Current Peak Oil And Energy Crisis News

PEAK OIL AND ENERGY CRISIS NEWSBITES

2009

"Oil prices have remained in the vicinity of $68 to $70 a barrel for nearly three weeks as the markets weigh conflicting signals. In the short term there is clearly adequate production and all indications are that the OECD economies are still contracting. Optimists continue to interpret indications of slower contraction as signals that economic growth will resume soon....Among the many interesting aspects of last week’s Iranian elections is that five days of nearly continuous demonstrations have had no discernable impact on world oil markets. Only a few years ago, this situation would have resulted in an instant price spike of several dollars a barrel. Tehran has issued reassuring statements that the demonstrations pose no threat to oil production. More important is the surplus production capacity of a reported 6 million b/d that currently exists within OPEC. There appears to be more than enough productive capacity available to replace all of Iran’s 4 million b/d should the situation ever deteriorate to the point where Iranian oil production is threatened."
Peak oil notes
ASPO USA, 18 June 2009

"The U.S. oil and gas industry’s costs of finding resources rose 35 percent last year amid the wild rise and fall in commodity prices, an Ernst & Young study released Thursday showed. The three-year average cost per barrel of oil equivalent, excluding acquisitions of proved reserves, was $27.22. But in 2008 that spiked to $51.96. 'This validates that finding oil and gas reserves is very, very expensive,' said Marcela Donadio, oil and gas sector leader for the Americas. She noted that cost also demonstrates why some companies have delayed final investment decisions on costly expansions or new projects, such as those in Canada’s oil sands or deep-water exploration."
Expense of finding oil and natural gas jumps
Houston Chronicle, 18 June 2009

"A global shift toward nuclear power is prompting countries to rush to lock in long-term access to tight supplies of uranium, and China and India look to be the next players to get in on the action. A tie-up between Rosatom, the Russian state-owned producer, and Canada-based miner Uranium One announced this week is just the latest in a series of moves on the part of Asian and European countries to lock in uranium supply to fuel construction of dozens of new reactors over the next decade. 'I think increasingly the supply of reactors is being tied to security of supply of nuclear fuel,' said Divya Reddy, an energy analyst with the Eurasia Group in Washington. Rosatom secured a 17 percent stake in Uranium One and a long-term supply deal in exchange for a half stake in the Karatau mine in Kazakhstan....the most likely sources of demand in the longer run will come from Asia, including India, which last year signed a deal ending a three-decade ban on nuclear trade with the United States....China, with the most ambitious nuclear power expansion plans, has been in talks with top uranium miner Cameco about a potential supply deal, a company spokesman confirmed. Australia is also mulling selling uranium from BHP Billiton's Olympic Dam mine to China, provided it is not used in Beijing's weapons program. Led by China, India and Russia, more than 100 new reactors will be built over over the next decade, Cameco estimates, all part of a global push to reduce dependence on greenhouse gas-producing power sources such as coal. With new reactors expected to be larger on average than the 426 currently in operation, generating capacity would grow by 28 percent, the company says....Kazakhstan has leveraged its massive reserves into a rapidly expanding industry, while Australia is also ramping up production with several mines in the planning stage. Uranium One CEO Jean Nortier said last week that Africa could emerge as the next hot spot for the mineral, where uranium is often found in copper and gold deposits. Equinox Minerals , for instance, plans to build a uranium mill to process ore from its Lumwana copper mine in Zambia. Increases in production will be necessary to keep afloat an industry that is already sharply in deficit. Mined production last year fell short of consumption by about 60 million pounds, with the shortfall made up largely by recycled material and diluted enriched uranium from decommissioned nuclear weapons, sold by Russia under an agreement with Western producers that will end in 2013."
Nuclear nations rush to lock in uranium deals
Guardian, 18 June 2009

"Russian Ambassador to Namibia, Nikolai Gribkov, said the forthcoming visit of Russian President, Dmitry Medvedev, to Namibia provides an ideal opportunity for the two countries to transform their political cooperation into strong economic and trade ties.Medvedev’s visit could re-ignite the two governments’ intentions to set up a nuclear power plant in Namibia, as proposed by Russian Prime Minister Mikhail Fradkov during his visit to Namibia in 2007. With Namibia having just leapfrogged Russia as the fourth largest uranium producer in the world, the Kremlin may take full advantage of Medvedev’s visit to exploit the African country’s uranium reserves. In 2007, three Russian mining giants Techsnabexport, Renova and Vneshtorgbank established a joint venture to mine uranium in Namibia, after acquiring prospecting licences."
Medvedev visit watershed for Namibia’s energy and trade
Informante (Namibia), 18 June 2009

"Furious protests threaten to undermine the Iraqi government's controversial plan to give international oil companies a stake in its giant oilfields in a desperate effort to raise declining oil production and revenues. In less than two weeks, on 29 and 30 June, the Iraqi Oil Minister, Hussain Shahristani, will award service contracts to the world's largest oil companies to develop six of Iraq's largest oil-producing fields over 20 to 25 years. Senior figures within the Iraqi oil industry have denounced the deal. Fayad al-Nema, the director of the South Oil Company, which comes under the Oil Ministry and produces most of Iraq's crude, said on the weekend: 'The service contracts will put the Iraqi economy in chains and shackle its independence for the next 20 years. They squander Iraq's revenues.' Mr Nema is reported to have since been fired because of his opposition to the contracts, which he says is shared by many other officials in Iraq's state-owned oil industry....The development of Iraq's oil reserves is of great importance to the world's energy supply in the 21st century. They may be even larger than Saudi Arabia's, as there was little exploration while Iraq was ruled by Saddam Hussein. International oil companies are desperate to get their foot in the door. 'Everyone wants to be in Iraq,' says Ruba Husari, an expert on Iraqi oil. 'Together with Iran, this is the only oil province in the world that has great potential. It is a great opportunity for oil companies because nobody knows the size of Iraq's reserves. Iraq itself needs to know what is under its soil.' But Iraqis are wary of the involvement of foreign oil companies in raising production in super giant fields like Kirkuk and Bai Hassan in the north and Rumaila, Zubair and West Qurna in the south. They suspect the 2003 US invasion was ultimately aimed at securing Western control of their oil wealth. The nationalisation of the Iraqi oil industry by Saddam Hussein in 1972 remains popular and the rebellion against the service contracts has been gathering pace all this week. Parliament is demanding that bidding be delayed.... Critics of the deal in parliament say that Iraq has already invested $8bn (Ł4.9bn) in developing its super giant fields. But Mr Shahristani needs $50bn over the next five or six years to raise current production levels from 2.5 million barrels a day of crude and knows the money and expertise can only come from outside Iraq."
Iraqi Oil Minister Accused of Mother of All Sell-Outs
Independent, 18 June 2009

"The US Department of Energy estimates that Opec’s production spare capacity has surged to a seven-year high of 4.7m barrels a day – up from 1.5m b/d last year – as demand for oil has dropped because the impact of the economic recession. The cushion is enough to cover twice the level of Iran’s oil exports, analysts said. 'There is a lot of spare capacity out there,' said Michael Wittner, global head of oil research at Société Générale in London. Opec’s production spare capacity hit a record low of 1m b/d in 2005 but, as the economic crisis has reduced oil demand worldwide over the last year, the cartel’s idle pumping capacity has surged. In the past, the oil market has reacted with panic to geopolitical events in Iran as spare capacity was not enough to cover even a relatively small disruption in supplies. This time, however, the largest demonstrations in Iran since 1979 have not hit prices because of the production cushion and record high inventories. West Texas Intermediate, the US oil benchmark, was hovering at the $70 a barrel mark on Wednesday, down from last week’s 8-month peak of $73.23 a barrel. The coolness of the oil market in the current Iran turmoil signals that the increase in spare capacity will allow Opec, the oil cartel, to manage oil prices more effectively during a geopolitical crisis. From 2005 until early- 2008, the cartel almost lost control of the market as razor-thin spare capacity meant the threat of a supply disruption in countries such as Nigeria, Iraq or Venezuela pushed prices higher. Commercial stocks of crude oil are also extremely high as result of low demand. Oil traders in the physical market said Iran’s oil exports were running at normal levels in spite of the turmoil, noting that the country’s oil fields and export terminals were far away from the capital, Tehran, the centre of the demonstrations. Iran last month produced about 3.65m b/d, according to the International Energy Agency, the western countries’ oil watchdog. As Iran’s domestic demand absorbs about 1.4m b/d, the country’s oil exports are running just above 2.2m b/d. Mr Wittner, a former intelligence official at the CIA, said Saudi Arabia, Opec’s most reliable member, has alone almost 3m barrels a day of spare production capacity of a 'crude oil of similar quality to the one pumped by Iran'. Riyadh spare capacity is set to increase further as the country is bringing into stream this month a new oil field, the massive 1.2m b/d Khurais development."
Crude ignores Iran effect
Financial Times, 17 June 2009

"An international plan to build a nuclear fusion reactor is being threatened by rising costs, delays and technical challenges. Emails leaked to the BBC indicate that construction costs for the experimental fusion project called Iter have more than doubled. Some scientists also believe that the technical hurdles to fusion have become more difficult to overcome and that the development of fusion as a commercial power source is still at least 100 years away. At a meeting in Japan on Wednesday, members of the governing Iter council reviewed the plans and may agree to scale back the project....Iter was formally launched in 2006 as collaboration between the European Union, the United States, Russia, Japan, China, India and South Korea. The plan was to build the world's most advanced fusion experiment within 10 years for a budget of $6bn (Ł3.6bn). But the grand scheme has been dogged by soaring costs caused by more expensive raw materials and increases in staff numbers. Emails seen by the BBC indicate that the total price of constructing the experiment is now expected to be in excess of $16bn (Ł10bn).... Costs are not the only problem; Iter is also beset by huge technical challenges. Fusion takes place when a superheated gas called a plasma reaches a stage called ignition, where hydrogen atoms start to fuse with each other and release large amounts of energy. Iter aims to achieve this but only for a few minutes at a time. MIT professor Bruno Coppi has been working on fusion research in Italy and the United States for many decades. He believes that Iter is the wrong experiment; it is too costly, will take too long and may not deliver fusion. He says we should be looking at other options....Another huge hurdle is how to contain gases that are 10 times hotter than the Sun. The materials required simply haven't been invented yet. Professor Balibar explained: 'The most difficult problem is the problem of materials. Some time ago I declared that fusion is like trying to put the Sun in a box - but we don't know how to make the box....Dr Norbert Holtkamp is the man tasked with building the machine....Dr Holtkamp says the view that the project is to be scaled down is wrong. 'Fusion is not going to be the alternative in the next 20, 30 or 40 years, that is correct. But there needs to a long term plan; 40 years is little more than a generation. We need to think about the next generation and the many after that.'...Ultimately fusion may be a technological dream that is just too hard to turn into reality. And Iter, in a beautiful setting in the south of France, may become the graveyard of a good but impossible idea."
Fusion falters under soaring costs
BBC Online, 17 June 2009

"Crude oil will rise to an average $80 to $85 a barrel in the coming year as inventories decline, billionaire investor T. Boone Pickens said in Calgary today.... The hedge-fund manager is promoting an energy plan that relies on U.S.-produced natural gas to cut the country’s dependence on foreign oil. 'In this market you’re going to see oil inventories work off,' Pickens said. 'There’s no question what the Saudis want; they want a balanced market and they want $75 minimum for their oil.'... Plans to build a pipeline to bring natural gas from Alaska to the lower 48 states don’t make sense, Pickens said. Gas found in shale deposits in Texas is more accessible, he said. Shale gas is locked in non-porous rock that made the reserves inaccessible until producers perfected new drilling technologies in the 1990s. 'I don’t think the pipeline from Alaska, through Canada and down to the lower 48 makes sense,' Pickens said. 'You’ve got 50 trillion cubic feet in the Barnett and then another twice that, maybe, over in Haynesville in north Louisiana. I don’t see quite how that pipeline gets built right now.' Other U.S. shale fields, including the Marcellus in Pennsylvania, West Virginia, New York and Ohio and the Woodford in Oklahoma will provide ample supplies in the coming years, he said.”
Pickens Says Oil Will Average $80 to $85 a Barrel
Bloomberg, 17 June 2009

"Alexei Miller, Gazprom's chief executive, warned in a speech in Italy last week of a looming 'supply crunch' in the oil market after 2012, caused by under-investment today, which could send oil and gas prices soaring. A few days later, he drove that warning home in the most vivid way possible, with Gazprom's investment cuts and production delays raising the spectre of a gas supply crunch in Europe. The decision to defer the flow of gas from Gazprom's first development of the huge reserves in the Yamal peninsula, in northern Russia, makes perfect sense in the short term. All the talk in the industry is of a global 'gas glut', fostered by a surge in supplies of liquefied natural gas, particularly from the mega-projects in Qatar now coming on stream. 'Barely a year ago everyone was saying Gazprom would not be able to keep up with demand,' says Jonathan Stern of the Oxford Institute for Energy Studies. 'The speed of the turnround has been extraordinary.' The global recession has hammered Europe's gas consumption, particularly for industrial users. The car industry, for example, uses gas-fired heaters to dry paint, and many assembly lines have fallen silent. Cedigaz, the gas industry association, has estimated that industrial demand in developed economies, including the European Union, the US and Japan, will be 17 per cent lower this year than last year. Residential consumption is more stable, but the EU's overall demand could fall 5 per cent this year, even after an unusually cold January. Gazprom, which is the biggest gas importer into the EU, has been forced to cope with that downturn at the same time as Russian demand has been plunging. Prof Stern estimates that EU demand will be 20bn cubic metres lower than last year, Russian demand 40bn cu m lower and demand from Ukraine and other former Soviet states also 20bn cu m lower. Gazprom has responded by cutting its own production and forcing independent Russian gas producers to cut theirs. It has also told Turkmenistan, one of its main central Asian suppliers, to cut its export price. An explosion in April cut the gas pipeline from Turkmenistan to Russia, and it has not yet reopened. The causes are disputed. The rate at which gas demand picks up will depend on the pace of economic recovery. Tony Hayward, chief executive of BP, said last week that although demand had steadied after dramatic falls earlier in the year, there were as yet no signs that it was rising again. So Gazprom's forecast that even in 2012 its production is likely to remain lower than last year is a plausible assumption. The alarming prospect for Russia is that western European demand will never recover. If the EU could meet its objective of raising energy efficiency by 20 per cent by 2020, then its gas consumption could fall through the decade. Cambridge Energy Research Associates, a consultancy, argued recently that even going halfway to the EU target could cut gas demand back to early 1990s levels by 2030. However, other experts are sceptical those savings can be achieved, or that other fuels can substitute for gas in the next decade. Colette Lewiner of Capgemini, the consultancy, argues that European gas demand is set to rise until at least 2020. 'I don't think renewables will be able to do enough,' she says. 'If you take all the other energy sources, you are still left with a rising need for gas.' European production, meanwhile, is in decline. The International Energy Agency estimates western Europe's gas production will fall by 30 per cent over the next two decades. The search is on for new sources of gas to bring to Europe. The EU has high hopes for Azerbaijan and Turkmenistan, and recently there has been growing optimism about gas from northern Iraq. But the reality is that the EU cannot do without Russia, and sooner or later that gas from Yamal will be needed."
Russian move raises supply crunch fears
Financial Times, 17 June 2009

"For decades, crude oil prices have gone to extremes, for instance, the $147-per-barrel peak last summer, followed by an overcorrection. But 2009 is puzzling. Prices are going in the opposite direction of demand. In the midst of a global meltdown, anyone who bought crude oil futures at the beginning of the year, in the low $30 range, has more than doubled their money. Meanwhile, natural gas continues to wallow in the trench. On Tuesday, oil nearly reached $73, as it reportedly continues to climb on news of a weakening dollar, despite ample oil supply and weak demand."
Oil's Paper Bubble
Forbes, 16 June 2009

"The UK is third from bottom in a league table of renewable energy across Europe, with only Luxembourg and Malta sourcing less of its energy from clean sources such as wind or sun. The table, showing the percentage of renewables in EU countries, was published by the government in response to a parliamentary question by the former environment minister Michael Meacher. It showed that the UK received 1% of its energy from renewables in 1995 and just 1.3% a decade later. Only Luxembourg, at 0.8% and 0.9%, and Malta, which has no renewable energy, came lower on the list. The numbers show the scale of the challenge facing the UK as it attempts to meet a commitment to source 15% of its energy from renewable sources by 2020, part of binding European climate targets. Top of the EU list was Sweden, with 35.7% of its final consumption of energy coming from renewables in 1995 and 40.8% in 2005. Romania jumped from 9.3% to 19.2% over the same period, while Denmark went from 8.3% to 17%. Portugal dropped from 22.8% to 17% and France from 11.4% to 9.5%, though both are still comfortably ahead of the UK. A spokesperson for the Department of Energy and Climate Change said several wind farms had become operational in the UK since 2005 and that the proportion of renewable energy in the country had risen from 1.3% in 2005 to about 1.8% now. 'Our [2020] target is ambitious but achievable. It's good for the climate to have more low-carbon energy, and good for our energy security to have more home-grown energy. 'We've started from a low base, but we have made big progress. There was an increase of 26% in onshore wind power generation from 2006 to 2007 and a 20% increase in offshore wind. The UK is now the world's leader on offshore wind, underlined by the green light given to the world biggest offshore wind farm, the London Array, thanks to the extra support in the budget."
UK trails EU league for renewables
Guardian 15 June 2009

"The price of oil has been extraordinarily volatile. At the beginning of the recession it fell by about 80 per cent as world expectations were lowered. In the past six months, the price has recovered by about 100 per cent, taking oil back to $70 a barrel. These price gyrations need to be explained, particularly the strength of the price recovery in 2009; the recession may have reached bottom but it has certainly not reached this level of recovery. Part of the explanation is the shift of the global economy from mature to emerging countries, particularly to the four biggest emerging markets of Brazil, Russia, India and China, the so-called Bric countries, which are holding their own economic summit in Yekaterinburg this week. In coming years Bric is expected to soar above the US and Europe; China alone will catch up with the US in five to ten years' time. The big emerging countries have continued to increase their demand for oil, even during the recession. The swing of effective demand to the emerging countries is not in dispute, but there are different views about an even greater shift in the oil market, so-called 'peak oil'. That is the point in time when flows of new production are fully cancelled out by declines in existing production. That does not mean that oil is running out; but it does mean that demand will outstrip new supply, as has happened in the North Sea and North America. This time it will be a universal shortfall. Many experts believe that the recession has indeed passed its low point; in that case demand for oil will recover in the countries worst hit, but will also continue to increase in the emerging countries, particularly the Bric countries. Much of the discussion in Yekaterinburg will centre on the future of oil supplies and particularly on the possible diversion of Russian oil from Europe to China. If the peak oil theory does prove correct, the present recovery in prices will only be the beginning. Those oil economists who accept the peak oil argument tend to expect the price to reach $150 a barrel, probably in 2010. This might be accompanied by a rise in the gold price above $1,000 an ounce. Oil and gold prices tend to move together, and the emerging countries have larger dollar reserves than they would altogether like. Gold is the one real alternative to paper currencies as a reserve asset. The old assumptions are being undermined. It is only too clear that most politicians are still living in the 20th-century world, the world in which they grew up. The peak oil market may already have been reached, but in any case it will be reached eventually. The only question is when. Power is passing from the North West to the SouthEast, from the US to China."
Lord Rees-Mogg - Rising oil prices will buy off democracy
London Times, 15 June 2009

"The UK is third from bottom in a league table of renewable energy across Europe, with only Luxembourg and Malta sourcing less of its energy from clean sources such as wind or sun. The table, showing the percentage of renewables in EU countries, was published by the government in response to a parliamentary question by the former environment minister Michael Meacher. It showed that the UK received 1% of its energy from renewables in 1995 and just 1.3% a decade later. Only Luxembourg, at 0.8% and 0.9%, and Malta, which has no renewable energy, came lower on the list. The numbers show the scale of the challenge facing the UK as it attempts to meet a commitment to source 15% of its energy from renewable sources by 2020, part of binding European climate targets....Top of the EU list was Sweden, with 35.7% of its final consumption of energy coming from renewables in 1995 and 40.8% in 2005. Romania jumped from 9.3% to 19.2% over the same period, while Denmark went from 8.3% to 17%. Portugal dropped from 22.8% to 17% and France from 11.4% to 9.5%, though both are still comfortably ahead of the UK...A spokesperson for the Department of Energy and Climate Change said several wind farms had become operational in the UK since 2005 and that the proportion of renewable energy in the country had risen from 1.3% in 2005 to about 1.8% now."
UK trails EU league for renewables
Guardian, 15 June 2009

"Russian state-owned nuclear giant Rosatom has secured a 17 percent stake in Canadian rival Uranium One (UUU.TO), acquiring another toehold in North America in exchange for a 50 percent stake in the Karatau uranium mine in Kazakhstan....The deal comes as several countries have sought to lock in supply of nuclear fuel to feed growing power industry demand...'You're not going to spend billions of dollars in building nuclear power stations and not have uranium to feed them, or more importantly be held at ransom,' said David Davidson, an analyst at Paradigm Capital in Toronto.
Russia swaps mine stake for 17 pct of Uranium One
Reuters, 15 June 2009

"The latest edition of the excellent BP Statistical Review of World Energy, published last week, shows that, for the first time, total oil demand in the emerging markets now outstrips the West. That's an important milestone. From now on, the Western world can slump but global oil prices can stay 'fundamentally' strong...These economies are home to no less than two-thirds of the world's population. They're in the midst of the fastest, most widespread industrial revolution the world has ever seen."
Oil prices will be driven upwards by the needs of developing nations
Daily Telegraph, 14 June 2009

"This month an Iraqi politician will appear on television to open envelopes and reveal the winners of a long and hard-fought contest. In the balance hangs the wellbeing of 28m people, tens of billions of dollars of contracts and how much you and I pay for everything from yoghurt pots to petrol. It should make good viewing. For the hopeful contestants, it has been a long wait — since 1972 to be exact. That was when the Iraqi oil industry was nationalised and foreign operators were booted out. Now the oil giants have been invited back. At the ceremony on June 29 and 30, Hussain al-Shahristani, the oil minister, will reveal which of them will be the first to be let back into the south of the country, where most of its oil and gas resources are found. ...At a time when explorers are going to great lengths to get at new sources, Iraq’s is the 'easiest' oil in the world. It costs between $2 and $4 a barrel to extract, compared with $50 or more for tar sands or deep-sea drilling. In its annual review of world energy, BP announced last week that global reserves fell for the first time in more than a decade. Lambert Energy, a consultancy, predicts that at present rates of decline the world will need 40m barrels a day of new production capacity within a decade just to keep up with current demand. Philip Lambert, its founder, said: 'The world needs Iraq, both the north and the south, to work. There is nothing else that can fill the gap.'... The deals offered to the oil giants in the south won’t be nearly as attractive as those in Kurdistan. They are technical contracts, under which companies are paid a fee to increase production. Oil groups have found such deals in other countries such as Iran unappealing. However, the contracts do provide for additional payments if production targets are passed. ”
Rush for ‘easiest oil in the world’
LondonTimes, 14 June 2009

"Over the past six years of violence in Iraq, oil has been the flashpoint in Kirkuk, a city forever home to a combustible mixture of races. Kurds have always claimed Kirkuk as a homeland; Turkomans, Assyrians and Arabs have at various times based empires here. The resulting melting pot of races and clans has never mixed comfortably. Since the US declared its invasion a success in mid-2003, Kirkuk has seen its biggest population shift in centuries, with Kurds capitalising on a power vacuum in Baghdad and Arabs rushing to reinforce their foothold. Kurds have been accused of ethnically engineering Iraq's most divided city to lay the foundations for a nascent Kurdistan. Arabs have been accused of doing anything - including bombings - to stop the city from escaping their grasp. All along, Kirkuk has had the feel of a boom-town-in-waiting, sitting on a subterranean lake of fabulous wealth that would one day create fortunes. 'That day is closer than ever,' said Sharlet Yohana, 50, an Assyrian woman who works in the Iraqi government-owned oil extractor, the North Oil company. 'The real conflict here is about oil,' she said from the sitting room of her middle-class home in an Assyrian Christian neighbourhood. 'Oil may well provide our future wealth and comforts, but it will also be our damnation. 'We will never have peace until the political problems surrounding the oil are solved. Everyone will suffer, far more than we are now: Kurds, Arabs, Turkmen, Christians. Already we have a curfew from midnight to 5am, and many Christians are blown up or assassinated. They are bringing this to a head now, before the foreign contractors come in.'....Advocates of the Arab claim to Kirkuk, among them an outspoken Sunni MP, Osama al-Najafi, insist the programme, which is authorised by article 140 of Iraq's constitution, is no longer relevant, because it has expired. 'The UN in its final report said article 140 was not suitable to solve this problem in its present form,' al-Najafi said. The UN report was released in April after two years of searching for a solution for Kirkuk. The UN recommended a jointly administered region and a referendum to decide the city's future racial complexion. But with the population and mix having changed so markedly and with Baghdad fearing it is now on the wrong side of the ledger, it is highly unlikely to endorse such a ballot. 'The report was unjust and one-sided,' al-Najafi complained. 'They dealt with the Kurdistan province and Iraq as distinct areas, not one country. And they compared the situation to Northern Ireland and the UK. And when they dealt with the Arab perspective, they put inside quotes and added question marks. 'The Kirkuk problem comes down to oil,' he said. 'The Kurds want the funds to finance the proposed state of Kurdistan. It is enshrined in the constitution that oil and gas is for all Iraqis. But they have signed a range of contracts from those that are without agreement from the central government. 'This situation cannot continue for long. The tensions are growing and there is no agreement about the shape of the future Iraqi state. There are deep divisions and they are not drawing any closer' To many Kurds, the divisions are indeed becoming more entrenched. 'We don't see this so much as Northern Ireland as a new Jerusalem,' said one senior member of the Kurdish parliament. 'This is a conflict with a history and we are prepared to play a long game on it. The oil is bringing things to a head rapidly and Baghdad feels it is starting to lose significant ground. 'The Turks remain uneasy in the north, but we will do nothing to provoke them. Time is on our side."
Kurds lay claim to oil riches in Iraq as old hatreds flare
Observer, 14 June 2009

"One way to know that the end of the Age of Oil will soon be upon us is the current excitement and chatter about going—literally—to the ends of the earth to find more oil. The Arctic Circle, which circumscribes about 6% of the earth’s total surface, is one of the last regions of any significant size to be explored for oil, and for good reason: It’s locked in ice for much of the year, far from support and distribution lines, and is one of the most extreme environments on earth. Whatever oil and gas is extracted from the top cap of our planet will be the most expensive and difficult oil ever produced. Yet the prospect of new oil production from the Arctic is attracting renewed attention as the world becomes increasingly cognizant of the end of cheap, easy oil, and the security and economic risks associated with the expensive, difficult oil that remains.... The important question now is: How much remains to be discovered up there? In an effort to answer this question, the United States Geological Survey (USGS) in cooperation with an international group of geological experts from Canada, Demark, Greenland, Norway, Russia, and other governmental agencies has just completed an effort to round up the available data on the Arctic region and assess its potential, known as the Circum-Arctic Resource Appraisal (CARA). Their summary report, 'Assessment of Undiscovered Oil and Gas in the Arctic,' was released last week. Much of the area is as yet unexplored, so an innovative approach to assessing the area and extrapolating from the limited data available was required. In order to have some way of evaluating the 'very sparse geological data' on the area, the evaluators used 'analogs' from the real world as comparison samples.... Maps of the resources reveal their uneven distributions: Sixty percent of the oil is concentrated in just six AUs, predominately in Alaska, and two-thirds of the undiscovered gas is in just four AUs, predominately in Russia.... A range of probabilistic estimates were developed for the assessment units, which were then aggregated into the summary report. Estimates of undiscovered resources are customarily stated in terms of a range of probabilities. The median, P50 estimates (50% probability) are usually reported in the press, but they’re often shown to be optimistic once a given resource is produced....an analysis by respected petroleum geologist Jean Laherrčre in March 2008 on The Oil Drum estimated that the Arctic would contain 50 billion barrels of oil and 1000 TCF of gas, putting his estimates just above the P95 estimates offered by the USGS. Laherrčre is one of the fathers of the modern peak oil study, a man with deep experience in the global oil and gas exploration and production industry, and his estimates are usually quite accurate. To give a sense of scale to these numbers, world oil consumption is around 30 billion barrels per year, and world gas consumption is about 110 TCF per year. So the Arctic may contain anywhere from a 1-3 year supply of oil and a 7-27 year supply of gas. However, these are merely estimates of 'original oil and gas in place.' Typically, only 25-35% of that amount is economically recoverable using current technology. So the Arctic may in fact have perhaps a 4-month world supply of recoverable oil, and around a 2-year supply of gas. In reality of course, the resources wouldn’t be found or produced all at once, but rather in chunks, over time, and would have far greater implications for the nations that lay claim to it (for example, Greenland) than for the world as a whole. 'With respect to oil, there’s nothing that we see in the Arctic that suggests this preeminence of oil within and around the Gulf states would be significantly shifted,' said geologist Donald Gautier, lead author of the survey.... In terms of the all-important production rate however, it seems safe to assume that although the Arctic’s resources will be most welcome to the nations that possess them, they will amount to little more than a trickle of very expensive hydrocarbons within the context of enormous world demand.Exploration and development of oil and gas from the Arctic Circle is a foregone conclusion. The world simply needs hydrocarbons too much, and the remaining prospects are few. But to exploit it will require technologies that don’t yet exist, enormous amounts of capital, and a high tolerance for risk. In other words, the price of oil will have to be high, and stay high, to make the effort worthwhile."
How Much Oil Is In The Arctic?
Business Insider, 13 June 2009

"The steady rise in the oil price has prompted a sharp increase in predictions for the crude price. With oil now above $70 a barrel, Goldman Sachs has raised its forecast for the end of the year from $65 to $85 and says prices could touch $100 by the end of next year. The Chancellor this week singled out rising oil prices, along with the failure of other European countries to clean up their banks, as serious threats to the recovery. The oil price had 'the potential to be a huge problem,' he said. Economists argue about how much impact a big rise in the oil price has on the British economy these days, although they agree that it is much less than it used to be. It is also less important than for the US. The doubling of the price in the past four months has put paid to hopes that British households will see further cuts in their utilities bills. If it increases much further, there will be fears that those bills could start rising again, though it takes some time for a rise in the oil price to feed through into long-term gas prices. The strengthening of sterling has also taken some of the sting out of the rise in the oil price in dollar terms."
Scrambling for green shoots
London Times, 13 June 2009

"For a tiny, teardrop-shaped fragment in the Indian Ocean, Sri Lanka punches far above its weight. Its location off the southeastern coast of India may have put it right in the line of the 2004 tsunami, but it also puts it in pole position to exploit the growing geopolitical struggle unfolding in the Indian Ocean. China’s role in the Sri Lankan civil war is well known. Its deal to build a major port at Hambantota in southern Sri Lanka is part of a regional strategy to create a 'string of pearls' of friendly harbours in Pakistan, Bangladesh and Burma, along key shipping routes through the Indian Ocean. ... Next month, for the first time, Sri Lanka will attend the Shanghai Co-operation Council as a dialogue partner, a blessing bestowed by Russia and China in recognition of its importance in the new Indian Ocean great game. Russia, which continues to growl over Nato expansion in Eastern Europe, is also observing keenly any activity in the Indian Ocean. Already Nato has encroached up to the Persian Gulf. In October 2007 it conducted its first ever naval exercises in the Indian Ocean, part of an American strategy to establish Nato’s presence in this crucial region. Russia, Iran — and even China — fear Nato’s expanding alliance with Pakistan will give it a foothold in the region. Despite Delhi’s friendly relations with the West, India is desperate not to allow Pakistan to gain any more influence there. Sri Lanka’s prime location in prime maritime real estate has elevated it to the jewel in the crown of the new Indian Ocean paradigm."
Sri Lanka's crucial role in Indian Ocean power struggle
London Times, 12 June 2009

"The uranium industry says Australia has slipped down the rankings of the world's biggest producers and that is threatening its position as an exporter. Industry leaders told a conference in Darwin they were determined to pressure governments to remove more barriers to the expansion of mining. The Uranium Association's executive director, Michael Angwin, said Australia had dropped from being the world's second biggest producer of uranium to the third biggest, behind Canada and Kazakhstan. He said Australia would be in a stronger competitive position if Queensland followed Western Australia and allowed uranium mining. 'We can't just store that up and think that on the strength of that uranium endowment we'll capture the world's uranium market whenever we want to,' he said. The Uranium Association says there is the potential for uranium exports to increase from 10,000 to 40,000 tonnes a year."
Australia slides down list of uranium exporters
ABC News (Australia), 12 June 2009

"As recently as 2007, the IEO projected that the global production of conventional oil (the stuff that comes gushing out of the ground in liquid form) would reach 107.2 million barrels per day in 2030, a substantial increase from the 81.5 million barrels produced in 2006. Now, in 2009, the latest edition of the report has grimly dropped that projected 2030 figure to just 93.1 million barrels per day - in future-output terms, an eye-popping decline of 14.1 million expected barrels per day. Even when you add in the 2009 report's projection of a larger increase than once expected in the output of unconventional fuels, you still end up with a net projected decline of 11.1 million barrels per day in the global supply of liquid fuels (when compared to the IEO's soaring 2007 projected figures). What does this decline signify - other than growing pessimism by energy experts when it comes to the international supply of petroleum liquids? Very simply, it indicates that the usually optimistic analysts at the Department of Energy now believe global fuel supplies will simply not be able to keep pace with rising world energy demands. For years now, assorted petroleum geologists and other energy types have been warning that world oil output is approaching a maximum sustainable daily level - a peak - and will subsequently go into decline, possibly producing global economic chaos. Whatever the timing of the arrival of peak oil's actual peak, there is growing agreement that we have, at last, made it into peak-oil territory, if not yet to the moment of irreversible decline. Until recently, Energy Information Administration officials scoffed at the notion that a peak in global oil output was imminent or that we should anticipate a contraction in the future availability of petroleum any time soon. '[We] expect conventional oil to peak closer to the middle than to the beginning of the 21st century,' the 2004 IEO report stated emphatically. Consistent with this view, the EIA reported one year later that global production would reach a staggering 122.2 million barrels per day in 2025, more than 50% above the 2002 level of 80.0 million barrels per day....In 2025, according to this new report, world liquids output, conventional and unconventional, will reach only a relatively dismal 101.1 million barrels per day. Worse yet, conventional oil output will be just 89.6 million barrels per day....[Unconventional] fuels include Canadian oil sands, Venezuelan extra-heavy oil, deep-offshore oil, Arctic oil, shale oil, liquids derived from coal (coal-to-liquids or CTL), and biofuels. At present, these cumulatively constitute only about 4% of the world's liquid fuel supply but are expected to reach nearly 13% by 2030. All told, according to estimates in the new IEO report, unconventional liquid production will reach an estimated 13.4 million barrels per day in 2030, up from a projected 9.7 million barrels in the 2008 edition."
It's Official - The Era of Cheap Oil Is Over: Energy Department Changes Tune on Peak Oil
Tom Dispatch, 11 June 2009

"British production in the North Sea is set to drop to levels not seen since the late 1970s, BP statistics suggested. Chief executive Tony Hayward said output will fall by at least 5 per cent a year in the coming years, and if investment is not stepped up the declines could be even steeper. Just 1.54million barrels of oil were produced in 2008, compared with a peak of 2.9million in 1999, and continued declines will leave output at its weakest since 1978. Combined oil and gas production has fallen to 2.6million barrels a day. 'The North Sea is a mature and declining province,' said Hayward. 'It will decline for sure at 5 per cent per year, and if the investment doesn't go in - and this year it is not going in - it will probably decline at a faster rate.'...At the current rate of production, the UK has six years of oil left and just under five years of gas, BP's annual Statistical Review of Energy showed. Making matters worse, the credit crunch is likely to lead to a halving of North Sea investment in 2010 compared with last year, according to industry lobby group Oil and Gas UK."
BP's grim warning over growing cost of North Sea oil
Daily Mail, 11 June 2009

"Output from Alberta's oil sands region, the largest crude reserves outside the Middle East, will rise to 3 million barrels per day by 2018, the province's energy regulator said on Wednesday, even as it slightly lowered its estimate of the region's reserves. In its annual estimate of the province's oil and gas reserves, Alberta's Energy Resources Conservation Board (ERCB) said it expects production of the tar-like bitumen contained in the oil sands to more than double over the next nine years, from about 1.3 million barrels per day last year. The forecast is more bullish than one released just days ago by the Canadian Association of Petroleum Producers. Cutting its production estimate for the third time in a year, CAPP estimated that by 2020, oil sands output would only be 2.9 million barrels per day in its most optimistic case. Both the CAPP and ERCB estimates were based on current and planned projects in the oil sands region of northern Alberta. The board could not immediately account for the discrepancy between the two forecasts. The regulator also lowered its estimate of the remaining recoverable oil sands reserves to 170.4 billion barrels from its 2008 estimate of 172.7 billion barrels due to more detailed technical data. Alberta's conventional oil reserves were pegged at 1.5 billion barrels, down 3 percent from last year and continuing a multi-year decline as new oil discoveries replaced only 77 percent of production. However the ERCB estimates that 3.7 billion barrels of oil will ultimately be found and recovered in Alberta through conventional methods. Total output of conventional and oil sands crude in 2008 fell 1 percent to 1.85 million barrels per day as planned and unplanned maintenance shutdowns at oil sands projects crimped production."
Alberta oil sands output pegged at 3 mln bpd by 2018
Reuters, 11 June 2009

