 13 February 2010 |
"Fresh controversy is mounting within the European Union over
biofuels and their unintended impact on tropical forests and wetlands, documents show. One leaked document from the EU's executive, the European
Commission, suggests biofuel from palm oil might get a boost from new environmental
criteria under development. But another contains a warning from a top official that taking
full account of the carbon footprint of biofuels might 'kill' an EU industry with annual
revenues of around $5 billion. The European Union aims to get a tenth of its road fuels
from renewable sources by the end of this decade, but has met with criticism that biofuels
can force up food prices and do more harm than good in the fight against climate change. Most of the 10 percent goal will be met through biofuels, creating a
market coveted by EU farming nations, which produce about 10 billion litres a year, as
well as exporters such as Brazil, Malaysia and Indonesia. Environmentalists say biofuels
made from grains and oilseeds are forcing farmers to expand agricultural land by hacking
into rainforests and draining wetlands -- known as 'indirect land-use change' (ILUC).
Clearing and burning forests puts vast quantities of carbon emissions into the atmosphere,
so the EU risks promoting damage to the climate by creating such a valuable market." |
"Cameco Corp., the world’s
second- largest uranium producer, said crews safely re-entered the main working level of
the Cigar Lake mine in Canada’s Saskatchewan province yesterday after the site was
fully drained of water. Access was established to
480 meters (1,575 feet) underground and inspections of the development are under way,
Saskatoon, Saskatchewan-based Cameco said today in a statement. Cigar Lake, which sits
atop the world’s richest untapped uranium deposit, flooded in October 2006 and again
in August 2008. Work to secure the underground is
expected to be completed before October and an
update on the project will be included in Cameco’s earnings release on Feb. 24, the
company said." |
"The International Energy Agency (IEA) gave the market some fresh
optimism today by boosting its global oil demand forecast by 50,000 barrels per day for
2009 and by 170,000 bpd for this year, on the back of stronger economic projections by the
International Monetary Fund (IMF). Global oil demand
is now estimated at 86.5 million bpd for 2010, up 1.8% year-on-year and a 170,000 barrel
increase compared with agency's last report.
For 2009, global demand is expected to come in at 84.9 million bpd, down 1.5% year-on-year
but 50,000 barrels higher than the last forecast....Growth comes entirely from
non-Organisation for Economic Co-operation & Development (OECD) countries and higher
demand readings from China and Asian countries, the agency said. Demand in non-OECD is now
forecast to increase by 4%, while stagnating at 2009 levels in OECD countries. Meanwhile,
oil price projections for 2009 and 2010 were revised up $1 and $4 respectively, to $58 per
barrel and $75 per barrel." |
"As Europe's leaders gather in Brussels today, they have only one
crisis in mind: the debts that threaten the stability of the European Union. They are
unlikely to be in any mood to listen to warnings about a different crisis that is looming
and that could cause massive disruption. ....the work of the Industry Taskforce on Peak
Oil and Energy Security shouldn't be disparagingly dismissed. Its arguments are well
founded and lead it to the conclusion that, while the global downturn may have delayed it
by a couple of years, peak oil—the point at which global production reaches its
maximum—is no more than five years away. Governments and corporations need to use the
intervening years to speed up the development of and move toward other energy sources and
increased energy efficiency. In the first report from the task force, Lord Ron Oxburgh, a
former chairman of Shell, wrote that 'It is pretty clear that there is not much chance of
finding any significant quantity of new cheap oil. Any new or unconventional oil is going
to be expensive.'... The Taskforce, assimilating
various opinions, believes 92 million barrels a day will be the most that global supplies
will be able to generate, 'unless some unforeseen giant, and easily accessible, finds are
reported very soon.' It may be that the oil
companies are keeping some giant secrets from us but that seems unlikely. So what lies
ahead is a mismatch between supply and demand. According to Chris Skrebowski, of the Peak
Oil Consulting firm, mid-2015 is when the crunch hits. 'This is when capacity starts to be
overwhelmed by depletion and lack of new capacity additions.' Some dubious emails and
slightly dodgy dossiers have cast a new, and unflattering, light on the global-warming
debate, raising the risk of a return to the belief that we can go on consuming oil with
impunity. Being a 'climate-change denier' is in danger of becoming almost fashionable. But
whatever the risk to the climate, scarce and
expensive oil would be a threat to established economies. We need alternatives." |
"Venezuela awarded on Wednesday the largest oil investment of
President Hugo Chavez's 11-year rule, drawing tens of billions of dollars of much-needed
foreign finance to the Orinoco Belt just three years after the leftist leader nationalized
operations there. U.S.-based Chevron (CVX.N) and Spain's Repsol (REP.MC) led groups that
looked beyond the risks of operating in Venezuela to tap into the OPEC member's 100-plus
billion barrels of reserves, a sign oil giants need to replenish crude reserves that are
increasingly under control of producer nations. The results show victories for both sides.
