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"I don't think in the last two or three hundred years we've faced such a concatenation
of  problems all at the same time.... If we are to solve the issues that are ahead of us,

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

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

PEAK OIL AND ENERGY CRISIS NEWS

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Peak Oil and Energy Crisis News Archives

2010

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2008

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2006/5/4/3/2

'Highlights' 2005 - 2010

"Christophe de Margerie, CEO of the French oil giant Total...[says] oil supplies will soon run seriously short, and until we come up with something better we need to make sure we suck every last drop from every last nook and cranny on the planet. 'We don't know everything,' he says. 'But on oil reserves and production we know a lot. And it's our duty to speak out.'....In an industry famous for being opaque, de Margerie speaks openly about the nightmare scenario — oil shortages — that most energy firms prefer to avoid or deny. De Margerie says the possible effects on the world economy of dwindling oil supplies are so great 'I am not prepared to shut my mouth.' Shortly after taking over at Total, he jolted oil executives at a London conference by stating the industry would be unlikely to produce more than 100 million barrels a day, far below the 120 million or so the International Energy Agency estimates the world could produce by 2030, and which will be needed for Asia's galloping growth. De Margerie now says 90 million barrels a day is 'optimistic.' Audiences regularly ask him when he thinks we might use earth's last drop of oil, and de Margerie says that date is decades off. But it's important to realize, he says during an interview with TIME, 'what will happen very soon is that oil supplies will not cover demand. That won't mean there is no oil. There are oil reserves, but you will need to invest billions and billions to get it.'"
Christophe de Margerie: Big Oil's Straight Talker
TIME, 25 January 2010

"Moves made to address carbon emissions are varied, but many governments seem to be prioritizing low-carbon energy programs as an alternative to fossil fuels. Fatih Birol [IEA Chief Economist] recently told the US Council on Foreign Relations of his certainty that developing states are interested in climate negotiations – and in reducing emissions – far more for energy security reasons than for climate ones. Diplomatically, he did not suggest that major industrial states might be acting for much the same reasons."
Shane Mulligan - Heads in the Sand? Or, Why Don’t Governments Talk about Peak Oil?
The Oil Drum, 5 January 2010

"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 (£300 billion) a year, with the bulk of this spent in the 13 member states of Opec, where most of the world's remaining supplies lie.... The dispute between the IEA and Opec goes to the heart of the debate over 'peak oil and how much of the world's energy needs its existing oilfields can supply in the years ahead. This year's World Energy Outlook report slashed its assessment of how much oil the world would be able to produce by 2030 by ten million barrels to 106 million per day and placed more emphasis than ever before on the need to develop alternatives. Opec has traditionally adopted a much rosier view of the prospects for future global oil production growth. For years, it has also been accused of overstating its reserves for political reasons and to discourage the development of alternatives. The IEA's report also gave warning that the present economic slowdown could have damaging consequences for the world's energy supplies by undermining crucial investment. 'We cannot let the financial and economic crisis delay the policy action that is urgently needed to ensure secure energy supplies and to curtail rising emissions of greenhouse gases,' Mr Tanaka [IEA executive director] said. 'We must usher in a global energy revolution by improving energy efficiency and increasing the deployment of low-carbon energy.”
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

"(Steven Chu, Obama Secretary of Energy) was my boss. He knows all about peak oil, but he can't talk about it. If the government announced that peak oil was threatening our economy, Wall Street would crash. He just can't say anything about it."
David Fridley, Lawrence Berkeley National Laboratory (US Department of Energy)

Cheer Up, It's Going to Get Worse
Bohemian.com, 17 June 2009

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PEAK OIL AND ENERGY CRISIS NEWSBITES
2010

"Russia crude production neared a post-Soviet record in February as TNK-BP, the venture owned by BP Plc and a group of billionaires, raised output at new fields in both western and eastern Siberia. Crude production reached almost 10.08 million barrels a day, a gain of 3.3 percent from a year earlier and 0.2 percent from the previous month, according to preliminary data from the Energy Ministry’s CDU-TEK unit. Output, which has exceeded 10 million barrels a day for six months in a row, was slightly below November’s record. Oil exports slumped to 5.21 million barrels a day, down 1.3 percent from January and 5.7 percent on the year, as the export tax climbed following the price of Urals, Russia’s benchmark blend. TNK-BP boosted output to 1.42 million barrels day after ramping up new projects, such as the Uvat and Kamennoye fields in western Siberia and Verkhnechonsk in the east. Production advanced 4.5 percent from a year earlier and 0.5 percent from the previous month, not including its OAO Slavneft venture."
Russia February Output Nears Post-Soviet Record on TNK-BP Gains
Bloomberg, 2 March 2010

"Asian buyers are taking record volumes of West African crude oil this year as fuel consumption rises in India, China and other East Asian countries, a Reuters survey of trade sources showed on Monday. Imports of cargoes of unrefined oil from Nigeria, Angola and other African producers via Atlantic ports averaged around 1.79 million barrels per day (bpd) in the first quarter, up from about 1.53 million bpd in the fourth quarter and close to 1.1 million bpd a year ago. In the first three months of this year, Asia consumed about 40 percent of all the West African crude produced, up from around 25 percent in Q1 2009, the Reuters survey shows. Asian buyers have so far taken 52 cargoes of West African crude oil due to load in March, compared with around 50 in February and at least 59 cargoes loading in January."
Asia buys record volume of W.African oil in Q1
Reuters,   1 March 2010

"The oil supply challenge is often summarized in terms of the production volume equivalent of Saudi-Arabia’s that needs to be replaced. This popular metric is based on in-depth studies of global decline rates that show a decline range between 4.5 and 6 percent over the current 73 million barrels of crude oil produced per day. By using such literature values for all types of production, it can be shown that:
* In the coming three years sufficient oil supply capacity to supply world demand is available under any economic scenario.
Supply constraints can only arise if OPEC proves to be too slow in turning available capacity into production.
*
Oil supply can no longer meet growing demand beyond 2013 in case of an unlikely rapid economic recovery.
*
In case of a fairly weak economic recovery the oil market will begin to tighten in 2014 when production capacity begins to decline and growing demand can no longer be met around 2017.
*
If we suffer another economic downturn, ample oil supply will be available for a period of at least a decade.

These results are based on a study that will be published next month, written by ASPO Netherlands in collaboration with NEA transport research. As a part of this study a boundary assessment was made for total production capacity. The resulting picture gives lower and upper boundaries for production capacity between 87 million and 98 million barrels per day in 2015, and 63 million and 111 million barrels per day in 2030. This is based on analyzing production developments from current fields, an oil field projects database, estimates for unconventional oil and natural gas liquids production, enhanced oil recovery developments, and future discovery estimates. Comparing these boundary estimates with demand forecasts from the IEA makes it clear that the International Energy Agency demand scenario from the World Energy Outlook 2009 can only be met under the most optimistic of assumptions."

Commentary: Drawing the lower and upper boundaries of future oil supply
ASPO USA, 1 March 2010

"Using fossil fuel in vehicles is better for the environment than so-called green fuels made from crops, according to a government study seen by The Times. The findings show that the Department for Transport’s target for raising the level of biofuel in all fuel sold in Britain will result in millions of acres of forest being logged or burnt down and converted to plantations. The study, likely to force a review of the target, concludes that some of the most commonly-used biofuel crops fail to meet the minimum sustainability standard set by the European Commission. Under the standard, each litre of biofuel should reduce emissions by at least 35 per cent compared with burning a litre of fossil fuel. Yet the study shows that palm oil increases emissions by 31 per cent because of the carbon released when forest and grassland is turned into plantations. Rape seed and soy also fail to meet the standard. The Renewable Transport Fuels Obligation this year requires 3¼ per cent of all fuel sold to come from crops. The proportion is due to increase each year and by 2020 is required to be 13 per cent. The DfT commissioned E4tech, a consultancy, to investigate the overall impact of its biofuel target on forests and other undeveloped land. The EC has conducted its own research, but is refusing to publish the results. A leaked internal memo from the EC’s agriculture directorate reveals its concern that Europe’s entire biofuels industry, which receives almost £3 billion a year in subsidies, would be jeopardised if indirect changes in land use were included in sustainability standards....Last year, 127 million litres of palm oil was added to diesel sold to motorists in Britain, including 64 million litres from Malaysia and 27 million litres from Indonesia. Kenneth Richter, biofuels campaigner for Friends of the Earth, said: 'The billions of subsidy for biofuels would be better spent on greener cars and improved public transport.'"
Green fuels cause more harm than fossil fuels, according to report
London Times, 1 March 2010

"The Canadian Oil Sands Trust has announced it will increase synthetic crude oil production capacity at its Syncrude project near Fort McMurray, Alberta. The company said that, based on preliminary scoping and design work by Syncrude and ExxonMobil, the existing Mildred Lake upgrading facility has latent capacity that can be 'unlocked' through a series of steps, allowing synthetic crude oil production to grow to approximately 425,000 barrels per day (bpd) by the end of the decade. The projects include accessing excess coking capacity, modifying facilities, and potentially adding new ancillary units. Alberta tar sands project will increase production."
Alberta tar sands project will increase production
Canadian Driver, 25 February 2010

"Shell Oil Co. said Tuesday it is abandoning its quest for water rights from the Yampa River in northwest Colorado to develop oil shale production, citing delays in the project due to the global economic downturn. The Yampa is the last free-flowing river in Colorado, uninterrupted by dams or other diversions. It winds through Dinosaur National Monument and is a popular rafting spot for the region's boaters. Colorado, Wyoming and Utah are thought to hold 800 billion barrels of recoverable oil in shale. But critics of a federal management plan for developing oil shale on public lands say the process would use too much of the region's scarce water. Though Shell dropped its bid for Yampa water this week, the company left open the possibility of pursuing the oil-shale project in the future. 'The exact scale and timing for development will depend on a number of factors, including progress on our technology development, the outcome of regulatory processes, market conditions, project economics and consultations with key stakeholders'” the company said in a statement. Shell was seeking a conditional water right to take up to 375 cubic feet per second, about 8 percent of the Yampa's average April-to-June flow. The company would have pumped the water into a new reservoir covering 1,000 acres and holding 45,000 acre-feet of water, or about 15 billion gallons."
Shell Oil walks away from Colorado's last free-flowing river
Vail Daily, 25 February 2010

"A survey of 70 active companies by industry body Oil & Gas UK shows that there are more projects under consideration than at this time last year. However, difficulties raising finance and the fact that the easiest – and therefore cheapest – reserves to extract have already been exploited means fewer projects are actually being developed. This will lead to a fall in the UK's domestic oil production and increase the need for imports. There are 11bn barrels of oil and gas in existing projects, up 15pc from the previous year – enough to meet half the UK's demand in 2020. However, companies will need to raise £60bn of capital expenditure to extract this oil. Oil companies are planning to extract only 5.25bn barrels from approved projects, up from a target of 6bn barrels at this time last year. Mike Tholen, the industry group's economics director and author of the report, said confidence had improved, but the investment climate was still not good."
Companies 'can't afford' to drill for North Sea oil and gas
Daily Telegraph, 24 February 2009

"Five years ago, when oil prices were climbing steadily and economists were stoking fears about peak oil and gas, it seemed that major energy producers like Russia were holding all the cards. Then-president Vladimir Putin spoke of his country as an 'energy superpower' and used energy supplies as a blunt instrument of Kremlin foreign policy. Gas cutoffs to Ukraine caused panic in Europe, while Western energy companies fell over each other to get a slice of Russia's oil and gas fields. But all that is over. Today, the super-giant Shtockmann natural-gas field under the Arctic sea—Russia's only big hydrocarbon discovery since Soviet times—has just been mothballed due to the towering cost of extracting the undersea gas. At the same time, worldwide demand for Russia's gas has plummeted. And meanwhile, the government has punctured investor confidence by pressuring BP, one of the few major foreign investors left in Russia's energy sector, to hand over a giant Siberian gas field to a government-owned rival. It's time for Moscow to kiss goodbye those dreams of energy hegemony. One problem is that the recession has eviscerated European demand for Russian natural gas (consumption dipped by 7 percent in 2009). Another is that demand in the United States for imported natural gas has fallen off too. Thanks to shale gas and other unconventional sources like tar sands, the U.S. is now close to self-sufficient in natural gas. It's a nightmare for Shtockmann, where the business plan hinged on freezing the product into liquified natural gas, or LNG, for export to the United States....The $20 billion cost of extracting the deep-buried gas in the harsh conditions of the Arctic has proved prohibitive for Gazprom and its minority partners, Total of France and Statoil of Norway....Now the European market seems oversupplied. More worrying still, Gazprom's traditional suppliers (gas fields in the Central Asian nations of Turkmenistan and Kazakhstan) have begun opening their own direct pipelines to China, where gas consumption has a future. And though Gazprom still controls about 17 percent of the world's proven natural-gas reserves, many of its existing fields are beginning to run dry. Getting at the remainder—for instance at the Bovanenkovo field in the remote Yamal Peninsula in Siberia—will need massive investment of cash and know-how. Who wants to sink in that kind of money with no guarantee of returns?....Russia remains the largest exporter of oil and gas in the world—bigger even than Saudi Arabia. But unlike the Gulf nations, Russia is fast pumping its existing wells of both oil and gas dry. To tap its reserves—and to maintain Russia's status as an 'energy superpower'—Russia needs to stop ripping off its investors just because a demand falloff has hurt its bottom line. Gas consumption will come back. But Russia's superpower aspirations won't also rise if Russia has alienated its partners. Without them, its new reserves—like the Shtockmann field—will remain buried in the ground."
So Long, Salad Days
Newsweek, 24 February 2010

"Forget global warming – the more pressing problem is that the lights are about to go out. Look at the projections, and you will see why Ed Miliband, the Cabinet minister responsible for energy (there have been eight since 1997), should be up at night worrying. Over the next seven years, all the assumptions about where our power comes from will be overturned. Five years ago, Britain became a net importer of fossil fuels. The depletion of North Sea oil and gas means that we are depending increasingly on foreign supplies. In 2000, we imported just one per cent of our natural gas supplies; now it's nearly half, and the National Grid expects it will reach 70 per cent by 2018. On Tuesday, Oil & Gas UK, which represents the industry, issued a warning that without more investment in the North Sea, its contribution towards our energy needs will continue to dwindle. At the same time, generating capacity is set to drop off sharply, as ageing coal, gas and nuclear power stations are taken out of service. As so often, Europe is playing its part, in the shape of the EU Large Combustion Plant directive, which says that they should be cleaned up at vast cost or closed. The Government admits that by 2020 the lost capacity will be vast – 22.5 gigawatts, or almost a third of our total requirements....the present Government has done to address the looming blackout. It has stuck to a policy designed for an age of plenty, when what is needed is one to deal with the insecurities of the 21st century. How, for example, should we protect ourselves against the prospect of rising oil prices at a time when economic growth elsewhere will drive up demand for ever scarcer supplies? How do we insure against political instability abroad? When Russia tightened the tap on its natural gas pipelines last year in a dispute with Ukraine, Britain suffered, because we are at the other end of that network and have far smaller stockpiles than our European counterparts. Argentina's sabre-rattling over oil exploration in the Falklands may be comical today, but what about a nuclear-armed Iran blockading the Strait of Hormuz, through which much of the world's oil supplies must pass? Last year, the Government admitted that by 2017, demand will at times exceed supply, and that we could expect the first power outages since the rationing of the 1970s. That would mean up to 16 million households sitting in the dark for an hour. Charts from Mr Miliband's own department show that the situation will be even worse a decade later....Energy security – or our lack of it – is where those on either side of the [climate change] debate can find common ground....We face a looming crisis that has inescapable parallels with the banking disaster that nearly brought the world's money system to a halt."
Labour has pushed us to the brink of a blackout
Daily Telegraph, 24 February 2010