"The International Energy Agency on Thursday forecast that the slump in global oil demand in 2009 would be slightly less severe than previously expected, the organization's first upward revision to its estimates in 10 months as economic indicators suggest the recession may be past its peak. The Paris-based agency said in its closely watched monthly survey that global oil demand would fall by 2.9 percent to 83.3 million barrels a day this year, or 2.5 million barrels a day less than in 2008. In May, the IEA was expecting a 3 percent annual fall in demand, the sharpest rate of decline since 1981. 'These revisions do not necessarily imply the beginnings of a global economic recovery and may only signal the bottoming out of the recession,' the IEA said in its report....Since predicting in August that 2009 global oil demand would reach 87.8 million barrels a day, the IEA has steadily lowered its forecasts as the financial crisis plunged the world into the deepest global recession since the Great Depression. Oil prices have been gaining quite steadily over the past weeks, rising from near $35 a barrel in March to highs above $72 on Thursday. Analysts say the rise can be attributed in part to hopes for a global economic recovery but mainly to the U.S. dollar's fall against other major currencies, as investors turn to commodities as a hedge against inflation and a safeguard from dollar weakness. The IEA mentioned rising refinery activity and OPEC's decision in late May to stick to its current production targets as contributing factors to higher crude futures."
International Energy Agency makes first upward revision to 2009 global oil demand in 10 months
Associated Press, 11 June 2009

"Crude oil rose for a third day, climbing above $72 a barrel for the first time in seven months, after China’s net imports jumped to a 14-month high and U.S. crude and gasoline stockpiles unexpectedly fell. China, the world’s second-biggest energy user, increased its net crude purchases to 16.62 million metric tons in May, or 3.9 million barrels a day, according to data released by customs on its Web site today. Oil was also supported by a 4.38 million barrel drop in U.S. stockpiles.... China’s spending on factories, property and roads surged a more-than-estimated 32.9 percent from a year earlier, the statistics bureau said today, helping to drive a recovery in the world’s third-largest economy and drive up demand for fuel. The Organization of Petroleum Exporting Countries will only consider increasing output when the price of crude rises to $100 a barrel, according to Kuwaiti Oil Minister Sheikh Ahmed al- Abdullah al-Sabah. OPEC is scheduled to meet on Sept. 9. U.S. fuel demand in the past four weeks averaged 18.3 million barrels a day, down 6.9 percent from a year earlier, the Energy Department said. There was a 7.7 percent deficit in the week ended May 29. Gasoline use averaged 9.2 million barrels a day during the period, up 0.4 percent from a year ago. Fuel imports to the U.S. dropped 379,000 barrels a day to 2.55 million, the department said. Crude-oil imports slipped 676,000 barrels to 8.97 million."
Oil Climbs Above $72 as China Imports Rise, U.S. Supplies Drop
Bloomberg, 11 June 2009

"Global natural gas resources could be more than quadrupled, helping tackle climate change, if the world adopted US technology and expertise to tap unconventional sources, according to a report by PFC Energy, a consultancy. For Europe, which geological surveys show has vast unconventional shale gas, coal bed methane and hard to access gas, this could ultimately lead to reduced dependence on Russia. Globally, it could ease the transition from high carbon coal to cleaner burning natural gas in electricity production. 'This is a game changer,' said Robin West, PFC chairman. PFC says that global unconventional natural gas resources, based on 1997 geological estimates that could rise with new technologies, total 3,250,000bn cubic feet. To contrast, the world's conventional natural gas reserves are 620,000bn cubic feet. PFC does not put a timetable on how quickly these resources could be developed - indeed, some may be left in the ground forever. There are political, economic and bureaucratic obstacles to recovering this natural gas. But the technology is available and for the first time companies are considering the potential. 'You're talking about massive new resources,' said Nikos Tsafos, PFC's upstream and gas group senior analyst. 'Even if you only got 10 per cent of that, given the need for economic viability at each formation, you would increase the reserve base globally by 50 per cent.' The growth in unconventional gas in the US underlines the potential. Richard Ranger, analyst at the American Petroleum Institute trade association, said accessing US shale had increased domestic natural gas supply estimates from 90 years' worth to 116 years. 'Unconventional gas has already transformed the supply picture in the US,'' Mr West of PFC said. US unconventional gas supplies have doubled from 2000 to 2008, to 8,000bn cubic feet, PFC says, which is about two-thirds the gas volume that Europe imports from Russia. Michael Steinhacker, project manager for Unconventional Gas Service at Wood Mackenzie consulting, said Europe's higher population density created problems in terms of the transportation of rigs and other equipment. Supporting infrastructure, which is already in place in the US, would also have to be built. The development of technologies to recover gas from shale - such as fracturing it with high-pressure water - has been led by independent natural gas company Devon Energy. Devon has formed a joint venture with Total, which is attempting to get a concession in France for 1.4m acres to produce shale gas. While there is no active shale development project outside the US, testing is continuing on the commercial viability of some shales, said Bill Van Wie, Devon's senior vice-president of exploration."
Unconventional sources promise rich natural gas harvest
Financial Times, 10 June 2009

"A game-changing moment could be upon us. In recent years, the world has grown used to condemning China as a climate criminal. But over the next few weeks and months, don't be surprised if you hear the same nation being hailed as the planet's first green superpower. The State Council, China's cabinet, will soon release the details of a staggeringly large 'new energy' programme that could propel the world's biggest greenhouse gas emitter past Europe and the US into a global leader in renewable energy and low-carbon technology. This is no short-term economic boost or sop for climate change negotiations; it is a long-term investment aimed at making China a dominant force in the global low-carbon economy for decades to come. Power plays do not come much bigger. The size of the energy stimulus has not yet been revealed, but reports in the domestic media and from foreign diplomats suggest between 1.4 trillion (US$200 bn) and 4.5 trillion yuan (US$600bn) will be invested over the next ten years in nuclear power plants, solar and wind farms, hydroelectric dams, 'green transport', 'clean coal' and super efficient electric grids. The consequences will be staggering. If the bigger figure proves correct, China will be spending the equivalent of its 2009 military budget on 'new energy' for each of the next ten years. ....China already makes most of the world's solar panels and wind turbines. Its carmakers, such as BYD, are pushing ahead faster than established Japanese and American rivals to mass produce electric vehicles. Its carbon capture technology and high-efficiency 'ultrasupercritical' coal plants are close to the global cutting edge. With the new package, the government will commit itself to developing domestic markets for these 'sunrise' industries....If a substantial amount of the new package goes on renewables and efficiency, Julian Wong, an energy analyst at the Center for American Progress in Washington DC, says the potential is enormous. He says: 'If those expectations are fulfilled, China could emerge as the unquestioned global leader in clean energy production, significantly increasing its chances to wean [itself] off coal, and at the same time ushering in an era of sustainable economic growth by exporting these clean-energy technologies to the world.' This is not being done because of international obligations, but as an investment in national security. Renewable energy eases China's dependence on foreign fuel supplies, which are a growing concern. In an age of soft power, asymmetric warfare and carbon anxiety, an investment in solar and wind energy will help the country to stake a claim to the moral high ground. Todd Stern, the top climate change envoy for President Barack Obama, recently warned that the US could fall behind. 'We need to recognise that if we aren't careful, we may spend the next few years chasing China to do more, but then spend all the years after that chasing them,' he said before heading to Beijing for talks with his Chinese counterparts this week."
China makes renewable power play to be world's first green superpower
Guardian, 10 June 2009

"The price of oil burst through the $71 a barrel mark today amid revelations that proven reserves had fallen for the first time in 10 years and predictions that the price could eventually hit $250....Kuwait's oil minister, Sheikh Ahmad al-Abdullah al-Sabah, put some of the rise down to signs of recovery in Asia but warned that overall demand was still weaker than last year. Opec would not raise supply at current oil prices but did not rule it out 'if it reached $100', he said...The latest surge has also raised fears that higher energy costs could snuff out the nascent economic recovery....The febrile atmosphere in oil markets was fed by the publication of BP's Statistical Review of World Energy, which showed that the world's proven crude reserves had fallen by 3bn barrels to 1.258tn by 2008 from a revised 1.261tn in 2007. Declines in important producers such as Russia and Norway offset rises in new areas such as Vietnam, India and Egypt. The figures did not include Canada's tar sands, which are put at 150bn barrels. The drop is partly attributed to a drop in exploration drilling due to the precipitous fall in oil prices last year but also to the end of 'easy' oil....Global oil consumption fell 0.6% to 81.8m barrels a day in 2008, the first decline since 1993 and the largest drop for 27 years. North Sea output dropped 6.3% to its lowest level for three decades."
Oil price leaps to year's high
Guardian, 10 June 2009

"The giant Russian energy company, Gazprom, which controls the world's largest reserves of natural gas, has issued a stark warning to the European Union saying it must decide if it wants to continue receiving supplies of Russian gas. Speaking in an interview for the BBC's Newsnight programme, Gazprom deputy chairman Alexander Medvedev warned that Europe was now at a crossroads. 'Only three countries can be suppliers of pipeline gas in the long-term - Russia, Iran and Qatar. So there is no other choice than to deal with these suppliers,' he said. 'Europe should decide how to handle this situation… and if Europe doesn't need our gas, then we will find a way of selling it differently.' The threat comes as the EU scrambles to find alternative energy suppliers following the crisis in January, when Russia shut down the main pipeline into Europe for two weeks in a price dispute with the key transit country, Ukraine. The EU currently relies on Russia for a quarter of its total gas supplies. Of the bloc's 27 member states, seven are almost totally dependent on Russian gas....But is it already too late for Bulgaria and Europe as a whole to escape the addiction to Russian gas? It is now a vital issue for the EU and it is leading to increasing friction with Moscow in what being described as a new 'Great Game' between Russia and the West over energy supplies. Gazprom is already manoeuvring cleverly in this game, pushing ahead with highly ambitious plans which would strengthen its hold over Europe. Despite the sharp fall in oil and gas prices which have hit Gazprom hard, the company is determined to build two new pipelines to Europe at a total cost of at least $20bn (Ł12.5bn)....The first pipeline, called Nord Stream, would go from western Russia under the Baltic Sea to Germany, while the second, called South Stream, would go from Russia's south coast under the Black Sea to Bulgaria, eventually ending up in Italy. Gazprom wants to pump gas under the sea directly to Europe so it can avoid transit countries such as Ukraine which lie along the existing land routes. It argues this will improve Europe's energy security. But it will also give Russia the ability to pump much more gas to Europe. Mr Medvedev of Gazprom believes that by 2020, Russia's share of the European gas market will increase from 26% to 33% 'because local production is going down and demand is increasing'...While the Commission seems unconcerned by the long-term implications of Nord Stream, there is real worry about Gazprom's other big pipeline project, South Stream. No construction work has begun on it yet, but Gazprom insists feasibility studies will be completed this year and the pipeline will be built across the Black Sea to Bulgaria and into the heart of Europe by 2015. For Europe this could spell disaster. It could kill off one of its most important schemes for breaking away from its dependency on Russia. For five years, the EU has been pushing for a pipeline to be built from the Caspian region to Austria which would carry gas from Central Asia, the Caucasus and Middle East. Crucially, the pipeline called Nabucco would not go across any Russian territory. But like South Stream it would enter Europe via Bulgaria and possibly use several of the same European transit countries. There are serious doubts that both Nabucco and South Stream are viable. One European Commission official told the BBC that there was now a 'war of gas pipelines' going on with Russia, with 'harsh competition as each side tries to gather support for its plans'....And Moscow itself is now openly saying that competition for energy supplies in areas including Central Asia and the Caspian Sea could lead to military conflicts along its borders over the next decade. A security strategy document, published in May, was signed by the Russian President Dmitry Medvedev."
Energy fuels new 'Great Game' in Europe
BBC Online, 9 June 2009

"The U.S. will get more than half of its natural gas supplies from so-called tight reservoirs by 2020, Royal Dutch Shell Plc estimates. New technology will allow tapping 500 trillion cubic feet of unconventional gas resources in North America, enough to supply the U.S. for two decades, said Malcolm Brinded, executive director for the upstream business at Europe’s biggest oil company. Shell expects to more than triple tight gas output to more than 300,000 barrels of oil equivalent a day in 2020. 'Having picked much of the low-hanging fruit, our industry is now focused on more difficult resources, tight reservoirs, fractured carbonates, oil shales, oil sands, and ultra-heavy oil,' Brinded said in a speech posted on the Hague-based company’s Web site today. 'Tight gas in North America has rapidly developed into a real game-changer.' The world holds 3,000 trillion to 10,000 trillion cubic feet of technically recoverable tight gas, according to Shell. It competes with StatoilHydro ASA and BP Plc, which are also developing unconventional gas projects in North America. Tight gas is methane locked in impermeable sandstone rock, which prevents the gas from flowing to well."
U.S. to Get Half of Gas From ‘Tight’ Fields by 2020, Shell Says
Bloomberg, 9 June 2009

"Last year, the U.S. Geological Survey completed an extensive analysis of Wyoming's Gillette coal field, the nation's largest and most productive, and determined that less than 6% of the coal in its biggest beds could be mined profitably, even at prices higher than today's. 'We really can't say we're the Saudi Arabia of coal anymore,' says Brenda Pierce, head of the USGS team that conducted the study. No one says the U.S. is facing a coal shortage. But the emerging ranks of 'peak coal' theorists argue that current production levels may be unsustainable and, if anything, create a false sense of security. David Rutledge, an electrical-engineering professor at the California Institute of Technology who has studied global coal production, figures the U.S. has about half as much recoverable reserves as the government says, which would work out to about 120 years' worth. The Energy Information Administration, part of the Department of Energy, says it is reassessing its coal tally in light of the new Geological Survey data. It intends to create a new coal baseline from which it will begin its annual subtraction 'as soon as we can,' says William Watson, a member of the energy analysis team at EIA in Washington, D.C. In the field, challenges are becoming more apparent. Mining companies report they have to dig deeper and move more earth to extract coal from aging mines, driving up costs. Utilities have grown skittish about whether suppliers can ship promised coal on time. American Electric Power Co., the nation's biggest coal buyer, says it has stepped up its due diligence to make sure its suppliers can make deliveries after some firms missed shipments last fall. It even bought a mine to lock down supplies. 'We are very much concerned, and it's getting worse,' said Tim Light, senior vice president for AEP....The country's coal supplies have been seen as a bulwark of energy security. In 1979, as the U.S. was reeling from an oil shock, President Jimmy Carter pushed for projects to create liquefied gas from America's vast coal reserves. Today the U.S. produces 1.1 billion tons of coal annually, more than any nation but China. Concerns about supplies are out of the spotlight now, masked by what could be a short-term lull in the appetite for coal. Recession has reduced demand from the two biggest users of coal, electricity producers and steelmakers....Experts expect coal production to drop this year by 5% to 10%, or as much as 100 million tons. Prices for coal from Wyoming's Powder River Basin are down nearly 30% from a year ago, to about $8.50 a ton.... The U.S. isn't the only nation employing improved drilling data and computer modeling to reassess its supplies. Germany cut its proven hard-coal reserve estimates by more than 99% in 2004 as it explored reducing mining subsidies, which would make coal more expensive to extract. Overall, assessments of total world reserves dropped by half from 1980 to 2005, according to a study by Energy Watch Group, an independent group based in Germany. The U.S. Geological Survey, the Department of the Interior's science agency, attempted to get a clearer picture of the nation's coal supplies beginning in 2004. Its full study of the Powder River Basin in Wyoming and Montana will be completed next year. The agency began with the Powder River's rich Gillette coal field, an 80-mile-long strip in northeastern Wyoming that contains the nation's 10 top-producing mines. About one-third of all coal in the country is produced there. Some 1.2 million short tons leave the field daily, a river of coal filling more than 75 trains of 125 to 150 cars each. For the Gillette study, USGS engineers, geologists and economists spent three years analyzing data from 10,200 drill holes, the most comprehensive study ever attempted of the region. The team concluded there are 201 billion short tons of coal in the Gillette field. Environmental rules and physical challenges put much of that out of reach, leaving what they figured were 77 billion short tons of recoverable coal. Little is presently worth mining. Analyzing coal beds that contained 82% of the Gillette deposits, the team determined that with coal selling for $10.50 a ton, the prevailing price two years ago, less than 6% of the coal could be extracted profitably enough to leave mining companies an 8% rate of return. If Powder River prices were to hit $60 a ton in current dollars, as much as 47% could be extracted. But at that price, coal would have a tough time competing with other fuels and technologies.... After many decades of mining, some of the country's coal fields are showing their age. 'What's left to mine is not as easy as what we mined even 10 or 20 years ago,' says Janine Orf, spokeswoman for Patriot Coal Corp. in St. Louis. 'The seams are getting thinner and there are more limestone intrusions.'"
U.S. Foresees a Thinner Cushion of Coal
Wall St Journal, 9 June 2009

"Three British companies have been shortlisted to bid for contracts to work on Iraq's oil and gas fields, pitting themselves against 32 other non-Iraqi companies in a televised, two-day bidding procedure revealed at Baghdad's Oil Ministry. BP, which provided technical assistance to the Iraqi state oil company in 2004-2006, BG International and Premier Oil were among the 120 companies who put themselves forward in June last year, and which now appear on the shortlist of 35 companies who are invited to submit proposals for consideration by a panel of experts at the Ministry. Along with other oil majors including Exxonmobil and Total, they are due to present proposals on June 29 and 30 to work on one of six oil fields and two gas fields. It will be the first major foreign investment in Iraqi oil for 40 years, which has the world's third-largest oil reserves but needs massive foreign investment to resurrect the country's energy infrastructure....Oil Minister Hussein al-Shahristani gave Iraq's current oil output as 2.4 million barrels per day, the highest since 2003, and anticipated that after this round of contracts is awarded, production would increase to 4 million barrels per day. Three fields in this round of bidding are in Basra, two in Kirkuk in the north, and one in Maysan, also in the south. The two gas contracts are for sites in Anbar and Diyala provinces. There are none in Iraqi Kurdistan, the northern region where revenue from resources is heavily disputed. However, Mr al-Shahristani slammed the semi-autonomous Kurdish Regional Government (KRG), who began exporting oil at the beginning of this month, calling the deals 'illegal' as they had not been seen by the Iraq Oil Ministry. 'The KRG has signed some contracts and created a backlash,' he said, adding that the revenue from the oil would go directly to central government, who would not pay firms who signed independent deals with the KRG. The KRG would continue to receive 17 per cent of oil revenue, he said, and no more. Companies, including Norway's DNO International, Toronto-listed Addax Petroleum and Turkey's General Enerji who signed independent deals with the KRG must be paid by the KRG, he said, adding that, 'we will not discuss any compensation for these companies under any circumstances.'"
Iraq unveils foreign oil contract shortlist
London Times, 10 June 2009

"Oil and gas players are slashing spending on new projects amid the current recession, but as energy demand climbs over the long term, 'the next [oil] price spike may already be in the making,' the chief executive of Royal Dutch Shell, Jeroen van der Veer, warned Monday. The steep slide in oil prices from their historic peak of July 2008 was 'only a dent in a graph that goes up all the time,' van der Veer said in an address to the 14th Asia Oil and Gas Conference in Kuala Lumpur. Citing the International Energy Agency's estimate of a 20% drop in oil and gas project investment this year compared with 2008 and a 40% slump in renewable energy sector investment, van der Veer said the current overcapacity in the market would disappear as in the long term, energy demand was bound to climb. As the world's population increases from 6 billion to 9 billion by 2050, 'energy demand, even taking into account energy saving, will double,' he said. Oil and gas would not be able to supply the incremental demand, 'in what I call more of the same,' van der Veer said. 'You need renewables, unconventionals and conventionals.' The Shell executive, who retires at the end of this month after 38 years with the oil and gas giant, reminded delegates that construction of oil and gas projects, be they in the LNG sector, refining, or the proposed development of oil reserves in the Arctic, takes 'at least four to five years' after the final investment decision. 'The system is very slow to react,' he said. While Shell itself plans to maintain investments 'at a relatively high level' in 2009, the same might not be true for the whole sector, van der Veer said....Shell estimates renewables could meet around 30% of global energy demand by 2050, but that means the remaining 70% would still come from fossil fuels and nuclear energy, van der Veer said."
Shell CEO warns next oil spike 'may already be in the making'
Platts, 8 June 2009

"Most believe our current economic problem was caused by the extension of too much credit, too freely, and to the wrong people, over the last 30-40 years. Some, however, are suspicious that the many-fold run-up in oil prices from their historic $10 or $20 a barrel that sopped up so much consumer purchasing power may have had more than a little to do with our current economic problems. While the consequences of the economic downturn are well understood, we are just starting to appreciate that the massive governmental effort to keep a recession from turning into a depression is threatening unprecedented repercussions of its own. In the last 10 months, the U.S. government and its central bank have spent or issued guarantees approaching $12 trillion in efforts to boost the economy. During the current fiscal year, the US will sell $3.25 trillion in new securities vs. $892 billion worth last fiscal year. Some are already calling this phenomenon the 'bailout bubble' and are worried that deficit financing on this scale could destroy the dollar and take much of the U.S. economy with it....Any increase in demand from a revitalized economy is almost certain to drive oil prices higher. In the last eight months, OPEC has reduced its oil production by about three million b/d which has kept production closer to demand for the time being. Although a few members of OPEC currently have surplus production capacity that could be turned into increased production, every year we are extracting some 30 billion barrels of mostly easy and cheap-to-produce oil. The simple message is that in three to four years excess production capacity is likely to be eaten up by depletion. After that increased oil production will become very expensive and take considerable effort. Much higher prices and considerable economic damage are virtually certain."
The Peak Oil Crisis: Watching a Mega-Crisis
Falls Church News-Press, 4 June 2009

"Uranium prices are probably too low to spur the development of new mines, leaving a potential shortfall in supply in the years ahead, Rio Tinto Group and Cameco Corp. officials said. Uranium prices peaked at $136 a pound in 2007 and have fallen as low as $40 this year, according to Roswell, Georgia- based Ux Consulting Co. Demand for uranium is expected to outstrip supply from next year through 2012, pushing prices up to $75 in 2011, Macquarie Group Ltd. estimates. 'The market is relatively balanced and utilities are well covered, but if you go out several years there has got to be some concern about where supply is going to come from,' George Assie, Cameco’s senior vice-president of marketing and business development, said in an interview in Edinburgh on June 1. The Saskatoon, Saskatchewan-based company is the world’s largest uranium producer. Uranium prices plunged partly on concern that countries including China and India would delay nuclear-power projects because of the global economic crisis. That spurred companies including Uranium One Inc., which operates in Kazakhstan, to cut exploration and spending. Uranium supply will expand by 5.8 percent this year and growth will slow to 1.2 percent in 2010 and 4.1 percent in 2011, Max Layton, an analyst at Macquarie, said in an e-mail. Uranium for immediate delivery is trading at about $49.50 a pound, according to Ux Consulting. 'It is possible we’re not at a level yet that will support the necessary amount of incremental production that we are going to need over the next five to 10 years,' Clark Beyer, managing director of Rio Tinto Uranium Ltd., said in an interview in Edinburgh. London-based Rio mines the metal in Australia’s Northern Territory and Namibia. Beyer and Assie declined to give specific forecasts for what prices would be needed to encourage new supply, saying that it depended on the project. Since 2003, the price of uranium has risen fourfold while output of the radioactive metal has advanced by about 24 percent, Kim Goheen, Cameco’s chief financial officer, said today at an investor conference in New York. Forecasts of additional gains in output have been tempered by lengthy regulatory processes and other challenges, including the October 2006 flooding of Cameco’s Cigar Lake mine, the world’s largest undeveloped high-grade uranium deposit. 'The current financial turmoil is likely to put additional pressure on the development of new production capacity,' Goheen said. Supply gains will also be curbed after 2013 when a program to convert Russian nuclear warheads into fuel ends. The 20-year plan to recycle bomb-grade metal into low enriched uranium suitable for reactors converted the equivalent of 14,000 warheads into 10,200 metric tons of fuel through the end of 2008, according to USEC Inc. The end of the program will sap so-called secondary supplies of uranium, said Gerard Pauluis of Synatom SA, the Brussels-based company that buys as much as 1,200 tons of uranium a year for Belgium’s reactors."
Uranium Price Slump May Hurt Supplies, Producers Say
Bloomberg, 3 June 2009

"Green energy overtook fossil fuels in attracting investment for power generation for the first time last year, according to figures released today by the United Nations. Wind, solar and other clean technologies attracted $140bn (Ł85bn) compared with $110bn for gas and coal for electrical power generation, with more than a third of the green cash destined for Britain and the rest of Europe. The biggest growth for renewable investment came from China, India and other developing countries, which are fast catching up on the West in switching out of fossil fuels to improve energy security and tackle climate change. 'There have been many milestones reached in recent years, but this report suggests renewable energy has now reached a tipping point where it is as important – if not more important – in the global energy mix than fossil fuels,' said Achim Steiner, executive director of the UN's Environment Programme. It was very encouraging that a variety of new renewable sectors were attracting capital, while different geographical areas such as Kenya and Angola were entering the field, he added. The UN still believes $750bn needs to be spent worldwide between 2009 and 2011 and the current year has started ominously with a 53% slump in first quarter renewables investment to $13.3bn....Wind, where the US is now global leader, attracted the highest new worldwide investment, $51.8bn, followed by solar at $33.5bn. The former represented annual growth of only 1%, while the latter was up by nearly 50% year-on-year. Biofuels were the next most popular investment, winning $16.9bn, but down 9% on 2007, as the sector was hit by overcapacity issues in the US and political opposition, with ethanol being blamed for rising food prices. Europe is still the main centre for investment in green power with $50bn being pumped into projects across the continent, an increase of 2% on last year, while the figure for America was $30bn, down 8%. But while overall spending in the West dipped nearly 2%, there was a 27% rise to $36.6bn in developing countries led by China, which pumped in $15.6bn, mostly in wind and biomass plants. China more than doubled its installed wind turbine capacity to 11GW of capacity, while Indian wind investment was up 17% to $2.6bn, as its overall clean tech spending rose to $4.1bn in 2008, 12% up on 2007 levels."
Green energy overtakes fossil fuel investment, says UN
Guardian, 3 June 2009

"Iraq’s self-governed Kurdish region began exporting oil for the first time yesterday, pumping crude through a pipeline to Turkey for sale to foreign markets. Iraq’s Kurdish President, Jalal Talabani, and Massoud Barzani, the president of the Kurdish regional government, opened a ceremonial valve in Arbil, the regional capital. Pointedly, there were no non-Kurds from the federal Government at the ceremony. Kurds and Arabs in Iraq are in a dispute over the division of the country’s mineral resources that could still spill into bloodshed. Mr Barzani said: 'This achievement will serve the interests of all Iraqis, especially the Kurds.' Turkey has long feared that the generation of Kurdish oil wealth from Iraq could spark secessionist violence among its own Kurds. However, the Turkish Genel Enerji is jointly developing the Taq Taq oilfield with Addax Petroleum, an oil and gas company based in Calgary, Canada. Economic ties between Turkey and Iraq have strengthened enormously in the past year, with Turkish exports to northern Iraq increasing by 76 per cent. Yet discord over oil rights between Baghdad and Arbil continues to delay the exploitation of much of Iraq’s massive proven oil and gas reserves. Kurdish officials recently unveiled an $8 billion (Ł5 billion) plan that could supply natural gas from northern Iraq to Europe via the Nabucco pipeline, a key element in the endeavour by the European Union to cut its reliance on Russian gas. Hussein al-Shahristani, the Iraqi Oil Minister, rejected the deal as illegal, saying that it was done without the participation of the Oil Ministry. Baghdad opposes Arbil signing its own contracts, a position Kurdish officials have ignored. Baghdad has said in response that it will award production rights to the Kirkuk oilfields — disputed between Arabs and Kurds and reputed to be the location of bigger oil reserves than the whole of Alaska — to the highest-bidding international oil company this month. Kirkuk’s constitutional status remains contested. The UN has recommended a referendum to decide the issue. 'Iraq has had a revenue shortfall of $10 billion due to the incompetence of Iraq’s Oil Ministry,' said Ashti Hawrami, the Iraqi Kurds’ natural resources minister, in a speech during which he vowed that the region would continue to seek partners without the approval of the central Government. More American soldiers died in Iraq in May than at any time in the past eight months, weeks before US forces are due to withdraw from Iraqi cities. Twenty-four US soldiers lost their lives last month, the highest number since September."
First oil exports for Iraq’s Kurdish region despite resources clash
London Times, 2 June 2009

"Gazprom, Russia’s state-controlled energy group, has told Turkmenistan to reduce its gas export price after saying it did not need central Asian gas. The statement marks an escalation in a dispute that has prompted Turkmenistan to intensify its efforts to find other export routes for its gas. Gazprom offered last year to pay central Asian gas suppliers high prices to outbid rival buyers in China and Europe. But Valery Golubev, deputy chairman of Gazprom, has now said it would be unprofitable to sell highly priced Turkmen gas in Europe and Ukraine where energy demand has fallen as the economic recession has taken hold....Gazprom has cut gas production by more than 20 per cent this year as demand slumped in Europe and Ukraine. It is determined that central Asian producers should share the pain of lost revenues."
Gazprom escalates Turkmen gas price dispute
Isabel Gorst in Moscow, Financial Times, 2 June 2009

"A report from one of the world’s top energy consultancies says oil production in Canada’s tar sands could see a five-fold increase by 2035. 'The oil sands have moved from the fringe to the center of energy supply,' notes the report 'Growth in the Canadian Oil Sands: Finding a New Balance' released by IHS Cambridge Energy Research Associates (CERA) on May 18. Environmentalists and some aboriginal groups want the oil sands to stay on the fringes because extracting heavy oil produces more greenhouse gas emissions than convention crude. Meanwhile, the Council on Foreign Relations (CFR) issued a report titled 'The Canadian Oil Sands: Energy Security vs Climate Change' on May 22 arguing that both the negative environmental impacts and benefits to U.S. energy security from Canada’s tar sands are overstated. 'Smart regulation can place a fair and reasonable price on the oil sands’ greenhouse gas emissions, providing the right incentive to reduce them,' said Michael Levi, an author of the CFR report. Levi told IPS that lifecycle green house gas emmissions from the tar sands are 17 percent worse than conventional U.S. oil imports. Environmentalists dispute this claim, stating oil production from the tar sands is at least three times worse than conventional oil. 'The development of Canadian oil sands encapsulates the complexities that the world faces on energy, environment and security,' said IHS CERA chairman Daniel Yergin in a statement. Yergin won a Pulitzer award for his book 'The Prize', a history of the oil industry. CERA did not respond to interview requests from IPS. Oil today accounts for 35 percent of global energy supply - the largest share of any form of energy. In 2008, world oil demand was 85.2 million barrels per day. CERA estimates global oil demand in 2035 could range from 97 million barrels per day (mbd) to 113 mbd. If the global economy stays in recession or a slow growth scenario, production from Canada’s tar sands will reach about 2.3 million barrels per day by 2035, an increase of about 1 million barrels a day from present levels, according to CERA. In 2008, Canada supplied the U.S. with 19 percent of its oil imports. That number could rise to 37 percent by 2035, according to CERA."
Oil Economy Driving Growth of Controversial Tar Sands
Inter Press Service, 1 June 2009

"Oil is the world’s most important commodity, and the need to understand the long-term supply is widely recognized. In some way, all energy projects—whether they involve conventional or green alternatives—will be measured against oil....Primary contributing factors to the present inadequacy of energy investment are price volatility and uncertainty of future delivery capacities, which are the byproducts of tightening supply. The authors confirm the work of others that the energy future depends upon a handful of irreplaceable and aging fields, many of which are in unknown states of depletion. It is time for the world to better understand global oil productive capacity in order to take appropriate measures.... The authors propose that the key to this understanding is the modeling of the largest fields.... As these largest fields diminish in productivity there is little prospect that the loss of their capacity will be offset by new discoveries. The historic trend is that new discoveries do little more than keep pace with depletion of nongiant fields....Compared to the period between 1940 and 1980, when 70% of the reserves of the largest fields were discovered, the 3 subsequent decades have contributed only 12%, even with the advantage of greatly advanced technology and access to a large portion of the world’s prospective areas. Considering the advanced depletion and large portion of global supply coming from the few giants and supergiants of the world, a sensitivity analysis will identify these fields as the critical variables in the future delivery of oil. The unanticipated decline of the largest fields poses the greatest risk to future delivery, and the loss of their production without replacement or energy alternatives would be economically catastrophic. The contribution of the smaller fields and future additions will not have the capacity to mitigate the significant disruption of the global economy brought on at some point by the decline of the largest fields. Therefore, a widely accepted method of forecasting supply is required.... Continuing to do what has been done before will not secure future global oil deliveries or deploy alternative technology on a large scale. Continued delay makes solutions increasingly difficult. By changing tactics, it is possible to create a world body with the mandate to forecast oil deliverability. The authors have proposed conventional modeling methods that require access to primary data that can reliably forecast future oil supply. Though the World Energy Council has taken tentative steps in this regard, a higher profile body with the capacity to cause appropriate cooperation is warranted. In the US, the Obama administration has the opportunity to take the initiative in calling for such a world body. In addition to the US, the OPEC countries, Japan, China, India, the Euro zone, Brazil, and Russia need to cooperate. Energy industry leaders can raise the level of awareness of the world’s energy peril and the need for a new approach. The inevitable transition from an oil-based economy is one of the greatest global challenges and deserves a similar level of attention to nuclear proliferation, global warming, and the current economic crisis. The stakes are too high to choose inaction or further delay."
Proposition: global effort to model largest oil fields
Oil & Gas Journal, Vol 7, Issue 22, June 2009

"Russian state uranium trader Techsnabexport has said it would sign contracts worth atleast a billion dollars for the supply of low-enriched uranium to a number of major US energy companies before the end of the year. This uranium would be processed from highly-enriched uranium retrieved from nuclear warheads.....Russian state uranium trader Techsnabexport has said it would sign contracts worth atleast a billion dollars for the supply of low-enriched uranium to a number of major US energy companies before the end of the year. This uranium would be processed from highly-enriched uranium retrieved from nuclear warheads. The contracts are being signed under the HEU-LEU contract, also known as the Megatons to Megawatts agreement. Under the provisions of this agreement, signed in February 1993, some 500 metric tons of highly-enriched uranium (HEU), the equivalent of approximately 20,000 nuclear warheads from dismantled Russian nuclear weapons, would be converted into low-enriched uranium (LEU). This would then be converted into nuclear fuel for use in US nuclear reactors. The agreement expires in 2013. Under the contracts signed this week, enriched uranium will be supplied to the US companies from 2014 through 2020."
Megatons to Megawatts: Russia to supply uranium to US companies
domain-b.com, 30 May 2009

"The earth has been shaking for a few days now all across Pipelineistan - with massive repercussions for all the big players in the New Great Game in Eurasia. United States President Barack Obama's AfPak strategists didn't even see it coming. A silent, reptilian war had been going on for years between the US-favored Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and its rival, the Iran-Pakistan-India (IPI) pipeline, also known as the 'peace pipeline'. This past weekend, a winner emerged. And it's none of the above: instead, it's the 2,100-kilometer, US$7.5 billion IP (the Iran-Pakistan pipeline), with no India attached. (Please see Pakistan, Iran sign gas pipeline deal, May 27, 2009, Asia Times Online.) This whole saga started way back in 1995 - about the time California-based Unocal started floating the idea of building a pipeline crossing Afghanistan. Now, Iran and Pakistan finally signed a deal this week in Tehran, by which Iran will sell gas from its mega South Pars fields to Pakistan for the next 25 years. According to Iranian energy officials speaking to the ISNA news agency, the final deal will be signed in less than three weeks, slightly after the first round of the Iranian presidential election. The last 250 km of a 900-km pipeline stretch in Iran between Asalouyeh and Iranshahr, near the border with Pakistan, still needs to be built. The whole IP pipeline should be operational by 2014. The fact that Islamabad has finally decided to move on is pregnant with meaning. For the George W Bush administration IPI was simply anathema; imagine India and Pakistan buying gas from 'axis of evil' Iran. The only way to go was TAPI - an extension of the childish neo-conservative belief that the Afghanistan war was winnable.... Pakistan is the absolutely ideal transit corridor for China to import oil and gas from Iran and the Persian Gulf. With IP in place and with multi-billion-dollar, overlapping Tehran-Beijing gas deals, China can finally afford to import less energy via the Strait of Malacca, which Beijing considers exceedingly dangerous, and subject to Washington's sphere of influence. With IP, not only China wins; Russia's Gazprom also wins. And by extension, the Shanghai Cooperation Organization (SCO) wins. Russian deputy Energy Minister Anatoly Yankovsky told the Kommersant business daily, 'We are ready to join the project as soon as we receive an offer.' The reason is so blatant that Gazprom officials have not even bothered to disguise it. For Russia, IP is a gift-from-above tool in rerouting gas from Iran to South Asia, and away from competing with Russian gas. The big prize, in this case, is the Western European market, dependent almost 30% on Gazprom and the source of 80% of Gazprom's export profits. The European Union is desperately trying to keep the Nabucco pipeline project - which bypasses Russia - afloat, so it may reduce its dependence on Gazprom. But as anyone in Brussels knows, Nabucco can only work if it is provided enough gas by either Iran or Turkmenistan. The Turkmenistan distribution system is controlled by Russia. And a deal with Iran implies no more US sanctions - still a long way away. With IP in place, Gazprom reasons, Nabucco is deprived of a key supply source....As for gas from the Daulatabad fields in Turkmenistan, assuming TAPI ever gets built though war-torn Afghanistan, that's much more unlikely. This all raises the crucial question: how will Islamabad deal with ultra-strategic Balochistan - east of Iran, south of Afghanistan, and boasting three Arabian sea ports, including Gwadar, practically at the mouth of the Strait of Hormuz? The New Great Game in Eurasia rules that Pakistan is a key pivot to both North Atlantic Treaty Organization (NATO) and the SCO, of which Pakistan is an observer. Balochistan de facto incorporates Pakistan as a key transit corridor to Iranian gas from the monster South Pars fields, and not to a great deal of the Caspian wealth of 'gas republic' Turkmenistan. For the Pentagon, the birth of IP is mega bad news. The ideal Pentagon scenario is the US controlling Gwadar - in yet one more prime confluence of Pipelineistan and the US Empire of Bases."
Pipelineistan goes Iran-Pak
Asia Times, 29 May 2009

