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 latest World Energy Outlook from the International Energy Agency came with a double warning. On the one hand, oil prices could soon spike to $150 once more, on the other, the world is barely five years away from sealing its fate on climate change.
Oil prices will average $120 per barrel to 2035, says the IEA, and volatility is here to stay. But the price could soon top the record $147 of 2008 if producers in Middle East and North African (MENA) fail to invest enough in new capacity. The oil supply is increasingly dependent on MENA countries, which need to spend $100 billion per year to keep up with global demand. If they miss that target by a third over the next few years, prices will spike again. The IEA didn’t say it, but this outlook seems to condemn the industrial countries to serial recessions until they radically reduce their oil dependency; the OECD has reached economic peak oil.
The IEA still has oil production rising to 99 mb/d on 2035, but as usual the forecast depends on some fairly heroic assumptions: the world needs to add 47 mb/d of gross production capacity, twice the current combined output of the Middle East OPEC countries, with 10mb/d coming from unconventional sources and almost 8 mb/d from Iraq.
On the climate, the Agency said the window to avoid global warming of more than 2°C could be closed for good by 2017. Four fifths of the emissions needed to push temperatures past the limit of ‘dangerous’ climate change are already locked in by existing capital stock — power stations, buildings, factories. On current trends, the remainder will be locked in by 2017. It would, in theory, be possible to get back on track after that date by retiring capital stock before the end of its economic life, but that would push up the cost enormously. In the power sector, for every $1 of low carbon investment avoided before 2020, an extra $4.30 would need to be spent after 2020 to compensate for the additional emissions – one in the eye for the anti-wind brigade. In summary, says the IEA, “If we don’t change direction soon, we’ll end up where we’re heading”.
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Oil
‘Invest in production or see oil hit record $150 a barrel’
The oil price could soon spiral to an all-time high of $150 (£94) a barrel without enough investment in production, the International Energy Agency (IEA) has warned.
The scenario could arise if investment in the Middle East and North Africa falls just a third short of the annual $100bn needed before 2015, the energy watchdog said…
Saudi set to overtake Russia as top oil producer
Saudi Arabia will overtake Russia as the world’s largest crude oil producer in about 2015 as output at new Russian fields fails to offset fast decline at mature deposits, the International Energy Agency (IEA) said on Wednesday.
In its World Energy Outlook the IEA also said Russia would eventually start to supply natural gas to China, becoming a major source of the fuel despite gas export monopoly Gazprom’s failure so far to secure a supply deal after five years of talks…
E.U. Poised to Overtake U.S. as Biggest Oil Importer
The European Union is expected to overtake the United States as the world’s biggest oil importer in 2015, the International Energy Agency said Wednesday in its annual report.
Oil imports to the United States are expected to decline significantly over the coming years because of new efficiency standards for cars and trucks and an increase in domestic oil and natural gas production, said Fatih Birol, chief economist of the agency…
IEA economist: ‘We have to leave oil before it leaves us’
The International Energy Agency (IEA)’s annual World Energy Outlook, due for publication on 9 November, will contain alarming research that the world is on track for a catastrophic rise in global temperatures unless fossil fuel subsidies are cut, energy efficiency is improved, and more countries introduce some form of carbon pricing.
Fatih Birol is the IEA’s chief economist, tasked with overseeing the World Energy Outlook reports, the Energy Business Council, and the organisation’s economic analyses of energy and climate change policy. He spoke to EurActiv’s environment correspondent, Arthur Neslen…
IEA fears oil spike; OPEC dreads European defaults
Oil prices could hit economically damaging record highs if unrest in Africa and the Gulf cuts investment in output, the West’s energy watchdog warned oil producers, which said the real problem was likely defaults among euro zone members and banks.
The International Energy Agency (IEA), which advises major oil-consuming countries on energy policies, said on Wednesday oil prices could spike by a third to above their all-time high of $147 a barrel. The Organization of the Petroleum Exporting Countries (OPEC) said the main risks were of price falls…
Crude Rises Near Three-Month High on Europe Sentiment, U.S. Inventories
Oil rose to its highest in more than three months in New York as falling unemployment applications and decreasing crude supplies in the U.S. bolstered confidence that demand will remain supported.
