Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
Oil prices dropped this week on rising US inventories, a strengthening dollar, and news of a further crackdown on credit in China. Speaking from the World Future Energy Summit in Abu Dhabi this week, Richard Jones, Deputy Executive Director of the IEA predicted that there would be little price volatility in 2010 as existing supplies and stock build ups would balance demand. This sunny outlook is clearly vulnerable to the risks described in last week’s newsletter.
Speaking in London Jeffrey Currie of Goldman Sachs warned that more serious oil shortages will return in 2011 as supply fails to keep up with demand. Currie blamed the shortfall on the credit crunch which has “interrupted the investment phase”. Such a prediction assumes a global economic recovery and the continuation of high growth in the developing economies, neither of which is assured.
The growing supply challenge is born out in the announcement this week that both Conoco and Total are to expand their operations in the Alberta tar sands despite the heavy costs involved both in environmental damage and investment. In an interesting twist a group of Shell shareholders led by FairPensions has issued a resolution requiring the company to give a review of the risks in its tar sands policy at its upcoming annual general meeting. FairPensions cited carbon costs and potential damage to Shell’s reputation from environmental degradation as some of the risks.
In the UK this week a report by the Royal Society of Engineers caught the attention of the press, not really for its content, but for a nice soundbite quote from its author labelling roof-mounted wind turbines and solar panels as “eco-bling”. The report itself focuses on the need to create efficient buildings to reduce emissions and energy requirements in the face of resource constraints. Its primary recommendations are around the lack of expertise in the construction industry to achieve this and the training required to fill this gap. The report even includes a peak oil chart – but none of this makes a sexy headline. “Eco-bling”, on the other hand, now that’s something a headline writer can work with.
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Oil
Oil Trades Near $76; Refiners Slash Processing on Weak Demand
Crude oil was little changed near $76 a barrel in New York, poised for a second weekly decline, after a U.S. government report showed refineries in the biggest energy consumer cut processing in response to lower fuel demand.
Oil fell yesterday after the Energy Department said refineries operated at 78.4 percent of capacity last week, the lowest rate outside the Atlantic hurricane season since at least 1989. Gasoline stockpiles climbed to the highest level since March 2008. Fuel consumption in the past four weeks dropped 1.8 percent from a year earlier…
IEA sees fine balance in oil demand and supply
There’s a good balance currently in world oil demand and supply, though demand is projected to increase slightly this year as the recession ends in major consuming countries, a top official of the International Energy Agency (IEA) said here on Tuesday.
Speaking to Gulf News on the sidelines of the ongoing World Future Energy Summit 2010, Richard Jones, Deputy Executive Director of the IEA, said: “There are large oil stocks in OECD [Organisation for Economic Cooperation and Development] countries and floating stocks on storages which would help maintain the demand-supply balance. We don’t foresee any big movements in oil prices this year.”…
Oil Shortages to Reappear in 2011, Goldman Sachs Says
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…
Shell faces shareholder revolt over Canadian tar sands project
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…
Conoco, Total to expand oil sands project
A major new oil sands project by international players ConocoPhillips Co. COP-N 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…
Oil and gas sector forecast for 12% growth in 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…
India to tackle pollution with energy cuts
India is planning to create a £10 billion-a-year market in energy-saving certificates that officials hope will burnish the country’s green credentials and help to avert a looming energy crisis.
Under the plans, due to be implemented in April next year, more than 700 of the country’s most polluting industrial units, such as steel and cement plants, will be given targets for reducing energy consumption…
OPEC Compliance With Cuts Fell to 58% in December, IEA Reports
OPEC’s compliance with record supply cuts announced last year slipped to 58 percent in December, down from 60 percent the previous month, according to the International Energy Agency.
The 11 members of the Organization of Petroleum Exporting Countries bound by production quotas raised output by 95,000 barrels a day to 26.6 million a day last month, the Paris-based IEA said in a monthly report today. That means OPEC exceeded its collective target by 1.8 million barrels a day…
Gas
BP and Sinopec join forces in shale gas talks
Sinopec, the Chinese oil and gas group, said on Monday that it was in talks with BP over potential collaboration in the exploration and development of shale gas. The move underlines growing international interest in China’s shale gas fields…
Nuclear
Britain finally waves farewell to radioactive waste from abroad
A cargo of highly radioactive nuclear waste set sail for Japan last night, after a breakthrough agreement that will cut Britain’s stockpile of high-level waste by almost 40 per cent over the next decade.
After years of planning, a programme to repatriate all 925 tonnes of foreign atomic waste from Britain to Japan and four other countries began yesterday…
Bitter row throws French nuclear industry into turmoil
The French nuclear industry is in turmoil as uranium supplies have dried up and the treatment of spent fuel has been blocked amid an increasingly bitter row between the heads of its two main state operators.