"Economically viable concentrations of rare earths are known to exist in only a handful of places -- mainly in China, Australia, and North America, with smaller deposits in India, Brazil, Malaysia, and South Africa. China's reserves, which are located mainly in Inner Mongolia and in soft clay ores in southern China, are, by a wide margin, the world's largest. Realizing their strategic significance, Chinese leader Deng Xiaoping said in 1992, 'There is oil in the Middle East; there is rare earth in China.' He clearly understood the West's growing dependence on rare metals for high-tech industries and put China on course to become the world's dominant supplier...A single three-megawatt wind generator (modest, as utility-scale wind turbines go) contains more than a ton of super magnets, more than 700 pounds of which is neodymium. A typical hybrid car, such as a Toyota Prius, contains around 25 pounds of rare earth metals -- mostly lanthanum in its rechargeable battery and neodymium in its drive motor. 'The global annual production of neodymium, essentially all of which is mined in China, is today at an all-time high,' Lifton says. 'There is no surplus -- the existing demand uses up all that's produced each year. So to build more wind turbines and hybrid cars, you'll need more neodymium. Where are you going to get it?'"
Renewing Our Dependence
OnEarth, 28 May 2009

"Texas oilman and former corporate raider and Republican financier T. Boone Pickens brought his plan to slash the United States' dependence on foreign oil to the Mackinac Policy Conference Thursday and seemed to find a mostly receptive audience. In remarks immediately following Gov. Jennifer Granholm's energy remarks. Pickens criticized the United States for not having an energy plan for 40 years, and ever-increasing percentages of American oil being imported from overseas. But he said there had been little leadership on changing that because until recently, 'we had cheap oil. Consequently America was never tasked to look at what would happen if it was cut off from us.' When it comes to oil, Pickens said, 'at some point we are going to have to face the fact that we are the problem.' He said the United States uses 25 percent of the world's oil, despite only having 4 percent of the world's population and 3 percent of its oil reserves, and needs to get its 'appetite in line with the rest of the world.' Pickens also pointed out that America is importing its oil from America-hating nations. 'We are importing oil from Venezuela, and we hear what that guy says about us. Yet we need his oil, one million barrels a day. The Mideast, I don't know who there likes us, dislikes us or hate us, there are countries in all three categories but I would guess not so many like us.' Pickens' solution? A major push toward wind power, along with transforming America's vehicle fleet to electric and compressed natural gas power, along with clean coal and nuclear power. 'I'm for anything that's American,' Pickens said. 'What your governor is talking about, I'm on board.' Pickens said America has abundant natural gas becuase it has developed technology that can convert carboniferous shale into natural gas. It's also easy to convert vehicles, combining to make 'a window of opportunity that we cannot pass up.' He said that without changes, America within 10 years will be importing 75 percent of its oil at $300 a barrel."
Pickens On Mackinac: Natural Gas Plus Wind Equals Less Foreign Oil
WWJ Radio, 28 May 2009

"The International Energy Agency on Wednesday repeated its warning that reduced investment in energy could result in future supply shortages and a new oil price spike in a few years' time. In a report prepared for last weekend's meeting of G8 energy ministers in Rome, the IEA said it saw 'clear evidence' that energy investment across the world would drop sharply this year, with global upstream oil and gas investment budgets already cut by around 21% or almost $100 billion from 2008 levels. 'Between October 2008 and end-April 2009, over 20 planned large-scale upstream oil and gas projects, valued at a total of more than $170 billion and involving around 2 million b/d of oil production capacity and 1 bcf/d of gas capacity, were deferred indefinitely or cancelled,' it said. A further 35 projects, involving 4.2 million b/d of oil capacity and 2.3 bcf/d of gas capacity, had been delayed by at least 18 months, the agency said. IEA chief economist Fatih Birol had already told Platts in a May 20 interview that lower investment as a consequence of the global economic crisis threatened future energy security as well as the effort to combat climate change. The paper prepared for Rome, entitled 'The impact of the financial and economic crisis on global energy investment,' said the sharpest cuts in spending were likely to be focused on exploration. 'It is likely that the upstream industry will reduce spending on exploration most sharply in 2009--largely because the bulk of spending on development projects is associated with completing projects that had already been launched before the slump in prices,' the IEA said. Canadian oil sands projects account for the bulk of the postponed oil capacity, the agency said, with the drop in upstream spending most pronounced in regions with the highest development costs and where the industry is dominated by small players and small projects. 'For these reasons, investment in non-OPEC countries is expected to drop the most. In addition, cuts in spending on existing fields risk pushing-up decline rates,' the IEA said. The agency said falling investment would have 'far-reaching and... potentially grave effects on energy security, climate change and energy poverty.' It said cutbacks on infrastructure spending 'will only affect capacity with a lag, often amounting to several years,' so that the current demand weakness was likely to see spare production capacity increase in the near term."
IEA repeats warning of possible new oil price spike
Platts, Petroleumworld, 27 May 2009

"Global energy demand is expected to soar 44 percent over the next two decades with most of the demand coming from developing countries such as China and Russia, the U.S. government's top energy forecasting agency said on Wednesday. The worldwide economic downturn has hit energy consumption, but an expected recovery next year could respark demand and boost prices, the Energy Information Administration said in its new forecast. U.S. oil prices are forecast to rise from an average $61 barrel this year to $110 in 2015 and $130 in 2030. Oil prices 'begin to rise in 2010-2011 period as the economy rebounds and global demand once again grows more rapidly than non-OPEC liquid supply,' EIA acting administrator Howard Gruenspecht told a news conference. Global oil demand is expected to rise to 107 million barrels per day over the next two decades from nearly 84 million bpd this year. Oil will account for 32 percent of the world's energy supply by 2030 from about 36 percent in 2006. Almost 75 percent of the rise in global energy demand through 2030 will occur in developing countries, particularly China, India, Russia and Brazil, the agency said...The EIA's report also found that global natural gas demand will increase by almost 50 percent to 153 trillion cubic feet. The agency said that unconventional natural gas production, particularly from gas shale, will make the United States 'virtually self sufficient in natural gas supply in 2030.'"
Global energy demand seen up 44 pct by 2030-EIA
Reuters, 27 May 2009

"It may seem a strange idea in the region of the world that is richest in hydrocarbons, but it is one that has been raising increasing concerns: the possibility of a critical gas shortage in Middle East. The countries of the region, particularly the wealthy Arab Gulf states, have one of the fastest growing rates of energy demand, as populations swell and the accumulation of petrodollars during the recent oil boom has driven rapid economic expansion. But they are finding to their cost that, after years of focusing on oil production, too little attention was paid to gas, which is now needed for power generation, desalination plants and to provide feedstock to the energy-intensive industries they have been seeking to lure. By some estimates, the cumulative supply shortfall for the six countries of the Gulf Cooperation Council up to 2015 will be at least 7,000bn cubic feet. Of the GCC members – Saudi Arabia, Qatar, Kuwait, Oman and Bahrain – only Qatar, which has the world’s third largest proven gas reserves and the largest natural gas field, can avoid the problem. The recent economic slowdown, which has caused a swathe of projects to be put on hold, will alleviate some of the short-term pressures. But, experts say, the medium and long-term outlook remains critical. 'The long-term issue of ensuring adequate gas supplies to fuel growth has not gone away,' says Rajnish Goswami, an analyst at Wood Mackenzie, the consultants. 'We see, with the exception of Qatar and Iran, every other country in the region facing challenges in ensuring supply growth.' Qatar is already piping 2bn cu ft a day to the United Arab Emirates, and is expected to provide around 1m tons of LNG to Dubai from 2010, analysts say. Kuwait has also been in talks with Qatar over gas imports, while Bahrain has been in discussions to buy gas from Iran – in spite of concerns from the US. Yet, neither Qatar nor Iran will necessarily provide answers to their neighbours’ predicament. Qatar has a moratorium in place on new projects in its North Field that is expected to remain until at least 2013 while a study is conducted into the reservoir. And even when it is lifted, there will be no guarantees that Qatar will look to the region. When recently asked if Qatar would be under pressure to help meet gas demand from its neighbours, Abdullah bin Hamad al-Attiyah, the energy minister, was straighttalking. 'If this study [in the North Field] shows we can produce more gas, then we will put this gas in a judgment where we should use it. Then we will see what is the added value, what is the best for us to sell it in the region or convert it to LNG or GTL,' Mr Attiyah says. 'At the end of the day I am concerned about what is the best revenue for the country,' he explains. 'I’m not in a social security game. I’m business-oriented here and we will see.' Iran is unlikely to provide a solution in the near future, because of global and regional politics. Observers believe that Bahrain’s discussions with Iran are in part designed to get its key allies, the US and Saudi Arabia, to press Qatar to help Manama meet its demand. Mr Goswami says Gulf policymakers are aware of the gas issue, but warns that much needs to be done. 'In our view, the steps that have been taken may be adequate in terms of near- to mid-term planning, but, on a 10-year view, the supply challenge is pretty enormous and more still needs to be done,' he says. Gulf countries, including Saudi Arabia, the UAE and Kuwait, already burn fuel for power generation, and they are expected to have to divert more oil to domestic use rather than exports. This creates an opportunity cost, has impact on global supply and an obvious environmental effect. Saudi Arabia has been boosted by discoveries in the Karan field – its first non-associated offshore gas discovery – which it hopes will produce 1.8bn cu ft a day. Contracts for the field’s development were awarded this year. But a second project involving international companies in the Empty Quarter has yet to produce discoveries, and experts warn that gas shortages will become a serious issue for the kingdom. 'It will not be an issue for the next couple of years,' says John Sfakianakis, chief economist at SABB Bank. 'But if they continue to build like this, develop industry and do not become more efficient and do not find more gas, it will become a crisis.'”
Middle East: Oil-rich region faces gas shortfall
Financial Times, 26 May 2009

"The next generation of nuclear power stations will not be built unless the Government steps in with financial assistance, the head of the UK's biggest nuclear generator has warned. Energy companies fear generous subsidies for wind farms will make investing in new reactors risky and might not bother. Vincent de Rivaz, UK boss of power giant EDF Energy, said in a newspaper interview that a 'level playing field' had to be created to make building the power stations attractive. His comments are an embarrassment to Energy Secretary Ed Miliband, who recently promised that the new generation of nuclear plants could be achieved without subsidy. The Government announced in April it had identified 11 potential sites for the new power stations....EDF is also worried that incentives for wind power will lead to so many wind farms that nuclear power stations will have to be shut down at times, jeopardising their chances of making a profit. The new generation of nuclear power stations are intended to maintain Britain's ability to generate its own energy after existing nuclear and coal-fired stations are shut down. The first station could go live in 2017. While critics warn that the move could mean a Ł75billion clean-up bill to deal with the waste produced by the new facilities, there is hope that the planned stations will bring jobs. A spokesman for EDF Energy was unable to comment."
Subsidise nuclear power stations or they won't be built, energy giant warns ministers
Daily Mail, 26 May 2009

"Russia's state uranium trader said on Tuesday it would sign a landmark deal to supply uranium directly to U.S. utilities, including PG&E Corp (PCG.N), from 2014. Russia's Techsnabexport (Tenex) said it would sign the deal on Tuesday with a structure partly created by Californian utility Pacific Gas and Electric Co, a unit of PG&E Corp (PCG.N), and two other partners, which were not identified. 'The contract we are signing today comes into force immediately,' Tenex CEO Anatoly Grigoryev told reporters. 'Supplies will start from 2014. Russia, one of the world's biggest sellers of uranium enrichment services, currently sells the United States only uranium recovered from dismantled Russian nuclear weapons under a programme known as 'megatons to megawatts'. Those sales are carried out through U.S. uranium trader USEC Inc (USU.N). All other sales of uranium to U.S. companies have been subject to U.S. anti-dumping measures but Moscow and Washington signed a deal last year to allow direct sales to other U.S. firms. Tenex is a unit of Russia's state atomic company, Atomenergoprom, one of the world's biggest players on the nuclear market."
Russia to sell uranium directly to U.S. utilities
Reuters, 26 May 2009

"The site, at Whitelee on Eaglesham Moor, has cost ScottishPower, its developer, Ł300 million, but this is a tiny fraction of what will be required to upgrade Britain's power network. According to Ernst & Young, the total cost of doing so and meeting tough targets to cut carbon emissions by 34 per cent by 2020 will be no less than Ł233.5 billion. Although some of that burden is likely to be shared with power companies, the figure, divided among the UK's 26million households, implies a total bill of up to Ł8,977 each — or Ł598 a year for the next 15 years. Tony Ward, power and utilities partner at Ernst & Young, said that about half of the total, or Ł112 billion, will need to be spent building new supplies of renewable energy, including vast new offshore wind parks - each many times the size of Whitelee — as well as biomass-fired power stations, tidal and wave-energy projects. Britain must also renew almost all of its ageing nuclear power plants, which account for about 20 per cent of the country's electricity supply, a project that is expected to add Ł38.4 billion to the cost. A further Ł28 billion or so will have to be poured into the grid to build a transmission network capable of supporting new reactors and remote wind parks sited as far north as the Shetlands and in the North Sea. This excludes the cost of building new coal-fired stations equipped with carbon capture and storage technology (CCS), bolstering the UK's gas storage facilities, new gas-fired power plants and a rollout of “smart meters” in every home and business in the country. Steve Holliday, chief executive of National Grid, whose company will be at the centre of this effort, said: 'It's very clear from the renewables and new nuclear stations being planned that there is going to be a need for a substantial increase in investment to build a modern, 21st-century grid.' He expects National Grid alone to spend up to Ł5 billion a year from 2012 and he is already drawing up plans for a network of seabed cables feeding renewable electricity from Scotland to consumers in the South, as well as sweeping reinforcements to conventional high-voltage lines that criss-cross the country....Ernst & Young's figures might underestimate the total expense because they do not include regular maintenance costs, Mr Marchant said, suggesting that a figure of Ł300 billion could be closer to the mark. However, he is optimistic that dramatic improvements in energy efficiency could mean that consumer bills will remain stable or even fall in the long term. The fear is that in Britain's liberalised energy market this tidal wave of required investment simply will not materialise. Dr Lowrey believes that, under its current structure — which relies on market forces plus consumer-funded incentives designed to boost investment in renewable energy — the scale of investment needed is unlikely either to meet expectations or to be allocated in the way that the Government or society wants. It is a concern that has been compounded in recent months by a collapse in funding that has accompanied the credit crunch and the plunging value of the pound, forcing up the cost of imported power-generating equipment. The falling prices of oil, coal and gas have also undermined the economic rationale of many investments in more costly, alternative forms of energy. 'There is a need for greater intervention to make this investment a reality,' Dr Lowrey said. 'We need a guiding hand from government.'”
Whitelee's wind of change merely heralds stormy debate
London Times, 25 May 2009

"Britain has signed up to an ambitious EU plan to generate 35 per cent of its electricity from renewable energy, such as wind and wave power, by 2020 — a dramatic increase from today's figure of less than 5per cent. Many in the industry doubt that this target is achievable, given the funding and planning wrangles faced by the wind developers and the complexity of linking schemes to the National Grid. Nevertheless, the Government is pushing hard for as many of these schemes to be built as possible. Meanwhile, a host of new gas-fired power stations is also on the way. The share of Britain's electricity produced by burning gas has already risen from 2 per cent in 1992 to 35 per cent. The figure is expected to rise further, with gas-fired plants under construction at Pembroke in West Wales, the Isle of Grain in Kent and Langage, outside Plymouth. Cheap and relatively quick to build, they may emit carbon but tend not to stoke the public ire against new coal plants. However, they do raise other problems. With domestic supplies of North Sea gas being depleted fast, the UK is becoming increasingly reliant on imports of the fuel from countries such as Russia, Qatar and Algeria, a trend that has raised concern about UK energy security."
Striking a balance between urgency, climate change and energy security
London Times, 25 May 2009

"Russia, already a large supplier of nuclear-reactor fuel to Europe and Asia, is expected on Tuesday to sign its first purely commercial contract to supply low-enriched uranium to United States utilities. With the signing, Russia’s nuclear-fuel trade with the United States will shift to a commercial footing, similar to Russia’s dealings with other consumers of fuel, like France and the Netherlands, both longtime buyers of Russian uranium. For the United States, the change is a sign that Washington is acquiescing to the idea of a major Russian role not only in the international nuclear power market, but also in the domestic market. Russia’s outsize role in supplying uranium to American utilities had previously been justified because the fuel was a byproduct of a program to eliminate nuclear weapons. Now the Russians will be selling nuclear fuel from virgin uranium. Yet the contract signing, after North Korea’s nuclear test on Monday, also underscores a counterintuitive element of American nonproliferation policies. The policy of buying diluted, or blended-down, Russian weapons-grade uranium yielded a clear nonproliferation benefit. The new mode — of having the Russians enrich new uranium for United States markets — is not directly beneficial for nuclear security because it does not remove weapons-grade uranium from stockpiles....Techsnabexport, the Russian state company that exports low-enriched uranium, is expected to sign the contract in Moscow with a consortium of American nuclear companies. Techsnabexport declined to identify its American partners or the size of the contract on Monday. The new contract is separate from a program to dilute surplus weapons uranium into civilian fuel for use in American reactors. Under that so-called megatons to megawatts program, begun in 1993, Russia is already the largest supplier of enriched uranium to American utilities and provides about half of all uranium consumed in civilian reactors in the United States. Yet Russia has been prohibited from selling directly to the utilities by provisions of American law to prevent dumping at below-market prices, and it was compelled to deal only through a monopoly importer, the United States Enrichment Corporation....In a negotiated settlement in February 2008, the United States agreed to allow Russia to sell low-enriched uranium directly to domestic utilities without the involvement of the enrichment corporation. But all sales of diluted weapons uranium will still go through the corporation. A spokeswoman for the company said the initial direct Russian sales will be small and will not harm its business. Nuclear reactors run on uranium that is composed of 3 to 5 percent uranium 235. In nature, uranium is only 0.7 percent uranium 235. Uranium used in weapons and in the reactors that power nuclear submarines use more than 90 percent uranium 235. “Enrichment” means raising the proportion of 235 compared with the dominant type, 238, and the Russian industry was set up to provide large volumes of high-enriched uranium for weapons and marine reactors."
Russian Uranium Sale to U.S. Is Planned
New York Times, 25 May 2009

"The world may witness a new crude oil price spike in two to three years - potentially worst than a peak of $147 a barrel seen last year - if oil producers don't invest enough, Saudi Arabia's oil minister said Monday. The world's largest oil producer is the latest to warn about the risk associated to under-investment after the International Energy Agency, which represents energy consumers, voiced similar concerns. Speaking at a G8 Energy ministers summit in Rome, Saudi oil minister Ali Al- Naimi said his country is 'continuing to invest now in both the upstream and downstream to help ensure an uninterrupted supply of energy when the global economy recovers.' But 'if others do not begin to invest similarly in new capacity expansion projects, we could see within two to three years another price spike similar to or worse than we witnessed in 2008,' he added."
Saudi Oil Min: Price Spike In 3 Yrs If Investment Lags
Dow Jones Newswires, 25 May 2009

"The Organization of the Petroleum Exporting Countries (OPEC) meets on Thursday to review its oil supply policy. The group has already pledged to curb output by 4.2 million barrels per day (bpd), around 5 percent of global supply, since September to match the sharpest fall in demand since 1981....Oil stocks stand at around 62.4 days of forward cover, the most since 1993 according to the International Energy Agency (IEA) and around 10 days more than OPEC considers comfortable. More than 100 million barrels of oil is estimated to be stored on tankers at sea....The rally in oil prices to a six-month peak of more than $60 a barrel, from a low of $32.40 shortly after OPEC last cut output in December, could encourage higher, rather than lower, production from less disciplined OPEC members....Apart from oil producers' dependence on oil revenues, OPEC -- as well as international oil companies -- have consistently said prices of around $75 a barrel are required to ensure new production is brought onstream. Of 165 planned projects between now and 2013, OPEC has said it has delayed 35, although it has not specified which ones. While the biggest international oil companies, such as Exxon Mobil, have said they have continued to invest through the downturn, others have abandoned more costly oil production projects and the International Energy Agency has said oil prices could surge after demand recovers."
OPEC meets to decide supply policy
Reuters, 25 May 2009

"When oil collapsed more than 70 per cent from its July 2008 record high, many major oil firms slashed their exploration budgets because the lower prices did not cover the expenses of today's high-cost reserve plays. The worldwide credit scarcity didn't help. In nations within the Organization of Petroleum Exporting Countries (OPEC), as many as 35 new projects have been delayed to 2013. About $100 billion worth of Alberta tarsands expansion projects are on hold....Officials at the International Monetary Fund are especially concerned about the impact of an oil-price rebound on impoverished economies. They regret that the current period of lower drilling costs was not seized upon as an opportunity to get long-term projects underway. 'The lower that oil prices drop now the greater the negative impact on future supply,' John Lipsky, first deputy managing director of the IMF said at an OPEC summit in Vienna in March. As oil prices were peaking last spring, Yergin's firm was projecting an increase in world oil capacity to 109 million barrels a day. The subsequent 'capital strike' by exploration companies has forced Yergin to revise that figure down to a current 101.4 million barrels a day. That's a "squeeze" scenario similar to the recent years of escalating prices, when the gap between supply and demand became been razor-thin. French oil producer Total S.A., one of the few companies to maintain an aggressive exploration program, including efforts to build a large presence in the Athabasca tarsands, is gloomier still. Christophe de Margerie, Total's CEO, said the proliferation of project cancellations means the world's producers will be struggling by the middle of the next decade to keep supply at even 90 million barrels a day."
Is $100 oil coming soon?
Toronto Star, 25 May 2009

"Imperial Oil Ltd (IMO.TO) on Monday said it would go ahead with its C$8 billion ($7.1 billion) Kearl oil sands project, the first major new development to be approved in the region of northern Alberta since the recession forced a spate of cancellations. Imperial, Canada's biggest oil exploration and refining firm, said it expects to complete the project's first 110,000 barrel per day stage by late 2012."
Imperial to go ahead with C$8 bln Kearl project
Reuters, 25 May 2009

"Falling energy investment will have far-reaching and, depending on how governments respond, potentially grave effects on energy security, climate change and energy poverty. Cutbacks in investment in energy infrastructure will only affect capacity with a lag, often amounting to several years. So, in the near term at least, weaker demand is likely to result in an increase in spare or reserve production capacity. But there is a real danger that sustained lower investment in supply in the coming months and years, could lead to a shortage of capacity and another spike in energy prices in several years time, when the economy is on the road to recovery. The faster the recovery, the more likely that such a scenario will happen.... These concerns justify government action to support investment in energy efficiency and clean energy. Many countries recognise this: a small but significant share of the additional public spending in short-term economic stimulus packages announced to date (about 5% of a total of $2.6 trillion) is directed at energy efficiency and clean energy – either direct investment or fiscal incentives for low-carbon power technologies and the development and commercialisation of more energy-efficient end-use technologies. These moves are a positive step in the right direction, potentially killing three birds with one stone: tackling climate change, enhancing energy security and combating the recession. But much more needs to be done. The investment needed to put the world onto an energy path consistent with limiting the rise in global temperature to around 2C far exceeds the additional investments that are expected to occur as a result of the stimulus packages so far announced. Our analysis suggests that, relative to their recent announcements, governments should be looking to increase the level of new funds they commit to energy efficiency and low-carbon energy policies by a factor of around four. And, at a minimum, this level of investment would have to be sustained each and every year for decades to come. The IEA, therefore, encourages world leaders attending the 2009 G8 Summit under the Italian Presidency to push for such action on a global scale – a Clean Energy New Deal – to exploit the opportunity the financial and economic crisis presents to improve energy efficiency and effect a permanent shift in investment to low-carbon technologies including carbon capture and storage. This must be seen as a long-term commitment that extends well beyond the limited time horizon of the economic stimulus packages."
The Impact of the Financial and Economic Crisis on Global Energy Investment
IEA Background Paper For The G8 Energy Ministers' Meeting 24-25 May 2009

"The UAE, which has got an approval from the United States to proceed with its nuclear plans, is expected to have its first nuclear reactor completed by as early 2015, making it the first operator of a nuclear plant in the region, experts told Emirates Business....Mahmoud Nasreddine, Advisor to the Secretary General of the League of Arab States expects the first plant to be completed by early as 2015. This is substantially shorter as the IAEA guidelines calls for about 10 to 15 years of planning, preparation and execution, before a nuclear power plant is online. On March 23, 2008, the UAE became the first country to approve nuclear plans although on the next day, Bahrain also penned a deal with the United States to co-operate on a civil nuclear power. The US State Department held out the deals as model for nations seeking to to meet their energy needs and cut their greenhouse gas emissions....One of the UAE's fast-tracking measures was its voluntary renunciation of its rights to enrich uranium under the non-proliferation treaty (NPT)....Nasreddine, said the UAE government's decision to adopt a nuclear option is based on the rapid increase in demand for electricity and fresh water. He said as many as 2,300 nuclear scientists, technicians and support staff will be needed to run the UAE's proposed three-reactor civil nuclear programme....In the past, Arab countries, especially oil-rich countries have not been in favour of electricity generation by nuclear energy. Such option has been excluded due to the abundance of cheap fossil fuels. 'As they undergo economic growth, their needs for fresh water and electricity increased. Decision makers are obliged to consider their energy strategies and to agree on different available options – nuclear and renewable energies,' Nasreddine said."
UAE to have first Arab nuclear power plant in 2015
Emirates Business 24/7, 24 May 2009

"OPEC has announced three separate rounds of production cuts since September in a bid to steady prices. In all, it has vowed to trim its output by 4.2m barrels a day (b/d). That leaves them with as much as 6m b/d of spare capacity. Despite this growing glut, however, the price of oil has been rising steadily in recent weeks (see chart 2). On Wednesday May 20th it closed above $60 a barrel for the first time in more than six months. That marks an increase of more than 75% since February. The price of futures contracts suggests that energy traders see the price rising higher still in the coming months and years. (During the day on Friday it appeared to be nearing $62 a barrel.) The explanation is simple. Oilmen are worried because they believe that many of the factors behind the record-breaking ascent last year remain in place. Much of the world’s 'easy' oil has already been extracted, or is in the hands of nationalist governments that will not allow foreigners to exploit it. That leaves firms to hunt for new reserves in ever more inhospitable and inaccessible places, such as the deep waters off Africa or the frozen oceans of the Arctic. Such fields take a long time and a lot of expensive technology to develop. Worse, new discoveries tend to be smaller than in the past and to run dry faster. So oil firms must work doubly hard to replace declining fields and to increase output. Yet the oil industry is short of equipment and manpower, thanks to underinvestment in the 1980s and 1990s, when prices were low. As soon as the world economy starts growing again, the theory runs, demand for oil will once again outstrip the industry’s ability to supply it. In other words, the global recession has only interrupted the 'supercycle' of which many analysts used to speak, during which the normal boom-and-bust cycle of oil and other commodities would give way to a protracted period of high prices, as ever-growing demand from emerging markets swallowed everything the extractive industries could produce. Oil bosses, OPEC ministers and anxious bankers all agree on what is needed to prevent this scenario becoming reality: lavish investment in the development of new fields and in exploration. Yet the reverse is happening. The oil industry is cutting its spending, bringing fewer new fields into production and exploring less. The International Energy Agency reckons that overall investment will drop by 15-20% this year....Saudi Aramco, the world’s biggest oil producer, recently completed a five-year scheme to expand its production capacity from 10m b/d to 12.5m b/d, at a cost of $70 billion. But in Russia, the world’s second-biggest oil producer, output is falling largely because private capital has been scared off by a series of expropriations, while the state starves the firms it controls of sufficient cash for investment. And most oil-rich states, naturally enough, are happy to see the price rise. Many have become used to bumper revenues in recent years and have struggled to balance their budgets since the price slumped last year.....there is little sign that governments are willing to grant oil companies easier access to the most promising territory for exploration. Iraq’s plans to sign big new contracts with foreign firms are years behind schedule, as is its new oil law. American sanctions continue to impede investment in Iran. The Nigerian government has been unable to quell the insurgency in the Niger delta, making it difficult for oil firms to operate there. Even in America, despite years of debate, most coastal waters and much of Alaska remain off-limits to drilling. So when demand begins to revive, a sharp rise in prices is inevitable. That does not mean that a price spike is just around the corner, however. The speed with which it arrives will depend on the strength of the global recovery."
The oil price: Bust and boom
The Economist, 23 May 2009

"Europe's economic slowdown has led to a collapse in demand for natural gas, while January's crisis has triggered a new push by EU states to find alternatives to Russian imports. Added to that, many industry analysts are revising down their long-term projections for natural-gas use in Europe, with far-reaching implications for Russia's resource-based economy. 'The days of high growth rates for European gas consumption are surely over,' Bernhard Reutersberg, chief executive of German energy company E.ON Ruhrgas AG, told a conference in Berlin this week....As oil and gas prices rose, Gazprom's ambitions grew. It talked of increasing its share of the European gas market from 25% to a third by 2015. Last summer, it boasted it would be the world's most valuable company by 2015, with a capitalization of $1 trillion. But as recession demolished Europe's appetite for gas, Gazprom's fortunes turned. IHS Global Insight says it expects gas demand in Europe to fall nearly 10% this year. Gazprom has responded by slashing production: Output fell 28% in April, to the lowest level in a decade. Gazprom's market cap is now around $85 billion. 'The bottom line is Gazprom's revenues will fall 30-40% this year,' said Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies. 'We've never had a decline in demand as dramatic as this.' Gazprom's exports should start to rise again later this year. The gas price in its long-term supply contracts is linked to the price of a basket of oil products, but with a six-to-nine month lag -- so the price Gazprom charges its customers will fall sharply in a few months' time. Many of them are delaying purchases till then. But the gas monopoly could find itself under pressure from customers to renegotiate some of those traditional long-term contracts, especially as alternative sources of gas emerge. A huge wave of liquefied natural gas from countries like Qatar will hit global markets over the next two years, much of it finding its way to Europe. Many analysts expect rising competition between LNG supplies and pipeline gas in the years to come. 'If the global recession lasts, or the recovery is slow, the market will be awash with LNG,' says Pierre Noël of EPRG, an energy research group at Cambridge University. 'The timing couldn't be worse for Russia.'"
Russia Faces Uncertain Times Selling Natural Gas to Europe
Wall Street Journal, 23 May 2009

"Mexican oil exports plunged 18.2% in April to levels unseen since 1990 outside hurricane seasons, in more grim news for a key economic motor relied on for a major chunk of government revenues. Crude export volumes tumbled to 1.177 million barrels per day as yields at Mexico's aging Cantarell field continued to plummet, state oil monopoly Pemex said today. Oil production declined 4.2% year-on-year to 2.642 million bpd in April, the fourth month in a row that it has been below a targeted level of 2.7 million bpd, according to a Reuters report....Mexico is a top three oil supplier to the United States but production has declined steadily since 2004 as the country struggles to replace capacity lost at Cantarell. The United States risks becoming more dependent on less politically stable sources of oil as Mexico's output dwindles. Cantarell, which was pumping more than 2 million bpd in 2004, yielded only 713,000 bpd in April, down more than 35% from a year ago, according to energy ministry data. The latest fall at Cantarell was partially offset by increased output at the nearby Ku Maloob Zaap offshore heavy oil field. Ku Maloob Zaap, which recently overtook Cantarell as Mexico's biggest producer, yielded a record 814,000 bpd in April, near the maximum 820,000 bpd Pemex thinks it can produce. Output at Ku Maloob Zaap is expected to begin to decline to 810,000 next year, however. Pemex has vowed to end this year with oil output at 2.7 million bpd. Executives say meaningful increases in production from the Chicontepec onshore project starting in July should reverse the trend of declining output in the first half of the year. Analysts remain skeptical that Pemex will be able to achieve its production goals at Chicontepec, where billions of barrels of crude oil are tightly locked in isolated geological formations, making oil production costly and challenging."
Mexico oil exports plummet
Upstream Online, 21 May 2009

"What do you get from an Austrian, a Hungarian, a Kurd and two Emiratis? If you believe in the deal signed at the weekend between OMV, the Austrian energy group, MOL, its Hungarian neighbour, the Sharjah-based Crescent Petroleum and Crescent’s affiliate Dana Gas, you get the most important energy project to come out of Iraq since the removal of Saddam Hussein. With luck and a following political wind, the $8 billion (Ł5 billion) investment by Pearl Petroleum in Kurdish Iraq could be the most significant since the discovery of oil at Kirkuk by the Iraqi Petroleum Company in the 1930s. It could equally well be sunk by squabbling Baghdad politicians, dysfunctional ministers in Brussels and bellicose generals in Ankara. That would be a pity, because the Pearl partners have a plan to extract gas from Khor Mor and Chemchemal, two giant fields in Kurdish Iraq, and pipe it across the Turkish border. From there, the gas would be carried by Nabucco, an as-yet-unbuilt European Union flagship pipeline, into Central Europe. This may be the last chance for Nabucco, a project to bring Central Asian and Middle Eastern gas into Europe that has been on the drawing board for seven years. Last week, Gazprom, arch-foe of Nabucco, was trumpeting a deal with Eni, the Italian energy group, that would double the size of South Stream, a rival pipeline project that would bring Russian gas across the Black Sea and into the Balkans, avoiding troublesome transit through Ukraine. Until Sunday, Nabucco’s prospects seemed bleak. Backed by the former Bush Administration, as well as by Brussels, Nabucco has been a pipeline seeking a gasfield. One by one, initially enticing gas reserves in Central Asia vanished as geopolitics and geography intervened. Turkmenistan grew tired of talk about trans-Caspian pipelines and looked to China for an alternative customer. After years of debate and the sight of Russian tanks entering Georgia, Kazakhstan and Azerbaijan decided that discretion and Gazprom’s offer of a better gas price were better than valour and a speculative deal with Nabucco’s partners. Until Sunday, there was no other supplier bar Iran, still a bridge too far. Iraq’s gas reserves are unknown, but sure to be big. The old regime never bothered to develop its gas. There are small gas recovery projects in the south and Shell is toying with a plan to win gas from the Kirkuk oilfield. The Pearl partners reckon that their two fields alone could deliver three billion cubic feet a day into pipelines heading north, equal to a third of UK daily consumption. Swift to protest, the Oil Ministry in Baghdad denounced the deals, insisting that Kurdish Iraq could not export gas without central government consent. There is jealousy in Baghdad over the upstart Kurdish regional government’s success in developing an independent oil industry. Baghdad initially blustered over exploration licences for tiny foreign explorers in Kurdistan, arguing that the Kurds were giving away too much oil profit to foreigners. But a fortnight ago, Baghdad granted export licences for two Kurdish projects. Meanwhile, impatience with the failure of Iraq’s central government to bring oil output to even the levels before the 2003 invasion is turning to anger. A petition signed by 140 Iraqi MPs last week criticised the Oil Ministry. The mood is also changing in Ankara, where Turkish distrust of Kurds is giving way to realpolitik and business deals. Turkey’s Government wants stability in Iraq, but also aspires to the role of Europe’s eastern energy hub. In a future Iraq, without the iron glove of American security, the Kurdish region is an oil and gas prize, lonely, unprotected, bordered by a hostile Iran and a chaotic cauldron to the south and west. If not Turkey, who will protect Kurdistan?"
Old enmities are put aside in fight for gas
London Times, 20 May 2009

"The Obama administration plans to set tougher fuel economy and emissions rules for car manufacturers in a move likely to please environmentalists but add to the industry’s challenges. A senior administration official on Monday said that the new plan would bring 'historic levels of fuel efficiency', introducing the first rules designed to reduce carbon emissions from cars and accelerating by four years an existing plan for new vehicles to achieve an average of about 35 miles per gallon by 2020. The corporate average fuel economy standard, which was first introduced in 1975 as a response to the oil embargo imposed on the US by Arab oil producers, had been due to rise from 25.3mpg today to 35mpg by 2020 but the new efficiency target would rise to 35.5mpg between 2012 and 2016."
Obama to unveil tough fuel rules for cars
Financial Times, 19 May 2009

"In the post-war years, there has been a clear link between oil prices and global growth: the long boom of the 1950s and 1960s was an era when crude was dirt cheap; all four major recessions (1974-75, 1980-82, 1990-92 and 2007 to now) followed a spike in oil prices. The last trough in oil prices occurred at the end of the 1990s, coinciding with the dotcom bubble and talk in the US of the new paradigm economy. Since then, the trend has been inexorably up, with supply struggling to keep up with strong demand from the mature markets of the developed world and the big emerging economies such as China and India. Chris Sanders, of Sanders Research Associates, traces the origins of the current crisis back to the turn of the millennium, when the fall in production from the big finds of the late 1970s – Alaska, deepwater Mexico and the North Sea – ended the era of cheap oil. A serious recession in the wake of the dotcom bubble was only averted because policymakers – Alan Greenspan in particular – manipulated interest rates to create another unsustainable boom. This did not mean the problem had been solved; indeed, putting it off for another day simply meant the problem grew bigger. Seen from this perspective, what we are witnessing is not the early stages of a new bull market, but a temporary lull in a much longer crisis that will see recovery hampered by high and volatile energy prices. Indeed, the volatility of crude over the coming years is likely to be as damaging as the fact that fuel will be becoming steadily more expensive....Price signals do matter, and oil companies are far more likely to beef up their spending on exploration and new refineries if the oil price is $100 a barrel than if it is $10 a barrel. That's the good news. The bad news is that even if the peak oil sceptics are right and there is plenty of untapped crude in the South Atlantic, Canada's tar sands or Central Asia, it is going to be more expensive to extract it. Oil has been critical to the development of industrial societies but energy firms, unsurprisingly, went for the oil that was easiest to get at and of the highest quality, since that meant low extraction costs and high profits. In other words, the energy required to get fuel out of the ground was small; the energy return on energy investment (EROI) was high. But as companies have moved to tougher environments, the EROI on oil and gas production has fallen – one estimate is from 33:1 in 1999 to 19:1 in 2005. This global trend mirrors what happened in the US, where oil is still produced in large quantities but much less efficiently than it was 75 years ago. From an estimated 100:1 in 1939, the EROI for American oil production dropped to 30:1 by 1970 and 11:1 in 2000. As Sanders puts it: 'Today we are attempting to extract oil and gas in commercially viable quantities from offshore deposits that lie under more than 25,000 feet of water, rock and hot salt. It may well be possible to do so, but what is highly unlikely is that it will be possible to do so in sufficiently large flows to make a material difference to general prosperity. Another way of putting this is that economic growth rates are going to have to slow.' On the basis of what has happened in the recent past, we are likely to see oil prices on an upward trend but with wild gyrations. Frequent oil spikes when the global economy appears to be on the mend will be followed by a crash in prices as the impact of dearer energy raises business costs and bites into consumer spending power."
Brain power can meet the energy crisis
Guardian, 18 May 2009

