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.
The US tropical storm season joined the economy and Libya as a factor driving oil prices this week. Gulf oil installations have escaped damage so far, but a lively storm season has led to platforms being evacuated, causing production delays and depressing US inventories.
In Libya, meanwhile, the production outlook remains uncertain, with Gadaffi still at large, the interim government struggling to provide essential services, and as the scale of the damage to oil export facilities becomes clearer. The IEA’s new Executive Director Maria van der Hoeven said that “Our experts think that 2013 or beyond will most probably show the complete full restoration of the Libyan supply to the market, but not before that”. Others think full restoration will take even longer.
In the UK, oil production fell to below 1 million barrels for only the second time in over 30 years this summer as maintenance work added to the depletion curve. The unexpected bonanza of North Sea oil which helped Britain cope with its last period of prolonged recession is long gone: output peaked in 1999 at 2.9 mb/d and has now shrunk by well over half. Operating costs are rising as output falls, and the industry claims uncertainty over tax relief for decommissioning costs is preventing new investment.
On the demand side, stock markets continue to bungee as investors panic over the financial crisis and prospect of a double dip recession; the OECD has slashed its growth forecasts for the US, Europe and Japan. President Obama now faces another battle to get his Jobs Act through Republican opposition in Congress, while the Eurozone continues to flounder amid its existential challenge. Yet oil prices remain firm, at around $115 for Brent crude, and it seems recession would have to cut demand dramatically to make much of a dent.
In gas, the Nord Stream pipeline from Russia to Germany via the Baltic started operations this week, although the first actual deliveries will not arrive until November, once the pipeline has been pressurised with ‘technical gas’. The new supplies are bound for Germany, France, Britain, Denmark and the Netherlands, and should reduce Europe’s vulnerability to any further interruption to supplies via Ukrainian pipelines. But the apparent increase in energy security may be limited: the bulk of Russian gas exports to Europe will still flow via the Ukraine, and the two countries’ bitter and chronic dispute shows no signs of resolution.
Oil
Oil Heads for Third Weekly Gain on Obama Job Plan, Storm in Gulf of Mexico
Oil headed for a third weekly gain as investors bet President Barack Obama’s job-creation plan will support demand for fuel and as producers in the Gulf of Mexico evacuated workers ahead of Tropical Storm Nate.
New York futures climbed as much as 0.5 percent, erasing a drop of 0.8 percent, after Obama asked Congress to pass a proposal that would inject $447 billion into the economy of the world’s biggest crude user. Prices slid yesterday after Federal Reserve Chairman Ben S. Bernanke stopped short of specifying measures the central bank may use to bolster growth when policy makers meet this month. Companies including BP Plc removed staff in the Gulf, home to 27 percent of U.S. oil output…
UK oil output falls below 1 million barrels a day
UK oil production fell below 1 million barrels per day (bpd) for only the second time in more than 30 years this summer as maintenance exacerbated a decline in output from depleted North Sea oilfields.
The British sector of the North Sea pumped 984,000 bpd of oil in June, down from just over 1 million bpd in May and a peak of more than 2.7 million bpd in 1999, industry data show…
North Sea oil ‘harmed by uncertainty over £30bn decommisioning bill’
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North Sea oil bosses have told the Government that uncertainty over who will pay the £30bn bill for dismantling old platforms is even more harmful to investment than the Chancellor’s unpopular tax grab on energy companies.
On Tuesday, BG Group, BP, Total, Shell and TAQA Bratani highlighted the huge problems associated with winding down old infrastructure, with a number of executives calling on ministers to clarify the Government’s role in helping meet the costs…
Former Shell chairman James Smith to lead deregulation of UK oil and gas industry
The Government has appointed James Smith, the former UK chairman of Royal Dutch Shell, to lead a radical deregulation of the oil and gas industry.
Charles Hendry, the energy minister, promised oil executives at Aberdeen’s annual Offshore Europe conference that they would be facing less regulatory oversight in years to come…
Unlocked by melting ice-caps, the great polar oil rush has begun
It’s the melting of the Arctic ice, as the climate warms, that makes it possible — and you can understand why they’re all piling in. In July 2008, the US Geological Survey released the first ever publicly available estimate of the oil locked in the earth north of the Arctic Circle.
It was 90 billion barrels, representing an estimated 13 per cent of the world’s undiscovered oil resources. If you’re an oil company, or an oil-hungry economy, that’s more than enough to make your mouth water…
Oil exploration under Arctic ice could cause ‘uncontrollable’ natural disaster
Any serious oil spill in the ice of the Arctic, the “new frontier” for oil exploration, is likely to be an uncontrollable environmental disaster despoiling vast areas of the world’s most untouched ecosystem, one of the world’s leading polar scientists has told The Independent.
Oil from an undersea leak will not only be very hard to deal with in Arctic conditions, it will interact with the surface sea ice and become absorbed in it, and will be transported by it for as much as 1,000 miles across the ocean, according to Peter Wadhams, Professor of ocean physics at the University of Cambridge…
Libya oil exports not to return to normal until 2013: IEA
Libyan oil exports are unlikely to return to their pre-war level before 2013, the new head of the International Energy Agency said on Thursday.