Futures extended gains after the Labor Department said that jobless claims fell by 10,000 to 390,000 in the week ended Nov. 5., the lowest level in seven months. Oil had already gained after Italy met its fund-raising target in a Treasury bills auction. The International Energy Agency reduced forecasts for global oil demand in 2012 for a third month on weaker prospects for developed nations…
Brazil’s oil boom: Filling up the future
GEOLOGICAL structures of vast antiquity are more often called on to bolster the arguments of atheists than enlisted as tokens of a deity’s existence—let alone his nationality. But the deep Cretaceous salts which trap oil in rocks off Brazil’s coast are “strong evidence”, in the words of President Dilma Rousseff, “that God is Brazilian.” It is not a new conceit, but it has rarely been a more apposite one. The pré-sal (“below the salt”) oilfields look set to generate wealth on a scale that could transform Brazil’s economy…
BP woes pile up as Argentine deal collapses
BP was involved in a testy exchange yesterday over the collapse of a $7.1bn (£4.4bn) Argentine oil deal as it fended off allegations that it had described Russian oligarchs in its TNK-BP partnership as “crooks and thugs.”
The failure to sell its 60pc stake in Pan American Energy, an Argentine integrated oil, gas and refinery business, will prove costly for BP.
BP…
Oil drilling plan to focus on Gulf of Mexico
The Obama administration will allow “robust oil and gas development” in the Gulf of Mexico starting in 2012, but will hold off on letting drillers into Arctic waters until more is known about spill response preparedness, according to a proposed five-year plan unveiled on Tuesday.
The Outer Continental Shelf leasing plan includes 15 potential lease sales over 2012-2017, including 12 in the Gulf of Mexico and three off the coast of Alaska…
Oil demand globally to peak before 2020
Global oil demand is expected to peak before 2020 as a “perfect storm” of regulation promotes energy efficiency, new technology and biofuel use across the world, according to a new study.
The report, by respected industrial consultancy group Ricardo, challenges the widespread view that ‘peak oil’ will come as soaring emerging market demand causes oil supplies to diminish…
Keystone XL Pipeline Decision to Be Investigated
The State Department’s inspector general will conduct a special investigation of the handling of the pending decision on the proposed Keystone XL pipeline in response to reports of improper pressure on policy makers and possible conflicts of interest, according to documents released on Monday.
Harold W. Geisel, the senior official in the inspector general’s office, told top agency officials in a memorandum dated Friday that he would open the review “to determine to what extent the department and all other parties involved complied with federal laws and regulations” relating to the pipeline permit process…
Gas
Pipeline Opening Highlights Russian Energy Role
Russian and European corporate and government leaders Tuesday used the unveiling of a major new pipeline to tout an important, but challenging, energy partnership that is expected to become increasingly important for Europe as some parts of the continent scale back nuclear power.
At an event to mark the start of the giant Nord Stream pipeline, German Chancellor Angela Merkel, French Prime Minister François Fillon and Russian President Dmitry Medvedev emphasized Russia’s growing importance for European energy security and offered sunny comments on their deepening energy interdependency…
Pawns in play on Antarctic ice-cap
The opening manoeuvres may have begun. During the Antarctic Treaty consultative meeting in Buenos Aires last June, Russia stated its intention to start prospecting for minerals, oil and gas in the white continent and surrounding seas. The document submitted by the Russian delegation listed the key points of the “strategy for the development of the Russian Federation activities in the Antarctic for the period until 2020, and longer-term perspective”.
Whether or not this document ruffled feathers among the 48 treaty nations nobody knows, since the meetings are closed to outside observers and the contents of the discussions are not disclosed. However the Russian document was discreetly posted on the treaty secretariat’s website…
Nuclear
Energy Costs to Rise ‘Viciously’ Without Nuclear, IEA Says
Energy will become “viciously more expensive” and polluting if governments don’t promote renewable and nuclear power in the next two decades instead of burning coal, the International Energy Agency said.
Global demand for energy is set to increase 40 percent by 2035, the Paris-based agency said today in its annual World Energy Outlook report. Consumption will rise 1.3 percent a year to 16.96 billion metric tons of oil equivalent in 2035, spurred by China and other emerging economies, the IEA said…
France Can’t Afford to Give Up Nukes, Utility Chief Says
So you’re thinking that, after Japan’s Fukushima disaster, you’d like to drop nuclear energy? Fine. But you’d better be prepared to pay the price.
That was the message from Henri Proglio, chief executive of Electricité de France, in an interview published on Wednesday in Le Parisien newspaper…
Renewables
A Coal Region’s Quest to Switch to Renewables
Germany’s bituminous coal mines are soon to lose their subsidies. But one Ruhr Valley company is looking to transform its mines into sources of renewable energy. Along the way, they could solve one of Germany’s largest challenges as it attempts to switch over to green energy.