"A group of retired senior U.S. military officers has concluded that the country's reliance on fossil fuels undermines its capacity to defend itself. Citing a 'serious and urgent threat to national security,' the group has urged the Pentagon to take the lead in shifting to a new age in energy. The dependence on oil-based fuels left the U.S. military seriously over-extended in Iraq and Afghanistan, according to the officers' report, issued on May 18 by CNA, a military think tank based in Alexandria, Va. The 62-page report asserts that the true cost of fuel, including logistics and the military protection of sea lanes, can run to hundreds of dollars a gallon. 'Our energy posture is not sustainable. It can be exploited by those who want to do us harm,' retired Air Force Lieutenant General Larry Farrell, a co-author of the report, said in an interview. Finding a suitable alternative fuel and scaling it up to the size of the U.S. economy 'is a 30-year project,' Farrell said. 'We've got to get started now.' The report, called 'Powering America's Defense: Energy and the Risks to National Security,' was written by CNA's military advisory board, comprised of 12 retired generals and admirals. It's a follow-up to a 2007 report by the advisory board called 'National Security and the Threat of Climate Change.'...Jim Jones, President Barack Obama's national security adviser and a former marine general, is expected to create a new senior slot on the National Security Council for global energy."
U.S. Reliance on Oil an 'Urgent Threat'
Steve LeVine, Business Week, 17 May 2009

"The Jordanian government on Sunday signed an agreement with Royal Dutch Shell for the exploitation of the country's huge oil shale reserves. The accord, which could involve an eventual multi-billion-dollar investment, was signed by the Minister of Energy and Mineral Resources Khaldoun Qteishat and Shell's Vice Chairman Malcolm Brendid. Under the agreement, Shell pledged to spend 540 million dollars in the course of preliminary exploration operations, which could take at least 10 years before commercial production begins, Qteishat said. The concessionary agreement will cover about 22,000 square kilometres and involves four stages at the end of which Shell will evaluate the outcome of its operations and decide whether to proceed to the next stage or halt the project, Maher Hijazin, director of the natural resources authority said. 'If Shell completes all stages it could arrive at a marathon project involving an investment of multi-billion dollars, whereby the country will not only reach self-sufficiency in energy but becomes an exporter of oil,' he added. Jordan currently imports more than 95 per cent of its energy needs, estimated at about 110,000 barrels of oil per day, from Saudi Arabia at market prices. Official estimates put Jordan's oil shale reserves at about 40 billion tons."
Jordan signs accord with Shell for oil shale exploitation
Deutsche Presse Argentur, 17 May 2009

"Russia and Italy agreed on Friday to increase the capacity of the planned South Stream gas pipeline under the Black Sea, in a move that will intensify concerns about the European Union’s reliance on Russian supplies. The South Stream project is intended to open a new route for Russian gas to reach the west, avoiding Ukraine. Disputes between Russia and Ukraine have disrupted Europe’s gas supplies, most seriously in January this year when 20 countries suffered shortages. Vladimir Putin, the Russian prime minister, and Silvio Berlusconi, his Italian counterpart, oversaw a deal between Gazprom, the Russian gas export monopoly, and Eni of Italy to double South Stream’s capacity to 63bn cubic metres a year – enough to supply more than four-fifths of Italy’s total gas consumption. Paolo Scaroni, Eni chief executive, said South Stream would improve Europe’s energy security. 'What is the meaning of this capacity extension of South Stream? It means 1bn cubic meters more here will be 1bn cubic meters less gas crossing Ukraine.' South Stream is a rival to the Europe-backed Nabucco project to bring Caspian gas to Europe across the Caucasus and Turkey, easing Europe’s dependence on Russian supplies. But Nabucco investors have struggled to secure gas supplies for the pipeline, a drawback underscored last week when Turkmenistan and Kazakhstan refused to join Azerbaijan, Turkey and Greece in committing to the project."
Russia and Italy sign gas supply deal
Financial Times, 15 May 2009

"Top oil exporter Saudi Arabia needs to rein in fast-growing power demand that threatens to eat into future exports, Saudi Oil Minister Ali al-Naimi said in remarks published late on Wednesday. An economic boom fuelled by record oil revenues this decade and subsidised domestic prices have led to a rapid rise in electricity consumption in the kingdom. Gas supplies were insufficient to meet all demand for power, so Saudi Arabia burns oil products and some crude to meet demand. 'If this trend in power consumption in the kingdom continues it will impact the size of exports and will affect the kingdom's income, which necessitates the implementation of a national programme to rationalise power consumption,' Naimi said in remarks published by the official Saudi Press Agency. Power demand grew at an average of around 5.6 percent per year from 2001-2008, up from 3.6 percent in 1995-2000, due to industrial expansion and cheap prices, he said. Demand for gas and refined products was also growing quickly, he said. Gas demand grew at around 7 percent per year and oil product demand around 5 percent per year since 1990. Those rates outstripped the average real GDP growth of 3.4 percent since 1990, he said. Saudi Arabia was studying the use of solar energy to replace oil and gas for power generation."
Saudi must rein in soaring power consumption
Reuters, 14 May 2009

"The International Energy Agency cut its oil-demand forecast for a ninth consecutive month, predicting consumption this year will fall the most since 1981 as the recession lingers. The Paris-based adviser to 28 nations cut its global oil demand estimate 'slightly' to 83.2 million barrels a day this year, down 3 percent from 2008, it said today in its monthly report. That is 230,000 barrels a day lower than it forecast last month. The revision comes a day after OPEC reduced its 2009 forecast, predicting oil demand of 84.03 million barrels a day. 'Demand continues to look very, very weak,' David Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris. 'Although there has been a lot of talk about the green shoots of economic recovery, we think it is still a little bit early to be flagging any start of a full blown recovery.' Oil prices have climbed 34 percent this year, trading above $60 in New York this week for the first time in six months on increasing optimism about an economic recovery and record production cuts by the Organization of Petroleum Exporting Countries. Still, U.S. crude stockpiles remain near the highest since 1990 as the recession saps fuel demand. OPEC crude production is beginning to rise as higher prices encourage members to pump more than their quotas. Demand is weakest in the world’s most developed nations, where consumption will drop by 5.1 percent this year, the IEA said. The IEA cited 'very weak' demand data in April for the U.S., and to a lesser extent, Europe. Crude inventories in developed nations are at their highest since 1993. Stockpiles were equivalent to 62 days of consumption as of the first quarter of the year, according to the IEA...The energy adviser said it expects consumption in developing economies to contract for the first time since 1994 as China and Russia 'continue to exhibit sustained weakness.' Demand in these economies will average 38.1 million barrels a day this year, a decline of 0.4 percent, or 140,000 barrels a day compared with 2008. The IEA demand estimate is based on a forecast that global GDP will shrink 1.4 percent in 2009 and the world economy won’t start to markedly recover until 2010 at the earliest, it said. Should the world economy see 'strong' economic recovery this year, the IEA’s oil demand could be 'too pessimistic,' according to the group. 'If we get an economic bounce in the second half of the year, demand could be stronger than we are showing,' Fyfe said. Non-OPEC supply will fall by 300,000 barrels a day this year, a second annual decline, to about 50.3 barrels a day. The IEA increased its forecast 50,000 barrels a day compared with last month because of 'stable' supply from the North Sea and higher-than-expected Russian output. Supply from OPEC rose for the first time in eight months in April as members backtracked on production cuts, according to the IEA."
IEA Cuts Oil-Demand Forecast, Projects Biggest Drop in 28 Years
Bloomberg, 14 May 2009

"At some point, the message that Jeff Rubin wanted to give began to diverge from the message he was expected to deliver as CIBC's chief economist. You could see it in his research reports over the past 18 months – talk about the urgent need for energy conservation, the inevitability of carbon pricing, oil at $225 (U.S.) a barrel by 2012, and how the high cost of transportation as a result of peak oil will throw the machinery of globalization into reverse....Rubin had just completed a new book, Why Your World Is About to Get a Whole Lot Smaller, much of it based on his research at the bank. An ambitious book tour was being planned, and Rubin had to choose between Bay Street and Main Street....In chapter 7, Rubin lays out in detail how high oil prices, which peaked near $150 in July 2008, led to inflation and rising interest rates that triggered the U.S. mortgage crisis and sent the economic dominoes, including global trade, falling....Why should anyone believe Rubin? He accurately predicted oil's rise to $50, then $100, and most recently $150. In 2005 he said the Canadian dollar would reach parity with the U.S. dollar, and it did....Rubin acknowledges in the book that many considered him 'out to lunch' when oil plunged back down to earth. He reminds, however, that it wasn't that long ago that oil was considered expensive at $40, and that it will shoot back up once the economy begins to recover and fast-rising demand bumps up against slow-moving supply. Easy, cheap oil is gone, regardless of what the oil giants tell you. One thing he's learned, he writes, 'is that it is pretty much impossible to convince anyone of something they just don't want to believe.' More are believing. Analysts at Raymond James said earlier this month that global production of petroleum actually peaked early last year. They called it a 'paradigm shift of historic proportions' and urged society to 'get ready to live in a peak-oil world.'"
A maverick's message on oil
Toronto Star, 16 May 2009

"Russia raised the prospect of war in the Arctic yesterday as nations struggle for control of the world’s dwindling energy reserves. The country’s new national security strategy identified the intensifying battle for ownership of vast untapped oil and gas fields around its borders as a source of potential military conflict within a decade. 'The presence and potential escalation of armed conflicts near Russia’s national borders, pending border agreements between Russia and several neighbouring nations, are the major threats to Russia’s interests and border security,' stated the document, which analysed security threats up to 2020. ' 'In a competition for resources it cannot be ruled out that military force could be used to resolve emerging problems that would destroy the balance of forces near the borders of Russia and her allies.' The Kremlin has insisted that it is not 'militarising the Arctic' but its warnings of armed conflict suggest that it is willing to defend its interests by force if necessary as global warming makes exploitation of the region’s energy riches more feasible. The United States, Norway, Canada and Denmark are challenging Russia’s claim to a section of the Arctic shelf, the size of Western Europe, which is believed to contain billions of tonnes of oil and gas. An earlier Kremlin document declared the Arctic a strategic resource for Russia and said that development of its energy reserves by 2020 was a vital national objective. It set out plans to establish army bases along the Arctic frontier to 'guarantee military security in different military-political situations'. The strategy published yesterday was approved by President Medvedev and drawn up by the Russian Security Council, which includes the Prime Minister, Vladimir Putin, and heads of the military and intelligence agencies. Mr Putin accused the West last year of coveting Russian energy reserves, saying: 'Many conflicts, foreign policy actions and diplomatic moves smell of oil and gas. Behind all that there often is a desire to enforce an unfair competition and ensure access to our resources.'... Dmitri Rogozin, the Russian Ambassador to Nato, warned the military alliance in March not to meddle in the Arctic, saying that there was 'nothing for them to do there'. The Foreign Minister, Sergei Lavrov, also criticised Norway, a Nato member, over military exercises based on 'a conflict over access to resources'. Norway responded that Russia was expanding its military presence in the region. A team of explorers led by Artur Chilingarov, the Kremlin’s special representative to the region, used mini-submarines to plant a titanium flag on the Arctic seabed in 2007 to stake Russia’s claim to the massive Lomonosov Ridge....The strategy document predicted that the struggle over energy resources would increasingly dominate international relations. It identified the Barents Sea and Central Asia, where Russia and China are vying for influence, as further areas of friction. The Caspian Sea is critical to the European Union’s hopes of breaking its dependence on Russian gas by building export routes for alternative supplies from Central Asia. Russia, Kazakhstan, Azerbaijan, Turkmenistan and Iran are locked in talks on dividing the seabed and its energy riches. The strategy paper also condemned as unacceptable threats to Russian securityAmerican plans for a missile defence shield in Eastern Europe and the expansion of Nato into the former Soviet republics of Ukraine and Georgia."
Russia warns of war within a decade over Arctic oil and gas riches
London Times, 14 May 2009

"Russia has warned that military conflicts over energy resources could erupt along its borders in the near future, as the race to secure oil and gas reserves gains momentum. A Kremlin policy paper, which maps out Russia's main challenges to national security for the next decade, said 'problems that involve the use of military force cannot be excluded' in competition for resources. The National Security Strategy's release coincides with a deadline for countries around the world to submit sea bed ownership claims to a United Nations commission, including for the resource-rich Arctic. The paper, signed off by Dmitry Medvedev, Russia's president, says international relations in the next 10 years will be shaped by battles over energy reserves. 'The attention of international politics in the long-term perspective will be concentrated on the acquisition of energy resources,' it said. 'Amid competitive struggle for resources, attempts to use military force to solve emerging problems can't be excluded. 'The existing balance of forces near the borders of the Russian Federation and its allies can be violated,' it added. The document said regions including the Middle East, the Barents Sea, the Arctic, the Caspian Sea and Central Asia could all be at the centre of competing claims for resources. Russia, the world's biggest natural gas producer, has already accused the United States, with which it shares a small sea border, of coveting its mineral wealth. But Moscow is also finding its control over natural gas exports under threat, as the European Union seeks alternative supply routes that would bypass Russia and the Ukraine. The country is also embroiled in a territorial dispute with Norway over claims to the Arctic sea bed, where around 25 per cent of the world's untapped reserves are believed to lie underneath the ice. The National Security Strategy also pointed to the US and Nato as major threats to global security. It criticised a US plan to deploy a global missile shield in Eastern Europe, which has already infuriated Russia."
Moscow warns of future energy wars
Al Jazeera, 13 May 2009

"Oil rose above $59 a barrel on Wednesday, a day after hitting a six-month high, supported by a U.S. government report that showed a surprise drop in crude stocks in the world's top consumer....'The amazing run over the last months on building crude stocks had to come to an end. We're starting to feel the impact of OPEC production cuts,' said Phil Flynn, analyst at Alaron Trading in Chicago....A forecast from the Organization of the Petroleum Exporting Countries that world oil demand in 2009 would be even weaker than previously thought and a fall in U.S. retail sales in April limited the upside for prices. OPEC also said in a monthly report said its production rose in April for the first time since July 2008, suggesting higher prices prompted some members to relax adherence to agreed output targets."
Oil rises over $59, EIA says US crude stocks fell
Reuters, 13 May 2009

"Kazakhstan approved its participation in a Moscow-led gas pipeline, which could divert potential supplies away from Europe's Nabucco project, days after refusing to commit to the EU-backed plan to cut reliance on Russia. President Nursultan Nazarbayev signed Kazakhstan's agreement with Russia and Turkmenistan into law on Wednesday, according to the presidential website akorda.kz. Diplomats who attended a summit in Prague last week said Kazakhstan, Turkmenistan and Uzbekistan had refused to sign a final declaration to speed up work on the European Union-backed Nabucco project to bring Caspian gas to Europe. Russia agreed with Central Asian producers in 2007 to carry more of their gas to Russia by increasing the capacity of the Central Asia-Center pipeline system, which would allow Moscow to keep regional gas flows under its control....Russia could sell the additional Caspian gas on to Europe through its proposed South Stream pipeline project which is seen as a direct rival to Nabucco. Gazprom currently buys about 50 bcm of gas a year from Turkmenistan, about 15 bcm from Uzbekistan and less than 10 bcm from Kazakhstan using a Soviet-era pipeline. All countries in the region plan to boost output in the future but the West hopes that these additional volumes would be exported through new routes bypassing Russia. A source close to the Nabucco project told Reuters the three countries wanted guarantees and tangible incentives to supply the pipeline. Turkmenistan, the region's biggest gas exporter, which also plans to begin shipments to China through a new link later this year, has said it could fill all the planned pipelines."
Kazakhstan commits to Russian-led gas pipeline
Reuters, 13 May 2009

"The first super-tanker from Qatar has begun delivering frozen gas at –160C to the South Hook LNG Terminal in the south-west Wales port of Milford Haven, which was formally opened on Tuesday. The biggest and most advanced LNG terminal in Europe, it will boast five giant storage tanks as large as the Albert Hall by the end of the year. The hi-tech project is a joint venture by Qatar Petroleum, ExxonMobil and Total. Qatar's LNG fleet will send one ship to Wales every three days, each supplying enough to meet Britain's gas needs for 24 hours. It is hoped that the new trade from Qatar's vast fields in the Persian Gulf will guarantee Britain a reliable source of gas as the North Sea basin goes into rapid depletion. As the world's biggest exporter of LNG, Qatar provides a counter-weight to Russian control of pipelines feeding Europe's grids – prompting Moscow's frantic efforts to rope Qatar into an OPEC-style gas cartel. The revolution in LNG technology over the last decade has opened up Qatar's off-shore gas fields, transforming the tiny sheikdom of 1.5m people (240,000 citizens) into the planet's richest country per capita. By 2013, Qatar aims to produce 5.5m barrels per day of oil equivalent, half as much as Saudi Arabia but with a fraction of the population. The task for Britain is to ensure that the fleet of LNG tankers keep sailing to Wales rather going East, where prices have been higher. Abdullah Al-Attiya, Qatar's energy minister, said yesterday: 'Asia demand for LNG now, in other parts such as India and China, is becoming very high. 'China's needs are still not satisfied. They need huge amounts of gas. So now China is the centre of the new LNG compass.'"
Qatari gas to reduce Russian dominance
Daily Telegraph, 13 May 2009

"Norway, the world’s fourth biggest crude exporter, said Monday that its oil production fell a sizeable 7% in April to 1.99 million barrels a day last month from 2.15 million barrels a day in March. Though preliminary, the data highlight one of the big underlying supply problems in non-OPEC states that many oil analysts believe is likely to send crude prices back over the $100 a barrel mark in coming years. Oil closed Friday at $58.63, its highest settle since mid-November. It is trading around $57.75 a barrel this morning. The Norwegian situation is being replicated in other non-OPEC oil producers, such as Mexico and the U.K. These regions are mature and giving up less oil, meaning that keeping production flat is getting harder and harder."
Oil Prices: Norwegian Supply Falls; Is $100 Oil Far Away?
Wall Street Journal, 11 May 2009

"Common knowledge about coal is that major producing nations like China, the United States and Australia, have enough to last hundreds of years, far beyond the reach of oil, which may already be in its twilight years. But worldwide coal production could plateau as early as 2025, according to one new estimate, and a growing group of scientists are concerned that fossil fuel supplies may begin dwindling by mid-century. Last year, David Rutledge of the California Institute of Technology analyzed the coal production patterns of five regions around the world -- eastern Pennsylvania, France, Germany's Ruhr Valley, the United Kingdom and Japan -- each of which was producing at less than a tenth of its peak levels. He found that each of the depleted regions followed a rough bell curve of production; initial production was followed by a steep ramp-up, a plateau near peak levels, and then a consistent decline.When he applied the same formula to coal data from around the world, the results were startling: the United Nations Intergovernmental Panel on Climate Change's maximum estimate for extractable coal is about 3,400 billion tons. Rutledge's calculations suggest just 666 billion tons. The problem with the IPCC estimate is that it lumps coal 'reserves' which are easy to mine with coal 'resources,' which may be impossible to mine. And Rutledge's study shows that, historically, national governments in the five regions have overestimated their reserves by a factor of four on average. 'These appraisals are large-scale issues,' he said. 'But they're done by governments. What's the incentive for governments not to give a number that is too high?' James Murray of the University of Washington agrees. In a talk being presented later this month at the American Geophysical Union Joint Assembly, he plans to call for a re-evaluation of IPCC emissions scenarios, all 40 of which overstate humanity's ability to emit the greenhouse gas carbon dioxide, according to Rutledge's numbers. The committee's projections call for CO2 levels in the atmosphere to approach 500 parts per million by 2050, if emissions continue on their current trend. But Rutledge's work suggest that even if humans burn all the coal and oil we can get our hands on, we won't be able to push CO2 past 450 ppm. Oil sands and other unconventional fossil fuels probably won't add much to that total. Murray and Rutledge diverge on the question of climate effects, though. Using IPCC models, Rutlgedge argues that global temperatures won't get higher than 2 degrees Centigrade (3.6 Fahrenheit) above preindustrial levels, at the lower end of what scientists think might spark 'dangerous' climate change. 'We're still going to have global warming, and it's a serious threat,' Murray said. 'I have no doubt the IPCC dramatically underestimates climate sensitivity.' Regardless of climate impacts, the concern over looming energy scarcity may be more acute than ever. 'I think we'll see peak coal somewhere between 2025 and 2035,' Richard Heinberg of the Post Carbon Institute in California said. 'This has huge economic implications. Without growth in our energy supplies, it's very difficult to see how we're going to grow the economy.'"
Coal Supply May Be Vastly Overestimated
Discovery News, 11 May 2009

"The government’s latest plans to turn coal into a 'clean' fuel are coming under increasing attack by climate-change activists and scientists. They say the technology to be used (see below) would miss the majority of new coal-plant emissions – if it works at all. Carbon Capture and Storage (CCS) has been proven only on small power stations that generate about 30MW of electricity, but new coal plants would produce 50 times that power. CCS-fitted plants also require more coal to operate, using up 25% to 40% of the total power generated to run the carbon capture equipment. Even the government’s former chief scientific adviser is perplexed by the plan. 'The energy needed to run CCS is significant and that of itself is a real problem,' said Sir David King. The bigger concern, said King, is that most of the emissions from new coal plants could go unabated. 'All new coal plants should be fitted with precombustion technology, where 90% of carbon emissions are captured, if we are to meet our climate-change targets,' said King. The government wants to experiment with different types of CCS. According to a letter from Downing Street obtained by The Sunday Times, of the four new coal stations planned, at least one would be fitted with the precombustion system. Eon has drawn up plans for a 400MW precombustion plant in Lincolnshire, though there are a number of other candidates. Another station would be fitted for postcombustion, where the carbon is removed after the coal is burnt, capturing only 20% to 25% of emissions. The other two plants are undecided. A Downing Street official said testing various technologies is the best way of working out the costs of CCS – currently estimated to add Ł800m to each new coal station. 'Britain can lead the global CCS market, but we need to make it cost-effective. If we demonstrate different technologies then we have a wider range of expertise to sell to the world.' Under the government’s proposal, no new coal-fired power station will be licensed unless at least 400MW of gross capacity is fitted with CCS. However, this represents only about 25% of the total generating capacity of proposed coal plants. The government said the entire capacity of the plant must convert to CCS within five years of the technology being technically and commercially proven. But nobody knows how long it will take to prove CCS works on a large scale. The government is banking on it working by 2025, but it could take longer. There is also the question of how the government will enforce its plan. It is unlikely to pull the plug if a power company argues CCS is not a commercially viable option and delays installing it."
You just can’t clean coal, warn activists
Sunday Times, 10 May 2009

"The relentless rise of white van man has been halted by the recession, with the first fall in van mileage for more than 15 years. A decline in overall traffic, which began last year amid high fuel prices, accelerated in the first three months of this year, with 2.7 billion fewer miles driven than in the same quarter in 2008. With fewer vehicles on the roads, average journey times became considerably quicker on motorways and A-roads. Boosted by the trend towards shopping online and home deliveries, van traffic increased by 40 per cent in the past decade. Boosted by the trend towards shopping online and home deliveries, van traffic increased by 40 per cent in the past decade. But as the recession took hold, falling consumption of goods and services resulted in a 2 per cent decline in van traffic in the three months to March 31, the first quarterly fall since records began in their current form in 1993. HGV traffic, which has fluctuated in recent years, fell by the steepest amount on record in the first quarter, down 12 per cent. The number of HGV drivers claiming jobseeker’s allowance also rose fourfold in the past year, up from 3,280 in March last year to 15,255, according to the Office for National Statistics....The Department for Transport said part of the reason for the 3.5 per cent decline in overall traffic in the first quarter was the heavy snow in February when millions of people stayed at home for one or two days. However, traffic has now fallen for four successive quarters. Some transport analysts believe that this may be the beginning of a permanent shift in travel habits, with people choosing to make fewer journeys and travel shorter distances. Journey times on the most congested tenth of the motorway and A-road network have fallen by 12 per cent since 2007. Drivers on these roads are saving 30 seconds for every ten miles they travel compared with two years ago."
White van man halted by credit crunch and higher fuel prices
London Times, 8 May 2009

"One of the few good pieces of news in the current economic crisis (maybe the only one) is that oil prices have gone from the 147$ a barrel of July 2008 more than 100$ down to less than $50 a barrel on the international markets. However, in the last days we have seen oil prises rising and reaching the price of $58 a barrel for the first time in nearly six months. Nevertheless low oil prices are also good news for gas, since gas prices are normally linked to those of oil....However, we should not be under any illusion. The current fall of oil prizes is just the consequence of an even more dramatic fall in demand due to economic crisis....But the fundamentals that drive the energy markets have not changed. Once the economic crisis is over demand for hydrocarbons will soar again, particularly in the developing world. And some countries are preparing for that. For example the Chinese government has granted a credit to Russian State owned oil companies Rosneft and Transneft $25 bn. against daily supplies of 48,000 tonnes of oil for the next 20 years. The world is aware that the production of the existing oil wells is decaying and that new discoveries are more scarce and more expensive....The lower prices that we are enjoying now can be in fact bad news. At this price oil producers have been forced to postpone many necessary investments in new production capacity. These investments take decades to be accomplished. In consequence, if the current economic crisis finished and demand recovers we could be facing huge shortage of supplies that can lead to extremely high prices....The current relatively low oil prices give a respite to prepare for the coming new oil crisis. We have to reduce our dependency in all those areas in which black gold is not indispensable, such as heating, or electricity production. For those areas which will have to continue to depend on it, like transport, we need to accelerate the research for alternatives, like biofuels, electric cars or hydrogen. And in all sectors, we have to accelerate our efficiency being aware that every barrel of oil that we are using is one of the last."
Are we moving towards a new oil crisis?
EU Energy Commissioner Andris Piebalgs (European Commision Blog), 8 May 2009

"The European Union will provoke fury in Moscow when it begins an unprecedented drive to forge a new pact with former Soviet states. Ignoring Russian condemnation, EU ministers will effectively open up a third front in an escalating East-West row on Thursday by meeting ex-Soviet bloc leaders in Prague for two summits that could reduce Moscow's energy stranglehold over Europe and its political influence over neighbouring states. Kremlin anger with the West has grown steadily in recent days, culminating with the formal expulsion on Wednesday of two Canadian diplomats assigned to the Nato mission in Moscow. The ejections took place after Nato withdrew the accreditation of two Russian diplomats at its Brussels headquarters after accusing them of spying. Further stoking tensions in what Moscow calls its 'near abroad', Nato meanwhile began a military exercise in Georgia, a move denounced by Dmitry Medvedev, the Russian president, as 'blatant provocation'. Russia and Georgia fought a five-day war last year that some commentators said was partly caused by the Kremlin's opposition to the Nato membership ambitions of Georgia and Ukraine. Western aspirations for an improved relationship with Russia have been further dented by Kremlin objections to the EU's summit with its recently created 'Eastern Partnership', a six-member bloc incorporating the ex-Soviet states of Belarus, Ukraine, Moldova, Armenia, Georgia and Azerbaijan. Mr Medvedev, outlining his foreign policy doctrine last year, insisted Russia was entitled to a sphere of 'privileged interest' in the former Soviet Union....Until this year Moscow appeared to have beaten the West in the 'New Great Game' to secure control over the gas resources of Central Asia, seen as a vital alternative for Europe to Russian energy. But a rare show of European unity over a long-stalled pipeline project in the Caspian sea region and the blossoming of relations with gas-rich Turkmenistan have revived hopes that a last-minute deal to cut out Russia could be secured at the summit. 'It is a make or break summit,' one European diplomat said. 'If there is no deal, the gas goes to Russia or China."
EU to forge pact with ex-Soviet states
Daily Telegraph, 7 May 2009

"Power capacity in Britain is sufficient to charge electric cars in the medium term, according to a new report. The study, which was carried out by a team of representatives from companies such as Ricardo, Jaguar-Land Rover, E.ON and Amberjac Projects, suggested that a ten per cent increase in electric cars and plug-in hybrids would raise power demand by less than two per cent. It also revealed that the increase in demand for energy would most likely be spread over the market and be distributed evenly. Neville Jackson, group technology director at Ricardo, said: 'The increasing electrification of road vehicles is likely to be a key enabler for future significant reductions in transport-related CO2 emissions. 'While the provision of publicly accessible street level infrastructure in the form of recharging points remains a challenge, the research findings published today show that existing UK power grid capacity will be sufficient in the medium term to support a significant expansion of plug-in hybrid and electric vehicle use and is therefore not a constraint on implementation.'"
UK power capacity 'sufficient for electric cars'
Energy Saving Trust, 6 May 2009

"Britain is facing an energy crisis as a rise in renewable power is pushing the 'outdated' National Grid to breaking point, experts warned yesterday. Analysts say the network cannot cope with the extra electricity generated by wind, wave and solar sources. They fear the increase in renewables will overload a system that was not designed to accept so much incoming power. Inenco, the UK's largest energy analyst, said Britain could be plunged into darkness unless the infrastructure was updated. Inenco analyst Ian Parrett said the overhaul could cost the government between Ł5 billion and Ł10bn. He said: 'The UK's electricity infrastructure is so outdated and expensive that the renewables push towards wind farms and other forms of micro-generation is going to place an impossible strain on the network. 'It was not designed for two-way power generation, where smaller generating sources put energy back into the grid, and this will continue to be the case unless the government invests heavily in upgrading the grid.'"
Surge in renewable power fuels fears of energy crisis
The Scotsman, 5 May 2009

"Oil production in the Gulf of Mexico could peak at more than 1.8 million barrels per day by 2013 under the industry’s best-case scenario, but natural gas production will likely continue its decadelong decline, according to a government study released Monday at the Offshore Technology Conference. About 1.1 million barrels of oil per day were produced in the Gulf in 2008, according to the Minerals Management Service, with about 829,000 coming from deep-water fields — those drilled in more than 1,000 feet of water. Natural gas production was about 6.43 billion cubic feet per day, with about 2.6 bcf coming from the deep water. Oil production from projects the industry has currently or is committed to starting up could peak at 1.6 million barrels by 2011, according to the agency’s forecast, but if announced discoveries and undiscovered resource estimates are included, the peak could reach 1.8 million barrels by 2013. 'The deep-water frontier has entered a new phase,' said Mike Prendergast, chief of staff for the agency’s Gulf of Mexico region, with technology developments leading the charge to larger and deeper projects. The Gulf of Mexico accounts for about 25 percent of domestic oil production and 15 percent of natural gas output, according to the agency. Royal Dutch Shell’s Perdido platform, in 8,000 feet of water 200 miles south of Freeport, represents the trend’s cutting edge and will be the new oil and gas deep-water champion when it comes on next year with a 130,000-barrel-per day capacity. The Anadarko Petroleum-operated Independence Hub is also in 8,000 feet of water about 185 miles from New Orleans. It just pumps natural gas. The number of production projects operating in depths greater than 1,000 feet grew 8 percent last year to 141, according to the report, while 57 percent of Gulf oil and gas leases in 2008 were in the deep water, up from 54 percent a year ago. Gulf natural gas production peaked in 1997 at 14.1 bcf but has dropped since then due to both the decline in production in mature shallow-water fields and the fact that the deepest formations tend to have much more oil than natural gas. Of the deep-water finds under development, it’s predicted that 84 percent of the output will be oil and only 16 percent natural gas."
A new phase in the Gulf
Houston Chronicle, 4 May 2009

"An average of analysts' predictions reckons on a reduction in demand of 1.5m barrels a day for 2009 over last year, while the International Energy Agency is predicting a fall of 2.5m barrels, but an estimate based purely on current economic growth figures would put the overall decline at 3m."
Rising reserves of unused oil put strain on storage
Daily Telegraph, 4 May 2009

"A new generation of engineers hover over their computers, making the refinements needed to produce an estimated 11,500 of the machines by 2012 to form what engineers call a 'cascade,' or a plant that produces enriched uranium. Rebuilt with super high-strength carbon fiber components and fashioned by computers and robotics not even imagined in 1985, the machine is the U.S.-built centerpiece for a high stakes, five-way race to see who will dominate the globe's nuclear fuel business....The competition USEC faces, both here and abroad, is formidable. Three competitors with foreign connections are setting up operations here to compete directly with USEC for the U.S. nuclear fuel. In addition, Russia -- which currently supplies about half of the U.S. nuclear fuel market with uranium fuel whose enrichment is blended down from dismantled nuclear weapons -- has its own global nuclear market ambitions....If it works, the laser enrichment process could open up vast new supplies of enriched uranium because, unlike centrifuge technologies, lasers might be able to extract more U-235 out of old uranium mining and processing wastes, which are called uranium 'tails.' The United States has a great abundance of them. While other parts of the picture of a nuclear 'renaissance' may still seem somewhat murky, industry officials are elated about future fuel supplies. 'With four planned new enrichment facilities in the works, we are approaching a robustness of fuel supplies that we have not seen in decades,' said Alex Flint, senior vice president for government affairs at the Nuclear Energy Institute. Thomas Neff, a senior researcher at the Massachusetts Institute of Technology who has followed the nuclear fuel industry for 30 years, is not that sanguine. He worries that not all these timetables will work out, and that there could be a fuel shortage as early as 2013, when the Russian government has said it will pull out of the U.S. market. Russia wants to use its uranium fuel to feed a growing internal need for nuclear fuel and to compete in other rapidly growing nuclear markets, such as India and China. The end of the fabled 'Megatons to Megawatts' deal, which Neff helped inspire, will leave a big hole in the U.S. market. Neff is particularly skeptical of USEC's ability to compete in the future enrichment market, where he thinks it could be underpriced by more advanced competitors. That could leave the United States, the pioneer of both centrifuge enrichment and the nuclear power plant, without a totally domestic source of enriched fuel. Referring to the 40-foot-high centrifuges, dredged out of past U.S. experiments and much larger than either the Russian or the European versions, Neff worries they may prove to be too expensive to compete. 'The other problem with these 40-foot monsters is that nobody knows how long they will last,' he adds. Still, Neff and others involved with the nuclear fuel cycle have difficulty seeing a coherent U.S. energy policy without a future nuclear component."
A 'robust' new fuel supply for nuclear power plants is emerging
New York Times, 4 May 2009

"Russia is planning a fleet of floating and submersible nuclear power stations to exploit Arctic oil and gas reserves, causing widespread alarm among environmentalists. A prototype floating nuclear power station being constructed at the SevMash shipyard in Severodvinsk is due to be completed next year. Agreement to build a further four was reached between the Russian state nuclear corporation, Rosatom, and the northern Siberian republic of Yakutiya in February. The 70-megawatt plants, each of which would consist of two reactors on board giant steel platforms, would provide power to Gazprom, the oil firm which is also Russia's biggest company. It would allow Gazprom to power drills needed to exploit some of the remotest oil and gas fields in the world in the Barents and Kara seas. The self-propelled vessels would store their own waste and fuel and would need to be serviced only once every 12 to 14 years."
Russia to build floating Arctic nuclear stations
Observer, 3 May 2009

"China, with ambitious plans to boost the amount of electricity produced from nuclear power, is in talks with Cameco Corp. [CCO-T] about a potential uranium supply agreement. The Asian giant has become a significant buyer of the radioactive metal on the spot market as it increases its nuclear power capacity, and has entered talks with Saskatoon-based Cameco, the world's largest uranium producer. China is actively taking advantage of weak prices to secure supply of the metal used to make nuclear fuel....Cameco spokesman Lyle Krahn said the company is currently in discussions with China regarding a potential uranium supply agreement. The Asian superpower expects to have 75 gigawatts (a gigawatt is one billion watts) of nuclear power generating capacity by 2030. That represents just three-quarters of current capacity in the U.S. – the largest nuclear power producer – and only 10 per cent of China's total electricity demand. 'The uranium market potential in China is absolutely huge,' Mr. Krahn said. Scotia Capital Inc. China strategist Na Liu said the market is underestimating the speed at which China is adding nuclear capacity. He is forecasting that China will have total nuclear capacity of 35 gigawatts by 2015 and 75 gigawatts by 2020, up from the 9.068 gigawatts operating today. China is currently building 20 new nuclear reactors, with approximately one gigawatt of capacity each. Scotia Capital predicts that by 2020, China will consume 15,700 tonnes of uranium a year. 'At this rate, China's currently known uranium resources can only last for five to 10 years. Clearly, in our opinion, it is imperative for China to secure long-term supply through imports or investment,' Mr. Liu said in a recent note to clients. China has also recently held discussions with Australian producers regarding potential supply agreements."
China seeking supply deal with Cameco
Globe and Mail, 1 May 2009

"Kazakhstan will supply over 2,000 tonnes of uranium to India for its existing nuclear plants. Both sides are negotiating the price. India could also take up equity stake in Kazakh uranium mines and join the nuclear research centre being set up with active Japanese collaboration. These issues were discussed during a recent telephonic conversation between Prime Minister Manmohan Singh and Kazakhstan President Nursultan Nazarbayev, said reliable sources. The leaders were due to interact when Mr. Nazarbayev was here as the chief guest at Republic Day, the first Central Asian President conferred the privilege. But the meeting did not happen as Dr. Singh was indisposed. The uranium supply will be for five years and comes with no strings attached."
Kazakh to supply 2,000 tonnes of uranium
The Hindu, 1 May 2005

"The worldwide rig count dropped dramatically in March, to 2,313, its lowest level since June 2004. According to Baker Hughes, the total was down by nearly 16% compared with February and by 29% against March 2008, with North America showing the biggest declines (see Figure 1). But despite Opec secretary-general Abdullah El-Badri's announcement in February that 35 drilling projects across the organisation's member states would be scrapped this year, the Middle East's rig count remains relatively healthy. The region saw a fall of just 2.6%, to 262, in March 2009 compared with the same period a year earlier."
Mideast still drilling despite world rig-count slump
Petroleum Economist, May 2009

