ODAC Newsletter – Sept 18

Peak oil supply will be hit this year after the economic crisis and low prices in the first quarter of 2009 slashed much needed investment, a senior executive at Australian investment bank Macquarie said.

“This is our view – capacity has pretty much peaked in the sense that declines equal new resources,” Iain Reid, head of European oil and gas research at Macquarie, told Reuters…

Oil prices will rebound to $105 per barrel by 2012 due to the upcoming tightening of supply, a new study has found.

According to a Morgan Stanley report, most of the scheduled incremental oil capacity from 2009 to 2015 is highly ambitious and unlikely to be achieved due to technical, financial and political setbacks.

This will result in tight spare capacity, one of the major reasons for price increases in 2005 until oil prices peaked last year…

A flurry of big oil discoveries from Brazil to Sierra Leone undermines those who believe that there are no new oil frontiers to explore but the finds may not be enough to ward off a supply crunch as the world economy recovers…

Oil traded little changed near $72 a barrel in New York after the Energy Department reported that U.S. crude stockpiles dropped to the lowest level since January.

The inventories fell by 4.73 million barrels, the weekly report showed yesterday, more than the 2.5 million-barrel decline forecast by analysts in a Bloomberg News survey. Crude prices were also helped by the dollar, which extended declines to the weakest level in almost a year. Global equities advanced, spurring expectations of improving fuel demand…

Venezuela has announced a $16bn (£10bn) investment deal with China for oil exploration in the Orinoco river.

The move comes shortly after Venezuela signed a similar agreement with Russia, which is estimated to be $20bn (£12bn)…

Nigeria’s main rebel group extended its cease-fire by 30 days and warned that its campaign targeting oil and gas installations will continue if the government doesn’t engage in meaningful talks.

“The government should use this extension of time to do the right thing instead of pretending to talk peace, while arming the military for a war it cannot win,” Jomo Gbomo, a spokesman for the Movement for the Emancipation of the Niger Delta, said in an e-mailed statement…

Russia’s stranglehold over dwindling global energy resources was dramatically confirmed yesterday when new figures showed that the country has become the world’s biggest exporter of oil.

With production in August hitting record levels, Russia toppled Saudi Arabia from the number one spot. It is already the world’s largest exporter of gas, and supplies around a third of the European Union’s consumption…

The Nordic Explorer set off last week for the seas off Cape Farewell on the southern tip of Greenland. For the next few weeks the 269ft research ship will zigzag across the water to collect data on the rock formations thousands of feet below the seabed. It is not alone. Up and down the coasts of this desolate, ice-covered country, seven other ships are carrying out similar work.

The ships are funded by oil companies hoping to determine whether the country, long dismissed as too icy and remote to be worthwhile exploring, is one of the world’s last virgin oil provinces…

BASHING “speculators” is a popular pastime for American politicians trying to explain high and volatile oil prices. But whether speculation has really been responsible for spiking prices is a controversial issue. In 2008 the Commodity Futures Trading Commission (CFTC) issued a report dismissing the role of speculators in last year’s startling run-up in prices. But banks, hedge funds and others who bet on oil (without a use for the stuff itself) still face limits on the positions they can take, if Gary Gensler, the new CFTC head, can show that their influence in markets does harm…

Gorgon, the Australian liquefied natural gas project which has a globally significant resource base estimated at 40,000bn cubic feet of natural gas, was officially given the green light on Monday when Chevron said it would proceed with the A$43bn (US$37bn) development.

The milestone came nearly three decades after gas was discovered in the fields off the Western Australian coast and followed years of work to secure federal, state and environmental approvals in Australia…

Ukraine is ensuring smooth transit of Russian gas supplies to Europe but there is a risk of disruption next year due to uncertainty on payments, the head of Russian gas giant Gazprom said Saturday.

Gazprom chief executive Alexei Miller, speaking in a meeting with foreign research and media specialists on Russia, hailed the “remarkable” current cooperation between Russian and Ukrainian state gas firms…

The UK Government is piling on the pressure for a “Southern Corridor” of energy supplies to avoid over-reliance on Russian gas.

Lord Hunt of Kings Heath, the Energy minister, is in Turkey and Azerbaijan this week as part of a concerted British effort to push energy security up the European agenda following last winter’s ruckus between Russia and Ukraine over gas supplied through the latter’s pipelines. “Last winter was a wake-up call to Europe because it showed we must develop diverse sources of supply,” Lord Hunt said. “I am here to encourage progress, talk to government and industry and do everything we can to encourage the development of the Southern Corridor.”…

Rolls-Royce will provide engineering and technical support to EDF under proposals agreed in a memorandum of understanding with the French utility group. Rolls will also supervise and manage the supply chain, which is likely to include hundreds of companies.

EDF is leading the expansion of Britain’s nuclear industry after acquiring British Energy for £12.5bn last year. The company hailed Rolls as “one of the strongest engineering brands in the UK”…

The Government’s low-carbon transition plan comprises five key points, ranging from securing international climate agreements to action on carbon budgets.

All the points are important, but it is the fifth that will make the real difference — “supporting individuals, communities and businesses to play their part”…

Ted Hopcroft is an energy specialist at PA Consulting Group.

The energy and climate change secretary, Ed Miliband, today announced a boost for green jobs including government funding for a new factory in the north-east, which will make the largest offshore wind blades in the world.