"Spare capacity, the market term for difference in supply and demand of crude, has remained constrained despite recession and a massive reduction in oil demand in 2009, Francisco Blanch, Global Head of commodities research at Bank of America Merrill Lynch, said in his latest report. Blanch cited the decline in supply from non-Opec suppliers for the reduction in spare capacity without giving a figure. He warned geopolitics and protectionism may play spoilsport for the oil markets. 'Last year, we estimated that global non-Opec production decline rates averaged 4.8 per cent for fields producing between 2003 and 2008. When adding 2009, we find non-Opec decline rates have increased from 4.8 per cent to 4.9 per cent. This step up shaves one million barrels a day by 2015 from our non-Opec supply projections,' Blanch wrote in his report. The global demand for oil will rise two million barrels a day this year with emerging economies accounting for three-fourth of this rise, Blanch had told Emirates Business earlier. 'While the demand in emerging economies will rise by 1.5 million barrels a day, it will rise by 0.5 million barrels a day in the OECD economies.' Oil will average at $85 a barrel this year, Blanch said. 'It will potentially get close to $90 a barrel by the third quarter. It will break into a hundred in the first quarter of the next year,' the analyst credited for forecasting $147 a barrel price for oil almost on the nose in 2008 had told this newspaper earlier. For most industries around the world the crisis was exceptional, but not for oil, Blanch's new report said adding that the commodity has fared the crisis with strength. Oil had already suffered two back-to-back recessions in the 80s and 90s, where utilisation rates dropped to very low levels. The first recession in oil occurred in the early 80s as increased North Sea crude production and a major switch in OECD oil demand towards natural gas and nuclear power forced Saudi Arabia to cut output by 6.7 million barrels a day. In the early 90s, the oil industry suffered a second large recession, as the economic collapse of the Soviet Union left five million barrels a day of spare capacity. Blanch has predicted that the non-Opec supply will peak by 2011. 'We conclude that non-Opec supply, including non-conventional oil, NGLs and biofuels, will likely peak by 2011 at around 52.3 million barrels a day. Thereafter we see steady declines in production, reaching 51 million barrels a day by 2015. The world will thus become more reliant on Opec and we see utilisation rates reaching 95 per cent by 2014,' he said.... Reliance on Opec crude will only grow from now to 2015, Blanch said. 'We see Opec utilisation rates reaching 94 per cent by 2014 despite large investments in Saudi Arabia, Angola and Algeria.' Blanch reiterated his opinion that the emerging markets (EMs) will drive the demand for oil until 2015....With Opec capacity utilisation rates now running at around 81 per cent, any return to the recent demand growth path will likely eat into spare capacity sooner rather than later, Blanch said.....As a result, large fluctuations in prices will likely remain the norm to bring medium-term supply and demand trends into balance. 'In line with this view, we see the band for oil prices widening from $70-$85 per barrel at present, to $65-105 barrel the next year. By 2014, the range could expand again to the $50-150 barrel band observed in 2008,' Blanch wrote in his report..... Following two decades of exceptionally high spare productive capacity in the 80s and 90s, the global oil market tightened at a very rapid pace in the 2000s as robust demand from emerging economies stumbled against limited supply growth, said Blanch. However, the recession brought about a substantial contraction in OECD oil demand, forcing Opec cartel members to cut supply by 3.1 million barrels a day in early 2009 and late 2008. 'While oil demand has started to recover again, the medium-term outlook for oil and the global economy remains extremely uncertain. What does oil have in store for the 2010s. A potential four-fold surge in Iraqi production, dramatic increases in oil efficiency and substitution or a demand bubble in the emerging economies could all create large swings in global oil supply and demand balances. But the departure point matters, suggesting that oil the oil markets could be very tight again by 2014,' said Blanch. He sees large fluctuations in oil prices after 2014....Taking the Iraqi government's announcement of raising its oil production capacity from 2.5 million barrels a day to 10-12 million barrels a day over the next decade with a pinch of salt, blanch said that such a development would keep oil prices below $100 a barrel. 'While we remain sceptical that these large increases in volumes can be achieved, a four-fold increase in Iraqi production over the coming years could be sufficient to keep oil prices from rising above $100 a barrel for much of this decade,' said Blanch."
Non-Opec output decline restricts spare capacity 
Emirates Business 24/7, 22 February 2010

"BP Plc and Royal Dutch Shell Plc may falter in their campaigns to save billions in oil and gas project costs as a resurgence in drilling and demand for engineers threaten to revive inflation in the industry. Crude prices doubled to near $80 a barrel in the past year, prompting producers to resume projects put on hold during the recession. Oil and gas industry spending will rise 11 percent this year to $439 billion, according to Barclays Capital. 'Oil price inflation and cost inflation are highly correlated, albeit with some delay,' said Paul Wheeler, a London-based managing director in the oil and gas group at investment bank Jefferies International Ltd. 'The oil industry is always people constrained. It’s one of the biggest challenges: a lack of young engineers and geologists.'
BP, Shell Cost Cuts May Falter on Drilling Inflation
Bloomberg, 22 February 2010

"When world oil producers and consumers convened in Jeddah for an emergency summit in June 2008, Samuel Bodman, then US energy secretary, had a simple message for Saudi Arabia: pump more oil now. As Steven Chu, his successor, flies to the kingdom this week, the agenda instead has a heavy focus on research and technology. The different messages underscore the fact that crude prices have fallen from $130 a barrel in June 2008 to $80 a barrel. They also reflect a further tilt in the balance of demand growth from west to east. While the US's thirst for oil still leads the world, demand fell in 2008-09 and most analysts expect that efficiency measures and bad memories of the recent price spike will keep a lid on any rebound. The US has also been diversifying its sources of oil. Canada has overtaken Saudi Arabia as the top supplier amid aggressive investment in its tar sands region. Angola, Nigeria and Brazil have also contributed. More important, these producers are competing for a smaller market. US crude imports peaked above 10m barrels a day in 2005, and in the past two years have fallen 9 per cent as recession thinned traffic and pared industrial activity. China's crude imports, meanwhile, rose about 14 per cent last year. Purchases from Saudi Arabia, its largest supplier, rose faster and reached a record 1.2m b/d in December. Saudi imports averaged 843,000 b/d last year, still lower than the US average in the first 11 months for which data are available. Jim Burkhard, managing director of global oil at IHS Cambridge Energy Research Associates, the consultant, said: 'This is a reflection of the global economy. China has been growing. The US hasn't. We've seen that reflected in oil demand figures.' For Saudi Arabia, in need of stable markets for 264bn barrels in oil reserves, China promises reliable demand as slower economic growth and efficiency measures take hold in the west. Analysts do not expect the shift in oil flows to undermine the strong political relationship between the US and the kingdom. Mr Chu's office said his visit is meant to strengthen US partnerships in the region. Greg Priddy, global oil analyst at Eurasia Group, a political risk consultancy, said the US was 'actually encouraging the Saudis to export more to China as an offset to Iran', which faces increasing international pressure over its nuclear programme. Saudi Aramco, the state oil company, owns half of Motiva Enterprises, a US refinery joint venture that it helps to supply. Still, there are signs the world's top crude producer is shifting attention east. Saudi Arabia is ending a lease for some of the vast storage facilities in the Caribbean it used to dispatch cargoes to US refineries. Ali Naimi, Saudi oil minister, recently said the kingdom was leasing new storage in Okinawa, Japan, from which to ship oil to the booming Asian market. 'Asia will be a huge market,' Mr Naimi said. Saudi Arabia has shouldered the bulk of the output cuts announced by Opec, the oil cartel. Analysts say it shut in cheaper, heavier crudes in order to preserve profit margins. This has squeezed operations at US refineries that specialise in the heavier grades, further damping US demand for Saudi oil. Amy Myers Jaffe, a research fellow at Rice University in Houston, said that while market forces had redirected Saudi exports, US energy policy was also a factor. 'Everything in oil is geopolitical,' she said. 'For sure, the Saudis have commercial reasons . . But oil is never 100 per cent commercial.'"
Saudi oil flows east as demand in Asia grows
Financial Times, 22 February 2010

"BP Plc and Royal Dutch Shell Plc may falter in their campaigns to save billions in oil and gas project costs as a resurgence in drilling and demand for engineers threaten to revive inflation in the industry. Crude prices doubled to near $80 a barrel in the past year, prompting producers to resume projects put on hold during the recession. Oil and gas industry spending will rise 11 percent this year to $439 billion, according to Barclays Capital. 'Oil price inflation and cost inflation are highly correlated, albeit with some delay,' said Paul Wheeler, a London-based managing director in the oil and gas group at investment bank Jefferies International Ltd. “The oil industry is always people constrained. It’s one of the biggest challenges: a lack of young engineers and geologists.”
BP, Shell Cost Cuts May Falter on Drilling Inflation
BusinessWeek, 22 February 2010

"The API reported that total US oil consumption is now at the lowest level, 18.4 million b/d, in 12 years despite the fact that gasoline rose steadily in January. US gasoline consumption is now about 8.7 million b/d as opposed to a high of 9.6 million reached in July 2007. Consumption of low sulfur diesel fuel, used in heavy trucks is down by 11.5 percent, a bad sign for the US economy."
Peak Oil Review - Feb 22
ASPO USA, 22 February 2010

"The world’s most powerful investors have been advised to buy farmland, stock up on gold and prepare for a 'dirty war' by Marc Faber, the notoriously bearish market pundit, who predicted the 1987 stock market crash. The bleak warning of social and financial meltdown, delivered today in Tokyo at a gathering of 700 pension and sovereign wealth fund managers. Dr Faber, who advised his audience to pull out of American stocks one week before the 1987 crash and was among a handful who predicted the more recent financial crisis, vies with the Nouriel Roubini, the economist, as a rival claimant for the nickname Dr Doom. Speaking today, Dr Faber said that investors, who control billions of dollars of assets, should start considering the effects of more disruptive events than mere market volatility. 'The next war will be a dirty war,' he told fund managers: 'What are you going to do when your mobile phone gets shut down or the internet stops working or the city water supplies get poisoned?' His investment advice, which was the first keynote speech of CLSA’s annual investment forum in Tokyo, included a suggestion that fund managers buy houses in the countryside because it was more likely that violence, biological attack and other acts of a 'dirty war' would happen in cities....One of Dr Faber’s darker scenarios involves growing military tension between China and the United States over access to limited oil resources. Today the US has a considerable advantage over China because it has free access to oceans on both coasts, and has potential energy suppliers to the north and south in Canada and Mexico. It also commands an 11-strong fleet of aircraft carriers that could, if necessary, secure supply routes in a conflict situation. China and emerging Asia, meanwhile, face the uncertainty of supplies that must travel from the Middle East through winding sea lanes and the Malacca bottleneck. American military presence in Central Asia, Dr Faber said, may add to the level of concern in Beijing. 'When I tell people to prepare themselves for a dirty war, they ask me: 'America against whom?' I tell them that for sure they will find someone.' At the heart of Dr Faber’s argument is a fundamentally gloomy view on the US economy and its capacity to service a growing mountain of debt. His belief, fund managers were told, is that the US is going to go bankrupt. Under President Obama, he said, the country’s annual fiscal deficit will not drop below $1 trillion and could rise beyond that figure."
'Buy farmland and gold,' advises Dr Doom
London Times, 22 February 2010

"Bank of America and Barclays Capital, two leading oil traders, have told clients to brace for crude above $100 (£64) a barrel by next year, before it pushes relentlessly higher over the decade. This is a stark contrast from recessions in the 1980s and 1990s, when it took years to work off excess drilling capacity built in the boom. 'Oil has the potential to flirt with $100 this year. We forecast an average price of $137 by 2015,' said Amrita Sen, an oil expert at BarCap. The price has doubled to $78 in the last year.   'The groundwork for the next sustained step up in oil prices is now almost complete. Global spare capacity is likely to be reduced to low levels within a relatively short time. The global economic crisis has postponed, but not cancelled, a crunch which would otherwise be starting to bite now,' said Barclays. Francisco Blanch, from Bank of America Merrill Lynch, said crude may touch $105 next year, with $150 in sight by 2014. 'Approximately 1.7bn consumers in emerging markets with a per capita income of $5,000 to $20,000 are eagerly waiting to buy cars, air-conditioning units, or white goods,' he said. China has overtaken the US as the world's top car market. Mr Blanch expects oil demand to rise by a further 2.8m barrels per day (bpd) in China and 2.5m bpd in India by 2015, when two giants will be absorbing the lion's share of Gulf output. Consumption in the West has already peaked and will fall each year as populations shrink and we waste less, but the West no longer sets the price. Global use will increase by 8.8m bpd to 95m bpd....Mr Blanch said output from non-OPEC states is falling by 4.9pc each year, despite Russia's reserves. Saudi Arabia and the Emirates can plug a quarter of the gap, but global spare capacity must soon drop to wafer-thin levels – leaving us vulnerable to the sort of 'super-spike' seen in 2008. The wildcard is whether Iraq can quadruple output to Saudi levels this decade, a target dismissed by most analysts as pie-in-the-sky. Painfully high prices are needed to unlock fresh supplies as reserves are depleted in the North Sea and the Gulf of Mexico. Deep-water rigs off Brazil are costly and require drilling far below the seabed. Canadian oil sands and US biofuels have break-even costs near $70. While the US, UK, and the Far East are turning to nuclear power, it takes a decade to build reactors. 'peak uranium' lurks in any case. The oil spike brought the global economy to a shuddering halt in 2008. This time the crunch may hit before the West has fully recovered. Whatever happens, the US, Europe and Japan will soon transfer a chunk of their wealth to the petro-powers. It is a new world order."
Barclays and Bank of America see looming oil crunch
Daily Telegraph, 18 February 2010

"Billions of barrels of oil may lie trapped in the rocks deep beneath the ocean floor of the South Atlantic, but finding them and bringing them to market is likely to be a big struggle — vastly expensive and fraught with political complications. A study by the British Geological Society suggested that the region could contain up to 60 billion barrels of oil — a similar-sized deposit to the North Sea. But such figures may give little sense of how much is recoverable using existing technology. No drilling has been carried out in the Falklands since 1998, when Shell and Lasmo drilled six wells in an area to the north of the islands, not far from where the current drilling programme is set to start next week. Traces of crude were discovered in all but one of the wells — where gas was found instead — but the following year the global price of oil fell to $10 per barrel, ending the commercial logic of further exploration....The drilling site lies in relatively shallow waters about 400 metres (1,300ft) deep and between 30 and 60 miles north of the islands. Two of the other companies, Falkland Oil and Gas and Borders & Southern, are prospecting in another region that lies to the south of the islands in deeper and more challenging waters up to 1,200m (3,900ft) deep. There is a reasonable chance that at least one of the companies will find oil — but whether it is found in commercial quantities is less clear. The Falklands are so remote that any oil discovery would need to be large to justify the multibillion- pound costs of building pipelines, export terminals and other infrastructure. Then there are the political obstacles with Argentina, which are likely to deter industry giants such as BP, Shell and Exxon. Until a resolution with Argentina can be reached over who owns the oil, they are likely to remain sceptical."
Oil may be there, but bringing it to market is another matter
London Times, 18 Feburary 2010

"With oil majors given the cold shoulder in many developing countries, it is no mean feat that Exxon Mobil managed to replace 100 percent of last year’s production with new reserves. Even so, not all energy is equal. The stuff Exxon is using to fill its pipeline will be harder to extract and of lower value to investors....clearing the crucial 100 percent hurdle by S.E.C. standards should be child’s play in 2010. With reserves of more than two billion barrels of oil equivalent, Exxon’s latest acquisition, XTO Energy, will replace more than a year of Exxon’s output at a stroke. The bigger concern for Exxon will be the nature of these new reserves. On the bright side Exxon is steering away from capricious developing nations, meaning fewer political headaches. Recent reserve additions have been in politically placid areas, notably Canada and Australia. But economic risks may offset fewer political ones. Discoveries of oil that is easy to extract and refine are failing to keep pace with output. The barrels taking their place may be tougher or more costly to reach, and therefore less profitable. Hopes are high that cleaner-burning natural gas will grow in popularity. The trouble is that gas still trades at a discount to its liquid cousin crude, especially in the United States, where it is worth about half the price of a barrel of oil. Liquids, about 57 percent of Exxon’s reserves 10 years ago, are now just half, according to IHS Herold. And squeezing energy from oil sands, an increasingly important source for Exxon, is often economical only when oil trades above $60 a barrel. Conventional wells are generally profitable at just half that level."
Barrels in Reserve but Harder to Get
Reuters, 17 February 2010

"EDF could face 'massive' new investment to extend the life of its French nuclear reactors beyond 40 years, the country’s safety authority has warned. Extending the life of its French reactors is crucial to EDF, which is hoping to secure 60-year life-cycles for its plants – a term that is already common in the US. The move comes as the French state-owned utility faces the prospect of greater competition in its home market and struggles to cope with record debt. André-Claude Lacoste, president of the French nuclear safety authority, said on Tuesday that the watchdog was 'beginning to treat' the question of the conditions EDF would have to meet to extend the life of its reactors beyond 40 years. 'To go beyond that without doubt would require massive investment,' he warned. The warning came as the regulator revealed that EDF has already been forced to commit hundreds of millions of euros to replacing the ageing steam generators on 34 of its 58 reactors."
EDF warned of ‘massive’ reactor bill
Financial Times, 16 February 2010

"Two of Britain’s biggest energy companies are lobbying the Conservative Party to keep some of the nation’s most polluting power stations operating beyond a deadline set by the European Union, The Times has learnt. RWE npower and E.ON, the two German-owned companies, have held private talks with senior Conservative politicians about the legal position of nine coal and oil-fired power plants due to close by the end of 2015 under new EU pollution rules. Together, the six coal and three oil-fired plants generate 12.3 gigawatts of electricity, about 15 per cent of total UK electricity supplies. E.ON and RWE are pressing for at least some of the plants to be exempted from the EU rules on the grounds that, without them, Britain could face blackouts by 2015 because not enough replacement stations are being built."
Energy giants turn up the heat for dirty power
London Times, 16 February 2010