"Lockheed Martin is best known for building stealth fighters, satellites and other military equipment. But since late 2006 the company has taken on a different kind of enterprise — generating renewable power from the ocean. The technology is still being developed in the laboratory, but if it succeeds on a large scale, it could eventually become an important tool in the nation’s battle against global warming and dependency on foreign oil. Lockheed and a few other companies are pursuing ocean thermal energy conversion, which uses the difference in temperature between the ocean’s warm surface and its chilly depths to generate electricity. Experts say that the balmy waters off Hawaii and Puerto Rico, as well as near United States military bases on islands like Diego Garcia in the Indian Ocean or Guam in the Pacific, would be good sites for developing this type of energy. Hawaii and many other islands rely on imported oil to generate most of their electricity, which is expensive, and last year’s spikes in oil prices have reinvigorated their search for homegrown alternatives. In the approach that Lockheed is pursuing (with another company, Makai Ocean Engineering), the water on the ocean’s surface is used to heat a pressurized liquid, usually ammonia, which boils at a temperature slightly below that of warm seawater. That liquid becomes gas, which powers a turbine generator. Cold water is then pumped from the ocean’s depths through a giant pipe to condense the gas back into a liquid, and the cycle is repeated. An important advantage of this method of producing energy is that it could run all the time, unlike solar plants, which cannot work at night, or wind turbines, which stop in calm conditions. In the approach that Lockheed is pursuing (with another company, Makai Ocean Engineering), the water on the ocean’s surface is used to heat a pressurized liquid, usually ammonia, which boils at a temperature slightly below that of warm seawater. That liquid becomes gas, which powers a turbine generator. Cold water is then pumped from the ocean’s depths through a giant pipe to condense the gas back into a liquid, and the cycle is repeated. An important advantage of this method of producing energy is that it could run all the time, unlike solar plants, which cannot work at night, or wind turbines, which stop in calm conditions."
Generating Energy From the Deep
New York Times, 29 April 2009

"It is a dazzling vision of a clean energy future. An entire continent powered by solar panels, wind and wave turbines, geothermal and hydroelectric power stations — and all stitched together by a European 'supergrid' stretching from the sunbaked deserts of the south to the windswept North Sea, from the volcanoes of Iceland to the lakes of Finland. It may sound like the stuff of science fiction but this is a vision that the European Union wants to make a reality. The concept is gaining ground among policymakers, including leaders such as President Sarkozy and Gordon Brown, who are concerned about Europe's carbon emissions and its steadily growing dependence on Russian gas. Adam Bruce, chairman of the British Wind Energy Association (BWEA), is convinced that a European supergrid that could eventually banish polluting fossil fuels altogether, is only a matter of time. 'We are only limited by our own ambition,' he says. 'The capacity is there. There is the potential for wind alone to supply 50 per cent or more of our energy needs.'....Such dreams of renewable energy certainly catch the imagination but for Britain, which generates just 1 per cent of its electricity from renewables — the least in the European Union after Malta and Luxembourg — the gap between ambition and reality seems particularly stark. The truth is that, despite the Government's talk of a green energy revolution, Britain's renewable energy industry is in crisis. About 40 per cent of the UK's power stations were built before 1975 and urgently need to be replaced. But the combined impact of the credit crunch, falling oil and coal prices and the weaker pound now threaten to hold up wind projects just as the UK has raised its commitment to green electricity....In last week's Budget, the Government announced incentives designed to bolster investment in huge offshore windfarms and ensure that Britain hits its target of raising the share of electricity produced from renewable sources to 35 to 40 per cent by 2020. So will they work? Not according to Jim Skea, director of the UK Energy Research Centre. He has just undertaken a big research project into how the UK can slash its carbon emissions by 80 per cent by 2050. 'In none of the scenarios we looked at were renewables picked up nearly fast enough to meet the 2020 targets,' said Professor Skea. 'It will be a big struggle. We are not spending nearly enough.' Wind power, easily the most economically attractive form of renewable energy in the UK, remains hugely expensive when compared with gas and coal. A recently approved gas-fired station in Pembroke will cost Ł1 billion and will be the largest in the UK, producing 2,000MW. It would cost six times as much to build a windfarm of similar capacity."
Europe's green energy vision puts UK in dark
London Times, 30 April 2009

"Government plans to generate more than a third of Britain's electricity from green energy sources, such as wind and solar power, by 2020 are doomed to failure without a dramatic increase in state support, according to a leading energy research group. Despite fresh incentives to increase investment in offshore wind parks announced in last week's Budget, the UK Energy Research Centre (ERC) said on Wednesday that it was virtually impossible for the UK to meet the target imposed by Europe of generating 15 per cent of total energy from renewable sources by 2020 — which equates to about 35 per cent of total electricity. Jim Skea, research director, said: 'Renewables can make a significant contribution, but if you look at the scale of what is required, I think that is very, very challenging and 2020 is almost tomorrow when you look at what needs to be achieved.' Professor Skea said that Britain urgently needed to set a higher carbon price to hasten the adoption of low carbon technologies and to boost investment in energy research — which has collapsed from Ł700 million a year in the 1970s and 1980s to just Ł100 million annually."
UK Government green goals face failure
London Times, 30 April 2009

"William Hague yesterday became the first member of the Tory leadership to predict a Conservative victory next year and said that his party was psychologically prepared for government.... In a sign of the leadership’s increasing confidence about the election, Mr Hague disclosed details of handover talks with the Civil Service — and contrasted them with the 'fantasy politics' that marked the talks he had held as Conservative leader in 2001. Mr Cameron’s team has instructed the Permanent Secretary of the Foreign and Commonwealth Office to prepare for a 'national security council'. Headed by Mr Cameron, it would include the defence, foreign, home and energy secretaries.... There was consensus with the Government on much foreign policy, but a Cameron administration would give higher priority to relations with the Gulf states and India."
We'll win the next election, says William Hague
London Times, 29 April 2009

"The world can burn only a quarter of proven reserves of oil, gas and coal to be confident of staying within safer climate limits, unless untested carbon fixes work, experts said on Wednesday. In two studies published this week in the journal Nature, scientists honed the basis for urgent climate action as the world tries to map by the end of this year agreement on a new treaty to replace the Kyoto Protocol. People could burn no more oil, gas and coal in their homes, cars and factories after 2024, at current rates, to limit to one in five the chance of exceeding 3.6 degrees (Fahrenheit) warming worldwide, one article found. 'It really casts doubt on whether any investment into more fossil fuel exploration is really a good investment,' said the Potsdam Institute's Malte Meinshausen, who led the study."
Study: World can 'safely' burn only 25% of oil
Reuters, 29 April 2009

"With oil prices stuck at less less than $50 a barrel, Tony Hayward, BP’s chief executive, is confronting perhaps the most difficult choice of his career. Should he cut the dividend and face the wrath of investors – and run the risk of losing his job – or curb the group’s spending plans at the expense of future production and growth? Yesterday, he appeared to offer his answer to this familiar industry dilemma. BP, he claimed, could hold its dividend and spending plans with oil at $55-$60 a barrel. But in the meantime it will set out to rein in its $20 billion capital expenditure programme this year. 'We believe we can do $20 billion of work for less than $20 billion,' he said. It sounds like a tempting idea and BP is right to try to force down costs during the downturn, when suppliers are squeezed and the cost of raw materials such as steel and cement are tumbling. But there are risks in taking this approach too far. BP had already announced plans to whittle down its spending plans from $22 billion in 2007 to as low as $20 billion this year. Now it says it wants to spend less than this, although it would not be drawn yesterday on how much less. The danger for BP is that forcing suppliers to reduce costs too much could threaten their ability to carry out the work properly or even to stay in business. Cheap deals struck with desperate subcontractors are often bad news for everyone, with corners cut and projects delayed – or worse. At BP, the results of this approach may take a while to feed through. But if Mr Hayward is not careful, their impact will come in the end in the form of lower oil production and engineering problems on key pieces of kit."
Danger of having BP contractors over a barrel
London Times, 29 April 2009

"Kazakhstan's national nuclear corporation, Kazatomprom, has signed a deal to supply 24,200 tonnes of uranium to China Guangdong Nuclear Power Co (CGNPC) by 2020, Zhou Zhenzing, the general director of CGNPC Uranium Resources Co, told reporters in Almaty. Kazatomprom and CGNPC signed a memorandum on Wednesday to form a joint venture to build nuclear power plants in China. This does not include uranium that a joint venture, Semizbai-U, will ship to China. Kazatomprom owns 51% and CGNPC has 49% of the joint venture. Semizbai-U will develop the Irkol uranium field in the Kyzyl- Orda region in southern Kazakhstan and the Semizbai field in the Akmola region. The fields should produce 750 tonnes and 500 tonnes of uranium per year, respectively. CGNPC intends to develop another uranium mine in Kazakhstan with reserves of 40,000 tonnes."
Kazatomprom to Supply 24,200 Tonnes Uranium to Cgnpc By 2020
InterFax, 29 April 2009

"China's oil demand fell by nearly six per cent year-on-year in the first quarter of 2009, Energy Intelligence (EI), the US-based energy advisory firm has said...In a new update, EI said that Chinese net crude imports and domestic production averaged 7.39 million barrels per day. That is 5.6 per cent lower than the corresponding figure in 2009....EI in its report said that the key factor was crude imports, which slid 9 per cent year-on-year to 3.33 million bpd. Domestic output slid 0.6 per cnt to 3.75 million bpd, it added....several other figures are not encouraging. 'China's power output, a key barometer of industrial activity, fell 1.3 per cent year-on-year in March and is likely to drop four per cent this month,' EI said."
China's oil demand fell by nearly 6% in Q1 of 2009
Emirates Business 24/7, 28 April 2009

"Crude oil output growth from deepwater areas may stagnate because current oil prices make it unprofitable to tap new deposits and large discoveries dwindle, a consultant said. 'The pace of growth will slow and then become flat for the next few years,' Michael Rodgers, a partner at PFC Energy, said in an interview at the Offshore Vessels conference in Singapore yesterday. 'There were not a whole lot of large commercial discoveries in the last couple of years.' Production from deepwater blocks grew 67 percent a year between 2005 and 2008 following discoveries off Angola and Nigeria. That beat a growth of 1.3 percent in total crude oil output during the same period. Global deepwater oil production may peak at 7.5 million barrels a day in 2013, Rodgers said....'Falling investment in commercial deepwater development will require fewer deepwater platforms in the next five years compared to the last five years,' Rodgers said. Production of oil from the deep seas accounted for 8 percent of global crude produced last year....Output in deepwater areas, or those at water depths of more than 1,000 feet (305 meters), soared in the past five years as companies discovered large deposits in Angola, Nigeria and the Gulf of Mexico, Rodgers said. The majority of deepwater areas have reached 'maturity' and current projects are facing delays, he said. Oil and gas explorers are postponing or scrapping deepwater projects, potentially reducing crude supplies by as much as 2.4 million barrels a day in 2011, Morgan Stanley said in a report in March. Oil prices in New York have declined more than 66 percent from a record $147.27 a barrel in July last year. Out of a sample of 46 deepwater projects in places including Brazil, Africa, Norway, Asia and the Gulf of Mexico, about 27 may have an internal rate of return of less than 15 percent, the minimum required for international oil companies to invest in deepwater developments, according to Rodgers. Oil must reach $50 a barrel for some developments to achieve more than 15 percent in returns, he said. No new contracts have been awarded since August 2008 when Morgan Stanley estimated that companies needed 139 new production platforms to develop fields in deep seas. Since then, 11 orders have been canceled and 46 delayed by an average 15 months, according to last month’s Morgan Stanley report. Worldwide spending on oil and gas exploration may drop 12 percent in 2009 to $400 billion, according to a report in December by Barclays Capital Research."
Deepwater Oil Production Growth May Stagnate on Low Prices
Bloomberg, 28 April 2009

"On the basis of depletion alone, world oil production will begin to decline around 2010, and coal production around 2025 or 2030. Since coal will peak later, that means that a greater proportion of our energy will be coming from coal than from oil. Therefore emissions may not decline so much or so fast as total energy—unless we implement emissions reduction agreements."
Italian magazine interviews Richard Heinberg
Energy Bulletin, 27 April 2009

"Petroleo Brasileiro SA, Brazil’s state-controlled oil company, may be hurt by a rig shortage as it begins development of the Tupi field, the largest discovery in the Americas since 1976, according to Jefferies & Co. Inc. The company expects to almost double the numbers of rigs operating in deepwater offshore Brazil to 68 by 2012, from 38 today, according to Jefferies analyst Jud Bailey. It’s 'questionable' whether six of these rigs can even be built because the contractors are 'small marginal' players, Bailey said April 24 in an interview from Houston. Others rigs may be delivered as much as a year late, he said. Tupi, which starts pumping oil on May 1, and other Santos Basin fields may contain about 100 billion barrels of oil, according to Marcio Mello, head of Brazil’s petroleum geologists association. That’s enough to supply all needs in the U.S., the world’s largest consumer, for more than 13 years, according to BP Plc. Petrobras is scouring the world in search of billions of dollars to finance the fields’ development. Demand for vessels that can drill in ocean depths up to 10,000 feet is growing faster than the supply of rigs, forcing oil companies to pay escalating rates even after crude lost two-thirds of its value in the past nine months. Producers are betting subsea discoveries will tap pools of crude so large that they will be profitable regardless of oil prices....A drop in oil prices has made it difficult for small rig builders to complete orders as margins narrow, Bailey said. Brazil’s government has also required Petrobras to hire local builders, who are not necessarily capable of building the rigs or don’t have the money to do it, he said. Petrobras would have to step in and 'backstop' some of these companies financially to allow them to produce the equipment in time, he said. 'The down side for Petrobras is that the world capital crunch will make it hard for many companies to finance new ships and drill rigs,' Peter Ping Ho, an oil and gas analyst with Planner Corretora De Valores in Sao Paulo, said April 24. Rio de Janeiro-based Petrobras, whose Tupi field is the largest discovery since Mexico’s Cantarell, is tapping overseas partners to help fund a $174.4 billion five-year investment plan. Chief Financial Officer Almir Barbassa was last week touring Asia to persuade equipment manufacturers and shipbuilders to expand their operations in Brazil....Tupi may hold as many as 8 billion barrels of oil. The field and nearby deposits in Brazil’s so-called pre-salt may almost double Petrobras’s oil reserves, the company said in January. The company is targeting a 53 percent increase in production to 3.66 million barrels a day through 2013. Petrobras will start pumping as much as 30,000 barrels of oil a day to test Tupi. A pilot 100,000 barrel a day project is scheduled for 2010. The oil is 320 kilometers (200 miles) off Brazil’s coast beneath almost 2,000 meters of water and another 5,000 meters of rock and salt."
Brazil’s Tupi Oil Field May Be Hurt by Rig Shortage: Week Ahead
Bloomberg, 27 April 2009

"After several years of speculation, the Alberta government last month released a long-awaited 'expert’s report' on nuclear power and oil sands and has now embarked on a series of province-wide public consultations. The move comes on the heels of a decision last month by Bruce Power, a private company that operates a publicly-owned nuclear station in western Ontario, to seek approval to build a $10 billion nuclear station at a site known as Whitemud, about 310 miles northwest of Edmonton. Bruce Power hopes to begin an environmental assessment next year. Its proposal calls for two to four 1,000-megawatt reactors, with three vendors – Atomic Energy of Canada Ltd., Westinghouse and Areva – competing to supply the equipment. According to the expert panel report, almost 90 percent of Alberta’s electricity comes from coal or natural gas, and demand is projected to jump 74 percent within the next 15 years, largely due to the needs of the oil sands projects — which consumes roughly 1 billion cubic feet of natural gas daily. At the same time, the National Energy Board has projected a drop in long-term natural gas production in Western Canada, and continued consumption by oil-sands production could turn the province into a net importer within the next few decades....But anti-nuclear activists and critics of Alberta’s oil sands industry are questioning the idea of using nuclear energy as an alternative. Andrew Nikiforuk, a Canadian journalist and the author of the 2008 book, 'Tar Sands: Dirty Oil and the Future of a Continent,” said Royal Dutch Shell has been testing a bitumen extraction process in Colorado that relies less on natural gas and instead uses long electrodes that can be driven down into the shale to gradually separate the trapped oil....Beyond the customary objections to nuclear power, Mr. Nikiforuk observes that the project may serve to further impair Canada’s international reputation on energy policy. 'The first country to use nuclear power to produce fossil fuels will not be highly regarded on the planet.'”
Using Nuclear Power to Extract Oil?
New York Times (Blog), 27 April 2009

"Kazakhstan's newest in-situ leach (ISL) uranium mine, Kharasan 1, has been officially opened at a ceremony attended by Kazakh, Japanese and Canadian dignitaries. The 24 April ceremony was led by Kazakh prime minister Karim Massimov and attended by official delegations headed by Japanese and Canadian diplomats, representatives from the companies involved in the Kharasan 1 project, and Kazakh dignitaries. The mine is expected to produce 180 tonnes of uranium in 2009, reaching its full capacity of 3000 tonnes of uranium per year in 2014. It is expected to operate until 2053."
Kazakh uranium mine starts
World Nuclear News, 27 April 2009

"The recovery of Iraq’s oil industry is still a mirage. The government aims to nearly double production – to 4.5m barrels a day – over the next five years. It can’t do that without foreign help. But for the moment, foreigners aren’t especially welcome. True, Royal Dutch Shell has signed a preliminary agreement with the oil ministry to capture flared gas in the Basra region. But the oil and gas committee of the Iraqi parliament says the $4bn deal is invalid. It says parliament, not the ministry, has the final word. Then there’s China’s National Petroleum Company, which has a 20-year service contract to develop the al-Ahdab oilfield. MPs are threatening to revoke that, too. Security is still a concern for oil majors. But the energy companies are hoping the violence will continue to subside. Some 32 of them have thrown their hats into the ring in a tender process to develop more fields. But as the Shell dispute shows, without a solid national hydrocarbon law the politics are risky. Political bickering has kept any law from passing parliament for over two years. The division of spoils, both within Iraq and between Iraq and the foreigners, is hotly contested. The political impasse explains why so few contracts have been tendered."
Iraqi oil recovery still a mirage
Business Standard, 27 April 2009

"'All targets and no trousers' seemed to be the gist of the reaction from environmentalists to last week's Budget. Greens welcomed the introduction of new, legally binding, carbon-reduction goals but attacked the lack of a clear road map showing how they could be achieved. Some applauded policies such as the extra subsidy for offshore wind and investment in building efficiency, but attacked overall funding of Ł1.4bn as miserly in comparison to the enormity of the climate crisis and recent financial bailouts. But for those who are more worried about oil depletion, the Budget was utterly hollow. The car scrappage scheme came without efficiency conditions attached, the return to inflation-plus fuel duty increases was welcome but timid compared to the escalator that was killed off by the petrol protests of 2000, and tax breaks for North Sea operators will do little to stem the decline in output. Production has halved since its peak in 1999, and is now dropping at 7 per cent a year, dragging Britain ever deeper into import dependency. Still less will the Budget improve the global oil outlook. The International Energy Agency forecasts a 'supply crunch' early in the next decade, Shell predicts a production plateau from 2015, and the head of the Libyan National Oil Company sees peak oil looming. In contrast, the big energy announcement of the week looked far bolder. The Energy Secretary, Ed Miliband, said new coal-fired power stations would only be approved if they included a demonstration plant for carbon capture and storage (CCS) from day one, and a commitment by the energy company to retrofit the entire power station once the Environment Agency judged CCS to be technically and commercially proven. This came beside plans to fund four of the new pilot plants through a 2 per cent levy on customers' bills. The move was welcomed by environmental groups and is an advance on the Government's previous dither in this area. But it is also a spectacular gamble and has three obvious risks. One, pilot plants will capture only a quarter of new power station emissions. Two, the technology may not be viable, at least not in time, posing a dilemma in the mid-2020s: whether to close the power stations or sacrifice the climate. Three, coal may be less abundant than the Government assumes. In 2000, the global coal supply was expected to last 277 years, but by 2006 that had plunged to 140 years as consumption rose and estimates of reserves were revised downwards. One forecasting group predicts peak coal as early as 2025, Mr Miliband's deadline for retrofitting CCS. The Government seems too timid to confront peak oil publicly, but reckless enough to gamble on potentially unabated coal emissions and the coal supply. Why not bet on true sustainability: get serious about energy efficiency, renewables, electrification of transport and a European supergrid, and commit the sort of money they have recently been throwing at the banking industry? The stakes are even higher."
A Government still addicted to petrol
Independent, 26 April 2009

"Oil could approach the record prices of last July as the global recession halts investment in exploration and energy projects, the Organization of Petroleum Exporting Countries (Opec) warned last night. At a meeting in Toyko, OPEC, the cartel of oil-producing countries, and 13 Asian finance ministers, called for greater monitoring of global oil prices, claiming volatility is not in the interest of either producers or consumers. The leaders expressed concerns in a joint statement that the world is heading for an oil price spike when it recovers from the economic crisis. ‘Price extremes have been unjustifiable and unsustainable,’ said the Saudi Arabian oil minister, Ali al-Naimi. ‘I have often cautioned that if prices remain too low for too long, they can carry the seeds of future spikes and volatility.’ …’The drying up of liquidity to fund projects underpinning economic growth in emerging and developing economies has been a significant consequence of the recession,’ said Mr al-Naimi.”
Oil will hit peak after recession, says OPEC
Telegraph, 26 April 2009

"Mexico's state-run oil giant Petroleos Mexicanos (Pemex) on Tuesday reported that its first quarter oil output was averaged at 2.667 million barrels per day (bpd), down 7.8 percent from the same period of 2008. Cantarell, Mexico's largest oil producing field for decades, produced 787,000 bpd of oil, down more than 34 percent year-on-year. The deposit has averaged between 40 percent and 60 percent of the nation's total oil output at least over the past 20 years. The oil output at Ku-Maloob-Zaap, now the nation's biggest oil producing field, averaged 797,000 bpd, up nearly 20 percent from a year earlier. The two fields, which are offshore in the Gulf of Mexico and are close to the southeastern Mexico state Campeche, accounted for around 60 percent of the nation's production during the first quarter of 2009. The firm had initially estimated that its output would be 2.8 million bpd this year. But last week a senior Pemex official told the press that it may be as low as 2.6 million bpd.... Mexico is the third-largest oil supplier to the United States. Oil is Mexico's top foreign currency earner, financing about 40 percent of its annual budget."
Mexico Oil Output Down 7.8% in First Quarter
Xinhua News Agency, 22 April 2009

"Japan opened a major uranium mine in Kazakhstan on Friday, gaining access to alternative energy supplies from resource-rich Central Asia. Khorasan-1, tucked away in the arid steppes of southern Kazakhstan, is being developed by a group of Japanese firms including Toshiba Corp (6502.T), as well as Kazakh state uranium company Kazatomprom and a unit of Canada's Uranium One (UUU.TO).On Friday, a delegation of Japanese executives, the head of Kazatomprom and other officials flew to the remote location for an official ceremony which marks Kazakhstan's growing resolve to become the world's top uranium exporter as soon as this year. Kazakh Prime Minister Karim Masimov pressed a symbolic button at the site, officially launching production....Kazakhstan produced 8,521 tonnes of uranium last year, up from 6,637 in 2007. Analysts say Kazatomprom is now on track to edge out Canada's Cameco this year as the world's No.1 producer....Dzhakishev said he saw 2009 production at 12,200-12,300 tonnes, significantly higher than last year's but below Kazakhstan's projected full capacity output of 20,000 tonnes. 'We will have to hold back production a bit because we will produce only as much as the market wants,' he said."
Japan opens major uranium deposit in Central Asia
Reuters, 24 April 2009

"A new generation of coal-fired power stations is to be built to plug Britain's energy gap, but ministers have insisted that they must be capable of stripping out and burying all carbon emissions by 2025. The move aims to place Britain at the forefront of an international drive to master carbon capture and storage (CCS), an unproven technology that advocates say is critical to global efforts to tackle climate change. But sceptics warned that Britain was taking a huge and potentially costly gamble with an immature technology that could force tens of thousands of British families into fuel poverty by driving up their bills. The technology is expected to add at least Ł700 million to the cost of building each new coal power station. The costs will be borne by consumers through a levy on energy bills of 2 per cent by 2020, an average of almost Ł30 per household per year.... The new stations would also bolster the security of Britain's future energy supplies and could reinvigorate the North Sea as a hub for stored carbon emitted from plants across Britain and Europe, he said. CCS, in which the carbon emitted from burning fossil fuels is stripped out using chemical scrubbers and piped for storage in old gasfields beneath the seabed, remains an untested technology on a commercial scale. The largest pilot project in the world is attached to a 30MW power plant but under the terms of the scheme announced yesterday, companies will be granted permission to build new coal plants if they apply CCS to 400MW of power generation, or a quarter to half of a typical plant. In a reversal of policy, Mr Miliband said that power companies must be able to capture and bury all the CO2 emissions from the new coal plants by 2025 at the latest, if the Environment Agency rules that CCS works. Last night there were still a range of unanswered questions about how the scheme would work. A Department for Energy and Climate Change spokesman said that it was unclear whether power companies would be allowed to generate electricity from the untreated section of a new coal-fired power plant before its CCS demonstration project is shown to work."
New life for old king coal, but this time without CO2
London Times, 24 April 2009

"Alistair Darling committed the UK to cutting greenhouse gases by 34 per cent by 2020 in the first legally binding 'carbon budget' in the world. The ambitious target will transform the way the UK generates and uses energy and the Chancellor announced Ł1.4 billion of new funding to aid the transition. This will include Ł525 million to increase the number of homes powered by offshore wind farms by 2.8 million and Ł375 million to improve energy efficiency in businesses and homes through insulation and more efficient heating systems. He also found Ł45 for small scale renewables like wind turbines on houses and Ł25 million for community heating schemes - where villages or small residential communities share energy generated from waste or wood. Some Ł405 million will go towards encouraging so-called 'green collar' jobs in the environment industry through boosting manufacturing in low carbon goods like solar panels. More controversially, he announced Ł90 million for research into carbon capture and storage (CCS) on fossil fuel power plants, such as coal, oil or gas. The money will go towards up to four plants demonstrating the new technology that captures carbon dioxide from coal-fired power stations and stores it underground. However experts said the spending would not be enough to meet the ambitious emissions targets and criticised the Chancellor for failing to introduce more green measures to stimulate the wider economy. Environmental groups had high hopes for this year's budget following President Barack Obama's 'new green deal' in America and the Government's earlier commitment to cut greenhouse gases by 80 per cent by 2050. Lord Stern, the former World Bank economist who first advised the UK on the dangers of climate change, said the UK will have to up the target to 42 per cent following any international agreement to on climate change in Copenhagen at the end of this year. He also said the UK will have to increase funding for renewables if the targets are to be met in the long term. 'The transition to a low-carbon economy cannot be achieved overnight and it is important to acknowledge that it will continue to make demands on the public finances over the next 10 years, and that there will be areas in which consumers must pay more, for instance through an increase in fuel duty,' he said. Mr Darling said the 34 per cent target will be met by cutting emissions in the UK rather than buying offsets from abroad but he failed to commit to the 42 per cent target at Copenhagen. Andy Atkins, Executive Director of Friends of the Earth, said it was a 'massive missed opportunity'."
Greenhouse gas emissions will be cut by a third in world's first carbon Budget
Daily Telegraph, 23 April 2009

"China is shaping as a multibillion-dollar new uranium export market as it looks to Australia to supply the resources it needs to underpin a massive expansion in its nuclear power industry. Chinese officials this week announced they would start building five extra power plants this year on top of the 24 already under construction and 11 already in operation. Chinese analysts say the country's dearth of uranium is "the tiger in the road" to fulfilling its nuclear power ambitions and that Australia is the most obvious solution. 'There are not enough uranium resources in China to support the aggressive nuclear power development plan for the next 20-30 years,' said Professor Liu Deshun, of China's Institute of Nuclear and New Energy Technology. 'Australia has the uranium resources that could be exported and in China we have the demand,' he said. The acceleration of China's nuclear power plans stems from mounting concerns about climate change, energy security and the more immediate task of kick-starting the economy as part of the Government's 4 trillion yuan stimulus plan. Vice-Premier Zhang Dejiang announced at a Beijing conference this week that China would 'accelerate the development of nuclear power and increase the ratio of clean energies like nuclear power'. But a Chinese official at the same conference raised concerns about nuclear waste disposal and operational safety. 'If we are not fully aware of the sector's over-rapid expansions, it will threaten construction quality and operation safety of nuclear power plants,' said Li Ganjie, director of National Nuclear Safety Administration. Chinese companies are lining up to invest directly in Australian uranium mining and exploration companies and sign long-term supply contracts with Australia's established mining companies, if expansion plans receive Government approval."
Billions in uranium bound for China
The Age, 22 April 2009

"The high oil prices in July 2008 were not due to manipulation, but as a result of complex market dynamics said Pierre Barbi, a senior director at French international oil company Total. 'There was a good reason for the market to spike in 2008. We have never before seen the kind of oil demand that we saw from 2003-04 onwards. This justified the big increase in prices,' , said Barbi, speaking at the Middle East Petroleum and Gas Conference 2009 in Dubai on 20 April. 'As a result, Opec increased its production to around its maximum capacity. Then people started to focus on peak oil [a peak in global production levels which cannot be surpassed],' added Barbi. 'In 2006, we saw a big increase in the level of inventories and a surge in stocks globally, and as a result Opec decreased production.'This, accompanied by the increasing presence of financial players in the market who increased the volume of trading, aided the peak in prices seen in July 2008 when the US' benchmark West Texas Intermediate (WTI) crude traded at $147.50. 'Oil markets do not suffer from major malfunctions,' he said. 'They do suffer from distortions which can be solved by light-touch regulation.' Governments should apply regulation to non-conventional oil traders such as banks and other financial institutions, he said."
Oil price peak not due to manipulation, claims Total
Middle East Business Intelligence, 22 April 2009

"Gordon Brown is to risk a clash with the green movement by throwing the government’s weight behind the construction of a new generation of coal-fired power stations. Ministers intend to give power companies permission to construct at least two new coal-fired stations, with more to follow. The move will anger climate change scientists and campaigners because coal produces more CO2 for each unit of energy generated than any other fuel. Brown and Ed Miliband, his energy secretary, will argue that Britain urgently needs more coal-fired generating plants to prevent future power shortages as old plants are shut down. They will soften the blow by pledging that any new plants will be designed so they can be fitted at a later date with equipment to capture CO2 — a technology that is still unproven. The plan may also be mentioned in Alistair Darling’s budget this week. The government is understood to want initially to approve 2.5 gigawatts (Gw) of generating capacity. This is equivalent to two fairly large power stations. The proposed plant at Kingsnorth in Kent, seen as the most likely to be approved first, would generate 1.6Gw. The plant has already been the focus of large-scale protests by green activists....In theory, so-called carbon capture could be capable of capturing up to 90% of the CO2 emissions from power plants. It would then be pumped underground for permanent storage. However, no industrial-scale CCS plant has yet been built anywhere in the world and the technology remains unproven. Britain burns about 63m tons of coal a year, with 84% used to generate power. Coal-fired plants generate about a quarter of the 560m tons of CO2 that Britain produces each year."
PM stokes row with ‘clean’ coal plan
Sunday Times, 19 April 2009

"The good news for Britain's energy supply is that the sheer scale of the recession has cut our electricity demand and carbon emissions. An impending energy security crunch has been postponed. The bad news is that the recession will almost certainly delay investment in Britain's energy infrastructure and encourage complacency....For the past two decades we have had ample reserves to absorb the shocks: now the margins are beginning to wear thin. Many of the existing power stations were built in the 1970s or earlier. All the coal-fired stations are more than 30 years old, as are most of the nuclear ones. They are all coming to the end of their lives and their reliability is inevitably beginning to suffer. Although significant numbers of gas power stations have been added, North Sea gas and oil supplies have been depleted at breakneck speed. After decades as an energy exporter, Britain now relies increasingly on imports of gas and coal. By [2015].... the remaining coal power stations will be facing closure because of the pollution control requirements of the EU directive on large combustion plants. By then all except one of the existing nuclear stations will also be closed or facing closure. Having to replace so much coal and nuclear capacity in such a short period is unprecedented - except perhaps in wartime. And at the same time because of the EU Renewables Directive the Government has committed itself to a crash programme to increase wind's share of electricity generation from the current 5 per cent to perhaps 35 per cent by 2020.... [Wind] is also expensive and may even reduce the security of supply. It is uncertain too. Few think that wind supply on this scale will be achieved - though, unsurprisingly, few politicians will admit this in public. The security problem arises because wind is intermittent. When it does not blow, back-up capacity is needed; and when it does blow, it reduces the profitability of power stations whose alternative energy supplies it displaces. If current capacity were around 70GWs, by 2020 even if demand stayed the same we might need as much as 90-100GWs of capacity to meet peak demand. So not only do we need to replace at least 30GWs of existing power stations, but we also need to add another big tranche of capacity to support the vagaries of wind power. Wind power is largely additional to the existing system: it does not replace the capacity that is being closed.... We will be lucky if even a single new nuclear station comes on stream by 2020. The carbon emissions from new coal stations will need to be sequestrated underground, and that technology is not likely to be commercially available until well after 2020. So before 2020 it would have to be 'unabated' coal - which sits uncomfortably with the climate change objectives....The Russians are not increasing investment in new gas resources and doubts remain about their ability to meet Europe's demand. Liquefied natural gas will be used to plug this gap, but the sources of supply are quite limited and again lots of other countries (especially the US and Japan) will want it too. The scale of the investment required to plug the energy gap while pursuing renewables is enormous. The cost of building not only power stations, but also new transmission networks and gas storage facilities, fitting smart meters, developing an offshore wind industry and implementing energy efficiency measures will run to tens of billions, possibly more than Ł100 billion in the next decade. Though the recession has brought a breathing space on the demand side of the equation, it has markedly worsened investment on the supply side. The credit crisis has made it harder and more expensive to finance investment; just when the investment is needed, finance has dried up. ... Unless reform is quick, the best hope for Britain's energy supply from a security perspective is that the economy does not recover quickly - a long hard Japanese-style recession would keep demand (and carbon emissions) low. But that's hardly a sound energy policy."
We are six years away from an energy crisis
London Times, 16 April 2009

"The rebirth of Britain’s nuclear power industry moved closer yesterday after the Government announced a list of sites for new reactors. Each of the 11 proposed nuclear power stations, which will be built on sites from West Cumbria to the Kent coast, will cost nearly Ł4.5 billion and have a capacity of up to 1,600 megawatts of electricity, enough to supply two million homes for up to 60 years. But energy experts warned that the first plant would not be operational before 2017 at the earliest, too late to plug a gap opening up in Britain’s energy supplies as ageing coal and nuclear power stations close. The gap is likely to be filled by the rapid construction of gas-fired power stations, which are powerful and relatively quick and cheap to build....Craig Lowrey, head of energy markets at EIC, an independent consultancy, said that the new plants would not help Britain to avoid a dangerous slide towards an overreliance on electricity produced from gas-fired power stations, just as domestic supplies of gas from the North Sea are running short and Britain is seeking to slash its carbon emissions. 'The UK is potentially in quite serious trouble,' he said. 'We are set to lose a quarter of our current generating capacity before [the first nuclear plant is built] and it is not clear how that gap is going to be filled.' The total generating capacity of Britain’s current fleet of power stations, including coal, gas, nuclear, hydroelectric, wind and biomass stations, is about 83,500 megawatts. Ageing nuclear plants are due to be closed. A number of coal-fired stations are also set to close by 2015 to meet new emissions rules. Dr Lowrey said that the Government’s failure to take firm early action meant that it was now inevitable that the gap would be filled by new, easy-to-build gas-fired power stations. However, the depletion of North Sea gas means that Britain will be forced to import more and more raw fuel from countries such as Russia, Algeria and Qatar, while consumers will be left increasingly exposed to fluctuations in the wholesale price of gas. Official figures show that the share of Britain’s electricity produced by burning gas has risen from 2 per cent in 1992 to 35 per cent today. It is expected to rise further, with gas-fired plants under construction at Pembroke in Wales, the Isle the Isle of Grain in Kent and Langage, near Plymouth. Dr Lowrey also gave a warning that the replacement of ageing power stations with new gas and nuclear plants and wind farms would be an enormously costly exercise that would hit consumers in the pocket. Calling for greater state involvement in the programme, he said: 'You cannot underestimate what the impact of this will be on consumers’ electricity bills.'"
All-clear for nuclear plants ‘too late to plug power gap’
London Times, 16 April 2009

"Deflation has returned to the US for the first time in more than half a century, taking the pressure off cash-strapped consumers but raising the stakes in the Obama administration's battle to restore economic growth. Consumer prices were 0.4 per cent lower last month than in March 2008, the first year-on-year drop since August 1955, as the effects of last summer's oil price collapse fed through into energy bills....David Buik, a market analyst at BGC Partners in London, said the March deflation may prove only temporary. 'The decline in year-on-year terms is all due to the spike upwards and subsequent reversal in energy prices last year – it does not reflect the beginnings of a widespread deflation this year. With oil prices now stable at close to $50 a barrel, there is no near-term prospect of a further substantial decline in energy prices.'...Consumer energy bills have plunged 23 per cent since March 2008, according to yesterday's figures. Transportation costs – including petrol prices and the cost of new and used cars – were down 13 per cent. Most other bills are rising on a year-over-year basis, however, with health care, education and food among the most robust."
Oil price fall sees deflation return to US for first time since 1955
Independent, 16 April 2009