“Our experts think that 2013 or beyond will most probably show the complete full restoration of the Libyan supply to the market, but not before that,” Maria van der Hoeven told AFP in an interview…
Libyan Crude Oil Cargo Is Said to Be Offered for Shipping Later This Month
An 80,000 metric-ton cargo of Libyan crude is being offered for shipment from the western port of Mellitah this month, according to three people with direct knowledge of the transaction.
The oil, equal to about 600,000 barrels, will be loaded from Sept. 15 to 17, the people said, declining to be identified because the consignment has not been publicly announced. Libya wants to resume crude exports in two to three weeks, Guma El- Gamaty, the U.K. coordinator for the country’s National Transitional Council, said in an interview in London today…
Hayward nets £14m in first Middle East adventure
Tony Hayward has outlined plans to dominate the vast reserves of newly accessible oil in the semi-autonomous Kurdistan region of northern Iraq. The former BP chief executive said his $2.1bn (£1.3bn) acquisition of Genel Enerji was just the beginning of his activities in the region.
Potential targets are understood to include Gulf Keystone, the Aim-listed oil explorer focused on Kurdistan, which is rumoured to be preparing for a sale, as well as other operators in the region. The group, which has enough cash to finance an estimated $4bn of further acquisitions, has also identified Libya as a potentially rich source of business, putting operators in the country on its list of possible targets…
New IEA Chief to Meet With OPEC Representatives
Praising Saudi Arabia and some other Persian Gulf oil producers as “reliable partners,” the new chief of the International Energy Agency promised Wednesday to embark on a fresh round of diplomacy following recent tensions between oil exporters and her agency.
In her first week on the job, IEA Executive Director, Maria van der Hoeven, said in an interview that she will travel to Vienna on Thursday to meet with representatives of the Organization of Petroleum Exporting Countries…
Saudi Arabia’s water needs eating into oil wealth
Long before it understood the value of oil, the desert kingdom of Saudi Arabia knew the worth of water.
But the leading oil exporter’s water challenges are growing as energy-intensive desalination erodes oil revenues while peak water looms more ominously than peak oil — the theory that supplies are at or near their limit, with nowhere to go but down…
Halliburton: BP Hid Gulf Disaster Details
BP PLC’s effort to save money while drilling the Deepwater Horizon oil well led it to withhold critical information from contractor Halliburton Co. in the run-up to the deadly explosion last year that caused the worst offshore oil spill in U.S. history, Halliburton contends in a lawsuit.
The Houston-based oil-services company said that BP did not disclose that there was a layer of oil-and-gas-bearing rock located several hundred feet above the bottom of the well. Had it known about the area, Halliburton said in the complaint filed in Texas state court on Thursday, it would have insisted on expensive and time-consuming changes to the well to ensure that explosive natural gas did not seep into the well bore…
China Halts Conoco Work
China’s coastal waters regulator on Friday ordered ConocoPhillips to suspend production in the country’s largest off-shore oil field, citing “negligence” by the U.S. energy company in handling underwater leaks.
The move by the State Oceanic Administration, which manages Chinese waters, rejects the Houston company’s claims this week that it stopped oil leaks associated with spills reported in June. Conoco, the agency said, “has not fulfilled its responsibility as a reasonable and prudent operator.”…
Gas
Russia launches major new gas pipeline to Europe, bypasses Ukraine
At the height of a new round of quarreling between Russia and Ukraine over natural gas prices, Russian Prime Minister Vladimir Putin on Tuesday launched a major pipeline that will start pumping gas to Western Europe next month, bypassing Ukraine.
With the click of a computer mouse in front of flashing cameras, Putin opened the valve to let the gas into the first Nord Stream pipeline at the Portovaya compressor station at the Russian-Finnish border, a stone’s throw from his hometown of St. Petersburg…
Before Release, a Hydraulic Fracturing Study for the State Draws Skepticism
New York State environmental officials commissioned a study of impacts of natural gas hydraulic fracturing from a consulting firm that counts oil and gas companies among its clients and that could gain business from increased drilling in the state.
The $223,000 study of the effects of “hydrofracking” on the economy and the quality of life was conducted byEcology and Environment Inc., a global environmental and engineering services company based in Lancaster, N.Y….
New York Extends Period For Comments On Fracking
New York’s environmental body on Wednesday extended a public comment period on proposed rules for natural gas drilling in the state, frustrating companies eager to exploit its rich natural gas deposits.
The New York Department of Environmental Conservation extended the comment period for its draft environmental impact statement on drilling from 60 to 90 days, bowing to pressure from environmentalists worried about the effects on water supplies…
Fracking stirs controversy in South Africa
A controversial method for extracting natural gas — hydraulic fracturing or ‘fracking’ — is stirring an environmental and property rights debate in South Africa.