"EU companies have taken millions of acres of land out of food production in Africa, central America and Asia to grow biofuels for transport, according to development campaigners. The consequences of European biofuel targets, said the report by ActionAid, could be up to 100 million more hungry people, increased food prices and landlessness. The report says the 2008 decision by EU countries to obtain 10% of all transport fuels from biofuels by 2020 is proving disastrous for poor countries. Developing countries are expected to grow nearly two-thirds of the jatropha, sugar cane and palm oil crops that are mostly used for biofuels. 'To meet the EU 10% target, the total land area directly required to grow industrial biofuels in developing countries could reach 17.5m hectares, over half the size of Italy. Additional land will also be required in developed nations, displacing food and animal feed crops onto land in new areas, often in developing countries,' says the report. Biofuels are estimated by the IMF to have been responsible for 20-30% of the global food price spike in 2008 when 125m tonnes of cereals were diverted into biofuel production. The amount of biofuels in Europe's car fuels is expected to quadruple in the next decade. The report attributes the massive growth in biofuel production to generous subsidies. It estimates that the EU biofuel industry has already received €4.4bn (£3.82bn) in incentives, subsidies and tax relief and that this could triple to over €13.7bn if the EU meets its 2020 target. The greatest support to the industry is exemption from excise duties. Duty at the pump is 20 pence less per litre compared to conventional fuels although this exemption due to end in 2010, a change which supermarket Morrisons cited last week as the reason for dropping one of its biodiesel blends. In 2009, the duty on low- sulphur petrol and diesel in the UK was 54.19 pence per litre; for biodiesel and ethanol it was 34.19 pence per litre."
EU biofuels significantly harming food production in developing countries
Guardian, 15 February 2010

"A 'miracle' plant, once thought to be as the answer to producing renewable biofuels on a vast scale, is driving thousands of farmers in the developing world into food poverty, a damning report concludes today. Five years ago jatropha was hailed by investors and scientists as a breakthrough in the battle to find a biofuel alternative to fossil fuels that would not further impoverish developing countries by diverting resources away from food production. Jatropha was said to be resistant to drought and pests and able could grow on land that was unsuitable for food production. But researchers have found that it has increased poverty in countries including India and Tanzania. Seeds of discontent: the 'miracle' crop that has failed to deliver... Millions of the plants have been grown in anticipation of rich returns, only for growers to be hit by poor yields, conflict over land and a lack of infrastructure to process the oil-rich seeds. Oil giant BP, which planned to spend almost £32m on a joint venture to set up jatropha plantations, has now pulled out and the charity ActionAid today warns that jatropha needs to be cultivated on prime food-growing land to produce significant yields. According to one estimate, up to one million hectares of jatropha – an area equivalent to Devon and Cornwall combined – are being cultivated around the globe, despite little evidence that it can produce enough oil to make the crop commercially sustainable....despite jatropha's much-lauded ability to grow where food crops cannot flourish, campaigners say there is evidence that commercially viable yields can only be obtained in fertile soil. In India, forecasted annual yields of three to five tonnes of seeds per hectare have been scaled back to 1.8 to two tonnes. The Overseas Development Institute, a leading international development think-tank, has stated that 'as the mainstay of people's livelihoods, jatropha looks distinctly marginal'."
Seeds of discontent: the 'miracle' crop that has failed to deliver
Independent, 15 Feburary 2010

"Saudi Arabia must be 'very serious' about any possible peak in oil demand, which is an 'alarm' for OPEC’s biggest exporter to diversify its economy, a Saudi Oil Ministry adviser said. Saudi Arabia is making a push into renewable energy and is starting its first carbon-capture project, Oil Ministry adviser Mohammad al-Sabban said today at the Jeddah Economic Forum. The country will start injecting carbon dioxide into Ghawar, the world’s largest oilfield, in 2012, he said. 'Talk of oil demand peaking is an alarm to speed up the economic diversification process,' al-Sabban said. 'The challenges facing Saudi Arabia are huge: we need to develop Saudis in order to be innovative, creative, to catch up with the rest of the world.' The world’s largest oil producer is investing in new industries such as aluminum and steel and pushing for more science and technology in education as it seeks to diversify away from dependence on income from exporting crude oil. More than 25 percent of the kingdom’s youth are unemployed. Oil demand in some developed industrialized nations is contracting, partly as a result of the economic slowdown. Those concerns are different from 'peak oil' theorists who say oil production has already reached maximum levels and will inevitably decline."
Saudi Arabia Says Peak Demand for Oil Is an ‘Alarm’
Bloomberg, 15 February 2010

"Britain's gas storage capacity will increase by a third after the Government today officially licenced a new development but the £600m investment will only be capable of meeting five days' average demand. The Gateway Project, 15 miles offshore, south west of Barrow-in-Furness will store 1.5bn cubic meters of gas in 20 salt caverns 750 meters below the seabed. It will be linked by pipeline to the national gas transmission system but will not be in service until 2014. Britain currently has only one offshore gas storage facility, Centrica's Rough field in the North Sea, and is vulnerable to winter surges in demand when supplies are stretched. Total gas storage is equivalent to 16 days demand compared with 88 in France and 77 in Germany."
New £600m gas storage caverns will handle just five days' demand
Daily Telegraph, 15 February 2010

"After attacking America's efforts to develop shale gas last week as 'dangerous to drinking water', it seems Russia has decided that not all unconventional supplies are bad news. Gazprom, the Russian state energy monopoly and world's largest gas producer, has decided to dip its toe into coal bed methane. It wants 1.5bn cubic metres of output a year by 2012 from a field in Siberia's coal-rich Kuzbass area. Russia may have 87 trillion cubic metres of coal-bed methane, which is the size of 'two Gazproms', says President Dmitry Medvedev. And it's even more than the 57 trillion cubic metres that has changed the face of US gas production."
Mining industry warns of another energy price spike
Telegraph, 14 February 2010

"Canada, faced with growing political pressure over the extraction of oil from its highly polluting tar sands, has begun courting China and other Asian countries to exploit the resource. The move comes as American firms are turning away from tar sands because of its heavy carbon footprint and damage to the landscape. Whole Foods, the high-end organic grocery chain, and retailer Bed Bath & Beyond last week both signed up to a campaign by ForestEthics to stop US firms using oil from Canadian tar sands. The Pentagon is also scaling down its use of tar sands oil to meet a 2007 law requiring the US government to source fuels with lower greenhouse gas emissions. Major oil companies such as Shell are also coming under shareholder pressure to pull out of the Canadian projects. Earlier this year, Shell announced it was scaling back its expansion plans for the tar sands after a revolt by shareholders. Producing oil from the Alberta tar sands causes up to five times more greenhouse gas emissions than conventional crude oil, according to the campaign group Greenpeace. In the most significant deal to date, the Canadian government recently approved a C$1.9bn (£1.5bn) investment giving the Chinese state-owned oil company Petro­China a majority share in two projects. Prime minister Stephen Harper said: 'Expect more Chinese investment in the resource and energy sectors … there will definitely be more.' China's growing investment in the tar sands is seen in Canada as a useful counter to waning demand for tar sands oil from the US, its biggest customer. The moves, which have largely gone unnoticed outside north America, could add further tension to efforts to try to reach a global action plan on climate change."
Canada looks to China to exploit oil sands rejected by US
Guardian, 14 February 2010

"The brains trust of the Pentagon says it is just months away from producing a jet fuel from algae for the same cost as its fossil-fuel equivalent. The claim, which comes from the Defense Advanced Research Projects Agency (Darpa) that helped to develop the internet and satellite navigation systems, has taken industry insiders by surprise. A cheap, low-carbon fuel would not only help the US military, the nation's single largest consumer of energy, to wean itself off its oil addiction, but would also hold the promise of low-carbon driving and flying for all. Darpa's research projects have already extracted oil from algal ponds at a cost of $2 per gallon. It is now on track to begin large-scale refining of that oil into jet fuel, at a cost of less than $3 a gallon, according to Barbara McQuiston, special assistant for energy at Darpa. That could turn a promising technology into a ­market-ready one. Researchers have cracked the problem of turning pond scum and seaweed into fuel, but finding a cost-effective method of mass production could be a game-changer. "Everyone is well aware that a lot of things were started in the military," McQuiston said. The work is part of a broader Pentagon effort to reduce the military's thirst for oil, which runs at between 60 and 75 million barrels of oil a year. Much of that is used to keep the US Air Force in flight. Commercial airlines – such as Continental and Virgin Atlantic – have also been looking at the viability of an algae-based jet fuel, as has the Chinese government. 'Darpa has achieved the base goal to date,' she said. 'Oil from algae is projected at $2 per gallon, headed towards $1 per gallon.' McQuiston said a larger-scale refining operation, producing 50 million gallons a year, would come on line in 2011 and she was hopeful the costs would drop still further – ensuring that the algae-based fuel would be competitive with fossil fuels. She said the projects, run by private firms SAIC and General Atomics, expected to yield 1,000 gallons of oil per acre from the algal farm. McQuiston's projections took several industry insiders by surprise. 'It's a little farther out in time,' said Mary Rosenthal, director of the Algal Biomass Association. 'I am not saying it is going to happen in the next three months, but it could happen in the next two years.' But the possibilities have set off a scramble to discover the cheapest way of mass-producing an algae-based fuel. Even Exxon – which once notoriously dismissed biofuels as moonshine – invested $600m in research last July. Unlike corn-based ethanol, algal farms do not threaten food supplies. Some strains are being grown on household waste and in brackish water. Algae draw carbon dioxide from the atmosphere when growing; when the derived fuel is burned, the same CO2 is released, making the fuel theoretically zero-carbon, although processing and transporting the fuel requires some energy. The industry received a further boost earlier this month, when the Environmental Protection Agency declared that algae-based diesel reduced greenhouse gas emissions by more than 50% compared with conventional diesel. The Obama administration had earlier awarded $80m in research grants to a new generation of algae and biomass fuels. For Darpa, the support for algae is part of a broader mission for the US military to obtain half of its fuel from renewable energy sources by 2016."
Algae to solve the Pentagon's jet fuel problem
Guardian, 13 February 2010

"Britain’s relations with Argentina fell last night to their lowest point since the Falklands conflict in a row over an oil platform that is due to arrive north of Port Stanley next week. The Ocean Guardian is expected to complete its journey to the disputed waters 100 miles off the Falklands coast from the Scottish Highlands as part of a campaign that Britain hopes will bring a black-gold rush to the windswept, sparsely populated islands. But, almost three decades after Britain and Argentina fought a bloody 72-day conflict over the islands, its impending arrival has stoked fury in a country that is still intent on claiming the territory as its own....The British Foreign Office denied that the oil operations were illegal. 'We are absolutely clear this is legitimate business in Falkland Islands waters and we will continue to reiterate our position that we have no doubt about our sovereignty over the Falkland Islands and the surrounding maritime areas,' a spokesman said. Analysts say that as many as 60 billion barrels of high-grade oil could be found in a 200 sq mile zone surrounding the islands, which is to be developed by Desire, AGR and Diamond Offshore Drilling. That could make the Falklands one of the world’s largest oil reserves, comparable with the North Sea, which so far has produced about 40 billion barrels."
British drilling for Falklands oil threatens Argentine relations
London Times, 13 February 2010

"Fresh controversy is mounting within the European Union over biofuels and their unintended impact on tropical forests and wetlands, documents show. One leaked document from the EU's executive, the European Commission, suggests biofuel from palm oil might get a boost from new environmental criteria under development. But another contains a warning from a top official that taking full account of the carbon footprint of biofuels might 'kill' an EU industry with annual revenues of around $5 billion. The European Union aims to get a tenth of its road fuels from renewable sources by the end of this decade, but has met with criticism that biofuels can force up food prices and do more harm than good in the fight against climate change. Most of the 10 percent goal will be met through biofuels, creating a market coveted by EU farming nations, which produce about 10 billion litres a year, as well as exporters such as Brazil, Malaysia and Indonesia. Environmentalists say biofuels made from grains and oilseeds are forcing farmers to expand agricultural land by hacking into rainforests and draining wetlands -- known as 'indirect land-use change' (ILUC). Clearing and burning forests puts vast quantities of carbon emissions into the atmosphere, so the EU risks promoting damage to the climate by creating such a valuable market."
Controversy mounts in EU over fall-out from biofuel
Reuters, 11 February 2010

"Cameco Corp., the world’s second- largest uranium producer, said crews safely re-entered the main working level of the Cigar Lake mine in Canada’s Saskatchewan province yesterday after the site was fully drained of water. Access was established to 480 meters (1,575 feet) underground and inspections of the development are under way, Saskatoon, Saskatchewan-based Cameco said today in a statement. Cigar Lake, which sits atop the world’s richest untapped uranium deposit, flooded in October 2006 and again in August 2008. Work to secure the underground is expected to be completed before October and an update on the project will be included in Cameco’s earnings release on Feb. 24, the company said."
Cameco Says Crews Re-Entered Cigar Lake Working Level
Bloomberg, 11 February 2010

"The International Energy Agency (IEA) gave the market some fresh optimism today by boosting its global oil demand forecast by 50,000 barrels per day for 2009 and by 170,000 bpd for this year, on the back of stronger economic projections by the International Monetary Fund (IMF). Global oil demand is now estimated at 86.5 million bpd for 2010, up 1.8% year-on-year and a 170,000 barrel increase compared with agency's last report.   For 2009, global demand is expected to come in at 84.9 million bpd, down 1.5% year-on-year but 50,000 barrels higher than the last forecast....Growth comes entirely from non-Organisation for Economic Co-operation & Development (OECD) countries and higher demand readings from China and Asian countries, the agency said. Demand in non-OECD is now forecast to increase by 4%, while stagnating at 2009 levels in OECD countries. Meanwhile, oil price projections for 2009 and 2010 were revised up $1 and $4 respectively, to $58 per barrel and $75 per barrel."
IEA boosts oil outlook
Upstream Online, 11 February 2010

"As Europe's leaders gather in Brussels today, they have only one crisis in mind: the debts that threaten the stability of the European Union. They are unlikely to be in any mood to listen to warnings about a different crisis that is looming and that could cause massive disruption. ....the work of the Industry Taskforce on Peak Oil and Energy Security shouldn't be disparagingly dismissed. Its arguments are well founded and lead it to the conclusion that, while the global downturn may have delayed it by a couple of years, peak oil—the point at which global production reaches its maximum—is no more than five years away. Governments and corporations need to use the intervening years to speed up the development of and move toward other energy sources and increased energy efficiency. In the first report from the task force, Lord Ron Oxburgh, a former chairman of Shell, wrote that 'It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. Any new or unconventional oil is going to be expensive.'... The Taskforce, assimilating various opinions, believes 92 million barrels a day will be the most that global supplies will be able to generate, 'unless some unforeseen giant, and easily accessible, finds are reported very soon.' It may be that the oil companies are keeping some giant secrets from us but that seems unlikely. So what lies ahead is a mismatch between supply and demand. According to Chris Skrebowski, of the Peak Oil Consulting firm, mid-2015 is when the crunch hits. 'This is when capacity starts to be overwhelmed by depletion and lack of new capacity additions.' Some dubious emails and slightly dodgy dossiers have cast a new, and unflattering, light on the global-warming debate, raising the risk of a return to the belief that we can go on consuming oil with impunity. Being a 'climate-change denier' is in danger of becoming almost fashionable. But whatever the risk to the climate, scarce and expensive oil would be a threat to established economies. We need alternatives."
The Next Crisis: Prepare for Peak Oil
Wall St Journal, 11 February 2010

"Venezuela awarded on Wednesday the largest oil investment of President Hugo Chavez's 11-year rule, drawing tens of billions of dollars of much-needed foreign finance to the Orinoco Belt just three years after the leftist leader nationalized operations there. U.S.-based Chevron (CVX.N) and Spain's Repsol (REP.MC) led groups that looked beyond the risks of operating in Venezuela to tap into the OPEC member's 100-plus billion barrels of reserves, a sign oil giants need to replenish crude reserves that are increasingly under control of producer nations. The results show victories for both sides. Oil companies agreed to tough conditions laid down by Caracas while Venezuela softened fiscal terms in another sign resource nationalism around the world has been weakened by falling oil prices.....Analysts say the world's reserves of easy-to-produce light oil are quickly running out, meaning the future of the industry is in difficult production areas such as the Orinoco Belt, Brazil's deep water fields or Canada's tar sands.....Venezuela's oil production has fallen below 2.5 million barrels per day (bpd) from more than 3 million bpd in 2001, according to the U.S. Department of Energy, due principally to limited oilfield investment and lack of qualified personnel."
Venezuela seals biggest oil deals under Chavez
Reuters, 11 February 2010

"Finding oil and gas to replace the world's fast dwindling reserves is increasingly risky as rigs probe areas once seen as too difficult or too dangerous, and costs are rocketing, which could imperil future supply. The cost of discovering each new barrel of oil and gas has risen three-fold over the last decade as technology has pushed the frontiers of exploration into ever more remote areas. As old fields run dry, oil companies are drilling wells in some of the most inhospitable regions, where political, physical, geological, geographical, technical and contractual risks are high, and they have had remarkable success....unless consumers pay more for oil in future, some analysts think we could face an energy supply crunch within a few years. 'The age of cheap oil has gone and it is not going to come back,' said Paul Stevens, senior research fellow at the Royal Institute of International Affairs at Chatham House in London. 'The world is not going to run out of oil tomorrow, but it is more and more expensive to find and will continue to be so,' he said. 'The worry is that investment may be squeezed as risks rise, and that could bring us to a looming supply crunch.'....The search for oil has always been costly and involved risk taking, but the challenges facing explorers have intensified as wells have moved further offshore, into deeper reservoirs and to places with much higher political and physical risks. Figures from upstream consultant Wood Mackenzie in Edinburgh show the cost of finding oil has almost tripled over the last decade even though the rate of discovery has barely changed. Each barrel of oil equivalent cost an average of just over $3 to discover last year, compared with just $1.18 in 2001, according to Wood Mackenzie. Data from BP Plc for the cost of finding new oil show an even bigger increase -- more than four fold in the five years to 2008. Those figures may seem low given that world spot oil prices are close to $75 per barrel, but discovery costs need to be multiplied many times as oil is pumped out of the ground, processed at a refinery and becomes fuel at a service station. Even established oilfields, such as those in the North Sea, now have breakeven costs of around $50 per barrel. The new ultra-deep offshore fields that lie beneath oceans more than 3 km (1.88 miles) deep and in positions up to 5 miles from rigs impose even higher costs. Because the rigs work in deeper water, they use more steel, new technology and are operated by highly trained and expensive specialists."
Oil exploration costs rocket as risks rise
Reuters, 11 February 2010