"Armenia is now free of Soviet control. But the Turkish-Armenian border, sealed during the Cold War years when it marked the tense boundary between Nato and the Soviet Union, remains closed. And though Armenians gaze across at Ararat’s elusive peak, they still cannot cross over into the lost provinces of their historic homeland that lie in northeast Turkey. Something, however, may at last be moving. Ali Babacan, Turkey’s Foreign Minister, will visit Yerevan today for a meeting of the Black Sea Economic Cooperation Council, an 11-nation regional grouping set up in 1992. But the real issue for him and for his Armenian hosts is the border. Can both countries set aside their historic animosities and suspicions and dismantle the last Cold War barbed-wire barricades? An open border would not only bring huge economic benefits to both sides: it could also help to thaw one of the last “frozen conflicts” in Europe’s backyard, the military stand-off between Armenia and Azerbaijan over control of the ethnically Armenian enclave of Nagorno-Karabakh. It could also help Russia to regain its balance within the turbulent Caucasus and Turkey to extend its reach to its cultural Central Asian hinterland....Reconciliation with Armenia, however, and an end to the Caucasus stalemate could benefit everyone. It would confirm the status of Turkey as the superpower within the Black Sea council. Turkey may look to the EU as a supplicant, but to its neighbours it looks an economic giant. Armenia, blocked to the north by the instability in Georgia and fearful of being too dependent on Russia, would have an alternative outlet to the world through Turkey. And economic cooperation could soothe historic hatreds. For Russia, there would also be gains. Paradoxically, the Russians have never had better relations with Turkey than now, largely because of the huge volume of trade, the massive flow of Russian tourists and the reduced threat from a Nato member on Russia’s borders. But these smooth relations are fragile. Historic competition for influence and for the region’s energy resources could flare up again. Russian actions in Georgia raised hackles in Turkey."
A promise of peace in the shadow of Ararat
London Times, 15 April 2009

"Biomass power - such as burning wood for energy - could do more harm than good in the battle to reduce greenhouse gases, the Environment Agency warns. Ploughing up pasture to plant energy crops could produce more CO2 by 2030 than burning fossil fuels, if not done in a sustainable way, it said. Its study found waste wood and MDF produced the lowest emissions, unlike willow, poplar and oil seed rape. The EA wants biomass companies to report all greenhouse gas emissions. The agency is calling on the government to introduce mandatory reporting of greenhouse gas emissions from publicly-subsidised biomass facilities, to help work out if minimum standards need to be introduced. Wood-burning stoves, boilers and even power stations are seen by many as critical to Britain's renewable energy targets. Biomass is considered low carbon as long as what is burnt is replaced by new growth, and harvesting and transport do not use too much fuel. The EA's report reiterated the belief that biomass had the potential to play a 'major role' in producing low carbon, renewable energy to help meet future energy needs and help cut greenhouse gas emissions. But the report Biomass: Carbon Sink or Carbon Sinner also found that the greenhouse gas emission savings from such fuels were currently highly variable. At its best, biomass could produce as little as 27kg of CO2 (equivalent) per megawatt hour - 98% less than coal, saving around two million tonnes of CO2 every year. However, the study also found that in some cases overall emissions could be higher than those of fossil fuels. This was particularly true where energy crops were planted on permanent grassland, it said."
Biomass energy 'could be harmful'
BBC Online, 14 April 2009

"All that separates Armenia and Turkey is a narrow bridge across the River Araks and almost a century of enmity that began with the massacres of Armenians in Ottoman Turkey in 1915 and continued with the Iron Curtain that divided the Soviet Union from the West. The Soviet legacy in the Caucasus and the painful burden of history have conspired to keep the border closed long after the end of the Cold War. Now more than 70 years of separation may be only weeks from ending as relations between Turkey and Armenia undergo a remarkable thaw. The opening of the border is being seen as a pivotal moment in Turkey’s rise as a major force in the Caucasus and beyond to Central Asia. With Russia also resurgent in the Caucasus after last summer’s war with Georgia the stage is being set for an intensified struggle for control of the region’s energy resources....The West views the Caucasus as a key channel for pipelines to link Central Asia’s massive oil and gas reserves with Europe, bypassing Russia. The opening of the border has special resonance in Margara, however, an impoverished village 40km (25 miles) from Yerevan, where refugees crossed the river to safety."
World Cup invitation brings down final part of Iron Curtain
London Times, 14 April 2009

"Britain’s wind energy industry increased its call for state aid yesterday, after new figures showed that investment in the sector has collapsed by nearly 80 per cent. The amount invested in British renewable energy schemes, including wind, solar and wave power, fell from Ł377 million during the first three months of last year to Ł79 million during the same period this year, according to figures from New Energy Finance, a research group that monitors industry trends. The figures have raised fresh questions over the Government’s ability to fulfil its pledge to slash Britain’s carbon emissions and produce more than one third of the country’s electricity from green energy by 2020. Adam Bruce, the chairman of the British Wind Energy Association, (BWEA), said that the figures reflected the need for the Chancellor to introduce new measures to support the industry, which is struggling to secure finance because of the credit crunch. It is also suffering from the weak pound, which has driven up the cost of turbines and other equipment — most of which is produced outside Britain — and the falling price of coal, oil and gas. There were signs yesterday that the Government was considering the inclusion of measures in the April 22 Budget to prevent the cancellation of large projects such as the London Array, a Ł3 billion scheme to build the world’s largest offshore wind farm in the Thames Estuary, which Gordon Brown has backed....Paul Golby, chief executive of E.ON UK, one of Britain’s 'big six' energy companies and one of the project’s backers, told The Times he now thought that it would be impossible for the country to meet its target of generating 15 per cent of total energy from renewable sources by 2020, which amounts to 35 per cent of its electricity. The target is a key part of Britain’s promise to cut its carbon emissions by 80 per cent by 2050."
Green energy feels the chill in harsh economic climate
London Times, 11 April 2009

"The International Energy Agency expects global oil demand to decline by 2.4 million barrels a day this year, about the same amount that Iraq produces, as the economic slump reduces consumption to the lowest since 2004. The adviser to 28 nations cut its 2009 forecast for an eighth consecutive month, slashing last month’s estimate by 1 million barrels a day, or 1.2 percent, to 83.4 million barrels a day. The IEA also said oil supply from outside the Organization of Petroleum Exporting Countries will drop this year. 'The pace of contraction is close to early 1980s levels, with a growing consensus that economic and oil demand recovery will be deferred to 2010,' the Paris-based adviser said in a monthly report today. Demand will shrink by 2.8 percent this year as worldwide gross domestic product shrinks by 1.4 percent, according to the IEA, which until now had assumed the global economy would expand in 2009. The decline outpaces supply from OPEC’s third-largest producer, Iraq, which last month pumped 2.27 million barrels a day. The outlook 'implicitly discards' the agency’s earlier view that industrial activity, and demand for fuels, would recover in the second half of the year. Consumption during the first three months of this year was revised lower by 700,000 barrels a day. The collapse in demand will be concentrated in the world’s most developed nations, the Organization for Economic Cooperation and Development, where an 'unusually severe recession' will curb consumption by 4.9 percent this year. As a result, crude inventories in these nations are at their highest since 1993, the IEA said. Stockpiles were equivalent to 61.6 days of consumption as of February. In December, OPEC ministers had expressed concern that a level of about 57 days was too high. Non-OPEC supply will fall by 300,000 barrels a day this year, a second annual decline, to 50.3 million barrels a day. This is 'largely because of adjustments on the biofuels side,' David Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris. That forecast is 320,000 barrels a day lower than last month’s, when the IEA expected non-OPEC output to be unchanged year-on-year. Supplies from outside OPEC may be curtailed by a further 360,000 barrels a day by the end of next year because of spending cuts in North America, the North Sea and Russia....Over the next five years global supplies will be 'severely constrained by today’s lower prices and lower investment,' the report said. Spending on new production will likely be constrained by around 20 percent this year."
IEA Cuts Oil Demand Forecast to Lowest in Five Years
Bloomberg, 10 April 2009

"French power station leading the way in the world's sluggish move towards using environmentally vital CCS technology The world's first retrofit of a power plant with carbon capture and storage (CCS) technology will begin operating this month in the south of France. At a power plant at Lacq, energy company Total has upgraded an existing gas-fired boiler with CCS technology – a crucial step towards reducing carbon emissions from fossil-fuel power plants worldwide....The 60m euro Lacq project will transport and store 60,000 tonnes of carbon dioxide every year in the nearby depleted gas field at Rousse – once the biggest onshore natural gas field in Europe, but which is now almost empty. It is the first to link together all parts of the carbon capture chain from burning natural gas to isolating CO2 from flue gases and burying it underground. Reusing an existing pipeline that has been transporting natural gas from Rousse to Lacq for 50 years, Total engineers plan to push the carbon dioxide from the power plant in the other direction, injecting the gas into the Rousse reservoir at a depth of around 4,500m. The Lacq project will run for two years, after which engineers will monitor the Rousse gas field to demonstrate that the carbon dioxide remains safely trapped inside. Last year, the Schwarze Pumpe power station in north Germany became the first demonstration experiment to build a a 12MW fossil fuel-fired boiler from scratch with full CCS – it will bury 100,000 tonnes of CO2 a year 3,000m below the surface of the depleted Altmark gas field....Despite agreement from almost all sides that CCS must be made commercial if the world can ever hope to meet its carbon-reduction targets, a full-scale system remains years away, largely because of the costs involved in its development. As a result, many leading power companies have been reluctant to fund CCS individually, arguing that governments should also shoulder some of the financial risks. The UK government wants to fund a single demonstration plant using post-combustion capture technology and is running a competition to decide which new power station will get the go-ahead. Within the next few weeks, ministers are expected to announce proposals on how to fund further CCS projects in the UK beyond the competition. But the British government's procrastination has forced many CCS projects planned in the past decade to be abandoned or moved abroad. These include BP's plans to build a carbon capture plant at Peterhead and Centrica's Eston Grange project....At Lacq, Total has fitted one of the plant's 30MW gas-fired boilers with oxyfuel technology, where the fossil fuel is burned in an atmosphere enriched with oxygen. The resulting exhaust gas is then composed almost entirely of carbon dioxide and water vapour, which can be easily separated and stored. 'Total needs to master this new technology,' said Luc de Marliave, climate change coordinator at the energy company. 'Oxycombustion had never been tested at this scale in such an integrated CCS scheme.'"
New era for fossil fuels as first carbon capturing power plant begins work
Guardian, 8 April 2009

"ConocoPhillips Chief Executive Jim Mulva didn't mince words with Wall Street analysts when, in the face of a slowing economy and lower oil prices, he outlined the oil major's nearly $2 billion cut in capital spending for 2009 and other belt-tightening measures. Against this backdrop, experts and energy company officials are now debating whether the cutbacks in production and infrastructure spending could lead to energy shortages and to another price spike down the road....The reduced activity reflects not only from depressed prices and demand, but also the lending structure between banks and independent oil and gas producers....While few experts call for a sharp price jump or oil shortage in 2009 or 2010, some warn that the collapse in prices could cause a big supply cut over the next few years. Experts at Cambridge Energy Research Associates, or CERA, a unit of IHS Inc.asserts that current scale-backs could hamstring the pace of future growth in crude stocks. The group's new 'Long Aftershock' study concludes that about 7.6 million barrels of oil per day, out of total potential future net growth of 14.5 millions of barrels a day from 2009 to 2014, are at risk. If all 'at risk' supply fails to materialize, the world's oil production capacity five years from now could reach 101.4 million barrels a day, down from the precollapse CERA projection of 109 million. Peter Jackson of CERA said world oil demand will likely fall in 2009 by about 1 million barrels a day -- faster than last year's decline. Demand could start picking up again in 2010. If project cutbacks continue, the flow of new oil may prove to be inadequate by 2014. 'If the recovery is gentle, there shouldn't be a problem, but if it's faster than expected and companies have cut back multiyear projects, we could see a return to the conditions that we saw last year,' Jackson commented. Energy producers face the double challenge of a current supply glut, coupled with relatively high costs of building energy projects. While oil prices are half of what they are a year ago, the price tag for building deep-sea oil rigs and other infrastructure remains about double what it was a decade ago, and hasn't fallen that much since energy prices burst last year."
Energy-spending cutbacks spark price-spike talk
MarketWatch, 8 April 2009

"Petroleos Mexicanos, the state oil company, may recover an extra 3 billion barrels from its Cantarell field, or 20 percent more than planned, by using a technology that extracts hard-to-reach crude. Pemex would inject so-called liquid foam to draw out oil from Cantarell’s rock under the process, Heber Cinco Ley, director of the Mexican Petroleum Institute, said in an interview April 6. The technology, which may be ready in three years, would shake loose oil that has seeped back into the rock walls after the field’s pressure fell, he said. The company’s output fell at its fastest rate since 1942 last year because of slowing production at Cantarell, which has lost pressure after producing almost a third of Pemex’s oil during the past three decades. The company expects to produce only half the 30 billion barrels Cantarell holds. Three billion barrels is enough to supply the U.S. for six months....The company is spending $29.1 billion on exploration and production at deepwater and onshore deposits through 2012 to offset Cantarell’s decline. Proved deposits at Pemex fell for a 10th year to 14.3 billion barrels last year. Chief Executive Officer Jesus Reyes Heroles said in August that output at Cantarell may fall 33 percent to 500,000 barrels a day by 2012, when it is expected to stabilize. The deposit once accounted for 2.2 million barrels a day, or about two- thirds of the company’s output. Pemex pumped 2.663 million barrels of oil a day in February, 8.5 percent less than a year earlier. Cantarell, stretched over 15,500 square kilometers in the Gulf of Mexico, fell behind Ku-Maloob-Zaap, an offshore field, as the second- largest field in Mexico in January. The company plans to raise $10.5 billion this year by issuing local and international bonds and taking loans from commercial banks to pay for its $19.5 billion capital spending budget. The company registered in February to sell 70 billion pesos of bonds during the next five years in the local market. In 1938, President Lazaro Cardenas seized the assets of companies that later became Chevron Corp. and Exxon Mobil Corp., the world’s largest oil company. Mexico created Pemex later that year, and prohibited private, non-Mexican companies from exploring or producing oil until last October when Congress revised the law. Pemex remains the only domestic refiner."
Pemex May Squeeze Extra 3 Billion Barrels From Cantarell Field
Bloomberg, 8 April 2009

"The installation and adjustment of main equipment for the China Experimental Fast Reactor (CEFR) has been completed. The sodium-cooled, pool-type fast reactor is being constructed with some Russian assistance at the China Institute of Atomic Energy (CIEA), near Beijing, which undertakes fundamental research on nuclear science and technology....The thermal power of the CEFR is 65 MW, matched with a 25 MWe turbine generator. A 600 MWe prototype fast reactor is envisaged by 2020 and there are outline plans for a 1500 MWe version by 2030. In October 2008, the Russian-Chinese Nuclear Cooperation Commission called for construction of an 800 MWe demonstration fast reactor similar to Beloyarsk 4, currently the world's only commercial fast breeder reactor. Unlike most of the reactors used today for nuclear power generation, fast neutron reactors (FNRs) make maximum use of uranium resources by generating a certain amount more fuel than they consume. They do this by using fast neutrons to 'burn up' uranium and plutonium mixed oxide (MOX) fuel, which can be surrounded a uranium 'blanket' in which slightly more plutonium is created than is used. The MOX fuel uses the plutonium recovered when spent fuel, including that from conventional light water reactors, is reprocessed."
Chinese fast reactor nears commissioning
World Nuclear News, 7 April 2009

"Total SA, Europe’s third-largest oil company, may postpone an investment decision in the Joslyn permit of Canada’s oil sands due to costs and has suspended and may dismantle a pilot project. 'The final investment decision on Joslyn may be pushed back a few months,' Total spokesman Kevin Church said by telephone today, adding the production potential of the project is 230,000 barrels of oil a day. 'We are studying costs and talking to the contractor.' Total was scheduled to make a decision on Joslyn, in which it has a 74 percent interest, at the start of next year. A Total production unit within the permit that started in 2006 didn’t reach an expected output level and has been stopped, the Paris- based company said in its 2008 annual report published on its Web site April 3. 'Both the mothballing of this site’s facilities and the possible complete removal of assets from this site are being studied,' the report said. Reserves for the site were 'debooked' from the end of last year. Total earmarked more than $10 billion during the next 10 years to boost production from Alberta’s oil sands, which are about 750 kilometers (466 miles) northeast of Calgary and are estimated by the provincial government to hold the largest oil reserves in the world outside of Saudi Arabia. Total has said it will make final investment decisions on projects in the region next year and that developing the reserves are an 'important part' of its strategy. The Joslyn pilot project using a technology called steam assisted gravity drainage, or SAGD, did not reach the expected 10,000 barrels a day production plateau 'due to constraints on the pressure of the steam being injected,' Total said in the report. The company had expected to reach this peak output as early as the beginning of last year through the use of the technique to extract oil from the tar sands using steam rather than mining equipment. Pairs of wells are drilled in the oil sands and steam is pumped through one, heating the bitumen and allowing it to flow out the other. The Joslyn permit is expected to be developed through mining techniques in two development phases of 100,000 barrels a day of bitumen each, according to the Total report. Joslyn’s production potential compares with Total’s overall output in the fourth quarter of last year of 2.35 million barrels of oil equivalent a day."
Total May Delay 230,000 Barrel Oil-Sands Project
Bloomberg, 6 April 2009

"BP Plc, Total SA and Royal Dutch Shell Plc are asking oilfield-service companies to cut project costs by up to 40 percent as the industry battles its worst slump since the mid-1970s. Executives at contractors including Technip SA, CGGVeritas and Saipem SpA said Europe’s biggest oil companies are pressing for discounts. In response, operators says they cut the number of working drilling rigs by more than 25 percent and next will take oilfield vessels out of service, threatening jobs. Projects in the Canadian oil sands, where reserves are hard to access, and marginal shallow-water fields are being trimmed, slashing the world drilling-rig total to a three-year low. The 64 percent plunge in oil from its July peak to about $50 a barrel is deterring new investment and leaves the services industry, valued at more than $60 billion, vulnerable as the order backlog shrinks. 'The pressure is much higher' than last year to make cuts, Thierry Pilenko, chief executive officer of Technip, Europe’s second-largest oilfield-services provider, said in an interview at a Paris oil conference last week. 'Total are talking about 20 percent, BP are talking about 40 percent, going back to the cost environment of 2004. That is much more difficult.' The global rig count fell for five straight months, declining 7.4 percent in February to the lowest since April 2006, according to data published by Baker Hughes Inc. Operating rigs decreased 28 percent from 3,557 in September, the biggest drop since the last recession in 2001 and 2002."
BP, Total Tell Suppliers to Cut Costs Amid $50 Oil
Bloomberg, 6 April 2009

"Crusader Energy (KRU) filed for bankruptcy Monday. Other oil and gas producers will likely follow. Like the Oklahoma City-based producer, many other over-stretched small energy firms are seeing their booked reserves - the main collateral offered banks in exchange for loans - shrink due to low prices. That's causing creditors to tighten credit lines and, in some cases, demand repayment. Small operators like Crusader, which relied on debt to fund drilling and asset purchases during the recent boom in oil and gas prices, are in increasingly fragile situations."
Small Oil, Gas Producers Struggle With Debt Crunch
Dow Jones Newswire, 2 April 2009

"China's energy sector will table a plan to nearly double its 2020 nuclear power capacity goal and is urging firms to acquire uranium abroad to build a fuel reserve, state press said Monday. The country's energy administration wants to increase capacity to 75,000 megawatts, up from the 40,000 it had called for in a plan put forward in 2007, the Shanghai Securities News said. The revised plan will soon be submitted to the State Council, the cabinet, for approval, Cao Shudong, a senior official with the National Energy Administration, told the paper. The 75,000 megawatt plan was 5,000 megawatts more than previously reported. China currently has a combined capacity of 9,100 megawatts at 11 nuclear reactors, Cao said, meaning the new plan, if approved, would call for an ambitious programme to construct new plants. In the past year, China has approved the building of 40 nuclear reactors, Cao said, while the construction of several plants has already started. China is banking on nuclear power as a cleaner alternative to coal, which currently covers about two thirds of its energy demand. Chinese companies will also be encouraged to buy overseas uranium mines, as the lack of the resource is increasingly straining the country's ability to boost nuclear power supply, Cao said."
China energy arm plans to up nuclear capacity
Agence France Presse, 30 March 2009

"Labor's return to government in Queensland has halted the expansion of the uranium industry in the Sunshine State at a time when the mining sector is suffering thousands of job losses. The debate over uranium mining became an election issue after former LNP leader Lawrence Springborg threw his support behind the industry. But the LNP's defeat means the status quo continues in the mining state, with only uranium exploration allowed. Mining of the resource is still not allowed....The Australian Uranium Association said there were between three and five good prospects for mines in Western Australia. South Australia, with BHP's massive Olympic Dam mine and the Northern Territory, with ERA's Ranger mine, are both pro-uranium states. Victoria and NSW have blanket bans on both exploring and mining uranium. The latest exploration spending figures from the Australian Bureau of Statistics show that uranium exploration spending in the December quarter 2008-09 was $51.9 million, down from $56.7 million in the preceding September quarter and down $17.7 million compared with the previous corresponding period. The executive director of the Australian Uranium Association, Michael Angwin, said earlier this month that the latest results represented the first decline in spending on uranium exploration for at least five years. But the figures had also been previously enhanced by exploration activity at Australia's two biggest operating uranium mines. Those drilling programs have now either ceased, in the case of Olympic Dam, or are being wound up, in the case of the Ranger mine. 'We can expect that these reductions in activity, coupled with the anticipated contractionary effects of the global financial crisis, will see the decline in exploration spending continue for some time,' Mr Angwin said. But Mr Angwin said the long-term fundamentals of the uranium industry were extremely sound. 'World uranium demand is growing steadily and continues to outpace supply,' he said. 'The best evidence available suggests a profound shift towards low-carbon nuclear energy is under way around the world, and Australia's uranium industry is well placed to seize the opportunity this presents.' Energy Resources of Australia, a subsidiary of Rio Tinto, is also confident of the long-term demand for uranium. In its annual report this month, the company said the supply and demand for uranium markets pointed to sustained higher prices in the medium term."
Uranium on hold after Labor's state victory
The Australian, 30 March 2009

"The world may no longer be flat very soon. Contrary to what Thomas Friedman told us after his analysis of globalisation, the world will indeed become a 'whole lot smaller' very soon, if a top Canadian economist is to be believed. Jeff Rubin, who quit as chief economist of Canadian Imperial Bank of Commerce (CIBC) here Friday to promote his book 'Why Your World Is About to Get a Whole Lot Smaller,' said the coming oil scarcity will change the world more profoundly than any other crisis. He added, 'We have all got our eyes right now on the global financial meltdown, but I believe that oil scarcity will change the global economy even more profoundly and in the process change all of our lives - from where we work to where we live to what we eat.' The Canadian economist said his analysis of the oil economy for over 20 years led him to believe that its (oil's) scarcity will be the end of globalisation."
Oil scarcity will spell end of globalisation: Economist
Economic Times, 28 March 2009

"Ministers were last night considering fresh incentives designed to spur investment in renewable energy amid evidence that the credit crunch is threatening government energy targets. The Energy Minister hit back at claims that the Government was failing to deliver on an ambitious plan to foster a green energy revolution by building thousands of onshore and offshore wind turbines. Mike O’Brien told a meeting of renewable-energy chiefs that he was determined that Britain would meet its goal of generating as much as 35 per cent of all UK electricity from wind, wave and solar power by 2020, up from less than 5 per cent at present. Responding to news of a further collapse in financing for the UK wind industry, he said that the Government was examining new ideas to increase investment, which has been hit by the recession as banks rein in lending and the price of conventional fuels plunges. Mr O’Brien said: 'We are fully aware of the investment challenges facing some parts of the industry. We are examining how we can help ensure there is sufficient finance and other support available for viable projects which are short of the investment they need.' Mr O’Brien was speaking after The Times revealed yesterday that Iberdrola Renovables, the Spanish energy company that is the world’s largest investor in wind energy, plans to cut its UK investments in renewable electricity this year by up to 40 per cent from as high as €700 million in 2008 to €400 million (Ł374 million). Iberdrola, which blames the cut on the global economic crisis, said that it remained committed to the UK market and hoped to raise the level of investment when conditions improved. However, Xabier Viteri, the chief executive, also cited delays in securing planning permission and access to National Grid connections as threats to industry investment in the UK....Lifting the UK’s share of renewable electricity generation to 35 per cent will cost an estimated Ł100 billion, but a string of investments have collapsed in recent months because of the credit crunch. Onshore wind energy generated only 1.14 per cent of UK electricity in 2007 and offshore wind accounted for only 0.2 per cent. Hydroelectric schemes, some of which were built decades ago, accounted for the biggest single slice at about 1.3 per cent."
Ministers pore over incentives to save growth of green energy
London Times, 27 March 2009

"The latest setback to Britain’s goal of producing more than a third of its energy from renewable sources is the result of a global collapse in investment in green projects in recent months. The credit crunch has undermined developers’ ability to borrow to fund big wind and solar power schemes, while tumbling prices for conventional fuels like oil, coal and gas have undermined the economics of the renewables industry. Angus McCrone, of New Energy Finance, says that global investment in clean energy — including wind, solar, biomass and tidal — hit a peak of $155 billion last year, up from $148 billion in 2007. 'This year we will struggle to get anywhere near those levels,' he said. The restricted supply of finance could not have come at a worse time, amid growing concern about the need for urgent action to tackle climate change. The funding squeeze is likely to be a key consideration at a United Nations meeting in Copenhagen in December to hammer out a successor agreement to the Kyoto Protocol. Despite Gordon Brown’s ambitious talk of a renewables revolution, progress has been slow in Britain, which remains a relative backwater in terms of investment."
When oil, coal and gas are cheap, who is going to throw their cash into the wind?
London Times, 26 March 2006

"Shortly before noon on September 12, 2001, a visitor stopped by the palace, looking for Crown Prince Abdullah bin Abdel Aziz al-Saud, the Crown Prince. The man who now sits on the throne of Saudi Arabia was kneeling in shock and prayer. He had prayed there all night and had received news from Washington, but could still not believe that the hijackers who crashed their planes into New York and Washington were his countrymen. That experience is credited widely as part of the impetus behind King Abdullah’s attempts to reform his reactionary kingdom. But Saudi Arabia remains as he did that night – in deep denial. However, it is also a rich and powerful country on which the West depends heavily for oil, and those who do business with it have learnt better than to risk puncturing its self-deluding bubble....Terrorism remains its most sensitive point. Since September 11 Saudi Arabia has declared itself at the forefront of the fight against terrorism, cracking down on home-grown militants, inviting Western journalists to film its antiterrorist forces in training and launching a much vaunted project to rehabilitate violent Islamists. It also sought to remake its international image as a factory of extremism with the sponsorship of an interfaith conference in New York. But Saudi billions fund the promotion of extreme forms of Islam around the world. Saudi is the home of Wahhabism, the austere interpretation of Islam that it has pioneered and the faith espoused by Osama bin Laden and his al-Qaeda followers. An estimated $90 billion (Ł62 billion) of Saudi money has gone to build mosques and madrassas, distribute religious literature and fund Islam across the world, with a portion of it, according to terrorism experts, directly or indirectly funding the violent expression of those beliefs. Jonathan Evans, the director-general of M15, told the Government last year that the Saudi Government’s multimillion-dollar donations to British universities had led to a 'dangerous increase in the spread of extremism in leading university campuses'. Official slights like these are rare. Saudi Arabia, in the words of a former diplomat there, 'gets away with things other countries could not' because of the West’s dependence on it – for oil, for arms contracts, for intelligence, for military bases and for being a firm friend in an often unfriendly neighbourhood."
West turns blind eye to friend it dare not offend
London Times, 26 March 2009

"Britain’s ambition to become a global leader in renewable energy suffered a major setback last night when the world’s biggest investor in wind power said that it was slashing its investment programme. The announcement comes less than two months after ministers backed a string of huge gas-fired power stations, prompting concern that the Government cannot fulfil its promise of a green energy revolution. Iberdrola Renewables’ decision to cut its investment in Britain by more than 40 per cent, or Ł300 million — enough to build a wind farm powering 200,000 homes — is the latest obstacle to Gordon Brown’s target of generating 35 per cent of the country’s electricity from renewable sources by 2020. Lifting it to that level from the current 5 per cent would cost an estimated Ł100 billion. But wind energy investments have collapsed as funding dries up in the credit crunch and the price of oil, gas and coal has fallen. Delays obtaining access to the national grid and planning permission have compounded the industry’s woes. Shell and BP have shelved or pulled out of renewable energy projects, including a Ł3 billion project for 341 turbines in the Thames Estuary, and questions have been raised over the future of npower’s Ł2.2 billion Gwint y Mor farm off the Welsh coast."
Green energy plans in disarray as wind farm giant slashes investment
London Times, 26 March 2009

"The global financial crisis and collapse in the oil market have stalled vital investment in oil exploration and production and are likely soon to lead to a sharp spike in prices, an energy consultant and financier says. Matt Simmons, founder of Houston-based investment bank Simmons & Co, argues the underlying rate of decline of the world's aging oilfields is as much as 20 percent a year and only high levels of investment can reduce that to single digits. With credit tight and oil prices almost $100 a barrel below their highs last year, oil companies are unable to sustain previous levels of spending and the result is falling production, he said in an interview on Thursday. 'We are three, six, maybe nine months away from a price shock. We are not talking about three to five years away -- it will be much sooner,' Simmons told Reuters in London. 'These prices now are dangerously low. The lower prices fall, the less oil will be produced and the greater the chance of an oil spike,' he said....Simmons' concerns over the impact of the credit crisis and the dramatic fall in oil prices are shared by many other, more conservative bodies, including the International Energy Agency (IEA), which advises 28 industrialized nations. IEA Deputy Executive Director Richard Jones warned the oil market this week that so far as much as 2 million barrels per day (bpd) of new upstream capacity due to come on stream had been deferred for now due to lack of funds and low oil prices. The IEA is also worried recent cuts in oil production by the Organization of the Petroleum Exporting Countries in an attempt to bolster prices have left oil inventories dangerously low, leaving little room for maneuver when oil demand recovers. Simmons says many OPEC oil producers will find it difficult to bring output back to previous levels once prices recover. 'When you have an old oilfield whose flow is being maintained by extremely high levels of investment and you reduce production, you rarely if ever get back to where it was.' Because of this and natural declines in output, oil use may not need to rise much before production fails to meet demand. 'Unless oil demand falls by 10 or 15 percent per annum, which it is not going to do, then we don't need to wait for oil demand to come back before we have a supply crunch,' he said."
Financier sees oil shock from credit crunch
Reuters, 26 March 2009

"Britain’s largest oil storage facility has been put up for sale after its troubled American owner filed for bankruptcy protection from creditors. The sale of Sem Logistics, operator of more than 50 huge tanks at Milford Haven, Pembrokeshire, with the capacity to store 8.5 million barrels of crude oil, or about 10 per cent of global daily production, is being handled by Blackstone Group, the American private equity firm. The auction, which is well advanced, follows the collapse of Sem Logistics’ parent, the oil trading and services group Sem, which was once one of America’s 20 largest private companies. Last year it suffered hedging losses of more than $2 billion (Ł1.4 billion) when it was caught on the wrong side of the extreme volatility in global oil prices...The deep-water port of Milford Haven is one of the largest petro-chemical complexes in the United Kingdom. It hosts two refineries, which are operated by Chevron and Murco, as well as two new liquefied natural gas (LNG) terminals and the Sem Logistics crude storage site."
Sem Logistics oil storage site for sale
London Times, 24 March 2009

"A sharp drop in U.S. drilling spurred by lower oil prices, scarce funding and potential tax hikes may thwart the Obama administration's plans to end U.S. reliance on foreign oil. U.S. oil output is poised to rise 8 percent this year to 5.4 million barrels per day -- the first increase since 1991 after a six-year rally in prices fed exploration and production projects -- according to the U.S. Department of Energy. But the drilling spree has collapsed alongside a 65 percent slump in oil prices since last July, putting any increase in domestic output at risk and raising the specter of increased foreign dependence in years to come. 'Drillers are like farmers; we only increase activity when the future looks good,' said Dewey Bartlett Jr., who chairs the National Stripper Well Association. 'I'd expect a sharp decline in U.S.-produced oil and gas a year or two from now.' Since September, the number of U.S. rigs drilling for oil and natural gas has dropped almost 50 percent to 1,085 rigs, the quickest decline since 1986, according to data from oil services company Baker Hughes (BHI.N)."
U.S. may need more foreign oil as drilling falls
Reuters, 24 March 2009

"Milford Haven is one of the world's greatest natural harbours. 'How far is it/ To this same blessed Milford?' Leonatas Posthumus asks in Cymbeline. 'And by the way/ Tell me how Wales was made so happy as/ To inherit such a haven'. That happiness has now returned to this lonely Pembrokeshire inlet, brought by a red-hulled tanker as it rounded the headland and glided towards a gleaming steel and concrete jetty. It was carrying 216,000 cubic metres of liquefied natural gas (LNG) from Qatar, the first consignment in a vast new project to supply Britain with energy from the Gulf....The LNG terminal is a colossal project. It has taken six years to build, at a cost of Ł1.1 billion, and comprises a new jetty and five vast gas storage tanks, each of which could easily contain the Albert Hall. A huge pipeline, buried its entire length, runs 200 miles from Milford Haven, over the mountains of South Wales, to Gloucestershire, where it connects with supply routes to Birmingham and the rest of the country. Ships carrying gas refrigerated to minus 160C and compressed to one six-hundredth of its volume will arrive about once a week from Qatar at the South Hook plant, where it will be regasified. The LNG will account for around a quarter of Britain's gas consumption, and by 2020 imports will amount to 80 per cent of the UK's gas needs, compared with 28 per cent today."
Security in the Pipeline
London Times, 24 March 2009

"A Shell Oil official confirmed Friday that the 'in-situ' oil shale production the company is researching at its Mahogany facility near Rangely currently consumes about three barrels of water for every barrel of oil produced. But, he said, contrary to recent media reports on an environmental study of energy company water rights on Colorado’s Western Slope, Shell is not trying to 'corner the market on water' in the Colorado and White River basins. 'We’ve been working for quite a number of years to acquire a pretty broad diversity of water rights in different areas that will allow us to have the flexibility so that we can source water from different locations so that the impacts to the agriculture and the other historical and traditional users will be minimized,' said James Thurman, a government affairs manager for Shell....Thurman added, extraction technology is still being developed, and water-to-oil ratios could improve by the time oil shale production is commercially viable in the coming 10 to 15 years."
Shell official confirms thirsty nature of oil shale, denies push to ‘corner water market’
The Colarado Independent, 23 March 2009

"Exxon Mobil oil discovery off the coast of Brazil may hold enough crude to rival the nearby Tupi prospect as the Western Hemisphere’s largest find in three decades. Exxon Mobil’s Azulao-1 well tapped a reservoir that could contain 8 billion barrels of recoverable oil, said Luiz Lemos, a partner at TozziniFreire Advogados, a Brazilian law firm that represents foreign energy companies with projects in the South American nation....A floating drilling rig began boring a second well, called Guarani, into the reservoir in BM-S-22 earlier this week, said Patrick McGinn, a Houston-based spokesman for Exxon Mobil. 'We have no idea how big it is,' McGinn said in a telephone interview. 'We’re nowhere near that yet. It’s premature to speculate until all of the appraisal work has been done.'....Exxon Mobil Chief Executive Officer Rex Tillerson last week said oil from Brazilian fields in the area around Tupi probably won’t begin flowing onto world markets for years because of technical challenges and harsh operating conditions."
Exxon Mobil's Brazil 'very huge' oil discovery runs counter 'peak oil'
Business Intelligence Middle East, 20 March 2009

"Brazil needs $270 billion in investment over the next 10 years to develop massive new deepwater oil reserves, its energy minister said on Thursday. The largest oil discovery globally in at least 20 years could put Brazil among the world's largest oil producers, but needs huge investment. 'We need $270 billion and that will be just for 10 years,' Energy Minister Edison Lobao told reporters at an OPEC seminar. The money would come from state oil company Petrobras (PETR4.SA) own resources, from partnerships with big international oil companies and from development banks, he said. Falling oil demand, lower prices and tight credit have cast doubt over Brazil's oilfield development plans. Deepwater oilfields are among the most expensive projects and were among the first to feel cutbacks as the oil industry adapted to a lower price environment. U.S. crude CLc1 has fallen around $100 a barrel from a peak last July."
Brazil needs $270 bln over 10-yrs for deepwater oil
Reuters, 19 March 2009

"The U.S. Energy Information Administration expects Mexican oil production to slip 10% this year as the giant Cantarell oil field sheds production at an alarming rate, according to a report published on the EIA's Web site this week. Mexican oil production fell 9.2% last year and is down 21% from peak levels in 2004. If the slide continues it will put the country's economy at risk and strip the U.S. of a traditional source of crude imports within five years. 'The decline is driven mainly by falling production at the super-giant Cantarell field, which has only been partially offset by higher production from other areas,' said the EIA in its Mexico Country Analysis Brief. The EIA expects total Mexican petroleum liquids production, including crude oil, condensates and natural gas liquids, to average 2.9 million barrels a day this year and 2.7 million in 2010, down from 3.19 million in 2008. Last year Mexico slipped to seventh place in the EIA's global production ranking from sixth in 2007. '2008 was the first time since the 1970s that Canada's oil production exceeded that of Mexico,' said EIA spokesman Jonathan Cogan in an email to Dow Jones Newswires. State oil monopoly Petroleos Mexicanos expects crude production to fall only 1.4% this year to 2.75 million barrels a day, which would be a major achievement following the severe decline last year. Pemex's projections only include crude oil, excluding the other liquids included in the EIA estimates. The most recent Mexican output data for January paints a bleak picture - crude output slipped to a 13-year low of 2.69 million barrels a day, below Pemex's target for the year. Last year Cantarell output fell by one-third to an average of 1 million barrels a day, and stood at 772,000 barrels a day in January. Pemex still expects Cantarell to average 756,000 barrels a day this year thanks to increased investments in drilling and well maintenance. The EIA did not provide a specific estimate for Cantarell, but the International Energy Agency recently predicted average output at the field will sink to 600,000 barrels a day in 2009."
EIA Expects Mexico Oil Output To Drop 10% In 2009
Dow Jones Newswires, 19 March 2009

"Royal Dutch Shell provoked a furious backlash from campaigners yesterday when it announced plans to scale back its renewable energy business and focus purely on oil, gas and biofuels. Jeroen van der Veer, the chief executive, said that Shell, the world's second-largest non-state-controlled oil company, was planning to drop all new investment in wind, solar and hydrogen energy. 'I don't expect them to grow much at Shell from here, due to portfolio fit and the returns outlook compared to other opportunities,' he said, speaking at the Anglo-Dutch group's annual strategy briefing. He said that instead Shell would focus its remaining renewable energy investments on biofuels, where it is conducting research into 'second generation' fuels, so far with little commercial success."
Anger as Shell reduces renewables investment
London Times, 18 March 2009