Miliband unveiled the £4.4m grant to Clipper Windpower to develop offshore wind turbines, with blades 70m long, 175m high, and weighing over 30 tonnes – “the size of a jumbo jet” – in a speech to the TUC in Liverpool…

There is “no danger” of mass power cuts in the UK during the next decade, Energy Secretary Ed Miliband has said.

He told the BBC it was possible to meet the country’s energy needs while using more “sustainable” sources such as wind farms and nuclear stations…

The World Bank is spending billions of pounds subsidising new coal-fired power stations in developing countries despite claiming that burning fossil fuels exposes the poor to catastrophic climate change. The bank, which has a goal of reducing poverty and is funded by Britain and other developed countries, calls on all nations in a report today to “act differently on climate change”.

It says that the world must reduce its dependence on fossil fuels, but it is funding several giant coal-burning plants that will each emit millions of tonnes of carbon dioxide a year for the next 40 to 50 years…

Don’t expect China to keep global warming below 2C, a senior government adviser warned in Beijing today at the launch of an influential report on the nation’s prospects for low-carbon growth.

Even in a best-case scenario with massive investment in solar energy and carbon capture technology, Dai Yande, deputy chief of the Energy Research Institute, said China’s emissions were unlikely to fall low enough to remain below the temperature goal recommended by the G8 and European Union…

Europe has clashed with the US Obama administration over climate change in a potentially damaging split that comes ahead of crucial political negotiations on a new global deal to regulate greenhouse gas emissions.

The Guardian understands that key differences have emerged between the US and Europe over the structure of a new worldwide treaty on global warming. Sources on the European side say the US approach could undermine the new treaty and weaken the world’s ability to cut carbon emissions…

When it comes to the future of automotive technology, electric cars get the lion’s share of the attention. But hydrogen-powered vehicles are slowly gaining traction, first with an announcement last week that auto companies are spending billions on fuel cell vehicles, and now with news that Germany is planning to launch a countrywide hydrogen fueling network by 2015.

A total of eight companies (Daimler, EnBW, Linde, OMV, Shell, Total, Vattenfall and the NOW GmbH National Organisation Hydrogen and Fuel Cell Technology) are working to bring the fueling network to fruition. In its first phase, scheduled for 2009-2011, the companies involved will lobby for public support and begin fuel station installations. The second phase will see the mass rollout of hydrogen-powered cars along with an accompanying fuel network…

Renault SA Chief Executive Officer Carlos Ghosn said the future of electric cars depends on a rebound in oil prices that may boost sales of the battery-powered vehicles he’s spending 4 billion euros ($5.9 billion) to develop.

“If it’s less than $70, we’re going to have a problem,” Ghosn said in an interview at the Frankfurt Motor Show. “If oil’s at $200 the economic equation’s very easy, and if it’s more than $200, even easier.”…

View Shai Agassi’s February 2009 TED Talk

The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination – and is why your Christmas stocking may be on the light side this year

The tropical waters that lap the jungle shores of southern Malaysia could not be described as a paradisical shimmering turquoise. They are more of a dark, soupy green. They also carry a suspicious smell. Not that this is of any concern to the lone Indian face that has just peeped anxiously down at me from the rusting deck of a towering container ship; he is more disturbed by the fact that I may be a pirate, which, right now, on top of everything else, is the last thing he needs…

While Barack Obama was busy yesterday telling Wall Street to shape up, French President Nicolas Sarkozy spent this morning criticizing the entire economic status quo. The key issue in question: how the world tabulates economic growth, or GDP. We’ve always known that the metric was flawed; since GDP is simply a measure of all economic growth, things like natural disasters, traffic jams, and urban violence (all of which put people and money to work even as they wreak havoc) can actually raise a country’s overall GDP. But never has anyone seriously tried to come up with a better way to calculate growth. Until now: at the behest of Sarkozy, a team of superstar economists, headed by Nobel laureate Joseph Stiglitz, have just unveiled some new ways to tabulate a country’s economic health. See below the dispatch from NEWSWEEK’s Tracy McNicoll, who attended the unveiling of the Stiglitz Report in Paris this morning:…

View the report

The heads of two central banks signalled yesterday that the US and UK economies have emerged from recession.

Mervyn King, the Governor of the Bank of England, said there were signs that the British economy was growing again — implying that, by definition, the recession was over.

“Following a precipitate fall in economic activity at the end of last year and the start of this, there are now signs that growth has resumed in the third quarter,” he told the Commons Treasury Select Committee.

But he added that the “strength and sustainability” of the recovery were still “highly uncertain”…

The number of young people out of work hit a record 947,000 in July as total unemployment hit in Britain hit 2.47 million.

Official data today showed that the number of jobless 16-24 year olds jumped by nearly 60,000 in the three months to July to the highest level since 1992, when records began.

The jobless rate among young people hit a record 19.7 per cent, meaning that one in five 16-24 year-olds is now looking for work…

China has emerged as the most significant winner from the global financial and economic crisis. At the end of 2008, many questioned whether China would achieve its growth target of 8 per cent in 2009. Who now dares to do so?

Cushioned by its more than $2,100bn (€1,440bn, £1,260bn) of foreign currency reserves, huge trade and current account surpluses and a robust fiscal position, Beijing has been able to deploy all its levers over the financial system and the economy…