"OPEC expects the world will need more of its crude oil this year than previously forecast, as the organization lowered its outlook for production of natural gas liquids. The Organization of Petroleum Exporting Countries, responsible for 40 percent of global supplies, predicted in a monthly report today that consumers worldwide will need 28.75 million barrels a day of OPEC crude in 2010. While that’s 150,000 barrels a day more than anticipated in last month’s report, the resulting 'call on OPEC' in 2009 is unchanged from last year. 'Required demand for OPEC crude is forecast to remain almost at the same level as last year, following two consecutive annual declines,' the group’s Vienna-based secretariat said in the report. 'World oil demand and non-OPEC supply remained almost unchanged' while 'OPEC NGLs experienced a downward revision.'....OPEC, next scheduled to meet on March 17 in Vienna, left its forecast for worldwide oil consumption in 2010 at 85.12 million barrels a day, which equates to growth from last year of 800,000 barrels a day. The group’s implementation of a record supply cut announced in 2008 slipped to 53 percent as oil prices around $70 a barrel encouraged members to exceed their quotas. OPEC Secretary-General Abdalla El-Badri told reporters in London on Feb. 2 that if market conditions change little and prices stay in their current range, then ministers will be 'reluctant' to alter their production target at next month’s gathering."
OPEC Raises Forecast Demand for Its Oil on Lower NGL Outlook
Bloomberg, 10 February 2010

"It's not been a great week for the 'greener driver'. First, Toyota announced it was ­recalling all its Prius hybrids ­after detecting a potential fault with the braking system. And ­yesterday Morrisons, the largest supplier of biofuels in the UK, ­announced it is withdrawing one of its most popular blends from its forecourts. From 1 April, it says it will no longer be selling B30, a blend of 30% rapeseed and recycled vegetable oil and 70% ordinary mineral diesel. The move follows last Nov­ember's pre-budget report announcing the '20p per litre duty differential' subsidy for biofuels was to be axed, although the subsidy for 'used cooking oil biofuels' would remain for two years.... This is undoubtly a big blow for the fledgling biofuel industry. However, the true environmental credentials of these blends is ­debatable. While they might offer marginal reductions in greenhouse gas emissions compared to pure mineral diesels, do they, by being reliant on biomass from food crops, act to drive up prices of commodi­ties such as corn and wheat?"
If biofuels go, should we mourn them?
Guardian, 10 February 2010

"An oil crunch more serious than the financial crisis threatens to strike Britain within five years, Sir Richard Branson and other business leaders have warned. Consumers face a spike in costs for heating, transport, food and other goods, according to the report entitled 'The Oil Crunch - a wake up call for the UK economy'. It said the challenges facing the UK would exceed those presented by the financial crisis and said the poorest in society were most vulnerable to potentially significant increases. The report said Government must acknowledge the risks to the economy and to produce contingency plans for transport, retail, agriculture and alternative power. 'Unless we do so, we face a situation during the term of the next government where fuel price unrest could lead to shortages in consumer products and the UK's energy security will be significantly compromised,'' it said. The report was compiled by the Industry Taskforce for Peak Oil and Energy Security, a group of private British companies whose members include Sir Richard, Brian Souter, chief executive of Stagecoach, Scottish & Southern Energy boss Ian Marchant and Philip Dilley, chairman of consultancy firm Arup. Virgin Group founder Sir Richard - whose airline and rail businesses are sensitive to volatility in the cost of crude - said businesses and Government should work together to prepare the economy. 'UK competitiveness will be hampered unless we can develop viable, affordable and secure long term sources of alternative energy,' he said.... Energy watchdog Ofgem has warned electricity and gas may become unaffordable for an increasing number of households unless drastic action is taken to secure power supplies. Oil prices have been particularly volatile in recent years, spiking at $147 a barrel in July 2008 before plummeting to $32 a barrel that December amid the financial crisis and onset of the economic downturn. It climbed again to around $70 to $80 late last year and has stayed relatively static as many world economies remain under pressure. Global economic woes have pushed the 'oil crunch' point - when global demand will use up stocks faster than they can be replaced by new production - back by two years and given governments and firms more time to work out how to act. But oil prices are still predicted to climb to a sustained level above $100 a barrel within the next five years. And the UK is seen to be particularly vulnerable to price fluctuations as it increasingly relies on energy imports."
Britain faces 'oil crunch' within five years, Richard Branson warns
Daily Telegraph, 10 February 2010

"Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years. The founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the ­coming crisis could be even more serious than the credit crunch. 'The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well,' Branson will say. 'Our message to government and businesses is clear: act,' he says in a foreword to a new report on the crisis. 'Don't let the oil crunch catch us out in the way that the credit crunch did.' Other British executives who will support the warning include Ian Marchant, chief executive of Scottish and Southern Energy group, and Brian Souter, chief executive of transport operator Stagecoach. Their call for urgent government action comes amid a wider debate on the issue and follows allegations by insiders at the International Energy Agency that the organisation had deliberately underplayed the threat of so-called 'peak oil' to avoid panic on the stock markets. Ministers have until now refused to take predictions of oil droughts seriously, preferring to side with oil companies such as BP and ExxonMobil and crude producers such as the Saudis, who insist there is nothing to worry about. But there are signs this is about to change, according to Jeremy Leggett, founder of the Solarcentury renewable power company and a member of a peak oil taskforce within the business community. '[We are] in regular contact with government; we have reason to believe their risk thinking on peak oil may be evolving away from BP et al's and we await the results of further consultations with keen interest.' The issue came up at the recent World Economic Forum in Davos where Thierry Desmarest, chief executive of the Total oil company in France, also broke ranks. The world could struggle to produce more than 95m barrels of oil a day in future, he said – 10% above present levels. 'The problem of peak oil remains.' Chris Skrebowski, an independent oil consultant who prepared parts of the peak oil report for Branson and others, said that only recession is holding back a crisis: 'The next major supply constraint, along with spiking oil prices, will not occur until recession-hit demand grows to the point that it removes the current excess oil stocks and the large spare capacity held by Opec. However, once these are removed, possibly as early as 2012-13 and no later than 2014-15, oil prices are likely to spike, imperilling economic growth and causing economic dislocation.'"
Branson warns that oil crunch is coming within five years
Guardian, 7 February 2010

"BP has become the latest oil company to face a shareholder revolt over its investments in Canada’s controversial oil sands. A coalition of shareholders has tabled a resolution for the oil giant’s annual meeting on April 15 highlighting what they describe as the environmental and social risks of tar sands development. The resolution, which follows a similar action taken by investors in Royal Dutch Shell, follows BP’s announcement last week that it is set to press ahead with a $10 billion investment in the industry. Vast reserves of oil lie locked in the bitumen-rich sands of Northern Alberta but processing them into a heavy form of synthetic crude oil is an expensive and environmentally fraught activity which critics say is unsustainable and should be stopped. Shareholders sponsoring the resolution, led by FairPension, include the Co-operative Asset Management, the Unison Staff Pension Scheme, Rathbone Greenbank, CCLA Asset Management and other fund managers, foundations and faith groups. Niall O'Shea, head of responsible investing at the Co-operative Asset Management said: 'BP, which previously made a virtue of its lack of exposure to oil sands, is now gearing up to exploit them. We believe that environmental costs may make an expensive business prohibitively so - without fundamentally addressing the issue of a large net rise in emissions. BP should reassure shareholders that what they're embarking on is fully costed, prudent and can withstand a more carbon-constrained world.' The resolution raises questions about the high costs of producing oil sands, and the risks to BP’s future profits presented by rising costs for emitting carbon dioxide as well as the legal and reputational risks stemming from environmental damage."
BP faces protest over oil sands development
London Times, 7 February 2010

"On the face of it the world’s big and publicly quoted oil companies should be celebrating some pleasing results this week. Royal Dutch Shell unveiled its results on Thursday February 4th, reporting that it had made $9.8 billion in 2009. Two days earlier BP boasted profits of $14 billion for the same year. Yet these billions are a disappointment compared with the bonanza of previous years (Shell, for example, raked in $31.4 billion in 2008 alone) when soaring oil prices pulled profits ever higher. In the long term, however, the firms’ success depends on sustaining reserves. The big western oil companies are trying to expand through acquisitions and investment, but the opportunities do so are becoming scarcer. The firms are spending where they can. Exxon Mobil, the biggest listed oil company, says that exploration and capital spending hit $27.1 billion in 2009, 4% higher than in 2008. The company expects to spend $25 billion to $30 billion annually to the same end over the next five years. BP intends to spend some $20 billion this year on investment in new projects and drilling, roughly the same level as last year. But there are limits to what money can buy. State-controlled rivals—in the Middle East, Russia and beyond—jealously guard oil reserves on their home patches. Few new big fields of oil, at least those that are easy to reach and cheap to exploit, have been discovered in recent years. And where new opportunities emerge, such as in Iraq, Western oil giants are scrambling to pay big sums at auctions for drilling rights in territory where the local government tightly limits their returns. Even then, competition from Chinese, Russian and other state-run oil firms can be severe. National oil companies will often pay prices that would alarm shareholders in the big listed oil companies. Thus Western firms are increasingly looking for different sorts of growth. One option is to deploy their expertise in the hunt for oil that is harder to reach, for example deep offshore, or to go for reserves such as tar sands that are trickier, and so much pricier, to refine. Another route is to speed up the quest for other energy reserves. France’s Total has branched out into nuclear-power generation. This week Shell announced a $12 billion joint-venture with Cosan, a Brazilian producer of ethanol from sugar cane. This is something of a change of tack. Exxon and Shell are both spending money on “second generation” biofuels made from algae or waste materials, but these could take years to develop. Now Shell can sell Cosan’s 'first generation' wares through it global distribution network. By far the biggest bet laid, however, has been on natural gas. Around 40% of Shell’s daily production is now in the form of gas. Total and BP are not far behind. Gas is increasingly important for power generation and heating and the global market is expected to grow by half by 2030. Big oil companies are keen to expand, calculating that their skills at managing huge capital projects will be useful when building gas-liquefaction plants that make the stuff readily transportable. Late last year Chevron, Shell and Exxon agreed to spend $37 billion to develop the Gorgon field off Australia, another potentially huge source of gas."
Beyond the black stuff
Economist, 4 February 2010

"Britain’s energy regulator yesterday warned of power blackouts and spiralling consumer prices and raised the prospect of partial renationalisation of the industry. In a damning report, Ofgem says Britain’s power industry is in a dire state and in desperate need of investment. The regulator raised the prospect of direct government intervention that would wind back the clock on 20 years of deregulation. Alistair Buchanan, Ofgem’s chief executive, said: 'We do not advocate change lightly, but all the facts point to the need for reforms now ... Leaving the present system unchanged is not an option.' In remarks akin to proposals by Ed Miliband, the Energy Secretary, in an interview with The Times on Monday, Mr Buchanan said that there was 'reasonable doubt' over the security of Britain’s energy supplies before 2015 and set out proposals to unlock an estimated £200 billion of investment needed to solve a looming energy crunch. 'Acting earlier will also help keep costs as low as possible for consumers and business,' he said. Mr Buchanan claimed that the crisis had been compounded by an 'unholy trinity' of factors — including the impact of the recession on energy industry investment, Britain’s growing reliance on imported gas as North Sea supplies are depleted and the closure of nine ageing coal-fired and oil-fired power stations by 2015 in order to meet new EU pollution laws, a move that will at a stroke scrap almost a third of UK generating capacity."
Energy regulator warns of power blackouts and renationalisation
London Times, 4 February 2010

"China overtook the USA for volumes of new installations and manufacturing of wind turbines for the first time in 2009, according to a report by the Global Wind Energy Council (GWEC). The world’s wind power capacity grew by 37.5GW to 157.9GW during the year, with a third (13GW) of these additions made in China, which doubled its capacity in the period. 'China is putting strong efforts into developing the country’s tremendous wind resource. Given the current growth rates, it can be expected that the even the unofficial target of 150GW will be met well ahead of 2020,' said Li Junfeng, secretary general of the Chinese Renewable Energy Industries Association."
China overtakes USA in wind
Business Green, 4 February 2010

"ENI SpA's chief executive said Thursday that the Italian energy company will pull out of Iran after current contracts to develop two gas fields there run out, as international pressure grows to isolate the country over its disputed nuclear program. Paolo Scaroni also said the company plans to raise around euro1.5 billion from selling off shares in three gas pipelines in order to settle a European Union antitrust dispute. He told reporters that the company won't prolong contracts it signed in 2001 to develop two Iranian gas fields. Iran has the world's second largest gas resources after Russia and has resisted global pressure - including U.S. sanctions - over its program to enrich uranium. Iran says its program is peaceful but the U.S. says it suspects Iran is trying to build nuclear weapons."
Italy's ENI to pull out of Iran
Washington Post, 4 February 2010

"The last time Britain suffered a winter this bitter, the phrase 'energy security' meant having a full coal scuttle. Now it's all about natural gas. Forty years ago, few houses had central heating and those that did ran on imported oil. Today, following the North Sea bonanza of the 1970s and 1980s, gas heats almost every home and generates over 40 per cent of our electricity, making Britain the world's fifth largest consumer. Only the US, Canada, Russia and Iran guzzle more. But these days Britain's gas supply is apparently on thin ice. Until the beginning of this year, National Grid had only once been forced to issue a Gas Balancing Alert – warning the market that supply might not meet demand and urging suppliers to pump harder. Since then it has issued another four. The first came early in the big freeze, when demand was running 30 per cent higher than a normal January day. A fault at Troll, one of the main Norwegian gas fields, caused imports through the Langeled pipeline to drop sharply and the wholesale gas price to jump from 30p to 60p per therm. Eventually, more gas started to flow and the danger passed, but not before electricity generators had switched from gas to coal-fired power stations, and industrial customers with interruptible supply contracts had been cut off, disrupting businesses around the country....None of this would have happened a few years ago, when North Sea production meant Britain was more than self-sufficient in gas. But after a 30-year boom, UK output finally peaked in 2000 and started to fall – slumping more than a third by 2008. In 2004 Britain became a net importer for the first time, and National Grid expects we will have to import three-quarters of our gas by 2015. That makes Britain increasingly vulnerable to any future supply interruptions like those last month, or when Russia next cuts off Ukraine in their long-running dispute over gas prices. The Government insists energy security is enhanced by having a range of sources of imported gas: pipelines from Belgium, the Netherlands and Norway, along with three new Liquefied Natural Gas (LNG) terminals in Wales and Kent, where tankers can deliver from as far afield as Qatar and Trinidad & Tobago. But having the infrastructure does not guarantee the gas will come to Britain. According to John Hall, countries like France and Germany that have long-term contracts with major suppliers such as Norway are far better placed than Britain, which buy on the open market. 'We have the import facilities but we don't have the contracts to safeguard supplies when things go wrong,' says Mr Hall. 'Britain comes after everyone else as far as Norway is concerned.' Britain's rising import dependency makes it increasingly vital to have substantial amounts of gas in storage to draw down in a crisis, and the Tories jumped on the spate of alerts in the New Year to charge the Government with negligence over the issue. Britain has 4.3 billion cubic metres of storage capacity, which amounts to less than 5 per cent of annual consumption, compared with more than 20 per cent in Germany and almost 25 per cent in France. With British storage already depleted by winter demand, Shadow Environment Secretary Greg Clark said remaining stores would last only eight days at current levels of consumption. In fact, storage levels have fallen far lower during previous crises – down to less than three days' supply last February, which is when Russia last cut off supplies to Ukraine. Energy Secretary Ed Miliband accused the Tories of using meaningless statistics, and in one sense he's right, but not necessarily in a good way. Expressing storage in terms of days' supply overstates the safety margin, because the gas could never be withdrawn that quickly. Three quarters of Britain's gas storage is held at Rough, a depleted gas field off the Yorkshire coast operated by Centrica, where suppliers can deposit gas during the summer when prices are low, and withdraw it for sale in the winter when prices are higher. During the recent alerts, Rough was delivering gas at its maximum rate – 45mcm per day – which represents just 10 per cent of current demand. The vulnerability of having so much storage in a single field was highlighted three years ago, when a fire at Rough closed the facility for six months. The closure came just two months after an earlier Ukraine crisis and, had the two coincided, the consequences could have been severe....Luckily the recent alerts came at a time when the world is awash with gas, the result of new LNG production capacity in the Middle East, new 'non-conventional' sources of gas in the US, and the recession, which has depressed demand in Europe by some 10 per cent. The International Energy Agency expects this glut to continue until around 2015, but many analysts predict the market will then tighten sharply. 'Around the middle of the decade we expect a perfect storm of falling domestic gas production, economic recovery and tightness in the global LNG market,' says Professor Stern, 'and we might not get very much warning. It could flip in a matter of weeks.' Britain's vulnerability to interruptions in the gas supply could be worsened by our response to the "energy gap" resulting from the closure of ageing coal and nuclear power stations over the next decade. In total, the closures amount to 20 gigawatts (GW), or one third of peak electricity demand. The Government hopes much of the gap will be filled by renewables, and last month announced the companies that have won the right to build offshore windfarms under its ambitious plans to develop 32GW offshore by 2020. But given the Government's record on renewables, many fear the targets will not be met. If so, the 'energy gap' is likely to be filled by new gas-fired power stations. Figures from New Power, an industry journal, show that 15GW of new gas-fired stations are either under construction or have received planning permission, with a further 15GW in the wings. Editor Dominic Maclaine says 'there is a new dash for gas in power generation'. That is likely to raise the proportion of electricity generated from gas even further, and increase Britain's vulnerability in the case of supply disruptions. In that case, without a major increase in storage capacity, future gas supply crises could also leave us in the dark."
How long before the lights go out?
Daily Telegraph, 4 February 2010