"It sounds absurd, that a tiny market, buffeted by local news, should become a proxy for values across a nation, not to mention the world, but that is roughly what has happened in the global oil market. Consider the benchmark US crude blend, West Texas Intermediate. It is the foundation of the US Light Sweet Crude Oil contract, traded on the New York Mercantile Exchange. Nymex WTI is the most widely traded oil futures contract. Every 24 hours, the volume in barrels traded exceeds by three times the 85 million barrels of crude consumed daily round the world. The all-time 'peak' oil price of $147 per barrel recorded in July was a US Light Sweet Crude price. Then consider this: the daily output of WTI is less than 300,000 barrels. The Nymex contract is based on dwindling deliveries of WTI crude at a pipeline hub in Cushing, Oklahoma. It is a landlocked market serving Midwestern American refineries without access to the ocean. The WTI price is buffeted by refinery shutdowns, hurricanes and local bumps and wrinkles....Light, low-sulphur ('sweet') crudes, such as WTI or Brent, are becoming rare and the global oil market is shifting to the sour, heavier Russian and Middle Eastern grades."
Crude truth behind numbers that govern our lives
London Times, 18 March 2009

"Oil prices jumped Mar. 16 with crude topping $47/bbl after Federal Reserve Chairman Ben S. Bernanke said over the weekend the US recession likely will end this year if the government can revitalize the banking system....At KBC Market Services, a division of KBC Process Technology Ltd. in Surrey, UK, analysts said, 'OPEC finally admitted that the collapse of the world economy is too great a force to resist. If 4.2 million b/d of production cuts has not succeeded in moving the world oil price much above $45/bbl for any meaningful length of time, then another cut of 1 million b/d—widely thought to be under serious consideration—is hardly likely to do the trick. So OPEC decided to roll over its agreement and meet again in Vienna on May 28 to see if they can spot any green shoots of economic recovery.' Markets also were encouraged when Algerian Oil Minister Chakib Khelil said compliance with production quotas among OPEC members will improve to 95% by the time the group meets in May. Sources reported OPEC was in 79% compliance in February with its December decision, which in conjunction with an earlier quota adjustment was to have reduced output by 4.2 million b/d to 24.85 million b/d (OGJ Online, Mar. 16, 2009). However, crude prices were down in early trading Mar. 17. Jakob observed, 'Saudi Arabia has now to prepare for the US withdrawal from Iraq and probably did not want to upset the new US administration with an OPEC cut 2 weeks before the king meets [President Barack] Obama at the G20 meeting (Apr. 2). The Algerian oil minister has confirmed on different newswires that the G20 meeting was a 'factor' that led to OPEC (i.e. Saudi Arabia) leaving things unchanged over the weekend.' Analysts at Pritchard Capital Partners LLC, New Orleans, reported Saudi Arabia has reduced its production 18% to 7.86 million b/d since July and is willing to keep output below its quota level of 8 million b/d unless consumers want more. Analysts noted an oil price of $60-75/bbl will be necessary for production of higher-cost oil resources such as ethanols, tar sands, and heavy oils. In other news, Chevron Corp. said Mar. 16 it shut in 10,000 b/d of crude production in Nigeria after rebel attacks ruptured an oil pipeline at the Abiteye flow station near Warri in the Niger Delta. Pritchard Capital Partners reduced its crude price estimates to an average $52.50/bbl for 2009 from its previous projection of $60/bbl. The reduction was to $65/bbl from $75/bbl for 2010. It lowered its natural gas price estimates to $4.75/Mcf from $6.25/Mcf for 2009 and to $6.25/Mcf from $7.50/Mcf for 2010. 'Although the crude oil markets appear to have bottomed, signs of weakness in the natural gas markets persist. Lower-than-expected industrial and consumer demand coupled with an increasing potential for LNG imports and US shale resource plays taking flight should put downward pressure on natural gas prices through the first half of 2009,' analysts said."
Crude prices top $47/bbl in optimistic market
Oil and Gas Journal, 17 March 2009

"A price war between liquefied natural gas and coal could lead to the temporary closure of coalmines, according to leading energy consultants, because of a surge in shipments of the gas from the Middle East into Europe and North America. Gas prices, already tumbling as a result of the recession, are suffering a triple whammy, according to Cambridge Energy Research Associates (Cera): from recession in the Far East; a long-awaited build-up in new supplies of liquefied natural gas (LNG); and unexpected discoveries of new gas reserves in the United States. The emerging gas glut could even displace coal in the supply of fuel to power stations in Europe, Michael Stoppard, managing director of Cera, said. In the teeth of a recession, the LNG industry is about to take a big upward step, Mr Stoppard said. 'Over the next 18 to 24 months, LNG capacity will increase by 30 per cent,' he said. 'Where is the stuff going to go? The answer will be in the Atlantic basin.'....the gas market is braced for a surge in LNG output from Indonesia, Russia, Yemen and Qatar. Britain will be a significant beneficiary of imports of frozen gas from Qatar when South Hook LNG, a regasification terminal at Milford Haven, Pembrokeshire, receives its first cargo, expected next month. Natural gas prices have tumbled in recent months, falling in the United States from an average of $12.61 in 2008 to $4.54 in February. In Britain, the fall has also been precipitous, from $13.46 to $6.79. According to Mr Stoppard, it was assumed that America’s demand for power for air-conditioning in the summer would absorb any excess Asian LNG that found its way West. However, the unexpected discovery of new gas reserves in shale deposits has changed the equation....The price of coal has collapsed, peaking last year at $220 per tonne for deliveries into Europe and presently trading at about $60 per tonne. According to McCloskey Group, the price is dropping close to a level at which the economics of some Russian coalmines may come into question. 'Prices for coal out of the Baltic are around the level of cash costs,' Mr Howland said....The key question is whether enough LNG can make its way into the European market and displace other energy sources, according to Mr Stoppard. Britain will become a leading market for LNG with the launch of ExxonMobil’s South Hook terminal and the expansion of National Grid’s Isle of Grain facility in the Thames Estuary."
Surge of cheap gas may put coalmines out of action
London Times, 16 March 2009

"Last week saw a spate of new forecasts for the global economy and the demand for oil during 2009. The International Monetary Fund and the World Bank issued forecasts that were much bleaker than those issued by private forecasters. Both foresee the world economy shrinking for the first time since World War II. The three major oil forecasting organizations, the US’s EIA, the OECD’s IEA and OPEC, also issued increasing pessimistic numbers during the week. The EIA now foresees a 0.8 percent reduction in the world GDP during 2009 with a 2.6 percent rebound in 2010. Average annual world oil consumption is seen as shrinking by 1.4 million barrels in 2009. This is 3 million b/d lower than the forecast six months ago. The IEA now foresees global demand for oil in 2009 shrinking by 1.2 million b/d to 84.4 million b/d, a drop of 270,000 b/d since last month. The agency sees non-OPEC supply as stagnant at 50.6 million b/d during 2009. Problems in Azerbaijan and the major drop in Mexican production are seen as offsetting increases elsewhere. Despite the economic problems, the IEA still foresees Chinese demand increasing by 0.6 percent during 2009. The IEA continues to warn that the OPEC production cut of 4.2 million b/d, which they seem likely to accomplish, will continue for several months and that there is no growth in non-OPEC production, so world stockpiles will drop swiftly unless, of course, demand falls more than the 1.2 -1.4 million b/d currently forecast. The heart of the issue remains the course of the global economy and the success of the many stimulus initiatives currently underway."
Peak Oil Review
ASPO USA, 16 March 2009

"Saudi Arabia's oil minister said Monday that petroleum-producing countries need a price of at least $60 a barrel to bring more energy resources on the market. 'If we want all hydrocarbon resources developed worldwide, 40 dollars is not enough,' Ali al-Naimi told reporters in Geneva, where he was attending an energy conference. Crude oil returns are key, he said, because they can allow companies and countries to invest in new and potentially valuable fuel source such as ethanol, tar sands and heavy oils."
Saudi Arabia says oil needs to be at $60-$75
Reuters, 16 March 2009

"Russia announced Sunday that it is cutting oil exports - welcome news for OPEC oil ministers looking for ways to bolster prices by reducing supply without further hurting the global economy. Russian Deputy Premier Igor Sechin spoke to oil ministers of the Organization of the Petroleum Exporting Countries before they decide how best to support prices without sending a new shock through economies of major consumer countries battling with the fallout of the financial meltdown....Russia will 'be cutting oil exports while increasing domestic consumption and expanding oil refining, said Sechin, adding that his country also would delay the development of two oil fields in the northwest. And he told the OPEC meeting that Russian oil production had already decreased by 1.9 percent in the first two months of the year. The cuts appeared to be a way of dressing up Moscow's inability to keep up present output levels because of lagging investment that is expected to result in an output decline of around 2 percent this year. At its peak in early 2008, Russia was producing 9.5 million barrels of crude a day. One focus of the OPEC meeting is individual member compliance with cuts agreed on since September that were meant to take a daily 4.2 million barrels off the market. The 11 members under production quotas are still overshooting their joint daily target level of just under 25 million barrels by about 800,000 barrels a day."
Russia says it is cutting oil output
Associated Press, 15 March 2009

"The great American drilling boom is over. The number of oil and gas rigs deployed to tap new energy supplies across the country has plunged to less than 1,200 from 2,400 last summer, and energy executives say the drop is accelerating further. Lower prices are bringing to an end an ambitious effort to squeeze more oil from aging fields and to tap new sources of natural gas. For the last four years, companies here drilled below airports, golf courses, churches and playgrounds in a frantic search for energy. They scoured the Rocky Mountains, the Great Plains, the Gulf of Mexico and Appalachia. But the economic downturn has cut into demand. Global oil prices and American natural gas prices have plummeted two-thirds since last summer. Not even an unseasonably cold winter drove down unusually high inventories of natural gas. The drop has been good news for American consumers, with gasoline now selling for $1.92 a gallon, on average, down from a high of $4.11 in July. But the result for companies is that it is becoming unprofitable to drill. The reversal of fortune could have important implications for the future health of the nation’s energy companies, for consumer wallets and for national aspirations to rely less on foreign energy sources. The drilling cutback has been particularly stark for natural gas. Gas exploration had soared in recent years after technology advances enabled the exploitation of gas trapped in huge shale beds found around Fort Worth, western Pennsylvania, upstate New York and elsewhere. But that boom has created such abundant supplies that companies are not only drilling less but also deciding not to pump from wells already drilled....Energy experts and company executives warn that oil and gas companies now cutting back on investments will be unable to respond quickly to a future economic recovery. John Richels, Devon’s president, said that if the slump lasted two years, it could then take 18 to 24 months for companies to reassemble rig crews. That means a glut could rapidly turn to scarcity, sending energy prices soaring again. Already, experts are predicting that lower domestic gas production by the end of the year will require increased imports of liquefied natural gas from places like Qatar. Through most of this year, gas supplies are not likely to decline sharply because so many shale wells came on line recently. But those wells should start to decline in productivity by next year, potentially leading to tight gas supplies if industrial and residential use picks up significantly in the second half of 2010."
As Oil and Gas Prices Plunge, Drilling Frenzy Ends
New York Times, 14 March 2009

"A uranium supply crunch could be around the corner due to industry-wide cuts to development projects, rising demand, and uncertainty about Russia's plans for its decommissioned nuclear arsenal, the CEO of top uranium producer Cameco Corp (CCO.TO) said on Wednesday. Speaking at the Reuters Global Mining and Steel Summit in New York, Cameco Chief Executive Jerry Grandey also said the company planned to take advantage of low valuations among uranium miners to make acquisitions, and said deals worth more than $2 billion were a possibility....'I think the financial crisis is clearly impacting the ability of every supplier to raise capital,' he said. 'When you see project cancellations, you see expansion derail, you see some projects that will just go slower. That is just simply taking away future supply and sowing the seeds of the next spike in the uranium price.' Spot uranium prices have been among the most volatile in the resource sector over the past decade, rising from a low of $7 a pound in 2000 to a high of $136 a pound in 2007. Prices have since come down, and were at $43.50 on Wednesday. Despite the recent decline, Grandey said the industry's mined output still lags consumption that has risen due to the resurgence of nuclear power as a non-greenhouse gas producing alternative to fossil fuel generation. He said global mined output is 115 million pounds a year, compared with consumption of about 180 million pounds that he expects to grow at between 2 and 3 percent per year. The shortfall has been made up by stockpiles, as well as annual sales of about 24 million pounds of uranium from decommissioned Russian nuclear weapons, which Cameco manages along with two partners under a 1999 commercial agreement. That deal expires in 2013, and Grandey said questions linger about how much uranium Russia may sell past that date, and how much may have degraded past the point where it can be sold. He said many expect Russian sales could fall by half. 'Somewhere between 24 and 12 million pounds of supply will drop out after 2013,' he said. Also factoring into the picture is the future of Cameco's Cigar Lake mine, which Cameco had initially expected to come to production by 2007, but has been continuously delayed following a flood in 2006....Cameco had hoped to bring the mine -- which had been expected to produce 18 million pounds a year -- to production by 2011. The company recently dropped that target, and Grandey said he didn't want to speculate when it might be up and running. However, he said he was confident the high-grade mine would come to production at some point. 'We are absolutely dedicated to moving this project along,' he said."
Mining Summit-Cameco CEO sees uranium supply crunch,M&A
Reuters, 11 March 2009

"The Tories released figures from the National Grid showing that the UK now only holds enough gas to meet 4.1 days of demand. Gas reserves are usually at their lowest at the end of winter, but the current holdings are less than half the size of the 9 days of reserves held two years ago, and down from the 4.3 days in storage last year....Britain's maximum reserves are about 15 days' consumption. Germany and France can both hold around 100 days' of gas. Government sources insisted the reserve figures are "misleading." Because Britain routinely imports gas through several different routes, there is no realistic threat of supply interruptions, officials said. 'We get most of our gas from the North Sea and imports from Norway so we have less need for dedicated storage in comparison to other countries which are more heavily dependent on imports,' said Mike O'Brien, the energy minister."
Britain has only four days of gas left in reserves
Daily Telegraph, 5 March 2009

"Gazprom, the world's largest producer of natural gas, posted solid third-quarter profit but said it will be forced to cut spending this year due to falling demand in key markets. Natural-gas demand is crumbling in key markets as national economies slow, and gas-export prices are set to decline significantly later this year. As a result, state-controlled Gazprom's earnings are expected to fall throughout 2009, possibly affecting the Russian company's ambitious investment plans. Gazprom's output fell in the first two months of the year, and data from the first days of March show output down by one-fifth from average production in March 2008. This has triggered concern among analysts that lower demand will cut into its profit. 'The big question is how much demand will fall this year,' said Ron Smith, chief strategist at Russia's Alfa Bank. 'It's already clear we'll have to revise the production plan approved late last year,' said Andrei Kruglov, deputy chairman of Gazprom, noting lower demand in Europe, the company's key export market. 'We simply won't be able to sell such volumes,' he added. Mr. Kruglov also said Gazprom might revise its investment program several times this year. The company usually reviews its spending plans twice a year."
Gazprom Sees Drop In Demand, Output
Wall Street Journal, 4 March 2009

"US biodiesel exporters face additional tariffs after the European Union on Tuesday announced temporary anti-dumping and anti-subsidy duties . A European Commission trade committee has imposed tariffs ranging from €29 (Ł20.60, $36) to €41 per 100 kg for an initial period of six months, according to people familiar with the matter. The move is the latest in a series of transatlantic trade spats and comes at a time of rising fears over protectionism. It highlights the perilous state of an industry that is suffering overcapacity and thin margins. European producers blame their woes almost entirely on imports of US biodiesel, which benefit from a $1 per gallon government subsidy. Those subsidies, they claim, have helped US exports to Europe grow from just 60,000 tonnes in 2006 to more than 1.5m tonnes last year."
EU slaps tariffs on US biodiesel
Financial Times, 4 March 2009

"British industrial demand for electricity has fallen by up to 6 per cent over the past year as the recession bites. Dorothy Thompson, chief executive of Drax Power, who announced a 10 per cent fall in 2008 earnings to Ł454 million, said there were also signs that households were using electricity more frugally after unprecedented rises in electricity bills last year. Drax operates Britain’s largest power station, near Selby in North Yorkshire, where six coal-powered turbines produce about 7 per cent of the country’s electricity."
Drax reports less demand for power
London Times, 3 March 2009

"The IEA says global oil demand will drop by 980,000 b/d this year but will rise again by about 1 million b/d in 2010. IEA’s Nabuo Tanaka worried that demand will snap back, starting a trend that will lead to higher prices and no spare production capacity by 2013. (2/28, #4) The current financial crunch has already led to the postponement or cancellation of over $100 billion worth of oil projects in the past six months, which will aggravate the 'supply pathology' when recovery begins. (2/27, #20) The EIA predicted that world oil demand this year would fall by 1.17 million bpd from 2008 to 84.7 million. That would be down from peak demand of 85.9 million bpd in 2007. (2/27, #16) A new Deutsche Bank analysis finds that with investment now falling, the downside risks of low oil prices to supply forecasts are increasing. The average oil price necessary to achieve good return on new development projects is now $68/bbl in Angola, $62/bbl in the US Gulf of Mexico, $60/bbl in deepwater Nigeria, and around $60/bbl in Brazil (2/28, #21) BP’s oil and gas production business in the North Sea is unsustainable at current low oil prices and high costs. The cost of developing and running oil and gas fields in the North Sea has increased 50 percent since 2004, but the oil price is now back at 2004 levels. (2/24, #16) World oil production may slide rapidly over 3-4 years past 2009 due to a short burst in decline of the resource base, then reach a gentler decline regime after 2010. Production from the super-giant and giant fields is the cornerstone of modern oil production. In the top 20, 16 of them are in decline."
Peak Oil Review
ASPO, 2 March 2009

"Iraq hopes to turn around years of sluggish oil production and boost output by over 300,000 barrels per day (bpd) by the end of next year, its oil minister said....Iraq now produces an average of 2.3-2.4 million bpd, less than it did before the US-led invasion to oust Saddam Hussein in 2003 sparked years of bloodshed and destruction. It is also looking to boost exports, now averaging around 1.8-1.9m bpd, to 2m bpd this year. Exports, which have been hindered by technical problems, hit a post-invasion peak of 2m bpd last May. 'We are in a race against time. Every day that passes in which the oil industry is halted, we lose a chance to develop,' Prime Minister Nuri Al Maliki said at the conference."
Iraq plans to boost output to 300,000 bpd
Reuters, 1 March 2009

"A shortage of oil could trigger another global recession around 2013 – says the IEA. By 2010 the price will reach new highs. The IEA in Paris is warning of a new, much more severe global economic crisis around 2013. The reason is that investments in oil from new projects are being cancelled by large oil companies. If demand starts increasing in 2010, the oil price could explode, fire up inflation and put global growth at risk. 'We are concerned, that oil companies are reducing their investment levels. When demand returns a supply shortage could appear. We are even predicting that this shortage could occur in 2013.' Said Nobuo Tanaka, head of the IEA in an interview with Sueddeutsche Zeitung. He is alarmed, because he has data that shows that the global oil supply capacity is declining and that oil reserves will likely be markedly reduced by 2013. The stronger oil demand will be in a recovery starting in 2010, especially in the US, China and India, the sooner the shortage will appear and strangle global growth. According to the IEA, the oil price could then exceed the records achieved in the summer of 2008 and reach $200 per barrel. 'We could be steering into a new crisis which could be greater than the current crisis', said Mr. Tanaka. 'That is why we are warning oil companies to invest', said Mr. Tanaka. Despite billions in profits in the prior year, oil companies are cancelling their investments because at the current price of $40, they are barely profitable. The investment levels are already down 25% from a year ago. The OPEC countries are reducing production, because they do not see sufficient demand. Of 130 large oil projects, 35 have been frozen by February, said OPEC general secretary Abdullah al-Badri....The investments however, are necessary to meet demand when it starts picking up again. This is not a matter of oil running out, but IEA studies prove that the oil produced from 580 of the largest 800 fields is declining. The CEO of the French oil company Total, Christophe de Margerie, is even predicting that global production will never exceed 89 million barrels per day, because the peak has passed and oil can only be extracted with ever increasing technical inputs....Mr. Tanaka stated his intention to appeal to the governments. 'When the heads of state of the leading industrialised economies meet, we will be warning them about the consequences of lacking investment in the energy sector.'"
The IEA warns of shortages - 'The next oil crisis is coming'
Suedeutsche Zeitung, 27 February 2009

"Sam Laidlaw, chief executive of Centrica, has warned that coal plants fitted with carbon capture storage (CCS) equipment are unlikely to be ready to make big cuts in Britain's emissions before 2030. The country's geology is not suited to the technology, which is expensive and unproven, he said. This meant it would take 'at least 15 years and probably closer to 20 years' before companies were in a position to deploy the technology on a large scale. This week, energy and climate change secretary Ed Miliband confirmed reports in the Guardian that the government wanted to fund more than one CCS demonstration project to accelerate development of the technology. The government favours "post-combustion" technology which could be retrofitted to clean up existing coal plants to capture their emissions."
Carbon capture won't work until 2030, says energy boss
Guardian, 26 February 2009

"BP PLC's (BP) oil and gas production business in the U.K. North Sea is unsustainable at current low oil prices and high costs, a spokeswoman for the company said Tuesday. The company, which is one of the largest producers of oil and gas in the North Sea, needs to act quickly to make sure it can continue investment in business, she said. BP has opened talks with key contractors and suppliers about reducing costs. The talks are still at an early stage but BP is looking for a quick response from oil service companies, she said. 'It's essential to have these contacts if we want to sustain a successful business in the North Sea ... doing nothing is not an option,' she said. The cost of developing and running oil and gas fields in the North Sea has increased 50% since 2004, but the oil price is now back at 2004 levels, she said. BP wants to see a 'significant reduction' in costs, she said, without giving figures...Industry lobby group Oil and Gas U.K. said earlier this month that investment in the North Sea could fall 30%, accelerating production decline in a province that is already well past its peak."
N Sea Oil Operations Unsustainable At Current Price,Cost-BP
Dow Jones Newswires, 24 February 2009

"Analysts have long warned of a looming peak in non-OPEC production that could occur as soon as next year, but in a recent report, analysts at Merrill Lynch say the peak may already have happened. Merrill argues that production of crude in non-OPEC countries will not increase and, fuelled by the current slowdown in investment, could even decline by as much as two million barrels per day (bpd) by 2015. The investment firm’s views have widespread support among oil experts. 'Non-OPEC crude production is probably about as high as it’s going to get,' says Michael Rodgers, an upstream expert and partner at PFC Energy, the Washington-based consulting firm. 'We’ve been in a bullish oil price market since 2000. When companies were going 110 per cent on everything, we still weren’t able to increase our non-OPEC supply.' Over the past decade, international companies have tapped some of the most difficult and costly sources of oil in the world. In the Gulf of Mexico and offshore Brazil, firms have drilled the deepest holes on record. The next frontier will be the waters of the Arctic, experts say...In a landmark study released in November, the International Energy Agency (IEA), a Paris-based group of major energy consuming countries, concludes that production from existing oilfields worldwide is declining by 4.1 per cent per year. In non-OPEC fields, the figure is 4.7 per cent. Every two years, the oil industry must introduce new production equivalent to Saudi Arabia’s capacity in order to make up for reservoir depletion and satisfy growing energy demand, the IEA says. More of the world’s oil is coming from smaller fields, which decline faster than larger reservoirs. The problem is compounded by the economic crisis that has dried up investment in oil projects and threatens to create a supply crunch next year, when demand should pick up, warns the executive director of the IEA, Nobuo Tanaka. 'We are already seeing that decline rates are increasing, but if we don’t invest now it will start to increase even more,' he has told Reuters. 'The resources underground are there if we are prepared to invest.' Merrill Lynch says the credit crunch has hit the industry harder than expected and decline rates are expected to accelerate as investment drops. Allocations for capital expenditures are dropping at the big international firms and enhanced oil recovery and deepwater drilling will be hit hard. 'Broadly, oil production decline rates are a function of the size and age of the fields and investment rates' Merrill writes. 'In our base-case scenario we see non-OPEC oil production pretty much stuck in the current 49 million bpd to 50 million bpd range until 2015... Should production decline rates accelerate to 6 per cent, however, non-OPEC production could decline precipitously towards 47 million bpd."
The great oil output race
The National (Abu Dhabi), 21 February 2009

"Cameco Corp. is putting itself in position to consolidate the beaten-down uranium sector. The Saskatoon-based company announced yesterday it is raising as much as $460-million in a bought deal financing. Combined with its current cash position, Cameco will have a war chest that could exceed $700-million. And it made no mystery of what it hopes to do with the cash, noting it wants financial flexibility to allow it to 'take advantage of opportunities that may emerge from the current industry environment.' When the market meltdown began last fall, Cameco chief executive Jerry Grandey made it clear that he hopes to capitalize on the weakened conditions and make acquisitions. He struck one major deal last August, buying the Kintyre project in Australia from mining giant Rio Tinto Ltd. Rio Tinto is still looking to sell assets to pay down debt, and industry experts said yesterday that Cameco could be interested in Rio's Rossing uranium mine in Namibia, or some assets out of Rio subsidiary Energy Resources of Australia Ltd."
Cameco uranium war chest at $700M
Financial Post, 19 February 2009

"World oil demand could begin to peak over the next decade as worries over security of supply, extreme price swings and climate change force a move towards other forms of energy, consultancy Arthur D. Little said. In a report entitled 'The Beginning of the End for Oil?,' the consultancy's Peter Hughes suggests the extraordinary price moves over the last year, environmental pressures and concerns that most of the world's oil is imported from volatile regions has concentrated minds in the big consuming countries....'The penny has dropped. To varying degrees, governments across the globe are acknowledging publicly, many for the first time, that decreasing reliance on imported oil -- and quickly -- is becoming an energy policy imperative,' the report said."
Oil demand may begin to peak soon
Reuters, 19 February 2009

"Switch on the light. Is the filament glowing because of a heavy gust of wind, or is it nuclear fission? If you flick a switch today, the light goes on because of coal. Almost half the power generated in Britain on Tuesday came from coal and a bit more than a third from natural gas. Nuclear power stations were contributing 17 per cent and windmills provided 0.6 per cent....The wind has failed, as it does during periods of intense heat and cold, and although we have built, with enormous subsidy, enough wind turbines to generate 5 per cent of our electricity, no more than 1 per cent is operational when we need it. Like Coleridge's ancient mariner, the nation is becalmed, a painted ship on a painted ocean and we have gone back a century, hewing the same coal that first put Britain on the fast track to the Industrial Revolution. The reason why we are still stuffing black lumps of carbon into furnaces is simple: it makes economic sense and the financial markets are shouting this message louder than ever before....The price of European Union allowances to emit carbon dioxide has collapsed and it has reached a level where even the greenest of utilities might be tempted to flirt with a hod of dirty brown coal. Mills and factories throughout Europe are dumping their allowances on the market and grabbing the cash. You will remember that the allowances (EUAs) were issued free to power companies and other carbon emitters, but the volume was capped to ensure scarcity and that was expected to drive up the price, forcing polluters to reduce emissions or pay for expensive permits....Recession has changed the equation and energy consumption is falling. Factories are running at half-capacity, the suppliers are demanding cash up front, the banks are not lending and somebody in the Treasury found a bundle of certificates, EUAs. In July, a tonne of carbon sold for €35, but today it fetches less than €9. Too bad, thinks the finance director, dump them anyway. If the politicians are still quacking about the climate in two years' time, we will buy them back, if we still have a business...Meanwhile, the UK must make a huge decision. We have promised to shut down seven old coal plants by 2015 because they emit too much sulphur. These can supply 12 gigawatts, or a sixth of UK capacity. Ideally, we would fill the gap with nuclear power, but EDF has made it clear that the first new British nuke won't be ready until 2017, supplying less than 2 gigawatts. It is self-evident that we must carry on burning coal for the time being and politicians must stop telling lies about energy. They must begin to set plausible targets, explain their true cost and how they will be achieved. The impact of recession on industrial demand is one reason why the carbon price is weak. The other reason is credibility."
Windmills flap helplessly as coal remains king
London Times, 18 Feb 2009

"The China Development Bank and Brazil's state-run oil company Petrobras are finalizing a deal for the bank to extend a $10 billion line of credit in exchange for future oil supplies, a Brazilian newspaper said on Wednesday. Petrobras Chief Executive Jose Sergio Gabrielli said on Monday that the company was seeking financing from foreign governments to bankroll an aggressive investment plan, but he gave no details on the amounts or sources....The financing is in line with China's policy of attempting to shore up future supplies in natural resources such as petroleum, agricultural goods and minerals for its voracious economy. On Tuesday, the China Development Bank, Russia's state oil champion Rosneft and pipeline monopoly Transneft signed a $25 billion financing deal in exchange for future oil from the huge new East Siberian oil fields that China hopes will power its economy for the next two decades. Petrobras said on Monday it was negotiating with up to four oil consumer countries to receive financing from them in exchange for future oil supply guarantees. The company needs financing to help it cover the massive costs of exploring large new discoveries of high-grade light oil and natural gas. Analysts estimate the so-called subsalt reserves could contain up to 80 billion barrels of oil, catapulting Brazil into the top 10 of the world's oil producers. This would be the first time Petrobras will have negotiated this type of financing, the company's finance director, Almir Barbassa, said earlier this week."
China to lend Petrobras $10 bln for oil - report
Reuters, 18 February 2009

"Investments in the oil industry in the Gulf region have faced a major contraction due to the global financial crisis which could endanger the future of the industry, a survey claims. The value of such investments fell dramatically as the economic downturn forced projects to be deferred, acting director general of OPEC Adnan Shehab-Eddin said in the survey....an average 20 percent of the projected total investments will have to be deferred as a result of the financial crisis, the survey said, indicating that the percentage could vary from country to country. No projects in the oil industry in the Gulf region have been recently cancelled and the 20 percent of delayed projects was less than delays of projects globally which is estimated at 30 percent, according to the survey. The review also said that the cancellation or postponement of projects risked cutting the oil supplies on the global market and could trigger sharp fluctuations in the oil prices which would not be in the interest of the oil exporting countries in the long run."
Oil industry investments take hit during crisis - survey
arabianbusiness.com, 18 February 2009

"Russia and China have signed a $25bn (Ł17.54bn) deal that will see Beijing supplied with oil from Siberian fields in exchange for loans to Russian firms. China Development Bank will lend $15bn to Russian state oil firm Rosneft, and $10bn to pipeline firm Transneft. In return Russia will supply 15 million tons - 300,000 barrels a day - of oil annually for 20 years. China is the world's second biggest oil importer, and has looked to diversify its imports away from the Middle East. Chinese Premier Wen Jiabao said the deal was one of 'political importance'.' In recent years China has turned to Russia, Kazakhstan, and countries in Africa and South America, as it seeks new oil supply avenues. Russia views China and Japan, another huge importer of oil, as key markets for its East Siberian oilfields. 'Rosneft and Transneft can't borrow easily, so China steps in...with a lot of funds to lend because of China's huge wealth funds,' said Leo Drollas, deputy director and chief economist at the Centre for Global Energy Studies. 'They have trillions of dollars of reserves and they're saying 'we'll lend you this amount to develop the oil fields and the pipeline infrastructure needed' and it will be paid for by deliveries of oil,' Mr Drollas added."
Russian and China sign $25bn deal
BBC Online, 17 February 2009

"Oil prices edged higher after the International Energy Authority (IEA) warned there would be supply shortages next year once demand picked up. Nobuo Tanaka, the IEA's executive director, said the squeeze was due to investment plans being shelved in the recession. 'Currently the demand is very low due to the very bad economic situation,' he said. 'But when the economy starts growing and recovery comes again in 2010 and onward, we may have another serious supply crunch if capital investment is not coming.' Mr Tanaka was speaking on the sidelines of a conference in London where he said he expected world demand for oil to rise by about 1m barrels per day from next year....The comments from the IEA, which advises 28 industrialised countries, helped lift oil prices in London, up 29 cents to $45.10 a barrel, and New York, ahead 65 cents to $38.16. However, those levels were a far cry from the near $150 a barrel reached last year when soaring demand from China and other emerging economies forced the price to record levels. Mr Tanaka also warned recession and the slump in the oil price had conspired to slow investment in renewable and nuclear energy, which would create serious global problems in the future."
IEA warns of oil 'supply crunch'
Daily Telegraph, 16 February 2009

"Economic slowdown and the recent collapse in oil prices is slowing investment in alternative energy, needed to wean the world off dependence on hydrocarbons, the International Energy Agency (IEA) said on Monday. IEA Executive Director Nobuo Tanaka told Reuters in an interview the sharp decline in the oil market, which has seen prices collapse by more than 70 percent from a peak of almost $150 per barrel last year was also slowing the search for new sources of oil as existing fields were depleted. 'Unfortunately we are seeing a deceleration occurring in the switch to renewables -- and also nuclear -- as both are very capital intensive,' Tanaka said. 'While the economic slowdown itself serves to reduce CO2 emissions, if we don't invest now we will have serious problems in the future. Tanaka said oil demand may already have peaked in the developed countries of the Organization for Economic Co-operation and Development (OECD) but failure to invest now in renewables could store up problems in the future. 'I don't see much chance it (demand) could come back now, but if we do not invest in renewables now, it could bounce back when the economy starts to grow again,' he said. The Paris-based IEA, which advises 28 industrialized countries, has said that even assuming no growth in oil demand, the world needs to bring on line an extra 45 million barrels per day of oil production by 2030 in order to compensate for declines in aging oilfields. 'We are already seeing that decline rates are increasing, but if we don't invest now it will start to increase even more,' he said. 'The resources underground are there if we are prepared to invest.' Tanaka said earlier on Monday there could be an oil supply crunch from 2010 as global demand begins to recover. He forecast world oil demand would rise by 1 million bpd, or about 1 percent, in 2010 as growth resumes outside the OECD."
Crisis slowing investment in renewables: IEA
Reuters, 16 February 2009

"Britain’s shortage of gas storage capacity is driving up wholesale prices, leaving businesses and consumers facing higher bills in the future, energy analysts have warned. During the recent cold snap, the gas price on the wholesale market leapt to 62p a therm, up 55 per cent from 40p in November. It eased on Friday to 45p. Ian Parrett, of Inenco, the energy consultancy, said that the price changes reflected the fact that Britain had been drawing almost the maximum daily flow from its largest gas storage facility, at Rough in the North Sea – about 45 million cubic metres a day – to help to meet total UK demand of about 380 million cubic metres a day. At the same time, the UK has had to compete with the rest of Europe for extra gas supplies piped in from the Continent. Supplies from both storage and piped-in imports are more expensive than the dwindling supplies from the North Sea, Mr Parrett said....Britain’s gas storage capacity is 4.3 billion cubic metres, providing no more than 15 days of supply, against 99 days in France. The facility at Rough, 18 miles off the East Coast, accounts for most of it – three billion cubic metres of the total – but it can pump only 45 million cubic metres a day, meaning that in periods of peak demand the UK could run out of gas relatively quickly as demand outstripped supply. Mr Parrett said that the shortage of storage is likely to force Britain to top up domestic supplies by importing gas via pipeline or ship as liquefied natural gas. In both cases, this would involve paying at a premium, pushing up costs for British consumers."
UK’s shortage of gas storage will cost users dear, analysts say
London Times, 16 February 2009

"While panic is not the prescription, experts are warning that the time to begin taking Peak Oil seriously is past. 'It's not about believing. It's about facts,' said Gord Miller, Ontario's environmental commissioner. Miller has been warning about Peak Oil for years. He thinks we hit peak around early 2007. 'If we're not there, we're awful close,' said Dave Hughes, a geoscientist who once ran Canada's national coal inventory. Peak Oil doesn't mean we have run out of the stuff. It means that we have crested the top of a bell curve of supply. Then it's a roller-coaster ride down. Depending on who you ask, that ride will either be slow and uncomfortable or teeth-rattling and destructive. 'Depletion is taking somewhere between 5 and 6 per cent of (existing) world oil production per year,' said Hughes. 'The reason that oil price is where it is today is that the economy has reduced demand.' No one has found a major new oil field since the 1960s. It's getting harder and more expensive to bring up the oil we know is there. All these signs point toward the peak. What happens now? The first stage is price volatility, a little like the $100-per-barrel drop we've seen in less than a year. The current low price 'will increase demand to a certain extent, which will then increase price,' Hughes said. 'There will be a few cycles of that. That is, until depletion kicks in for good.' Hughes guesses a barrel of oil could cost $200 (U.S.) within the next two to four years. It sits at $41 today. Andrew Nikiforuk, author of Tar Sands, imagines it could go as high as $300 in that time. 'The second stage is supply shortages,' Hughes said. 'We could see a replay of the (oil crisis of the) early '70s.' Canada might initially be insulated from supply shocks, owing to our huge deposits in the Alberta oil sands. Of course, most of that oil is pumped into the U.S. Since Ontario, Quebec and the Maritimes get most of their oil from overseas, we are vulnerable. And then? 'It will be a slow deterioration in our quality of life, in the reliability of transportation, in the availability of certain foods as well as price spikes for food,' Nikiforuk said. 'It will cause pandemonium in both the public and private spheres.' So what should we do? 'Save your capital. Reduce your consumption. A lot. Make yourself accessible to mass transit,' Hughes said. 'And forget about buying things at Wal-Mart that were shipped here from halfway around the world.' 'You prepare by walking more, operating one vehicle. You prepare by buying more food locally and talking to your friends about getting engaged in the political process,' said Nikiforuk. 'Oil has made us fat and lazy. ... It was a 150-year addiction to an energy source we didn't appreciate or use particularly wisely. It distorted our economy. Now it's going. And we can't go back to business as usual.'"
Take Peak Oil seriously - it'll be here much sooner than you think
Toronto Star, 15 February 2009