The controversy stems from concerns over the safety of the technology, which uses large amounts of clean water mixed with sand and various chemicals to crack the rocks underground to release the gas. Various reports from the United States — where the method has spread widely over the past decade — suggest that the method pollutes water supplies, potentially endangering local environments and people’s health…
Renewables
German Solar Firms Eclipsed by Chinese Rivals
Green energy used to be Germany’s great hope for its economic future. But now the German solar industry is in trouble amid huge losses, job cuts and the threat of bankruptcies. Chinese firms are gaining an ever greater share of the German market — and are benefiting from German subsidies for renewable energy.
The mayor of the eastern German town of Bitterfeld-Wolfen, Petra Wust, is all too familiar with booms and busts. The region was a center for the chemical industry in communist East Germany. Wust experienced at first hand how the industry was wound down after the fall of the Berlin Wall, putting about 50,000 people out of work…
Marine energy in Scotland: A rising tide?
EVEN on a sunny day the rugged coastline of Caithness—with its small towns huddled round little harbours, looking 15 miles across the Pentland Firth to the dark cliffs of Orkney—feels as though it is on the edge of the world. The remoteness of this most northerly part of the British mainland was why, in 1955, the government sited an experimental nuclear reactor at Dounreay, a few miles from Thurso. Yet even though the reactor is being decommissioned and its 1,900 associated jobs are dwindling, locals are upbeat—unlike those in most of recession-hit Britain.
“There’s a chance for us to become the centre of a global industry,” says Calum Davidson, a director of Highlands and Islands Enterprise, an economic-development agency. Three big British utilities (ScottishPower, Scottish and Southern Energy, and E.ON UK), along with some smaller firms, have bought licences from the Crown Estate, a government agency, letting them develop 1.6 gigawatts of electricity-generating capacity by 2020 from the waves and tides in the Pentland Firth and off Orkney—projects that are expected to cost about £6 billion ($9.8 billion)…
Britain’s solar sector hit by cut in Government support
Britain’s solar sector is reeling from an overhaul of the Government incentives offered to those installing the technology, the head of the industry’s trade association warned yesterday.
Howard Johns, the chairman of the Solar Trade Association, said forecasts that last month’s revamp of the feed-in tariff rules would damage the sector — and Britain’s efforts to generate more energy from renewables — were already proving correct…
UK
Time to place your bets on fossil fuels versus renewable energy
It is where energy, climate change and bare-knuckle street politics collide: soaring household electricity and gas bills. And so it’s no surprise that prime minister David Cameron has been taking a keen interest and received a briefing from his new, ex-BP, adviser Ben Moxham.
It was leaked today, allowing the Daily Telegraph to strike the latest blow in the right-wing press’s campaign against green energy policies: “Environment policy reforms to add £300 to energy bills”…
Advisers’ letter to David Cameron on energy and climate policies
Letter to David Cameron from advisers Ben Moxham and Gila Sacks on the impact of energy and climate policies on consumer energy bills.
Prime Minister,
Your seminar on Green Deal implementation raised a number of wider questions about the impact of energy and climate change policies on energy prices, the impact of our renewables target in particular, how well the electricity market is operating, and what can be done to minimise consumer bill increases in the short and medium term…
Huhne tells Big Six to ‘pull their finger out’ and increase domestic insulation rates
Energy and climate change secretary Chris Huhne has told the Big Six energy companies to “pull their finger out”, after new figures confirmed they were in danger of falling short of the government’s mandatory domestic energy efficiency targets.
According to figures released today, almost 300,000 efficiency measures such as loft and cavity wall insulation were installed over the past three months under the government’s Carbon Emissions Reductions Target (CERT) scheme, which requires large energy firms to fund domestic energy efficiency measures capable of saving up to 293 million tonnes of lifetime CO2 emissions by December 2012…
UK households too lazy to insulate, E.ON claims
Ten per cent of UK homeowners simply “can’t be bothered” to insulate their cavity walls and lofts, missing out on savings of around £390 a year, according to a new study from Eon.
Research carried out last month by OnePoll of 2,000 people revealed a myriad of reasons homeowners give for failing to insulate their homes.
Fifteen per cent did not know how to go about insulating their homes, while nine per cent had too much clutter in the loft to install lagging. Three per cent cited the lack of a ladder as a major hurdle…
Transport
Infrastructure projects: The great train robbery
AT THE launch of the Liverpool-Manchester railway in 1830, a statesman was killed when he failed to spot an approaching train. That was not the last time a new train line has had unintended consequences. Victorian railways ushered in a golden age of prosperity; these days politicians across the developed world hope new rapid trains, which barrel along at over 250mph (400kph), can do the same. But high-speed rail rarely delivers the widespread economic benefits its boosters predict. The British government—the latest to be beguiled by this vision of modernity—should think again (see article)…
The Coalition’s vision for renewable transport
During its first fifteen months, the Coalition Government has been grappling with a series of tough challenges: restoring sustainability to the public finances, rebuilding our economy and delivering our climate change commitments.
Conventional wisdom dictates that supporting economic growth is incompatible with cutting carbon. Like most conventional wisdom, this is way off the mark. But, although reducing carbon on its own is relatively easy, doing so while generating growth and spreading prosperity is a far tougher challenge: one requiring co-operation and commitment from both Government and industry…