"Britain's offshore wind revolution, launched with great fanfare by Gordon Brown last month, may struggle to get halfway to its ambitious goals and should be scaled down in favour of a new dash for gas to keep the lights on over the next 10 years, BP warned last night. Tony Hayward, chief executive of the UK's largest oil company, said that British government ministers risked being seduced by 'headline-grabbing options' such as offshore wind and clean coal in a bid to bolster energy security and meet climate-change goals. BP makes billions of pounds a year from oil and gas, but is also investing in onshore wind farms in America. Talking to the Guardian exclusively, the BP boss said he was not calling for the third round of wind licensing in the deep waters of the North Sea to be shelved. But he did believe that the heavily subsidised move into wind power should be slowed down, because it would not deliver anything like the targets set for it: possibly 15 gigawatts of power rather than the 25GW the wind industry expects. And in a speech due to be delivered to the London Business school today, he says: 'Energy efficiency, gas-fired power, lighter cars and biofuels all offer relatively low-cost routes, while other headline-grabbing options are not the most cost-effective. With today's technology, carbon capture to make clean coal, for example, is very expensive. Offshore wind is also costly – for example in comparison to onshore wind, which is now a big business for BP in the United States – and indeed to nuclear.' Hayward told the Guardian that wind power, like nuclear energy, was nowhere near being commercially viable and would rely for some time on "sovereign" intervention by governments. Instead, he said, there should be more emphasis put on gas, which was very commercial, using a mixture of what remained of UK North Sea supplies and imports. The BP man believed the UK should drop its 'paranoid' concerns about gas imports from Russia and accept that piped and liquefied natural gas from overseas sources offered a better solution to help beat global warming and energy insecurity in the short term. 'There is a lot of gas in the world. There are a lot of diverse sources of gas in the world. The paranoia has been about Russia, but it is misplaced. We have approximately zero Russian gas in the UK [imported currently] and if you look at Europe, the imports of Russian gas into Europe have halved since 1980.' Hayward, whose Russian TNK-BP joint venture is a major part of the wider oil company's business, said the fear of Russia using energy as a political weapon was 'massively exaggerated'. He believed Britain should not be concerned even if Siberian gas accounted for 10% of Britain's imports, as long as 90% came from a diverse group of suppliers such as Norway, Qatar and Algeria, as they already did....The BP chief executive did agree with Ofgem's Alistair Buchanan that the UK had reached a critical point in its energy history and needed to change the market model with increased government involvement. 'It has been true throughout history that at certain points in time government has had to intervene to shift the boundaries of the market to allow the right market structure to evolve,' said Hayward. He added: 'We did not displace coal with gas in the 1960s and 1970s without a massive government intervention ... we are probably at one of those points again.'"
Dash for gas is UK's best energy strategy, says BP chief
Guardian, 4 February 2010

"BP raised its oil and gas production levels by 4%, while Shell saw a 2% fall over 2009. But the latter has also been looking madly for cost-savings and has rowed back on plans to invest more heavily in carbon-intensive tar sands. Hayward has kept Browne's sunburst logo and 'beyond petroleum' slogan on its marketing material but has followed Shell into Canada's tar sands. The BP boss – an improbably youthful 52-year-old – says he is not cutting back there despite mounting criticism from green groups that they are in danger of triggering runaway global warming. He is keen to emphasise that BP is engaged in a much more limited way than Shell while steering clear of the more controversial mining techniques. 'BP has never been in the strip-mining of the tar sands and never will be. We are focused on so-called steam-assisted gravity drainage, which is much more akin to conventional reservoir engineering … therefore the environmental footprint on the ground is no more or worse than normal oil or gas operation.' 'It is clearly carbon-intensive and we also see that it will remain commercial even with a very high legislative price of CO2'. Tar sands are part of a wider diversity of supply of energy sources that the world is going to require, Hayward argues, dismissing the idea that the growing pressure on the US military not to use these imports will bear fruit. By 2015 BP could be providing 100,000-200,000 barrels a day from this source for which the company is preparing two US refineries specially to process the crude. 'The likelihood of the US army not using a secure local supply of energy is quite low … Canadian heavy oil is going to be a very important part of America's energy,' he argues. He rejects the suggestion that exploiting tar sands contradicts the "beyond petroleum" mantra, seeing it instead as just another fuel source on top of its wind, solar and biofuel investments. He is particularly upbeat about the prospects of the latter even allowing for the food-not-fuel arguments that arose when crop-price increases were blamed on biofuels. By 2020 up to 10% of global petrol supplies will be made up of plant-based biofuels, Hayward believes, while the figure could be as high as 20% in the US. BP is preparing for this by making big investments of between $5bn-$6bn in Brazil on sugar-based ethanol 'first-generation' biofuels. But BP is also working on synthetic 'second generation' biofuels in conjunction with US chemical group, Du Pont, in this country. The wind operations that BP is involved with are based onshore in the US where the land is cheap and planning easy to obtain. But Hayward makes clear he has enormous reservations about the North Sea wind 'revolution' launched by the UK government. He questions whether the UK can build 14 to 15 gigawatts (GW) of offshore wind by 2020, never mind the 25-27GW – the total expected by ministers and industry here. Equally, he questions how quickly nuclear power plants can be built and whether a rush will help either develop in the most cost-efficient way....The straight-talking oil explorer, who is said to still enjoy the occasional triathlon, is an optimist and has little time for those who argue the world has passed, or is even approaching, peak oil supplies. 'I personally – and BP – have never believed we will see peak oil because of supply. We always believed we would see peak oil because of demand. There will come a time – I believe it is beyond 2020 – when because of the changes in the energy portfolio, because of the drive for energy efficiency, because of the introduction of biofuels, demand for oil will peak.' There is plenty of oil in the world, he argues, not least in Iraq, where BP has staff working on the ground, even ahead of important political elections. Hayward expects Iraq's oil production to grow from a couple of million barrels a day today to close to 10m, putting it on par with Saudi Arabia. This makes it 'a big part of oil security for the world.'"
Tony Hayward: BP's straight-talking chief on evolution not revolution
Guardian, 4 February 2010

"Total has previously mentioned 100 Mb/d [for the peak of global oil production] and that they are now saying 95 Mb/d shows that they are approaching the conclusion that my Ph.D. student Fredrik Robelius presented in his thesis. That scenario had a maximal production of 93 Mb/d in 2018. The requirement for that level of production was that production from 7 giant oil fields in Iraq would commence immediately. The fact that this has been delayed makes it all the more difficult to reach that production level."
Kjell Aleklett, President of ASPO International
ASPO Intenational, 4 February 2010

"Energy regulator Ofgem today warned Britons may not be able to afford to heat their homes in the years ahead unless there is radical overhaul of the country's energy supplies. The regulator warned the country's current system may not be sufficient to ensure 'secure and sustainable' power across the country beyond 2015. In announcing proposals for a radical range of options (pdf), including setting up central buying of power, Ofgem's chief executive, Alistair Buchanan, admitted that maintaining the current free-market approach was no longer an option. Energy bills could rise between 14% and 25% by 2020 as the industry pays for the £200bn cost of investment needed to overhaul of the current system. He warned that increasing number of consumers would be unable to afford the cost of heating their homes. The proposals could force the government to undo the privatisation of the energy markets led by Margaret Thatcher and could force a form of nationalisation again if it decides to implement central buying of power. The regulator had previously warned that average household gas and electricity bills could reach nearly £2,000 a year without drastic action to shore up supply. Buchanan said: 'Our evidence shows that Britain has a window of opportunity to put in place far-reaching reforms to meet the potential security of supply challenges we may face beyond the middle of this decade. We do not advocate change lightly, but all the facts point to the need for reforms now to provide resilient supply security. Acting earlier will also help keep costs as low as possible for consumers and business.'...The regulator said reform was needed because of a confluence of events ranging from the global financial crisis, significant worldwide demand for investment in energy, tough EU emissions targets, the closure of ageing power stations and an increasing dependency on gas imports. The regulator set out five key issues: • A need for unprecedented levels of investment over many years in difficult financial conditions and against a background of increased risk and uncertainty. • The uncertainty in future carbon prices is likely to delay or deter investment in low carbon technology and lead to greater decarbonisation costs in the future. • Short-term price signals at times of system stress do not fully reflect the value that customers place on supply security which may mean that the incentives to make additional peak energy supplies available and to invest in peaking capacity are not strong enough. • Interdependence with international markets exposes Britain to a range of additional risks that may undermine the country's security of supply. • The higher cost of gas and electricity may mean that increasing numbers of consumers are not able to afford adequate levels of energy to meet their requirements and that the competitiveness of industry and business is affected."
Energy bills will be unaffordable without system overhaul, says regulator
Guardian, 3 February 2010

"Global oil demand is set to peak between 2020 and 2030, as falling developed world demand balances growing demand in emerging markets, the chief executive of Europe's largest oil company said on Tuesday. Tony Hayward told Reuters Television that government policies in the developed world were eroding demand at the rate of 1 percent per year. Hayward said this was contributing to an oversupply of refineries, which was prompting rivals to close and sell facilities. However, he added: 'We've got the right set of refineries.'"
BP sees peak oil demand in 2020-2030
Reuters, 2 February 2010

"China aims to raise the annual production capacity of shale gas to 15-30 billion cubic meters by 2020 as part of its response to recent widespread gas shortages, the Ministry of Land and Resources said. The National Development and Reform Commission, the country's top economic planner, is reviewing a plan to encourage the development and utilization the unconventional gas source in an effort to meet rising energy demand without excessively increasing greenhouse gas emissions, the ministry said in its in-house newsletter..."
China Aims To Sharply Raise Shale Gas Output Capacity By 2020
Wall St Journal, 1 February 2010

"Royal Dutch Shell, Europe's second biggest energy company, is poised to become the biggest oil major in biofuels as it battles to reassure investors about profitability. The Anglo-Dutch company has signed a memorandum of understanding with the most powerful Brazil bioethanol producer, Cosan, in a joint venture said to be worth $12bn (£8.19bn). The move, if finalised, will cement Brazil's position as the world's alternative energy superpower with the potential to ship huge quantities of fuel to the United States and Europe. Shell will now lobby the US administration to reduce its tariffs on biofuel imports in a move that could transform profitability. The company hopes the aggressive moves into biofuels it has plotted for two years will signal to investors that it has growth potential as it readies itself to announce what is expected to be a 40% drop in quarterly profits on Thursday. Analysts expect the group to report a quarterly profit of $2.9bn. This would take its annual profit to $13.4bn, down on the $31.4bn it made in 2008. There are suggestions the company will make further job losses on top of the 5,000 already announced. The joint venture is intended to more than double Cosan's existing bioethanol production, which currently stands at 2bn litres. Cosan is Brazil's leading bioethanol producer in a country where virtually all new cars run on sugar cane. But there are serious reservations among environmentalists that the growing attraction of biofuels in Brazil could see agricultural land earmarked for food shifted to fuel crops, creating pressure to chop down more rainforests....Biofuel in the UK powers 2.7% of the country's transport according to the Renewable Fuels Agency. Britain is on target to meet its 5% target by 2014."
Shell to do deal with Brazilian biofuel producer Cosan to secure future
Guardian, 1 February 2010

"The Government is drawing up plans for a wholesale reform of Britain’s energy markets that could wind back the clock on 12 years of deregulation. In an interview with The Times, Ed Miliband, the Energy and Climate Change Secretary, said that Britain’s existing, highly liberalised market regime, introduced under Labour in 1998, was failing to deliver the investment needed to cut UK carbon emissions by more than a third by 2020. A market structure was being designed to boost long-term investment in low-carbon sources of electricity, including wind parks, nuclear reactors and fossil fuel stations equipped with carbon capture and storage (CCS) technology. Mr Miliband said: 'We are going to need a more interventionist energy policy to deliver the low-carbon investment we need....Mr Miliband said that details of the reforms would be in a document to be published in April called Roadmap to 2050, published with the 2010 Budget. He said that the changes were essential to help Britain to prepare for a doubling of electricity demand by 2050, driven by other policy objectives such as a growth of electric cars and a move from gas to electricity for heating.'"
Labour prepares to tear up 12 years of energy policy
London Times, 1 February 2010

"In their exuberance, oil- and gas-industry officials repeat a single refrain when describing the natural gas from Pennsylvania's Marcellus Shale: A game-changer. Tony Hayward, chief executive officer of oil giant BP P.L.C., was the latest to gush enthusiastically when he called unconventional natural gas resources like the Marcellus 'a complete game-changer.' 'It probably transforms the U.S. energy outlook for the next 100 years,' Hayward said Thursday at the World Economic Forum in Davos, Switzerland. The breathtaking emergence of natural gas as America's energy savior was not in the cards. Just four years ago, after Hurricanes Katrina and Rita devastated Gulf Coast rigs and rattled gas markets, energy pundits forecast a bleak winter of short supplies, high prices, and low thermostats. The vast scale of shale-gas resources has come into focus quickly, and industry officials are touting the possibility of steady supplies for decades to come. The Potential Gas Committee in Colorado last year revised its outlook of America's future gas supply - up 35 percent in just two years. The forecast was the highest in its 44-year history. The Marcellus Shale is the nation's fastest-growing producing area. Though it lies under five states, about 60 percent of its reserves are in Pennsylvania, according to Terry Engelder, a Pennsylvania State University geologist. 'In terms of its impact on Pennsylvania, this is probably without peer in the last century,' said Engelder, whose projections in 2008 alerted the public about the size of the Marcellus. 'America's energy portfolio has undergone a first-order paradigm shift just in the last two years,' he said. 'This is such an exciting thing.'....Not everyone has climbed aboard the bandwagon. Some environmentalists are uneasy about the hydraulic-fracturing process that has unlocked the shale gas. The technique requires the injection of millions of gallons of water into a well to break up the shale to initiate production. And some analysts say they believe the gas industry's estimates are too optimistic. 'I would look at all this with a bit of healthy skepticism,' said Arthur E. Berman, a Houston gas-industry consultant, who says he believes some operators have overstated the production potential and understated the cost of Texas shale-gas wells. His pointed criticism got him banished from one trade journal - and invited to speak at scores of investor workshops. 'Two years ago, we were talking about importing gas from the Middle East,' he said. 'And now we have a hundred-year supply of domestic gas?' Berman said he had been unable to conduct a similar analysis of Marcellus wells because Pennsylvania law allows operators to keep their production data secret for five years, unlike other states, where output is reported to taxing authorities promptly.  'If something looks too good to be true,' he said, 'I need to look more closely.' Questioning voices such as Berman's are uncommon in the industry, which portrays natural gas as abundant, cheap, and cleaner than coal and oil - a domestically produced 'bridge fuel' to ease the transition to renewable wind and solar generation."
The sudden emergence of the shale-gas frenzy
Philadelphia Inquirer, 31 January 2010

"The International Energy Agency (IEA) expects total natural gas output in the EU to decrease from 216 billion cubic meters per year (bcm/year) in 2006 to 90 bcm/year in 2030. For the same period, EU demand for natural gas is forecast to increase rapidly. In 2006 demand for natural gas in the EU amounted to 532 bcm/year. By 2030, it is expected to reach 680 bcm/year. As a consequence, the widening gap between EU production and consumption requires a 90% increase of import volumes between 2006 and 2030. The main sources of imported gas for the EU are Russia and Norway. Between them they accounted for 62% of the EU’s gas imports in 2006. The objective of this thesis is to assess the potential future levels of gas supplies to the EU from its two main suppliers, Norway and Russia. Scenarios for future natural gas production potential for Norway and Russia have been modeled utilizing a bottom-up approach, building field-by-field, and individual modeling has been made for giant and semi- giant gas fields. In order to forecast the production profile for an individual giant natural gas field a Giant Gas Field Model (GGF-model) has been developed. The GGF-model has also been applied to production from an aggregate of fields, such as production from small fields and undiscovered resources. Energy security in the EU is heavily dependent on gas supplies from a relatively small number of giant gas fields. In Norway almost all production originates from 18 fields of which 9 can be considered as giant fields. In Russia 36 giant fields account for essentially all gas production. There is limited potential for increased gas exports from Norway to the EU, and all of the scenarios investigated show Norwegian gas production in decline by 2030. Norwegian pipeline gas exports to the EU may even be, by 2030, 20 bcm/year lower than today’s level. The maximum increase in exports of Russian gas supplies to the EU amount to only 45% by 2030. In real numbers this means a mere increase of about 70 bcm In addition, there are a number of potential downside factors for future Russian gas supplies to the European markets."
Doctoral thesis: Production from Giant Gas Fields in Norway and Russia and Subsequent Implications for European Energy Security
Acta Universitatis Upsaliensis, Uppsala University, Sweden, 29 January 2010