"The Iraq war was just the first of this century's 'resource wars', in which powerful countries use force to secure valuable commodities, according to the UK government's former chief scientific adviser. Sir David King predicts that with population growth, natural resources dwindling, and seas rising due to climate change, the squeeze on the planet will lead to more conflict. 'Future historians might look back on our particular recent past and see the Iraq war as the first of the conflicts of this kind - the first of the resource wars,' he told an audience of 400 in London as he delivered the British Humanist Association's Darwin Day lecture. Implicitly rejecting the US and British governments' claim they went to war to remove Saddam Hussein and search for weapons of mass destruction, he said the US had in reality been very concerned about energy security and supply, because of its reliance on foreign oil from unstable states. 'Casting its eye around the world - there was Iraq,' he said....Commenting on the idea of 'resource wars', Alex Evans, of the Centre for International Co-operation at New York University, who last month wrote a report on food security for the Chatham House thinktank, said he believed King was right...King summed up by saying that with growing population and dwindling resources, fundamental changes to the global economy and society were necessary. 'Consumerism has been a wonderful model for growing up economies in the 20th century. Is that model fit for purpose in the 21st century, when resource shortage is our biggest challenge?'"
UK's ex-science chief predicts century of 'resource' wars
Guardian, 13 February 2009

"Urgent measures are needed to prevent the effects of the global recession combined with the banking crisis from dampening new investment in the recovery of the UK's still significant oil and gas reserves, Oil & Gas UK warned this week. The annual Oil & Gas UK 2008 Activity Survey, which summarizes planned expenditure on the UK continental shelf (UKCS) by 75 oil and gas companies, reveals that the combination of low oil prices and the freezing of capital markets will have a marked effect on exploration and development activity over the next 12 to 18 months....Oil & Gas UK Chief Executive Malcolm Webb said: 'The UKCS is clearly a mature oil and gas province but production has responded to a step-up in investment in 2005-2006 and as a result, the annual rate of decline has slowed from 7.5 percent to 5 percent in 2008. This year and next, however, capital investment in exploration and development is forecast to drop, thus hitting future production. We cannot stand by and simply allow the decline rate to accelerate. 'Of the UK's remaining 25 billion boe, the survey tells us that companies have plans to invest GBP44 billion (US$63 billion) to recover 9.6 billion boe. Our research shows that if investment could be sustained at around GBP5 billion (US$7 billion) per annum, the industry could hold production decline at 4-5 percent a year on average. However, if investment falls, that decline will again accelerate.' Oil & Gas UK's latest estimate is that capital investment in new and existing fields fell from a peak of GBP5.6 billion (US$8 billion) in 2006 to just under GBP5 billion (US$7 billion) in 2008, despite the rise in oil prices over the period. Scarcity of capital now means that new investment is being secured for only the most attractive projects; accordingly, it is anticipated that investment will fall to somewhere in the range of GBP3.5-4.5 billion (US$5-6.5) in 2009 and could decline to between GBP2.5 billion (US$3.6) and GBP4 billion (US$5.7 billion) in 2010. Meanwhile, the cost of developing and producing UK oil and gas in 2008 rose by 12 percent compared with 2007. The break even oil price for new field investment is now over US$40. Indeed, only a third of new developments now under consideration break even at current costs, a US$50 oil price and the present UK fiscal regime which taxes production at a marginal rate 50-75 percent. Webb said, 'Since the oil price was last in the US$40-45 per barrel range four years ago, the cost base and supplementary charge on corporation tax have both doubled. The fundamental mismatch of the tax rate and business environment is detracting from the value of investments, rendering them less competitive. This becomes particularly apparent when oil prices are lower.' While Oil & Gas UK still estimates that the total future potential of the UKCS is up to 25 billion boe, the recovery of the last 15 billion boe will require maintaining sufficient exploration activity to access all those reserves. Exploration and appraisal activity in 2008 (109 wells) was roughly the same as in 2007. However, Oil & Gas UK fears a rapid reduction in 2009. A year ago, it was anticipated that up to 113 wells would be drilled in 2009 whereas the latest survey predicts 77 wells, of which only 34 have a committed drilling rig......'Stimulating exploration for and investment in our own reserves will help avoid the worst impacts of a potential energy crunch on the UK economy. We are in urgent and constructive discussion with the Government through the PILOT forum on all these matters and I hope that measures to address the various issues will be announced soon, certainly no later than this year's Budget.' Oil & Gas UK is the major representative organization for the UK offshore oil and gas industry. Its members are companies licensed by the government to explore for and produce oil and gas in UK waters and those who form any part of the industry's supply chain."
Global financial crisis puts UK oil investment at risk
Energy Current, 13 February 2009

"Economic relations between Saudi Arabia and China received a shot in the arm with the signing of five landmark agreements aimed at taking ties to a new height. The agreements, including the one for the ambitious Makkah mono-rail project, were signed yesterday - the first day of a high-profile official visit from Chinese President Hu Jintao. King Abdullah Bin Abdul Aziz and Hu were present at the signing ceremony. Earlier, both leaders highlighted the significance of further strengthening bilateral relations during their talks, which covered a wide-range of issues. The agreements signed included cooperation in oil, gas and mining; in the field of health; on quality inspection and standards of goods and services; a memorandum of understanding to set up a chapter of King Abdul Aziz Public Library in Beijing and the Makkah railway project.....China is keen to ensure huge supply of oil and petrochemicals for its industries from the Kingdom while Saudi Arabia, the largest oil producer and supplier in the world, wants to tap the potential of the most populous country in the world. China Petroleum and Chemical Corporation (Sinopec) and the Kingdom's oil giant Saudi Aramco signed earlier agreements to establish oil refineries in the Kingdom. Sinopec has been joining hands with Saudi Aramco in oil exploration since 2004. According to Saudi Arabian officials, the Kingdom would spend 450 billion riyals ($120 billion) on infrastructure projects over the coming five years. The report, released by the Chinese embassy in Riyadh, showed that Saudi Arabia has been the largest trading partner of China in West Asia and Africa over the past eight years and the value of trade exchange between the two countries exceeded $41.8 billion in 2008."
Saudi Arabia and China sign landmark agreements
Gulfnews, 11 February 2009

"World oil demand will contract by far more than previously expected in 2009 due to extreme weakness in the global economy, the International Energy Agency (IEA) said on Wednesday. Demand is expected to fall by 980,000 barrels per day (bpd) in 2009 to 84.7 million bpd, the agency said in its monthly market report. The IEA's forecast last month was for demand to contract by 500,000 bpd this year....World oil demand is now expected to average 1.4 million bpd less than it did in 2007, before crude's price spike and the slowdown in the global economy started to cut demand....The IEA also cautioned that future oil supply growth has come under threat from the collapse in prices, with decline rates in mature oilfields likely to accelerate if oil remains at $40 a barrel. 'Hand in hand with the downward revisions in demand is the impact on supply,' said Fyfe at the IEA. 'The trend now is that downside demand revisions are being matched on the supply side.' Oil prices peaked at $147.27 a barrel in July 2008 due in part to burgeoning demand from economies such as China and India, but have since collapsed due to the steep drop in demand. "
World oil demand to fall by 980,000 bpd in 2009 - IEA
Reuters, 11 February 2009

"The number of passengers using UK airports fell sharply in January, as demand for air travel continued to fall and airlines cut capacity and removed some unprofitable routes. The sharp traffic decline along with the problems for potential bidders of raising debt finance are making the sale of BAA airports, led by the disposal of Gatwick, a fraught process for the UK group and Ferrovial of Spain, its majority owner. BAA, which operates seven UK airports, said it handled 9.4m passengers in January, a 6.3 per cent decline from the same month in 2008 and the tenth successive year-on-year decline in monthly passenger numbers. The number of flights to and from the seven airports, which include Heathrow, Gatwick and Stansted, fell 7.5 per cent year-on-year in January. "
UK airport passenger numbers drop 6.3%
Financial Times, 11 February 2009

"Less than a year ago, pundits were predicting $200-a-barrel oil, endless growth in Chinese energy demand, and a world running out of crude. But at CERAWeek, the big energy conference put on by data and advisory outfit IHS (IHS), running Feb. 9-13 in Houston, the talk has now focused on industry consolidation, how to beat down supplier costs, and just how low the price of oil might go.....'It has become painfully clear that our understanding of market forces remains imprecise at best,' Ali Ibrahim Al-Naimi, Saudi Arabia's Minister of Petroleum & Mineral Resources, told conference attendees on the night of Feb. 10. 'Groupthink dominated financial markets. What many forgot, ignored, or wished away is that markets are cyclical and recessions inevitable.' Al-Naimi said that with a big new field coming on line, his country would soon have some 4.5 million barrels per day of spare oil production capacity, well above the 1 million to 2 million barrels per day the country typically maintains. Peter Mellbye, senior vice-president at Norwegian oil company Statoil Hydro (STO), displayed a slide showing the cost to produce a barrel of oil all over the world, from $20 in Saudi Arabia to more than $100 for the viscous goo found in Venezuelan lake beds. In a startling display of oil-company candor, Mellbye also showed Statoil's costs across all its projects. The average was $40 a barrel, about where the price is today."
Trouble Comes to the Oil Patch
Business Week, 11 February 2009

"Executives from major energy firms yet to cut prices in 2009 have said they are 'optimistic' that gas and electricity bills will fall soon. But senior figures from EDF Energy, E.On and Scottish Power did not tell MPs when such moves would be made, and Npower was non-committal on cuts. British Gas and Scottish and Southern Energy (SSE) have already trimmed bills for some of their customers. However, further cuts may not be forthcoming, one executive warned. Wholesale energy prices for summer 2010 are about 10% higher than they are now, SSE's chief executive Ian Marchant told the Energy and Climate Change Committee. 'I'm concerned that if the wholesale price increases, we might see an increase,' he said. 'I would have expected us to see another round of decreases [in energy bills] later this year or early next year, but objective analysis suggests that this might not happen.'"
Energy prices 'will be cut soon'
BBC Online, 11 February 2009

"Gazprom is facing a cash squeeze as shrinking demand for energy in Europe forces the world's largest utility to curb spending, postpone the development of new gasfields and put its domestic customers on a regime of prepayments for fuel. The Russian company, which cut off supplies to the Ukraine in January in a dispute over unpaid gas bills, said that it was reviewing its budget for 2009 because of an anticipated fall-off in export volumes and revenues. In a presentation to investors in London yesterday, Gazprom said it was expecting volumes to Western Europe to shrink by 5percent this year while prices would fall by almost a third. The utility giant reckons exports to former Soviet satellite states will tumble 15percent and Andrey Kruglov, head of finance, said the budget would be revised and financial efficiency would be improved....Gazprom had borrowings in June of $48 billion (Ł33 billion) and must repay about $10 billion in borrowings this year. At the same time the company has important commitments in spending on projects necessary to maintain gas production with $29 billion already budgeted for 2009. The capital budget for this year is a reduction of almost $10 billion from spending in 2007 and Mr Kruglov indicated that capital expenditure would be trimmed again but the size of the cut would not be finalised until the end of the first quarter. Cuts in spending on new gas production are likely to create anxiety among Europe's gas importers due to concern that Gazprom will be unable to meet increasing demand when economic growth picks up."
Gazprom to curb spending and delay development
London Times, 11 February 2009

"....the cyclical downturn in energy prices is pushing investment out of the sector at a time global oil field decline rates are accelerating. In our base case scenario, we estimate global oil production decline rates for mature fields of at least 5 per cent, and see non-OPEC oil output in the current 49-50m barrels a day range over the next seven years. There is a risk, however, that decline rates accelerate to 6 per cent if the investment drops further. This situation could push non-OPEC production down precipitously towards 47m b/d by 2015 from the current levels....With the ongoing upward shift in the cost of credit, investors now require higher rates of return, and investment into marginal energy projects such as oil sands is drying up. Therefore, even if governments are successful in reigniting the global economy, physical energy supply constraints will prevent a return to the high world GDP growth rates of recent years.....The commodity super-cycle is not over, it is just pausing. For the world economy to resume growth of 5 per cent, energy supply must expand by a similar rate. But with lower oil prices and a credit crunch, energy investment is plummeting, suggesting global energy demand will eventually pick up more rapidly than productive energy capacity. Assuming the ongoing global recession does not turn into a multi-year event that pushes energy demand down structurally, steep decline rates could again put upward pressure on oil prices as soon as 2010 or 2011. In particular, if the low oil price/high cost of money environment persists for most of this year and next, our base case scenario for non-OPEC production could prove optimistic, exacerbating the second leg of the commodity super-cycle. If and when the global economy starts to recover, too many dollars chasing too few barrels will only lead to much higher oil prices."
Francisco Blanch - Global head of commodities research at Banc of America Securities-Merrill Lynch
Credit crunch will exacerbate the commodity super-cycle
Financial Times, 10 February 2009

"LNG terminals are being built around the world, especially in Asia. The four big countries in LNG are Russia, Iran, Qatar and Indonesia. RBC Capital Markets estimates global LNG production will increase more than 30% in the next two years, or just less than 10 billion cubic feet per day (bcf/d). All the shale gas in the United States has increased production there by the same 10 bcf/d since 2002. So the new LNG supply is the same as adding 3-4 major shale gas plays."
Could Natural Gas Replace Oil?
Resource Investor, 9 Feburary 2009

"Qatari Oil Minister Abdullah Al Attiyah said Qatar would reach its target LNG capacity of 77 million tonnes per year by 2012, a newspaper reported on Sunday. Attiyah said Qatar's gas production currently stood at 31 million tonnes a year and would increase by 46 million tonnes over the course of the next three years, Al Watan reported. The oil minister had recently said the world's largest liquefied natural gas (LNG) exporter would ramp up production by 2010, while officials at state gas companies had said Qatar would not reach the 77-million tonne target until 2012. The minister also said OPEC was becoming accustomed to the rise and fall in oil prices but that there were expectations conditions in the market would stabilise in 2010, Al Watan said."
Gas output target to be reached by 2012 - Qatar oil min
Reuters, 8 February 2009

"Energy and Climate Change Minister Mike O'Brien granted consent for the construction three new power stations on Thursday – the largest addition to the UK's generating capacity since the construction of Drax power station in Yorkshire in 1986. The new sites will generate a combined 4 gigawatts of electricity, enough for around four million homes. The government has approved the construction at sites in Pembroke in West Wales, King's Lynn in Norfolk and Hatfield in Hertfordshire. RWE's npower unit will build a 2,000 megawatt combined cycle gas turbine power station at Pembroke, Powerfuel will construct a 900 megawatt integrated coal gasification gas-fired power station at Hatfield and Centrica has permission to develop a 1,020 megawatt combined cycle gas turbine power station at King's Lynn. Each of these companies agreed during the planning process that they would ensure that enough land was left available in the design to retrofit a carbon capture and storage (CCS) plant....Mr O'Brien said: 'It is essential to replace older polluting power stations that are reaching the end of their lives with new stations that operate more efficiently. Investment like this in the energy sector will create new engineering and construction jobs.' Gas fired power stations produce less than half of the carbon emissions of traditional coal fired stations, according to government data."
Three new gas power stations get approval
Daily Telegraph, 6 February 2009

"The melting of the Arctic may not be on the mind of anyone in Britain today, with snow and ice still gripping the country. But this year will bring an acceleration of the race for the 'High North' — the scramble for territorial rights over the Arctic, which has been dubbed the new Cold War. At a Nato conference, the Secretary-General, Jaap de Hoop Scheffer, warned that members might need a military presence in the Arctic because of growing tensions. Russia, with a third of its territory north of the Arctic Circle, has been noisiest in its claims....In the final weeks of his presidency, George W.Bush issued the US’s strategy for the region. Why now? Two summers in which the Arctic ice has melted much further than expected have suggested that the Northwest Passage, a hugely valuable sea route, might open up through the once-frozen sea. Some scientists think that the Arctic waters could be ice-free in summer within four years, decades earlier than previously suggested. The retreat of the ice cap also offers the chance of extracting the huge oil and gas reserves believed to lie in fields around the North Pole."
Russia leads Arctic race to claim Northwest Passage
London Times, 6 Feburary 2009

"The third-largest exporter of oil to the U.S. — Mexico — has real challenges of its own and that poses greater problems for us. Its reserves are depleting very fast and within five years Mexico will move from being an oil exporter to an oil importer. Mexico has announced that it will be significantly reducing its imports to the United States to maintain its ability to provide for its own needs. When your third-largest supplier (the other two are Canada and Saudi Arabia) cuts you off, that leaves you with only one answer to meeting our energy needs: more oil from the rest of your foreign suppliers who, because they know you are importing such a high percentage of your energy needs, have you, literally, over a barrel and will charge you a higher price. Think about this. In 2007 (the last year for which full-year figures are available) the countries that numbered four through seven on the list were: Venezuela, Nigeria, Iraq and Angola. They shipped us about 3.2 million barrels of oil per day. Think about having to replace oil from Mexico with more oil from Angola and Nigeria. That’s not a very comforting thought."
U.S. is making headway in fight to cut oil imports
Houston Chronicle, 5 February 2009

"Carlos Macellari, director of geology for Repsol YPF, a private oil and gas company, said that re-exploring in existing oil and gas fields with more sophisticated technological tools has yielded more in the last 20 years than new exploration efforts....As companies rushed to drill unconventional natural gas prospects and the technology improved for unlocking tough-to-tackle reservoirs, the industry has produced too much gas. Natural gas for March delivery settled at $4.60 per million British thermal units Wednesday on the New York Mercantile Exchange, up 8 cents for the day but down 66 percent from the 2008 high of $13.69 on July 2. Bahorich estimates there are 31 million acres of natural gas shale prospects leased in the U.S. today, but 90 percent will languish over the next decade because demand will not justify drilling."
Natural gas industry sees strategy for better days
Houston Chronicle, 5 February 2009

"Sudan’s oil production will peak next year before it starts to consistently fall, according to a new forecast. Oil and gas liquids production will increase by one third (30.3 percent), with volumes peaking at 700,000b/d in 2010, according to a Business Monitor International forecast. But the oil and gas volumes will then steadily fall to 596,000b/d by the end of the 2018, according to Business Monitor. And growth is forecast to fall from 12.7 percent in 2008 to 7.9 percent this year. The forecast comes at a time when the Government of National Unity is preparing to bring new oil wells to production. GoNU energy and Mining Minister Azhari Abdullah early January announced that a new oil field was set to start operations at Qamari, Upper Nile. The minister told the press that those 75 oil wells will cost Sudan 30 million US dollars to bring to production, and will produce 50,000 barrels per day upon completion. Yet, as production falls, local oil consumption is forecast to increase by 71 percent by 2018, according to the forecast. Local oil consumption will rise from 94,000b/d in 2007 to 126,000b/d in 2013. Then the demand will rise to 161,000b/d by 2018, eating up nearly one third of all oil produced that year."
Sudan's growth to fall after oil peak
Daily Nation (Kenya), 4 February 2009

"Kazakhstan's state-owned nuclear energy company could become the world's largest uranium producer by this year, the company said in a statement Wednesday. Kazatomprom Chairman Mukhtar Dzhakishev announced that the country's uranium output is expected to reach 11,935 tons in 2009, a more than 40 percent increase over the 8,521 tons produced last year, the statement said. The final figure could vary depending on the situation in global demand, Dzhakishev said....Canada and Australia are also leading producers of uranium, which is used for nuclear power plants.According to the London-based World Nuclear Association, Canadian uranium production reached 9,477 tons in 2007, the latest full-year figure available, and has been declining recently. In Australia, uranium output reached 8,603 tons in 2007, but could increase to more than 11,000 tons by 2012-13, according to industry estimates. Planned production sites in Kazakhstan slated for opening in 2009 include the Khorasan-1 and Khorasan-2 mines, which will eventually have production capacities of 3,000 tons and 2,000 tons of uranium per year respectively, the company said. 'By the middle of 2010, we will be able to complete the creation of the technical foundations necessary for boosting Kazakhstan's uranium output to 27,000 tons per year,' he said."
Kazakhs may be top uranium producer in 2009
Associated Press, 4 February 2009

"Steep falls in oil production means the world now needed to replace an amount of oil output equivalent to Saudi Arabia’s production every two years, Merrill Lynch said in a research report. Non-OPEC crude oil production may have already peaked and international oil companies faced the prospect of both younger and older oil fields declining steeply, the firm said in the report released on Wednesday. It said the cumulative decline of global oil production from today could amount to 30 million barrels per day by 2015. 'As a result of these steep decline rates, the world now needs to replace an amount of oil production equivalent to Saudi Arabia’s production every two years,' said Francisco Blanch, head of global commodities research at Merrill Lynch...Merrill Lynch said the combined declines in OPEC and non-OPEC countries alike could lead to pressure for higher oil prices as soon as 2010 or 2011, assuming the economic slowdown did not turn into a multi-year event where global oil demand was pushed down structurally for the next five years."
Oil output could fall by 30m bpd by 2015 - Merrill
Arabian Business, 4 February 2009

"Some biofuels cause more health problems than petrol and diesel, according to scientists who have calculated the health costs associated with different types of fuel. The study shows that corn-based bioethanol, which is produced extensively in the US, has a higher combined environmental and health burden than conventional fuels. However, there are high hopes for the next generation of biofuels, which can be made from organic waste or plants grown on marginal land that is not used to grow foods. They have less than half the combined health and environmental costs of standard gasoline and a third of current biofuels...Using computer models developed by the US Environmental Protection Agency, the researchers found the total environmental and health costs of gasoline are about 71 cents (50p) per gallon, while an equivalent amount of corn-ethanol fuel has associated costs of 72 cents to $1.45, depending on how it is produced. The next generation of so-called cellulosic bioethanol fuels costs 19 cents to 32 cents, depending on the technology and type of raw materials used. These are experimental fuels made from woody crops that typically do not compete with conventional agriculture. The results are published online today in the Proceedings of the National Academy of Sciences. 'The dialogue so far on biofuels has been pretty much focused on greenhouse gases alone,' said David Tilman, a professor at the department of ecology, evolution and behaviour at the University of Minnesota. 'And yet we felt there were many other impacts that were positive or negative not being included. We wanted to expand the analysis from greenhouse gases to at least one other item and we chose health impacts. ' The health problems caused by conventional fuels are well studied and stem from soot particles and other pollution produced when they are burned. With biofuels, the problems are caused by particles given off during their growth and manufacture...So-called cellulosic ethanol can be made from plants such as switchgrass or jatropha that can grow with very little fertiliser on poor land, but the technology to convert these plants into fuels is in its early stages."
Biofuels more harmful to humans than petrol and diesel, warn scientists
Guardian, 2 February 2009

"If President Barack Obama's green-energy rhetoric is on the level, this should be the year the U.S. gets clued in to what much of the rest of the world is already betting: that jatropha, like other nonfood sources such as algae, will revive a biofuels movement battered of late by charges that it diverts too many crops from too many mouths. India has set aside 100 million acres for jatropha and expects the oil to account for 20% of its diesel consumption by 2011. Australia, China, Brazil and Kenya have also embraced it. In December, a Boeing 747 was successfully test-flown by Air New Zealand using a 50-50 blend of jatropha and aviation fuel....'This is a superior biodiesel,' says Roy Beckford, a University of Florida researcher and expert on sustainable farm development. He has been studying different varieties of jatropha and in February plans to publish his findings that trees like those the Daltons are growing (since 2006 they've planted 900,000 near Fort Myers) thrive so well in Florida that they may yield up to eight times as much oil as they do in places like India and Africa. That translates into as much as 1,600 gal. of diesel fuel per acre per year, vs. 200 gal. for stocks that grow in the wild....Native to the Caribbean, Jatropha curcas was taken to India in the 1600s by Portuguese sailors who used the seeds for long-burning lamp oil. When Paul Dalton, 54, a Washington child-advocate attorney, decided to invest $500,000 in an alternative-fuel venture, he followed the Portuguese trail to India and found prolific new jatropha varieties being cloned in the city of Mysore. The fuel emits negligible greenhouse gases, and the trees can capture four tons of carbon dioxide per acre (which might make growers eligible for carbon credits on the global market). Says Ron Pernick, co-founder of the alternative-energy research firm Clean Edge: 'Jatropha isn't a silver bullet, but it looks very promising.'"
The Next Big Biofuel?
TIME, 29 January 2009

"The airline industry reported on Thursday an 'unprecedented and shocking' plunge in global air cargo traffic.Air freight accounts for 35 per cent of the value of goods traded internationally and the International Air Transport Association said traffic volumes had fallen by 22.6 per cent year-on-year in December."
Airlines report ‘shocking’ plunge in traffic
Financial Times, 29 January 2009

"The government must boost subsidies for renewable energy projects urgently to have any chance of meeting its 2020 targets, the chief executive of Centrica, owner of British Gas, has warned. In an interview with the Guardian, the chief executive, Sam Laidlaw, said that the UK faces a energy crunch in as little as two years because companies are shelving their investment plans. The cut-backs by firms, Laidlaw said, would lead to much higher electricity and gas prices and threaten security of energy supply. He believed the UK could struggle to cope unless the government soon put together a financial support package for new power plants, particularly for offshore wind farms. Executives from the 'big six' utility firms in the UK recently met Gordon Brown to discuss the issue. The government is relying on the big utility companies to invest Ł140bn in new energy infrastructure and power plants; about Ł100bn of this is needed to build enough wind farms to meet the government's 2020 renewable energy targets. However, plunging carbon and electricity prices, and the credit crunch, have made companies nervous about massive offshore wind farms. This week, Paul Golby, the chief executive of E.ON UK, warned that the economics of the building of the world's largest offshore wind farm, the London Array, were on a knife edge. Laidlaw said: 'Investment is starting to fall off quite quickly. The big fear I have is that in two or three years' time the next cycle [of high energy prices] will repeat, and security of supply ... will actually go right back on to the top of the agenda, and we will be even less prepared to cope with it unless we make the investment now.'"
Gas chief warns of energy crunch
Guardian, 29 January 2009

"Consumers agreed with producers in Davos that the oil price must eventually rise to ensure investment in future supply, while energy chiefs said more should be done now to protect the climate. At its peak near $150 in July, oil was clearly taking a toll on the global economy and eroding demand for fuel. But a $100-plus collapse since then has slowed investment and raised the potential of tight supply when consumption picks up. Many in the industry see $60-$80 as a more desireable level, up to double Thursday's price of around $41 a barrel. 'That seems to be what you need to get investment,' BP Chief Executive Tony Hayward told the World Economic Forum in Davos on Thursday....Nobuo Tanaka, executive director of the International Energy Agency, which advises 28 industrialised countries, agreed consumers would have to pay more. But low prices were needed now by a world economy that the International Monetary Fund has said will be at a near standstill this year. 'To stimulate the economy, you need a low price, but to stimulate investment long-term the price should be higher,' he said on the sidelines of the forum. 'In the mid to long term, oil prices will go up.'"
Energy chiefs say oil price must rise to ensure supply
Reuters, 29 January 2009

"Canadian oil and gas drilling could fall 21 percent this year because of slowing petroleum demand and low commodity prices, the Petroleum Services Association of Canada said on Wednesday....'The world's rapid decline into recession has reduced demand for all commodities, including oil and gas. This has triggered a dramatic deterioration in commodity prices for oil and natural gas, leading to a significant reduction in related field activity in Canada,' Soucy said in a statement."
Canadian oil drilling seen dropping 21 pct in '09
Reuters, 28 January 2009

"Central and southern European leaders have voiced strong backing for a major pipeline project that could reduce EU reliance on Russia for gas. But the talks in the Hungarian capital Budapest did not result in a pledge of direct financing for the 3,300km (2,050-mile) Nabucco gas pipeline. Nabucco would bring Central Asian gas to western Europe via Turkey and the Balkans, bypassing Russia. It is expected to account for no more than 5% of EU gas needs. The Budapest meeting followed serious disruption to European gas supplies during Russia's recent dispute with Ukraine. Czech Prime Minister Mirek Topolanek, whose country currently holds the EU presidency, insisted that Nabucco 'is not an anti-Russian project'. Russia's plans for two alternative pipelines bypassing Ukraine - Nord Stream and South Stream - are well advanced. Mr Topolanek said the Russian pipelines would 'maintain the EU's high energy dependency on Russia' and called them 'a direct threat to the Nabucco project'.Work is scheduled to start on Nabucco in 2011, with the first gas deliveries expected in 2014. The major sources of gas for Nabucco are expected to be Azerbaijan, Kazakhstan and Turkmenistan. But Mr Topolanek said 'we should also ask ourselves whether we are capable of reaching an agreement with Iran on gas supplies for Nabucco'. The EU said it could not go beyond offering loans and credit guarantees for the pipeline, which is expected to cost about 10bn euros (Ł9bn; $12bn). It is planned to supply up to 31bn cubic metres of gas annually. EU Energy Commissioner Andris Piebalgs, quoted by Reuters news agency, said the commission would avoid a bigger commitment to Nabucco 'because then it's not anymore the consortium's project but a public-private partnership and I'm not ready at this stage to even consider such a type of option'."
EU pipeline scheme gains momentum
BBC Online, 27 January 2009

"Doubts are surfacing over the future of BP's Ł5.8 billion project to squeeze crude from the oil-rich sands of northern Canada after one of the chiefs of Husky Energy, its joint-venture partner, resigned unexpectedly. Catherine Hughes, vice-president of oil sands for Husky, based in Calgary, left the company last week amid speculation that the project may be delayed after a collapse in the price of oil. A string of oil-sands projects, which depend on prices of as much as $70 a barrel to remain economic, have been scrapped or delayed in recent months as crude oil prices have plummeted, from highs of more than $147 last July to lows of less than $40 this month....The nine billion-barrel Sunrise project was scheduled to start in 2012 as an integrated production and marketing operation. BP and Husky planned to use a technology that used a steam-assisted gravity drainage project, whereby steam is pumped underground to loosen up tar-bitumen in the oil sands so that it can be pumped to the surface in wells."
Resignation of Catherine Hughes triggers fresh doubts about future of BP's oil-sands project
London Times, 26 January 2009

"Petroleo Brasileiro SA, Brazil’s state-controlled oil company, will seek to cut costs by as much as $4 billion annually to prevent debt from swelling after the company announced a $174.4 billion five-year investment plan....The biggest hurdle to developing ultra-deep oil deposits off Brazil, which include the Tupi field, the largest discovery in the Americas in the last 30 years, are expenses after oil prices plunged, Exploration Director Guilherme Estrella said."
Petrobras to Cut Costs to Free Funds, Limit Debt Rise
Bloomberg, 26 January 2009

"Total oil product consumption in the US now is down 4.7 percent as compared to the same 4 week period last year. Much of this decline is due to a nearly 14 percent decline in the consumption of jet fuel, a 9.9 percent drop in the consumption of residual

	PEAK OIL AND ENERGY CRISIS NEWS
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Peak Oil and Energy Crisis News Archives 2009 2008 2007 2006/5/4/3/2	'Highlights' 2005 - 2009 "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." Total says oil output near peak Financial Times, 15 February 2009 "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 (Ł300 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.” IEA report on oil gets angry Opec reaction London Times, 13 November 2008 "The global economy is tanking, U.S. forces remain tied up in Iraq, Afghanistan is on a downward spiral -- one might wonder why anyone would want to be U.S. president during these trying times. Recently, the nation's chief intelligence officer weighed in, painting an even more somber picture of a far more complicated world. National Intelligence Director Mike McConnell looked beyond the immediate future, focusing on what his analysts are telling him about the challenges the world community is likely to face by 2025. It isn't pretty. Speaking to an annual conference of intelligence officials and contractors, McConnell said demographics, competition for natural resources and climate change will increase the potential for conflict. President-elect Barack Obama may get a glimpse of some of those challenges on Thursday. McConnell is expected to lead Obama's first top-secret intelligence briefing, according to U.S. officials familiar with the process. According to McConnell's outlook, economic and population growth will strain resources. 'Demand is projected to outstrip the easily available supplies over the next decade,' he said at the annual conference. The intelligence community's forecast indicates oil and gas supplies will continue to dwindle and production will be concentrated in unstable areas, he said. And there appears to be no relief at hand. McConnell said studies have shown that new energy technologies -- such as biofuels, clean coal and hydrogen -- generally take 25 years to become commercially viable and widespread." New president faces increased risk of conflict, intel chief says CNN, 5 November 2008 "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'." Oil production constraints to cause 'huge recession' Global Media, 20 February 2008 "If you speak to people in the industry, they will conceed that whatever my company may say publicly, we understand that we are facing decline in our own production and worldwide, we are not going to be able to produce more fuel liquids or crude oil in the near future... I was recently at a conference in New Mexico, sitting next to one of the recent CEOs of a major oil company and he, in response to a question from the audience, said 'of course I am a peakist, it is just a question of when it is coming' and I think that that is illustrative of once one is retired as a CEO, one is freer than one was in position to say I am a peakist. And what you hear privately from almost all people is we are coming to it.... I think that many of these politicians will ultimately find that the public blames them for its failure to warn them. Of course in a sense the public is responsible because it is the present public attitude to which politicians play up, and tell them what they want to hear but when the view of the world changes, what the public wanted to hear some time ago is no longer what they want to hear in the future." James Schlesinger, former US Energy Secretary Interview with David Strahan, ASPO 6, September 2007 "Oil ruled the 20th century; the shortage of oil will rule the 21st.... Last Tuesday the lead story in The Financial Times was the latest report from the International Energy Agency. The FT quoted the IEA as saying: 'Oil looks extremely tight in five years’ time,' and that there are 'prospects of even tighter natural gas markets at the turn of the decade'. For an international agency, that is inflammatory language.... 27 of the 51 oil-producing nations listed in BP’s Statistical Review of World Energy reported output declines in 2006. One projection of world crude oil production actually forecasts a 10 per cent reduction in total world output between 2005 and 2015. That would be a revolution..... Some analysts think that the peak oil moment has already been reached; some still think that it will not come until 2020 – which is itself only 12 years away. Market trends and the statistics both support the IEA’s view that consumption is accelerating and supplies falling faster than expected. Of course, if the 'crunch' point is only five years’ away for oil, and closer for natural gas, it has, for practical purposes, already arrived....The shortage of oil and natural gas, relative to demand, had already changed the balance of world power. Historians may well conclude that the US decision to invade Iraq was primarily motivated by the desire to gain physical control of Iraq’s oil and to provide defence support to other Middle Eastern oil powers. Political motivations are always mixed, but oil is an essential national interest of the United States. If the US is now deciding to withdraw from Iraq, the price will have to be paid in terms of loss of access to oil.... The world is coming to the end of the age of oil, which produced its own technology, its balance of power, its own economy, its pattern of society. It does not greatly matter whether the oil supply has peaked already or is going to peak in five or 12 years’ time. There is a huge adjustment to be made. There will be some benefits, including higher efficiencies and perhaps a better approach to global warming. But nothing will take us back towards the innocent expectation of indefinite expansion of the first months of the new millennium." Lord William Rees-Mogg Are these the last days of the Oil Age? London Times, 16 July 2007 "If Iraqi production does not rise exponentially by 2015, we have a very big problem, even if Saudi Arabia fulfills all its promises. The numbers are very simple, there's no need to be an expert.... Within 5 to 10 years, non-OPEP production will reach a peak and begin to decline, as reserves run out. There are new proofs of that fact every day. At the same we'll see the peak of China's economic growth. The two events will coincide: the explosion of Chinese growth, and the fall in non-OPEP oil production. Will the oil world manage to face that twin shock is an open question.... I really hope that consuming nations will understand the gravity of the situation and put in place radical and extremely tough policies to curb oil demand growth." Fatir Birol, Chief Economist, International Energy Agency Le Monde, 27 June 2007 "The world is consuming oil at a rate that will result in oil production peaking in 15 to 25 years, a group of geoscientists told the American Association of Petroleum Geologists' annual convention in Long Beach, Calif. When world oil production reaches the peak by 2020-30, the rate will be 90-100 million b/d, only 10-20% higher than it was in 2005. Depending on the level of world oil resources, which is highly uncertain, that peak is likely to last 20-30 years before production begins its ultimate decline. The estimates are released for the first time following an AAPG Hedberg Research Conference held in November 2006 in Colorado Springs.... Unconventional resources-tar sands and extra-heavy oil, oil shale, and oil from mature source rocks-provide a massive in-place resource. Each is known to have at least 3-4 trillion bbl. The problem with these unconventional resources is recoverability. Each faces a major challenge, whether poor quality oil (extra-heavy oil), poor quality reservoirs (oil from source rocks), or both (oil shale). Production of extra heavy oils and oil shale also requires substantial energy, enough so that oil shale production may be severely constrained by being mostly uneconomic due to a low net energy gain. The 75 Hedberg conference participants came from 18 countries on all six populated continents. " World oil production to peak in 15-25 years, AAPG told Oil And Gas Journal, 4 April 2007 ".... a series of crises in oil supply is likely over the coming decades. The first, related to the peak and decline of non-OPEC production, is practically upon us and underpins the currently high oil prices...... The imminent inability of non-OPEC production to meet incremental demand and its decline after 2010 precipitates the second crisis as OPEC’s diminishing spare capacity (even with Iraq’s production back to preinvasion levels) becomes less and less able to accommodate short-term fluctuations.....The third crisis, due to OPEC’s incremental supply being unable to meet incremental demand, follows in the first half of the next decade. This assumes that OPEC’s reserves are as published. .....These crises will have global economic and geopolitical significance: The oil price will be high and volatile, and demand growth will have to be curtailed..." Oil Supply Challenges - 2: What Can OPEC Deliver? Oil and Gas Journal, 7 March 2005 The Energy Challenge Of The 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." Transcript of Barack Obama’s Energy and Environment Team Announcement New York Times, 15 December 2008 "The most important contributors to the world’s total oil production are the giant oil fields....The evolution of decline rates over past decades includes the impact of new technologies and production techniques and clearly shows that the average decline rate for individual giant fields is increasing with time. These factors have significant implications for the future, since the most important world oil production base – giantfields –will decline more rapidly in the future, according to our findings.... By 2030 the production from fields currently on stream could have decreased by over 50% in agreement with IEA (2008) . The struggle to maintain production and compensate for the decline in existing production will become harder and harder. Our conclusion is that the world will face an increasing oil supply challenge, as the decline in existing production is not only high but also increasing." Giant oil field decline rates and their influence on world oil production Energy Policy Volume 37, Issue 6, June 2009
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