Shortly before 2 p.m., tiny, twinkling lights become visible at the end of the long, dark tunnel on the seventh level of the Prosper-Haniel mine in Bottrop, a city in west-central Germany. The lights slowly begin to take shape, as miners with mine lamps on their white helmets make their way back to the surface. It has been a difficult shift, and the men have covered several kilometers through an intricate labyrinth of tunnels and shafts…
Here Comes the Sun
For decades the story of technology has been dominated, in the popular mind and to a large extent in reality, by computing and the things you can do with it. Moore’s Law — in which the price of computing power falls roughly 50 percent every 18 months — has powered an ever-expanding range of applications, from faxes to Facebook.
Our mastery of the material world, on the other hand, has advanced much more slowly. The sources of energy, the way we move stuff around, are much the same as they were a generation ago…
Taming Unruly Wind Power
For decades, electric companies have swung into emergency mode when demand soars on blistering hot days, appealing to households to use less power. But with the rise of wind energy, utilities in the Pacific Northwest are sometimes dealing with the opposite: moments when there is too much electricity for the grid to soak up.
So in a novel pilot project, they have recruited consumers to draw in excess electricity when that happens, storing it in a basement water heater or a space heater outfitted by the utility. The effort is rooted in some brushes with danger…
UK
Britain can’t afford to bet its future on shale gas – wind turbines are here to stay
Two months ago, an unlisted energy company released an initial estimate of UK shale gas resources. Cue protesters picketing my department, and suggestions that Britain should tear down its wind farms and move the pound to a mythical “shale standard”.
As ever, behind lurid headlines lurks a little truth. The announcement by Cuadrilla Resources that there could be 200 trillion cubic feet of gas in the shale under Lancashire could, if the volumes are proven and the reserves recovered, change Britain’s energy market. But a golden age of cheap energy looks increasingly unlikely — and wind turbines are certainly here to stay…
Wind power sector slams ‘flawed’ KPMG energy report
The renewable energy industry has slammed the findings of a forthcoming report that suggests the UK could save £34bn by ditching plans for a massive expansion in wind power capacity.
The preliminary findings of a report by KMPG, previewed in the Sunday Times yesterday, claimed Britain could meet its 2020 carbon reduction targets more cost effectively by building nuclear and gas-fired power stations instead of wind farms…
MP backs gas fracking despite reports of quakes in Blackpool
The head of an influential cross-party energy committee yesterday threw his weight behind “fracking” for gas, a day after a report linked the controversial process to earthquakes for the first time in the UK…
Emergency power systems to be worth £1.5bn by 2020
Emergency power systems at Britain’s hospitals, factories and offices could be used to keep the lights on, as old power plants close and the grid relies more on inconstant renewable energy such as wind, experts said.
The UK’s “substantial hinterland” of stand-by generators waiting to be deployed if, for example, power to a sewage treatment works or chilled warehouse stops, could offer 20 gigawatts (GW) of power capacity, according to a London School of Economics report commissioned by Npower…
Energy companies join forces for UK’s first carbon-capture project
Two major energy companies have combined forces to bolster the case to build the UK’s first carbon-capture project at Peterhead power station near Aberdeen.
The power company SSE and Shell, the fuel producer, announced their alliance on Wednesday after the recent collapse of £1bn proposals to fit carbon-capture and storage (CCS) plant to Longannet coal-fired power station, one of Europe’s largest coal-powered stations…
Scottish green energy plan unrealistic, report warns
Alex Salmond’s goal of meeting all Scotland’s electricity needs with green sources by 2020 has been attacked for the second time in a week for lacking credibility.
In a highly critical report, the Institution of Mechanical Engineers (Imeche) said the first minister’s target was poorly worked out, uncosted and unrealistic…
Climate
World headed for irreversible climate change in five years, IEA warns
The world is likely to build so many fossil-fuelled power stations, energy-guzzling factories and inefficient buildings in the next five years that it will become impossible to hold global warming to safe levels, and the last chance of combating dangerous climate change will be “lost for ever”, according to the most thorough analysis yet of world energy infrastructure.
Anything built from now on that produces carbon will do so for decades, and this “lock-in” effect will be the single factor most likely to produce irreversible climate change, the world’s foremost authority on energy economics has found. If this is not rapidly changed within the next five years, the results are likely to be disastrous…
Australia passes landmark carbon price laws
Australia passed landmark laws on Tuesday to impose a price on carbon emissions in one of the biggest economic reforms in a decade and injecting new impetus into December’s global climate talks in South Africa.
Tuesday’s vote in the upper house Senate made Australia the second major economy behind the European Union to pass carbon-limiting legislation. Tiny New Zealand has a similar scheme…