"Using biofuel in vehicles may be accelerating the destruction of rainforest and resulting in higher greenhouse gas emissions than burning pure petrol and diesel, a watchdog said yesterday. The Renewable Fuels Agency also warned that pump prices could rise in April because of the Government’s policy of requiring fuel companies to add biofuel to petrol and diesel. More than 1.3 million hectares of land — twice the area of Devon — was used to grow the 2.7 per cent of Britain’s transport fuel that came from crops last year.   Under the Renewable Transport Fuels Obligation, a growing proportion of biofuel must be added to diesel and petrol. This year fuel must be at least 3.25 per cent biofuel on average. By 2020 the proportion will be 13 per cent. The agency’s first annual report revealed that fuel companies had exploited a loophole to avoid reporting the origin of almost half the biofuel they supplied to filling stations last year. The origin of fuel from land recently cleared can be described as 'unknown'. Last year Esso reported the source of only 6 per cent of its biofuel and BP reported 27 per cent. Shell was the best-performing of the main oil companies but still failed to report the origin of a third of its biofuel....From March 2011 companies will be required under a European directive to report the previous use of all the land from which they derive their biofuels. However, they will also gain an additional loophole because they will not have to admit using rainforest land if the trees were removed before 2008."
Using biofuel in cars 'may accelerate loss of rainforest'
London Times, 29 January 2010

 

"Algae have been touted as a solution to environmental worries over biofuels, but they may be a long way from providing a truly green option. Unlike maize, soya beans and oilseed rape (canola), algal farms don't take up valuable farmland, so algae-based biofuels don't threaten food supplies. However, Andres Clarens at the University of Virginia in Charlottesville has modelled the environmental impacts of algal farms and concludes that they require six times as much energy as growing land plants - and emit significantly more greenhouse gases (Environmental Science and Technology, DOI: 10.1021/es902838n). 'You have to add a whole lot more fertilisers, and the environmental cost of producing these is the primary drawback,' Clarens says. Using waste water instead of fertilisers helps, but not enough, he says. The only trick that tipped the balance in favour of algae in his models was to use nutrient-rich household waste like concentrated urine to fertilise the algae, but this would require new infrastructure and so is no short-term fix."
Algal power not so green after all, yet
New Scientist, 28 January 2010

"Royal Dutch Shell chief executive Peter Voser cannily chose the safe ground of an exclusive interview with the Financial Times to finally admit the all-too-obvious - the Canadian oil sands development Shell has touted as a major growth driver is instead a costly distraction, on which time is now being called. Mr Voser said the massive expansion the company had previously planned for its Athabasca Oil Sands Project (AOSP) - envisioning growth from the current 155,000 barrels per day (bpd) capacity to an eventual 770,000bpd - was now 'clearly scaled down' and would be 'very much slower'. Over the past few years Shell has emphasised heavy investment in so-called 'unconventional' hydrocarbon sources, both Canadian oil sands and gas-to-liquids projects elsewhere, as a substitute for the new conventional oil and gas resources the company has been notably lacking since its reserves-booking scandal of 2004. But the relatively high costs of new oil sands developments in particular mean scant profits with oil prices anchored stubbornly in a $70-$80 a barrel trading range. As recently as November, Shell oil sands head John Abbott indicated the in-construction $14bn (£8.69bn) AOSP Expansion 1 project, coming onstream later this year to boost total AOSP output to 255,000bpd, needs oil prices around $60 per barrel just to break even. And new investments would require higher prices. Two previously-slated medium-term expansions of 100,000bpd each are on ice indefinitely, and any serious AOSP growth beyond de-bottlenecking, which could add perhaps some 100,000bpd in small increments by 2020, seems moot. Mr Voser was not questioned on what this strategic U-turn means for Shell's resource base, defined as its portfolio of hydrocarbon exploitation opportunities not yet migrated into developed reserves. But the effective scrapping of further large-scale AOSP growth will presumably have a material impact - while oil sands currently account for 8.4 per cent of proved Shell reserves, totalling 11.9bn barrels-of-oil-equivalent (boe), they were previously thought to account for perhaps a third of Shell's total resource base, estimated at 66bn boe."
Shell forced into oil sands U-turn
Investors Chronicle, 28 January 2010

"At a meeting of oil leaders at the World Economic Forum at Davos, Tony Hayward, group chief executive of BP, said that there was a 'supply challenge' for the industry which would have to increase output to 100mbd - a new peak for oil. Mr Hayward said that at present the world was producing between 83 and 84mbd.  He said he hoped Iraq would become a major oil player, producing up to 10mbd in the next decade if the political situation remains relatively stable. A need for a new peak in oil production will dismay environmental campaigners who hoped that the West’s declining reliance on oil would mean less CO2 emissions. Instead, demand from the emerging economies, including India and the other BRIC countries, China, Russia and Brazil, will lead to new record levels of consumption. Mr Hayward’s comments were supported by Peter Voser, the chief executive of Shell, who said that the industry would have to find up to $27trn of investment over the next 20 years to meet demand. At the session new figures from PriceWaterhouseCoopers revealed that non-OECD countries will account for two-thirds of world consumption by 2030. Mr Hayward said that demand from non-OECD nations would increase by 40pc. 'The obvious thing in the mature markets of Europe and the United States is that demand for oil products is in structural decline,' Mr Hayward said. He argued that demand was now coming from the East, pointing out that China sold 13m cars last year. 'The challenge is how do we meet this growing demand for oil and keep a lid on price?' Hayward said.....Turning to Iraq, Mr Hayward said that he was 'cautiously optimistic' that the country could increase world supply. 'BP has a major contract to redevelop an existing field that BP first found in 1953,' Mr Hayward said, revealing that he wanted to increase BP production from 1mbd to 3mbd. Iraq could eventually produce 10mbd. Mr Voser said that although much of the oil in Iraq was 'easy oil' (onshore and relatively accessible) its technology was 20 years behind much of the rest of the sector. He also argued that although renewables would be able to supply some of the increase, there needed to be a 'more balanced discussion between oil and renewables' and that increasing gas supply had a lot of potential. 'There is plenty of gas. Here we have an energy source which from a CO2 point of view is better than other fuels – than for example coal for electricity generation.' Andrew Liveris, chairman and chief executive of Dow Chemical Company, one of the largest industrial users of oil in the world, said that price stability was essential for economic growth. He revealed that in 2002 the cost to the company of its oil needs was $8bn and that had risen to $32bn by 2008. At times such was the volatility of the market there would be a '10pc aberration' in the oil price in a week. 'We need certainty, we need predictability,' he said."
Davos 2010: a new peak in oil production is needed, energy leaders argue
Daily Telegraph, 28 January 2010

"A controversial method of extracting gas from shale rocks and coal seams pioneered in the US has been described by the head of BP as a 'complete game changer' that would transform the future of energy in that country over the next 100 years. Excitement in the industry over 'unconventional' gas supplies has led to a wave of investment in America which Tony Hayward, BP's chief executive, believes could eventually spread around the world. '[Unconventional gas is a] complete game changer in the US,' he said in answer to a question at an energy summit which was part of the World Economic Forum in Davos, Switzerland.' 'It probably transforms the US energy outlook for the next 100 years. It's yet to seen if it can be applied globally.'....There is also speculation that there could be shale-based gas schemes available in mainland Europe now that new drilling and extraction techniques have been proven in the US, largely Texas, Wyoming and Pennsylvania. Development of these reserves in major quantities has sent the price of natural gas spinning downwards in America but promises a much-sought increase in self-sufficiency. It also offers a lower carbon footprint than oil....Unconventional gas has burst to prominence as US-based oil companies – often led by smaller independents – have used new directional and horizontal drilling techniques to exploit new reserves. But rock formations have to be broken up with a mixture of water, sand and chemicals in a process called hydraulic fracturing.....Environmentalists have major reservations about these techniques, saying enormous amounts of water are needed and that the drilling can pollute local water tables. The Texas Oil and Gas Accountability Project has blamed hydraulic fracturing for making people ill and poisoning cattle by polluting water supplies, which is denied by the oil and gas industry....But there are already bills being prepared for Congress that would tighten restrictions on unconventionals and Exxon has inserted a clause in its takeover documents for XTO that enable it to scrap the transaction if there were changes to the law that made hydraulic fracturing 'illegal or commercially impracticable'."
BP chief hails American breakthrough in gas supplies from shale rocks
Guardian, 28 January 2010

"There is still plenty of oil in the ground and the world should put aside fears about 'peak oil', the head of the Saudi state oil firm Saudi Aramco said on Thursday. 'The concern about peak oil is behind us,' chief executive Khalid al-Falih told a session on energy supplies at the World Economic Forum in Davos. The peak oil theory that oil supply is at or near its peak gained currency when prices zoomed to a record of nearly $150 a barrel in 2008. The issue remains a concern for many in the industry. Total's chief executive Thierry Desmarest said the world would struggle to surpass 95 million barrels per day (BPD) in the future -- 10 percent above present levels. 'The problem of peak oil remains,' he told the same panel. His contention was swatted aside by Falih. 'Of the 4 trillion (barrels) of oil the planet is endowed with, only 1 has been produced,' Falih said. 'Granted most of what remains is more difficult and complex (to exploit) ... there's no doubt we can do a lot more than the 95, 100 (million barrels) that are projected in the next few decades. Saudi Arabia has a long list of projects in its portfolio that would more than offset declines, he said."
DAVOS-Saudis say don't worry about peak oil
Reuters, 28 January 2010

"Venezuela Oil Minister Rafael Ramirez was leaving Wednesday for Russia and then to China to discuss plans for developing heavy crude blocks in the eastern Orinoco region, the Venezuelan government said in a statement."
Venezuela Oil Chief Heads To Russia, China To Discuss Pacts
Wall St Journal, 27 January 2010

"CNNC International Ltd. on Monday said it will acquire a 37.2% stake in the Azelik uranium mine in Niger through an acquisition of Ideal Mining Ltd. for as much as $414 million Hong Kong dollars (US$53.3 million), extending its footprint to Africa for the first time. The deal comes as China rapidly expands its capacity to generate nuclear power as part of a strategy to minimize use of coal and crude oil, which are widely blamed for making Chinese cities among the smoggiest in the world. CNNC International is the sole platform for its parent, China National Nuclear Corp., to secure uranium resources overseas. Shares of CNNC International jumped 8.3% to HK$8.88 in Hong Kong trading Monday. CNNC International's financial controller, Philip Li, said the company is looking for acquisition targets in Kazakhstan to boost its uranium reserves in order to fuel China's nuclear power boom. 'We hope to become the largest uranium supplier in China in the long run. We will buy more uranium mines through acquisitions or our parent if the project can deliver a reasonable return for us,' he said. The Africa mine is expected to start production in the second half of the year, Mr. Li said."
CNNC Buys Stake in Niger Uranium Mine
Wall St Journal, 26 January 2010

"It is past midnight in a jet high above the Persian Gulf, and one of the key figures in global energy shows no sign of retiring. Instead, Christophe de Margerie, CEO of the French oil giant Total, zeroes in on a favorite target: criticisms of oil companies by environmental groups, gathered in Copenhagen for the U.N. Climate Summit. 'People say they are inventing electric cars,' de Margerie says, puffing on a Marlboro. 'Well, where is the electricity coming from? Flowers? Maybe someday. But what is available now is oil and gas.' The argument is delivered in de Margerie's trademark style: blunt and impassioned, with an almost cocky certitude. He credits his confidence to years spent traveling — 'moving my ass,' as he calls it — and witnessing the world up close. All that time on the road has convinced him of this: oil supplies will soon run seriously short, and until we come up with something better we need to make sure we suck every last drop from every last nook and cranny on the planet. 'We don't know everything,' he says. 'But on oil reserves and production we know a lot. And it's our duty to speak out.'....In an industry famous for being opaque, de Margerie speaks openly about the nightmare scenario — oil shortages — that most energy firms prefer to avoid or deny. De Margerie says the possible effects on the world economy of dwindling oil supplies are so great 'I am not prepared to shut my mouth.' Shortly after taking over at Total, he jolted oil executives at a London conference by stating the industry would be unlikely to produce more than 100 million barrels a day, far below the 120 million or so the International Energy Agency estimates the world could produce by 2030, and which will be needed for Asia's galloping growth. De Margerie now says 90 million barrels a day is 'optimistic.' Audiences regularly ask him when he thinks we might use earth's last drop of oil, and de Margerie says that date is decades off. But it's important to realize, he says during an interview with TIME, 'what will happen very soon is that oil supplies will not cover demand. That won't mean there is no oil. There are oil reserves, but you will need to invest billions and billions to get it.'"
Christophe de Margerie: Big Oil's Straight Talker
TIME, 25 Januarry 2010

"United Nations climate talks are a bigger threat to top oil exporter Saudi Arabia than increased oil supplies from rival producers, its lead climate negotiator said on Sunday. Saudi Arabia's economy depends on oil exports so stands to be one of the biggest losers in any pact that curbs oil demand by penalizing carbon emissions.....The possibility that oil demand might peak this decade was a 'serious problem' for Saudi Arabia, Sabban said. The kingdom had looked at the assumptions behind studies that pointed to demand peaking in 2016 and saw 'some truth in it,' Sabban said. The kingdom was watching future demand projections closely and would match any future investment in capacity expansion with demand, Sabban said. 'We will continue keeping the same spare capacity but no more,' he said. Saudi had plenty of spare capacity to increase output if global demand warrants, Sabban said. Demand should grow this year with the economic recovery, he added. The kingdom completed a program to boost its capacity last year, coinciding with the global contraction in oil demand due to the economic recession, and led record OPEC output cuts, leaving it with more than double the spare capacity it targets. The kingdom has around 4.5 million bpd of spare capacity while having a policy of holding 1.5 million to 2.0 million bpd to deal with any surprise outage in the global oil supply system. The kingdom is producing around 8 million bpd. Meanwhile Saud Arabia plans to invest heavily in solar energy technology, Sabban said, and hopes to begin exporting power from solar energy by 2020. Saudi Oil Minister Ali al-Naimi has said the kingdom aims to make solar a major contributor to energy supply in the next five to 10 years."
Climate talks bigger threat to Saudi than oil rivals
Reuters, 24 January 2010

"It is only a matter of days before the last of Iraq’s yet-to-be awarded oil contracts are due to be signed, bringing to a close a two-stage, seven-month process under which Western energy majors have gained access to a country with the planet’s third-largest oil reserves. Such deals will inevitably be a focus of the UK oil sector’s year-end reporting season, which begins the following week, and the annual round of strategy presentations to investors that starts shortly after. No more so than for BP, which has a 38 per cent interest in Rumaila, the vast 18 billion-barrel field in southern Iraq that was the biggest single project on offer, and Shell, which has stakes in two other bumper schemes: the first phase of West Qurna, where it is working alongside ExxonMobil, and Majnoon, where it has teamed up with Malaysia’s Petronas. Indeed, with the exception of Chevron, which failed to secure licences in either round, Iraq is destined to become a significant contributor to the output of the world’s 'super major' oil companies for many years to come. But rather than welcoming such deals as a fillip to future profitability, shareholders might instead come to rue them. Not because of the large sums of capital expenditure involved, or the political and security risks of operating in what remains a volatile territory. Rather, contends RBS, the opening up of Iraq — or rather the unprecedented production commitments the majors have signed — threaten to pull long-term oil prices steadily lower. 'Investors expecting the imminent return of oil price rises fuelled by increasing Chinese demand may be disappointed,' says David Cline, RBS’s oil and gas analyst. 'Instead, the rehabilitation of Iraq may dominate oil markets and weigh on prices for much of this decade.'... It is that view that underpins Mr Cline’s prediction that oil prices, currently hovering around $75 a barrel, will inexorably slide over the next few years to touch $50 by 2016 — not far above the nadir reached in late 2008 amid the height of the financial crisis. That perspective sets RBS firmly apart from both the oil futures market, which prices in a rise in Brent crude to $94 a barrel by the middle of the decade, and rival investment banks, whose consensus forecasts assume a price of $82 a barrel by 2013. Mr Cline’s case is persuasive. If newly agreed contracts are honoured, Iraq faces a period of output growth unparalleled in the history of the oil industry: a quintupling of production capacity to nearly 12 million barrels a day by 2017, about the same level that Saudi Arabia, the world’s biggest producer, is forecast to reach in the next few years. On consensus forecasts of global oil consumption that take China’s growth into account — that is, consecutive annual rises of 1.5 per cent — RBS calculates that Iraq’s increase in output will satisfy 88 per cent of projected oil demand over the next eight years (see chart, below). If further Iraq contracts are signed and production from Kurdistan also starts to pick up, that figure would be even higher. RBS believes that such developments could between them add a further 4 million barrels a day by the end of the decade. What is unusual about Iraq is that its oilfield contracts are predicated on oil production rising to a peak within six or seven years of the licence award but then staying at those levels for at least as long: seven years in the case of those granted under the first licence round (such as Rumaila and West Qurna phase 1) and up to 13 years for those handed out in the second (including West Qurna phase 2, won by Lukoil of Russia and Statoil of Norway). Such terms are in stark contrast to commercial agreements forged elsewhere in the world, where fields are worked at a peak levels for only a few years at most. Sceptics suggest that security problems, inadequate transport and export infrastructure and the potential imposition by Opec of quota restraints on Iraq (which have been suspended since its invasion of Kuwait 20 years ago) mean that the projected rapid growth of the country’s oil output is unlikely to be met....RBS concedes there are difficulties but counters that its forecasts are pegged on binding contracts agreed with multinational companies that are experts in oilfield development — and face substantial fee penalties if they fail to deliver. Of course, most investors’ time horizons do not stretch too far. Increases in Iraqi output will be modest until 2013 and, as next month’s full-year results season is set to confirm, a rebound in oil prices has underpinned a strong recovery in profits."
Iraq’s production bonanza may fuel a slide in oil
London Times, 23 January 2010