EDF, the electricity group that runs 58 reactors in France, said that Areva, the nuclear energy group, had stopped uranium deliveries on January 4 and was refusing to take away spent fuel for reprocessing…
Renewables
Germany, France cut support for solar power
Germany said yesterday (20 January) that it would cut its subsidies for solar power in line with the rapid take-up of the photovoltaic market. The news follows a similar announcement by France last week.
Open-field sites and farmland installations would follow in July with 15% and 25% cuts respectively.
People who mount solar panels on their rooftops and utilise the energy for personal use would, however, receive higher tariffs…
U.S. says wind could power 20 percent of eastern grid
Wind energy could generate 20 percent of the electricity needed by households and businesses in the eastern half of the United States by 2024, but it would require up to $90 billion in investment, according to a government report released on Wednesday.
For the 20 percent wind scenario to work, billions must be spent on installing wind towers on land and sea and about 22,000 miles of new high-tech power lines to carry the electricity to cities, according to the study from the Energy Department’s National Renewable Energy Laboratory…
Offshore wind power : Oil rigs to whirligigs
New plans to increase clean power are ambitious and expensive
THE diameter of a wind turbine capable of generating five megawatts (MW) of electricity is, at 120 metres, roughly that of the London Eye. If it is to be installed in seas 40 metres deep, its pylon and foundations must measure 170 metres or so, half again as high as St Paul’s Cathedral. If it is to stand in the North Sea, it will confront waves that can rise more than ten metres high and winds that can reach over 100 kilometres an hour. And if it is to be part of plans to increase the proportion of electricity generated from renewable sources to something like 30% by 2020 (it is currently 5.5%), it will be one among thousands…
UK
Buildings threaten UK emission targets, report says
UK targets for cutting carbon emissions by 2050 will not be met without radical changes to the engineering of buildings, a report says.
One of the study’s authors criticised the government’s “woeful track record on setting ill-considered targets”.
The Royal Academy of Engineering report lays out a groundwork for reducing the environmental impact of new buildings as well as refurbishment of old ones…
Security fears threaten smart meter plan
The £8.1 billion rollout of smart meters in Britain could be knocked off course unless the Government and Ofgem, the energy regulator, act urgently to convince the public that the information provided by the meters will be held securely.
Fears that data on energy consumption could be misused by criminals, police or insurance companies have curtailed the compulsory introduction of the meters in the Netherlands, according to a report by Datamonitor, the market analyst…
Climate
UN drops deadline for countries to state climate change targets
The UN has dropped the 31 January deadline by which time all countries were expected to officially state their emission reduction targets or list the actions they planned to take to counter climate change.
Yvo de Boer, UN climate change chief, today changed the original date set at last month’s fractious Copenhagen climate summit, saying that it was now a “soft” deadline, which countries could sign up to when they chose. “I do not expect everyone to meet the deadline. Countries are not being asked if they want to adhere… but to indicate if they want to be associated [with the Copenhagen accord]…
Murkowski to call on Congress to block federal greenhouse gas regulation
A Republican senator from Alaska is expected to call on Congress today to strip the Obama administration – and any future US government – of its powers to curb global warming pollution.
Lisa Murkowski, an emerging leader on energy in Republican ranks, told a press conference on Wednesday she was thinking of invoking an obscure, rarely used measure that allows Congress to roll back government regulations.
“At this point in time, my inclination is to proceed with the resolution of disapproval,” she said. “I think that is a more clear path forward.”…
Economy
China’s economic growth soars by 10.7 per cent
China stepped up its roaring pace of recovery from the financial crisis in the final quarter of 2009, beating official growth targets and putting it on course to become the world’s second biggest economy behind America later this year.
Gross domestic product (GDP) — a key measure of a country’s economic health — rose by 10.7 per cent in the fourth quarter compared with the final three months of 2008. Overall China’s economy grew by 8.7 per cent last year…
Russia diversifies into Canadian dollars
Russia’s central bank announced on Wednesday that it had started buying Canadian dollars and securities in a bid to diversify its foreign exchange reserves.
Analysts said the move could be a sign of increased diversification of emerging market central bank assets away from the dollar and into investments denominated in other commodity-linked currencies, such as the Australian dollar…
UK economy faces decade of ‘painful readjustment’
The UK economy faces a decade of “painful readjustment” as it refocuses from debt-led consumer spending to increased exports, a study has warned.
That is the conclusion of the latest quarterly report from the Ernst & Young Item Club economic forecasting group.
“After a decade of relying on the domestic consumer, firms have to start chasing overseas customers,” said Peter Spencer, its chief economic adviser…
The Item Club warns UK economic growth will struggle to hit 1% this year…