Oil companies agreed to tough conditions laid down by Caracas while Venezuela softened
fiscal terms in another sign resource nationalism around the world has been weakened by
falling oil prices.....Analysts say the world's reserves of easy-to-produce light oil are
quickly running out, meaning the future of the industry is in difficult production areas
such as the Orinoco Belt, Brazil's deep water fields or Canada's tar sands.....Venezuela's oil production has fallen below 2.5 million barrels
per day (bpd) from more than 3 million bpd in 2001, according to the U.S. Department of
Energy, due principally to limited oilfield investment and lack of qualified personnel." |
"Finding oil and gas to replace the world's fast dwindling reserves
is increasingly risky as rigs probe areas once seen as too difficult or too dangerous, and
costs are rocketing, which could imperil future supply. The cost of discovering each new
barrel of oil and gas has risen three-fold over the last decade as technology has pushed
the frontiers of exploration into ever more remote areas. As old fields run dry, oil
companies are drilling wells in some of the most inhospitable regions, where political,
physical, geological, geographical, technical and contractual risks are high, and they
have had remarkable success....unless consumers pay more for oil in future, some analysts
think we could face an energy supply crunch within a few years. 'The age of cheap oil has
gone and it is not going to come back,' said Paul Stevens, senior research fellow at the
Royal Institute of International Affairs at Chatham House in London. 'The world is not
going to run out of oil tomorrow, but it is more and more expensive to find and will
continue to be so,' he said. 'The worry is that investment may be squeezed as risks rise,
and that could bring us to a looming supply crunch.'....The search for oil has always been
costly and involved risk taking, but the challenges facing explorers have intensified as
wells have moved further offshore, into deeper reservoirs and to places with much higher
political and physical risks. Figures from upstream consultant Wood Mackenzie in Edinburgh
show the cost of finding oil has almost tripled over the last decade even though the rate
of discovery has barely changed. Each barrel of oil equivalent cost an average of just
over $3 to discover last year, compared with just $1.18 in 2001, according to Wood
Mackenzie. Data from BP Plc for the cost of finding new oil show an even bigger increase
-- more than four fold in the five years to 2008. Those figures may seem low given that
world spot oil prices are close to $75 per barrel, but discovery costs need to be
multiplied many times as oil is pumped out of the ground, processed at a refinery and
becomes fuel at a service station. Even established
oilfields, such as those in the North Sea, now have breakeven costs of around $50 per
barrel. The new ultra-deep offshore fields that lie
beneath oceans more than 3 km (1.88 miles) deep and in positions up to 5 miles from rigs
impose even higher costs. Because the rigs work in deeper water, they use more steel, new
technology and are operated by highly trained and expensive specialists." |
"OPEC expects the world will need more of its crude oil this year
than previously forecast, as the organization lowered its outlook for production of
natural gas liquids. The Organization of Petroleum Exporting Countries, responsible for 40
percent of global supplies, predicted in a monthly report today that consumers worldwide
will need 28.75 million barrels a day of OPEC crude in 2010. While that’s 150,000
barrels a day more than anticipated in last month’s report, the resulting 'call on
OPEC' in 2009 is unchanged from last year. 'Required demand for OPEC crude is forecast to
remain almost at the same level as last year, following two consecutive annual declines,'
the group’s Vienna-based secretariat said in the report. 'World oil demand and
non-OPEC supply remained almost unchanged' while 'OPEC NGLs experienced a downward
revision.'....OPEC, next scheduled to meet on March 17 in Vienna, left its forecast for
worldwide oil consumption in 2010 at 85.12 million
barrels a day, which
equates to growth from last year of 800,000 barrels a day. The group’s implementation of a record supply cut announced in 2008
slipped to 53 percent as oil prices around $70 a barrel encouraged members to exceed their
quotas. OPEC Secretary-General Abdalla El-Badri told reporters in
London on Feb. 2 that if market conditions change little and prices stay in their current
range, then ministers will be 'reluctant' to alter their production target at next
month’s gathering." |
"It's not been a great week for the 'greener driver'. First, Toyota
announced it was recalling all its Prius hybrids after detecting a potential fault
with the braking system. And yesterday Morrisons,
the largest supplier of biofuels in the UK, announced
it is withdrawing one of its most popular blends from its forecourts. From 1 April, it
says it will no longer be selling B30, a blend of 30% rapeseed and recycled vegetable oil
and 70% ordinary mineral diesel. The move follows
last November's pre-budget report announcing the '20p per litre duty differential'
subsidy for biofuels was to be axed, although the subsidy for 'used cooking oil biofuels'
would remain for two years.... This is undoubtly a big blow for the fledgling biofuel
industry. However, the true environmental credentials of these blends is debatable.
While they might offer marginal reductions in greenhouse gas emissions compared to pure
mineral diesels, do they, by being reliant on biomass from food crops, act to drive up
prices of commodities such as corn and wheat?" |
"An oil crunch more serious than the financial crisis threatens to strike Britain within five years, Sir Richard Branson and other business leaders have warned. Consumers face a spike in costs for heating, transport, food and other goods, according to the report entitled 'The Oil Crunch - a wake up call for the UK economy'. It said the challenges facing the UK would exceed those presented by the financial crisis and said the poorest in society were most vulnerable to potentially significant increases. The report said Government must acknowledge the risks to the economy and to produce contingency plans for transport, retail, agriculture and alternative power. 'Unless we do so, we face a situation during the term of the next government where fuel price unrest could lead to shortages in consumer products and the UK's energy security will be significantly compromised,'' it said. The report was compiled by the Industry Taskforce for Peak Oil and Energy Security, a group of private British companies whose members include Sir Richard, Brian Souter, chief executive of Stagecoach, Scottish & Southern Energy boss Ian Marchant and Philip Dilley, chairman of consultancy firm Arup. Virgin Group founder Sir Richard - whose airline and rail business |