"The British oil major and its partner China National Petroleum Corporation won the right to develop the massive Rumaila field in a historic televised oil field auction last June. The contract was formally signed in November.  But amid rising public anger about the foreign 'colonisation' of Iraq's oil fields, Shatha al Musawi, an independent MP, is contesting the prize contract in her country's federal court. Iraq's efforts to boost its oil output could lift it from being the 11th biggest producer to the top three, after years of under-investment and neglect under its former leader Saddam Hussein. If successful, Mrs al Musawi's case could set a legal precedent that would invalidate all the agreements that Iraq secured last year – with BP, CNPC, ExxonMobil, Petronas, Royal Dutch Shell, Eni, Gazprom and Lukoil. The court is due to hear the case next week, on February 1, with Mrs al Musawi arguing that the BP contract violates the constitution on four counts. She claims that the deals with foreign oil companies need to be properly approved by parliament under Iraq's constitution. The government contests the allegations and it is trying to get the case thrown out, insisting that its actions were lawful....BP was the first oil major to secure a long-term contract in Iraq, when it agreed to cut its fee per barrel from $3.99 to $2. Many oil majors were shocked by the fact that Iraq insisted on much lower returns than they are used to being paid. The Rumaila field, which contains 17bn barrels, is considered one of the world's prime oil fields."
BP's Iraq oil deal faces court battle
Telegraph, 23 January 2010

"Cameco Corp. says it's on track to restart development of its flood ravaged Cigar Lake mine as early as this spring and remains focused on doubling its production by 2018, while sticking close to its uranium core. Saskatoon, Sask.-based Cameco has struggled with the Cigar Lake project as a result of two floods in the past three years, leading to long delays in production.....The mine was originally set to begin production in 2007. That was gradually pushed back to 2011, which is the most recent company estimate. Mr. Goheen said yesterday that Cameco will put out new production and cost estimates at the end of the first quarter. Some analysts are now expecting production to begin around 2013. Cameco's last cost estimate for its share of capital costs was about $508-million in March, 2007, according to a company spokesman. Cameco is the mine operator and has a 50-per-cent stake in the project. French nuclear giant Areva Group owns a 37-per-cent stake, Idemitsu Canada Resources Ltd. holds 8 per cent and Tepco Recources Inc. has 5 per cent. Once up and running, Cigar Lake is expected to produce 18 million pounds of uranium annually, half of it belonging to Cameco. Mr. Goheen said the company is also making uranium its sole focus, in particular after selling its stake in Centerra for proceeds of about $871-million late last year. 'The focus in the company right now front and centre is moving from 20 to 40 million pounds [of production],' Mr. Goheen said. He said the production target doesn't rely on new acquisitions, but that the company is always looking for new opportunities to grow."
Cameco nears restart of flooded mine
Globe and Mail, 23 January 2010

"One-quarter of all the maize and other grain crops grown in the US now ends up as biofuel in cars rather than being used to feed people, according to new analysis which suggests that the biofuel revolution launched by former President George Bush in 2007 is impacting on world food supplies. The 2009 figures from the US Department of Agriculture shows ethanol production rising to record levels driven by farm subsidies and laws which require vehicles to use increasing amounts of biofuels. 'The grain grown to produce fuel in the US [in 2009] was enough to feed 330 million people for one year at average world consumption levels,' said Lester Brown, the director of the Earth Policy Institute, a Washington thinktank ithat conducted the analysis. Last year 107m tonnes of grain, mostly corn, was grown by US farmers to be blended with petrol. This was nearly twice as much as in 2007, when Bush challenged farmers to increase production by 500% by 2017 to save cut oil imports and reduce carbon emissions. More than 80 new ethanol plants have been built since then, with more expected by 2015, by which time the US will need to produce a further 5bn gallons of ethanol if it is to meet its renewable fuel standard. According to Brown, the growing demand for US ethanol derived from grains helped to push world grain prices to record highs between late 2006 and 2008. In 2008, the Guardian revealed a secret World Bank report that concluded that the drive for biofuels by American and European governments had pushed up food prices by 75%, in stark contrast to US claims that prices had risen only 2-3% as a result."
One quarter of US grain crops fed to cars - not people, new figures show
Guardian, 22 January 2010

"As many as 1,400 jobs at one of Britain’s largest oil refineries are under threat after Chevron said last night that it was planning a restructuring that would involve sweeping cuts across its global refining operation. The announcement, which came after notice was given to employees on Monday, has raised fears relating to Chevron’s refinery at Pembroke in South Wales, which employs 600 permanent workers and 800 contractors. A UK spokesman for Chevron, the second-biggest American oil company, confirmed that the future of Pembroke was being considered but that no final decisions had been taken.....Unions and Chevron workers in Wales reacted angrily to the announcement, saying that they were deeply concerned about the possible implications of the redundancies and for Britain’s energy security.... The oil refining business has been hit by a combination of low margins and the recession. The threat of tougher carbon regulation is also a concern, particularly for operators of plants in Europe."
Up to 1,400 UK jobs at risk as Chevron plans deep refinery cuts
London Times, 21 January 2010

"A major new oil sands project by international players ConocoPhillips Co. (COP-N50.60-1.64-3.14%) and Total SA is the latest sign of recovery in northern Alberta, a driver of the Canadian economy that had been waylaid by soaring construction costs and a steep drop in the price of crude. Conoco of Houston and Paris-based Total said Tuesday they are expanding their Surmont project south of Fort McMurray, Alta., to 110,000 barrels a day from a current capacity of 27,000, buoyed by results from the first phase that was completed in 2007. The companies didn't disclose a price, but based on recent industry costs the investment will likely be about $1.5-billion. Since the financial crisis, oil sands development has proceeded slowly, as some companies retrenched after a period in which they were faulted for expanding too quickly. Today, new projects are considered more carefully, and the Surmont expansion joins a small group that is going ahead, including Suncor's Firebag and Imperial Oil Ltd.'s Kearl."
Conoco, Total to expand oil sands project
Globe and Mail, 19 January 2010

"Shell chief executive Peter Voser will be forced to defend the company's controversial investment in Canada's tar sands at his first annual general meeting, after calls from shareholders that the project be put under further scrutiny. A coalition of institutional investors has forced a resolution onto the agenda calling for the Anglo-Dutch group's audit committee to undertake a special review of the risks attached to the carbon-heavy oil production at Athabasca in Alberta. Co-operative Asset Management and 141 other institutional and individual shareholders raise 'concerns for the long-term success of the company arising from the risks associated with oil sands.' Shell, which will hold its AGM in May, has been one of the lead companies in moves to develop oil reserves that are either mined or sucked out of the ground using expensive and energy-intensive techniques. BP and Total of France are also engaged in the sector. Shell has insisted that 'unconventional' hydrocarbon sources such as tar sands are all justified to ensure that the world does not run out of oil too soon. But environmentalists have ­condemned their exploitation as "the biggest environmental crime in history" and said it must be stopped before it tips the planet over into runaway climate change....Shell disputes the scale of the pollution but also says it will use carbon, capture and storage techniques to mitigate any negative impact. This argument has not stopped environmentalists – or shareholders – from opposing the plans. 'Given Shell's level of commitment to oil sands there is a greater obligation to shareholders to reassure how it would cope under a number of scenarios,' said Niall O'Shea, head of responsible investing at Co-operative Asset Management. 'What if carbon capture and storage proves too costly in the oil sands? What if sustained high oil prices and carbon regulation lead to switching away from marginal, high-cost, high-carbon sources? And then there's the cost of cleaning up the locality. Companies must be more rigorous and transparent with their investors,' he added....'Given Shell's level of commitment to oil sands there is a greater obligation to shareholders to reassure how it would cope under a number of scenarios,' said Niall O'Shea, head of responsible investing at Co-operative Asset Management. 'What if carbon capture and storage proves too costly in the oil sands? What if sustained high oil prices and carbon regulation lead to switching away from marginal, high-cost, high-carbon sources? And then there's the cost of cleaning up the locality. Companies must be more rigorous and transparent with their investors,' he added."
Shell faces shareholder revolt over Canadian tar sands project
Guardian, 18 January 2010

"Ageing coal-fired power stations should be exempted from environmental regulations and kept open to stop the lights from going out, the chief executive of E.ON UK has urged the government. Paul Golby told the Guardian that some of the coal and oil-fired plants due to close this decade because of European pollution regulations should remain operational and ready to come online during periods of peak demand such as those experienced in recent weeks. The Guardian revealed this month that almost 100 large power users had to switch to alternative sources when National Grid triggered clauses in their interruptible supply contracts."
E.ON chief: Preserve coal plants to keep lights on
Guardian, 18 January 2010

"Oil and gas sector spending is forecast to grow by 12 percent this year, driven by large national oil companies, according to the latest research. Total capital expenditure of leading listed oil and gas companies is expected to exceed $798bn, a report by GlobalData released on Thursday said."
Oil and gas sector forecast for 12% growth in 2010
Arabian Business, 18 January 2010

"Goldman Sachs Group Inc. said that shortages will reappear in the crude oil market as supply fails to keep pace with a recovery in demand. Global oil consumption will return to levels seen before the financial crisis by the third quarter of this year, Goldman analyst Jeffrey Currie said in a presentation in London today. At the same time, projects to bring new oil to consumers are still lagging as a result of the credit crunch, he said. 'By 2011, the market is back to capacity constraints,' Currie said in slides shown with the presentation. 'The financial crisis created a collapse in company returns which has significantly interrupted the investment phase.' Crude oil futures traded around $78 a barrel in New York today, having recovered 78 percent last year with the passing of the biggest economic shock since World War II. Investment into new oil capacity is being held up because 'political impediments on the flow of capital are still very large,' Currie said at the conference."
Oil Shortages to Reappear in 2011, Goldman Sachs Says
Bloomberg, 18 January 2010

"North Sea oil and gas exploration dropped by 35 per cent last year, taking it back to levels last seen five years ago, according to figures published by Deloitte yesterday. Only 78 new wells were drilled in 2009, compared with 121 in 2008. Exploration activity was down by almost half, appraisals by a quarter. Meanwhile, new drilling in the Norwegian North Sea shot up by 18 per cent last year thanks to a more generous tax regime..... Despite the signs of recovery elsewhere in the economy, there are no green shoots in UK Continental Shelf (UKCS) exploration activity so far because of the long lead times of the oil and gas industry. Some improvements are expected in 2010. The danger is that lower exploration rates now will lead to a market dip in production in the future, as the oil and gas industry's long lead times feed through. 'We've got to keep things going year on year or production will drop back, the decline will be accelerated, and we will not make the most of what we have,' Mike Tholen, the economic director at industry group Oil and Gas UK, said. There are also worrying implications for Britain's oil and gas industry. 'If companies providing resources to the UK see the market starting to shrink they will move their resources elsewhere in the world and then the decline will snowball,' Mr Tholen said."
Oil and gas exploration falls to lowest level in five years
Indepedent, 15 January 2010

"The US has expressed concern to Chinese officials about Beijing's attempts to buy up global oil reserves for the long term. 'We are pursuing intensive dialogue with the Chinese on the subject of energy security, in which we have raised our concerns about Chinese efforts to lock up oil reserves with long-term contracts,' David Shear, deputy assistant secretary of state for East Asian and Pacific affairs, told the House Armed Services Committee yesterday. 'We will continue to engage them on this subject at very senior levels,' he told the panel, which was holding a hearing on recent security developments in China. Shear was responding to questions by Republican Roscoe Bartlett, who said he was worried that the Chinese were 'aggressively buying up oil all over the world' and might not share it with other countries in the future. China, the world's second-largest oil consumer, has been pressing ahead with efforts to secure long-term access to natural resources such as oil and minerals to help fuel its rapid economic growth. China has been encouraging state-owned oil companies to expand upstream investments abroad and to increase crude stockpiles. China's oil companies have been snapping up energy assets all over the world, including stakes in Canadian oil sands projects, an oilfield in Iraq, and buying the Swiss oil explore Addax Petroleum, reported Reuters."
US raises concern over China oil policy
Upstream Online, 14 January 2010

"The recession has put a dent in future North Sea oil and gas production, with companies tapping fewer new oil reserves in 2009 than in previous years of operations there. Only eight new oil and gas fields - expected to produce a combined total of 140m barrels over their lifetime - began production in 2009, according to Wood Mackenzie, the industry consultants.That compares with an average of 600m barrels of new reserves brought on stream each year between 2004 and 2008. New start-ups are critical to extending the life of Britain's oil and gas industry. Production at the North Sea's old fields has been declining since the start of the last decade, driving companies out of the region, reducing tax revenues and increasing UK dependence on foreign supplies.... Geoff Gillies, the author of the research, noted that the decline was not due to a lack of drilling opportunities in the area. 'Some companies weren't able to drill even if they wanted to, due to the downturn and subsequent restricted access to capital funding and tightening of capital budgets,' he said."
Downturn warning for North Sea oil and gas
Financial Times, 14 January 2010

"British business has had it tough in the big freeze. Consumers have turned up the thermostat to counter the plunging temperatures and industry has had to suffer power cuts to make up the shortfall. Angst over national power supplies has rarely been so severe. Yet the solution for the office, the factory or the depot may lie not in billion-dollar international energy deals but on its doorstep. IGas, a coal-bed methane group, began a campaign yesterday to persuade large energy users to allow it to set up mini-gas production facilities on their sites and supply them directly with a substantial proportion of their gas requirements. The move comes after National Grid issued four gas-supply warnings in the space of a week. Last week more than 100 industrial users suffered a temporary cut when supplies were interrupted because a Norwegian gasfield was shut down. IGas said that it had been granted planning permission for a full production site at Ellesmere Port, the industrial town in Cheshire that is home to car and chemicals companies, with a view to selling its gas to one of the businesses based there. Work on a pilot site at Keele University, which will be taking the gas produced, is already under way. The group has submitted planning applications for another four sites, including one next to the Trafford Centre in Manchester. It believes that there could be as many as 50 by 2014, each producing enough gas to supply the equivalent of 100,000 homes. The production sites, which could be easily located in a car park next to a factory or office building, will sit above 11 areas, covering 1,754 sq km in the North West, where coal seams are known to exist....It believes that once planning permission has been granted on a site, it could be operational within a month. The gas produced would be cheaper than buying it from the grid. IGas also claims it would be more environmentally friendly because the gas is not being transported vast distances. The process, along with other unconventional gas-production techniques, such as extracting from shale, has a very low profile in Britain and is responsible for less than 0.5 per cent of its gas supplies. It is common in the United States and Australia and IGas thinks that the method could provide 10 per cent of the national supply....Jeremy Nicholson, director of the Energy Intensive Users Group, said that the impact on big gas users would have been much greater if it had not been for the recession reducing demand. Supply alerts, he added, would become more common. As a result, any way of securing a dedicated supply was becoming increasingly attractive, he said. “It’s not the same as being at the end of a long pipe, the risks of which are becoming quite apparent.”
What’s that in the car park? Looks like a drilling rig
London Times, 14 January 2010

"Russia rescued British energy consumers by ensuring a steady flow of gas into the power network as supplies from Norway faltered during the cold weather, industry customers users said today. As the National Grid warned of a 'high' possibility of shortages in the north-east and south-west owing to another cold snap, the Major Energy Users' Council said Britain had been lucky to survive without shortages. Eddie Proffitt, chairman of the council's gas group, said: 'The [British] gas industry has coped very well but we have been lucky. It would have been desperate if we had seen the kind of disputes between Russia and Ukraine that have reduced gas flows on the continent in the past two or three Januaries.' Politicians said four 'gas balancing alerts' – warnings of pending shortages – in the space of a week meant it was time Britain reviewed its whole energy policy. 'This winter has shown the system we have devised does not have the resilience it should have. It runs on a 'just-in-time' principle which has economic benefits when it works but risks ending up in a 'just-too-late' if all goes wrong,' said John Hemming, MP for Birmingham Yardley. 'If the Russians had hit the kind of problems with its neighbours seen in previous years then we would have toppled off the knife edge we have been sitting on with our gas supplies.' The disruptions to supplies from Norway – normally seen as highly reliable – left Britain importing gas through the interconnector pipeline which runs from Zeebrugge in Belgium to Bacton in north Norfolk. In previous years shortages from Siberia have led German and Dutch suppliers to halt gas exports to Britain. The National Grid admitted that much of the stress in the gas supply system had been caused by technical problems on Norwegian fields such as Ormen Lange and Troll but said everything was back to normal. A Grid spokeswoman insisted the gas alerts had worked as they were expected to: drawing new supplies from other sources, such as liquefied natural gas on board vessels and the continent. She declined to comment on what would have happened if Russian gas had not been flowing normally. The Major Energy Users' Council also had serious concerns that changes to the regulatory regime next year could make the situation worse. Proffitt said there were 1,250 customers around Britain on 'interruptible' gas contracts, but this number would fall to 27 by October 2011 when new Ofgem regulations come into force. 'Some of our members are very concerned about this because they fear a supply shortage could lead to demands that sites lose their gas. Many of those who choose to have interruptible contracts have back-up power sources such as diesel-fired generators,' he said. Nearly 100 customers had their power cut at one stage last week, including the Vauxhall car plant at Ellesmere Port on Merseyside."
Russia comes to the rescue as Norwegian gas supplies to Britain falter
Guardian, 13 January 2010

"The US overtook Russia as the world’s largest natural-gas producer last year as operators tapped unconventional resources while demand in Russia plunged amid the country’s worst economic decline on record.   US output advanced 3.9%t in January through October to 18.3 trillion feet (519 billion cubic metres), according to the latest Department of Energy data. Russian output, about four-fifths of which comes from state-run Gazprom, plunged 17% in the period to 462 billion cubic metres.....The US growth trend may indicate that Gazprom will not be able to break into the US market as it had planned, Mikhail Korchemkin, head of East European Gas Analysis, said in a Bloomberg report. Gazprom set a target to take as much as 10% of the US market by 2020 through LNG sales from Arctic plays, Gazprom executive Alexander Medvedev said in June. The surprising boost shale gas has given US output has closed the world’s biggest energy consumer to some imports and 'created a huge oversupply of LNG in Europe,' Korchemkin said. In July, Qatari LNG prices in the UK fell as low as $75 per thousand cubic metres compared with Gazprom prices of between $210 and $220 per thousand cubic metres for countries in the European Union under long-term deals, Korchemkin said. Gas deliveries from Norway and Qatar to Europe in the third quarter outpaced European growth in consumption while Russian exports lagged behind, according to the International Energy Agency. European imports from Qatar more than doubled to 4 billion cubic metres in the third quarter from the same period the previous year. Supplies from Norway rose 27% to 21.1 billion cubic metres while overall European imports grew 10% to 100.1 billion cubic metres, according to the IEA. Imports from the former Soviet Union grew 8.6% to 32.6 billion cubic metres. 'There are winners and losers in the world gas business,' Korchemkin said. 'The losers are Gazprom, Nigerian National Petroleum Corporation, Turkmengaz' and NAK Naftogaz Ukrainy. European imports from Nigeria fell 38% to 2.1 billion cubic metres in the period, according to the report. Turkmenistan’s route to Europe was closed when Gazprom stopped purchases in April of this year. Gazprom’s share of the European market may fall further as it refuses to show flexibility by giving a temporary price discount to European buyers, Korchemkin said. This may result in Gazprom exports to Europe remaining flat at levels just above contractual minimums over the next five to 10 years while others take advantage of growth, he said. Russia surpassed the US in gas production in 2002, pumping 539 billion cubic metres versus America’s 536 billion, according to figures from UK supermajor BP. Russia, which has the world’s largest reserves and a quarter of Europe’s market, led the world in output from 1986 to 1996 and again in 1999, the year after the government defaulted on $40 billion of domestic debt and devalued the ruble. The EIA said full-year US output probably increased 3.7% to the equivalent of 624 billion cubic metres. The agency is slated to release November data on 29 January. Russia’s annual output fell 12% to 582 billion cubic metres. Demand for gas in Russia, the world’s largest user of the fuel after the US, contracted last year along with the economy. Prime Minister Vladimir Putin said 30 December that annual gross domestic product declined 8.5%, the most since the collapse of the Soviet Union in 1991."
US passes Russia as top gas producer
Upstream, 12 January 2010

"All the recent panic about UK gas supplies hasn’t developed into any kind of lights-off crisis. If anything, it has shown that the eminently sensible National Grid has a good warning system in place to make sure industry is flexible about switching from gas to other forms of generation when there are exceptional weather conditions or production problems. But what the current situation does highlight is some of the cracks in the UK’s energy planning pipeline that could develop into real shortages in future. One of the most worrying examples is our dependence on coal as a back-up fuel when there is abnormal demand for gas in cold weather. At the moment, our emergency coal-fired stations are hurtling along at full capacity to help warm and power homes and businesses. However, a European Union directive from two years ago says 10 of the dirtiest stations must close by 2015 or after 20,000 hours of generation. We are currently planning for these to come off the system in 2015. But if you look at the latest figures for their progress, some have already used up almost half of their allotted hours after just two out of eight years. If they carry on burning up coal at this rate, they could come off the system as early as 2012 – only two out of the 10 plants are generating power in keeping with the shutdown timetable. This is worrying analysts at Inenco. 'Alternative forms of generation will need to be online way before the these plants reach their 2015 deadline or the ‘generation gap’ could occur at some point after 2012,' says Nick Campbell. 'If we continue down the line of gas fired generation and not a diverse generation portfolio, then the impact of extraordinary cold weather or supply side issues on gas could have a major impact on the power market. 'The situation means the government needs to bring new storage facilities and renewable energy projects online more quickly, amid fears that the plants may have to stop power generation way before they are due to be decommissioned in six years time.'”Both gas and wind power need back-up in cold weather. If the coal stations are going to burn out sooner than we thought, the need for extra gas storage and import capacity becomes even more pressing."
Britain puts off its gas crisis – for now
Daily Telegraph (Blog), 12 January 2010

"There have been few worse years for the US motor industry than 2009. Sales plunged, two of the big three — General Motors and Chrysler — went into bankruptcy and now it emerges that the US market was outstripped by China for the first time. The China Association of Automobile Manufacturers revealed yesterday that a record 13.6 million light vehicles were sold in China in 2009, compared to around 10.4 million in the United States. Small wonder then that carmakers gathered in Detroit for the city’s Motor Show — widely considered the most important on the world circuit — are increasingly looking to China for sales growth."
Chinese car companies are catching up fast
London Times, 12 January 2010

"The U.S. Energy Information Administration on Tuesday slightly raised its estimate for domestic natural gas production in 2010 but still expected output this year to be down 3 percent from 2009 levels. In its January Short-Term Energy Outlook, EIA said it expected marketed natural gas production to be down 1.8 billion cubic feet per day, or 3 percent, this year, primarily due to steep declines from initial production at newly drilled wells and the lagged effect of reduced drilling activity. EIA also forecast U.S. natural gas consumption this year would average about 62.44 bcf per day, little changed from 2009 demand of 62.45 bcf daily, as growth in residential, commercial and industrial use is offset by declining demand from the electric power sector."
EIA sees US natgas production down 3 pct in 2010
Reuters, 12 January 2010

"World oil demand will rise to 86.65 million barrels per day in 2011, up 1.47 million bpd from a year earlier, the U.S. Energy Information Administration said on Tuesday. In its new monthly energy forecast, the agency also projected 2011 U.S. oil demand would rise to 19.11 million bpd, up 216,000 bpd from 2010. This report offered traders their first glimpse at the agency's supply and demand forecasts for 2011. At the same time, the EIA cut its forecast for global growth in petroleum consumption this year to an increase of 1.08 million bpd from 2009. Last month the agency projected a 1.1 million bpd rise in world oil demand in 2010. The EIA also lowered its outlook for U.S. oil consumption in 2010. The agency said it now expects a 211,000 bpd rise in demand, down from the 270,000 bpd increase predicted in the previous report. Although the rebound in oil demand will be led by developing countries in 2010, richer nations should 'begin to show significant oil demand growth in 2011 in response to improving economic conditions,' the EIA said."
World oil demand to grow 1.47 mln bpd in 2011-EIA
Reuters, 12 January 2010

"Britain's electricity network is not ready to cope with a plan announced today to massively expand offshore wind generation, experts have claimed. A 'Super Grid', the first stage of which would cost £10-15bn to build, would be needed before the country's electricity network could deal with the huge peaks associated with wind power. The Crown Estate today announced nine sites around Britain for wind power generation with the aim of producing up to 32 gigawatts - enough to power 20 million homes - from 6,400 offshore turbines. But those close to the project warned that generating capacity was leaping ahead of plans to distribute the power....The 'Super Grid' would work by linking the electricity networks of Britain, Germany, Norway and Denmark to allow the power generated on windy days to be distributed across the countries. On days when there is excess capacity the energy could stored or used to pump water at hydroelectric sites to create generating capacity when the wind drops....It is unclear how the super grid will be financed and how much each country would contribute to what would eventually be a pan-European network of undersea cables. The companies building the new wind farms would contribute a substantial proportion of the cost but they themselves will be supported by public subsidies for wind power paid for by homes and businesses through higher energy bills."
Dash for wind power leaves Britain with £15bn funding blackhole
London Times, 8 January 2010

"The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline on Wednesday connecting Iran's northern Caspian region with Turkmenistan's vast gas field may go unnoticed amid the Western media cacophony that it is 'apocalypse now' for the Islamic regime in Tehran. The event sends strong messages for regional security. Within the space of three weeks, Turkmenistan has committed its entire gas exports to China, Russia and Iran. It has no urgent need of the pipelines that the United States and the European Union have been advancing....The 182-kilometer Turkmen-Iranian pipeline starts modestly with the pumping of 8 billion cubic meters (bcm) of Turkmen gas. But its annual capacity is 20bcm, and that would meet the energy requirements of Iran's Caspian region and enable Tehran to free its own gas production in the southern fields for export. The mutual interest is perfect: Ashgabat gets an assured market next door; northern Iran can consume without fear of winter shortages; Tehran can generate more surplus for exports; Turkmenistan can seek transportation routes to the world market via Iran; and Iran can aspire to take advantage of its excellent geographical location as a hub for the Turkmen exports. We are witnessing a new pattern of energy cooperation at the regional level that dispenses with Big Oil. Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and Turkmenistan hold respectively the world's largest, second-largest and fourth-largest gas reserves. And China will be consumer par excellence in this century. The matter is of profound consequence to the US global strategy....What matters most to Russia is that its dominant role as Europe's No 1 energy provider is not eroded. So long as the Central Asian countries have no pressing need for new US-backed trans-Caspian pipelines, Russia is satisfied. During his recent visit to Ashgabat, Russian President Dmitry Medvedev normalized Russian-Turkmen energy ties. The restoration of ties with Turkmenistan is a major breakthrough for both countries....Moscow has chosen to pay a high price, that is primarily because of its resolve not to leave gas that could be used in alternative pipelines, above all in the US-backed Nabucco project.....The United States' pipeline diplomacy in the Caspian, which strove to bypass Russia, elbow out China and isolate Iran, has foundered. Russia is now planning to double its intake of Azerbaijani gas, which further cuts into the Western efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran is also emerging as a consumer of Azerbaijani gas. In December, Azerbaijan inked an agreement to deliver gas to Iran through the 1,400km Kazi-Magomed-Astara pipeline. The 'big picture' is that Russia's South Stream and North Stream, which will supply gas to northern and southern Europe, have gained irreversible momentum. The stumbling blocks for North Stream have been cleared as Denmark (in October), Finland and Sweden (in November) and Germany (in December) approved the project from the environmental angle. The pipeline's construction will commence in the spring."
Russia, China, Iran redraw energy map
Asian Times, 8 January 2010

"Nine giant new wind farms in the seas around Britain will be announced today, but few of the 6,000 turbines needed are likely to be built here. Ed Miliband, the Energy and Climate Change Secretary, will say that the world’s biggest expansion of offshore wind power, costing £75 billion, will create 70,000 jobs in Britain by 2020. However, the Government has failed to persuade any of the major wind turbine manufacturers to open a factory in Britain. The companies granted licences today to build the farms will not be obliged to source any parts from domestic manufacturers and most are expected to buy turbines made in Denmark or Germany....The nine farms announced will generate enough electricity to power more than half of Britain’s homes, but only when the wind blows. The turbines will be twice as large as those on land, typically rising 170m (557ft) from sea level to the tip of the blade. They will stand in up to 70m of water, compared with only 10-25m for existing offshore turbines. They will also be much farther away from the coast, with the biggest, Dogger Bank, starting 130 miles off the North East coast. Residential platforms will be built near the turbines to accommodate hundreds of workers who will carry out servicing and repairs.....The timetable for the construction will depend on how quickly the finance can be raised and what happens to the price of the fossil fuels with which wind energy competes. None of the farms is likely to be generating electricity before 2015."
Wind farms could power half of Britain’s homes, but jobs could go overseas
London Times, 8 January 2010

"The shutdown of a giant gas field offshore of Norway has pushed Britain's gas infrastructure into emergency mode, forcing the closure of industrial companies in the north of England in order to preserve supplies to homes, shops and offices. National Grid, which operates Britain's gas network, issued a warning this morning that the system would run short of gas when pressure dropped in Langeled, a pipeline that brings gas from Norway to a terminal at Easington on the East coast of England. With demand for fuel at record levels, some gas companies cut off supplies to some industrial customers on interruptible contracts....Statoil, the Norwegian state energy company, said that Troll, a giant offshore gasfield suffered a minor technical problem which forced it to shut down production for one hour. The brief stoppage caused pressure to plunge in Langeled, prompting National Grid to issue a National Balancing Alert. Statoil said that production had since resumed to normal levels but a spokesman for National Grid said the alert would remain until 6am tomorrow pending a review of the pipeline pressure in Langeled. The Norwegian pipeline which commenced operations two years ago has become a lifeline for Britain's energy network, supplying about a fifth of the gas consumed in Britain. Demand for fuel has soared during the recent weeks of exceptional cold. Gas consumption has reached record levels with demand in recent days as much as 28 per cent above seasonal norms. Today's alert follows an alert on Monday when Troll ceased production due to gas leak. Statoil said that the second shutdown was unrelated to Monday's incident. The cut-off of supplies to customers is the first time for six years, said National Grid that it has been forced to take such measures. Industrial companies called today for more gas storage facilities to be built in Britain. EEF, the engineering employers’ organisation said calls by industry for investment in storage had been ignored and inadequate incentives were available for investment to bring Britain's gas storage up to levels that exist on the Continent. 'The longstanding vulnerability in our energy system has today been exposed and as a nation we now need to take security of our energy supply more seriously,' said Roger Salomone, EEF’s energy adviser."
National Grid issue warning over gas supplies
London Times, 7 January 2010

"McKinnon & Clarke, the UK's largest independent energy consultancy, has called on the Government to take tough decisions and invest in the UK's energy industry or face the reality of running low on energy. The move comes as the National Grid today issued the second Gas Balancing Alert this week - unprecedented in recent times. With low gas reserves and record demand, further concern was raised today as Norway's largest gas producer, Statoil, announced that production is down at their Kroll A field - causing a dramatic fall in pipeline supplies to the UK from our biggest import source.  M&C's energy analyst, David Hunter, believes this latest warning throws a spotlight on the UK's precarious energy position. Mr Hunter said: 'We are seeing unprecedented levels of demand for gas and as we've heard Norwegian pipeline imports have just fallen dramatically. This sent the gas system from surplus to deficit very quickly at a time of very high demand. Outages are not uncommon but occurring during a time of sustained record demand is making traders and industry very nervous. 'It has been almost four years since the National Grid last issued a balancing alert - to have two in one week is unprecedented. This is an urgent call to action for suppliers to find extra gas from somewhere, and for power generators to reduce demand. 'Although the Norwegian problems are short-term, the markets and grid operator will be very nervous until supplies return and this could lead to further price volatility. The UK has lagged behind other European countries in building gas storage capacity for winter, despite exporting gas to other countries when demand is lower. The reality is we are the ones who are relying on our European neighbours to keep our lights on and homes heated."
UK Gas Supplies On Red Alert As Norwegian Imports Falter
Fresh Business Thinking, 7 January 2010

"Canada and China have signed a deal that will see PetroChina, the market arm of the state-owned China National Petroleum Corp., investing $1.7 billion in two Canadian tar-sands deposits in Alberta. Canadian Industry Minister Tony Clement said the government gave PetroChina the go-ahead for the acquisition. Industry sources said the deal was agreed about two months ago but only finalized before Clement's announcement before the new year. If successfully exploited, the tar-sands development will secure for China's energy-hungry economy a substantial resource from about 5 billion barrels equivalent of 'best case' bitumen. Canada is the world leader in oil produced from tar sands, followed in a smaller measure by Venezuela. The Canadian tar-sands industry, centered in Alberta, produces more than 1 million barrels a day of synthetic oil -- about 40 percent of Canada's oil production -- from the sands currently under exploitation."
China buys into Canadian tar sands exploitation project
United Press International, 5 January 2010

"Moves made to address carbon emissions are varied, but many governments seem to be prioritizing low-carbon energy programs as an alternative to fossil fuels. Fatih Birol [IEA Chief Economist] recently told the US Council on Foreign Relations of his certainty that developing states are interested in climate negotiations – and in reducing emissions – far more for energy security reasons than for climate ones. Diplomatically, he did not suggest that major industrial states might be acting for much the same reasons."
Shane Mulligan - Heads in the Sand? Or, Why Don’t Governments Talk about Peak Oil?
The Oil Drum, 5 January 2010

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

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

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

   

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