Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
Lower oil and US gas prices saw Q2 profits down at most of the oil majors, though Exxon recorded another record quarterly profit of $15.9 billion due to asset sales. Nevertheless the Brent oil price hit $106/barrel on Thursday even as the global economy stutters on, the Eurozone unravels and the UK falls further into recession.
British Gas, which is owned by Centrica, bucked the trend with a profit hike of 23%, the company benefiting from increased gas consumption due to the poor weather. The news was greeted with anger by consumer groups who accused the company of profiteering. They say the British Gas is slow to pass on reductions in wholesale prices, and renewed calls for stronger competition in the sector.
Gas received a boost in the UK this week as part of the long awaited government announcement of renewable subsidy revisions. To listen to Ed Davey the announcement was a victory for the Lib Dems as they held off pressure from Conservatives to reduce onshore wind tariffs by more than 10%. Bloomberg however seems to have the story about right with the headline “U.K. Boosts Gas While Cutting Support For Wind, Biomass“. In comes a tax allowance for offshore gas production, but subsidies for onshore wind are to be reviewed again almost immediately, reporting in early 2013, so even that victory for Ed Davey might be short-lived.
The underlying picture is one of the Treasury dictating energy policy to DECC, not only on wind and gas, but also in the broader Electricity Market Reform (EMR) – the long awaited energy bill intended to set the investment framework in the power sector over the next couple of decades. Tim Yeo MP, the senior Tory who chairs the energy select committee, this week excoriated the Treasury’s influence on the EMR, and in a scathing report his committee condemned the proposals as “vacuous” and “unworkable“.
This seems to mark the beginning of a profound and retrograde shift on energy policy. The new “energy glut” message has strong advocates on the government side of the house, and Osborne’s recent statements have shown him moving away from the political consensus on climate change policy. If the GHG emissions of a new fleet of gas fired plant are allowed to continue unabated, Britain is highly unlikely to hit its legally binding climate targets. A pro-gas generation policy also lashes UK energy prices to a depleting fossil fuel whose price is bound to be volatile and to rise over time. In a week when consumers complained bitterly about the cost of energy, somebody isn’t joining the do…
And finally…Anyone interested to read a conclusive demolition of the recent Maugeri report should check the www.lastoilshock.com/blog on Monday.
Disclaimers
Oil
For Exxon Mobil and Shell, Earnings Fall With Energy Prices
Exxon Mobil and Royal Dutch Shell, the biggest oil companies in North America and Europe, reported disappointing earnings on Thursday, attributing the results largely to lower global energy prices resulting from weakening economies.
The results came as no surprise to energy analysts, who noted that international benchmark prices for oil had declined by more than 7 percent in the second quarter, compared to the same period last year when turmoil in North Africa and the Middle East caused a spike in oil prices…
Big oil on the back foot in changing energy world
Oil prices fall and the industry turns cannibal: big energy companies hunt out bargains among overstretched producers and promising explorers. It’s the season for takeovers and asset deals again.
Only this time, there are no easy pickings for the U.S. and European heavyweights such as Exxon (XOM.N), BP (BP.L), Shell (RDSa.L) and Chevron (CVX.N). The oil “majors”, which report second quarter results in the next few days, have rarely looked so threatened…
Oil Gains Fourth Day on Speculation Economic Prospects Improving
Oil rose for a fourth day in New York after reports signaled improving economic prospects in the U.S. and China and the head of the European Central Bank predicted the euro will survive.
Futures rose as much 0.8 percent, trimming this week’s decline to 1.5 percent. Profits at industrial companies in China fell at a slower rate than previous months while U.S. reports showed bookings for durable goods climbed more than projected and fewer Americans than forecast filed first-time unemployment claims. ECB President Mario Draghi said policy makers will do whatever is needed to preserve the European currency…
China dives into UK’s North Sea oil industry
China has made a dramatic swoop on the North Sea oil industry, buying up assets that account for more than 8pc of the UK’s entire oil and gas production.
Chinese state-controlled group CNOOC agreed a $15.1bn (£9.7bn) offer to buy Canada’s Nexen, which is the second biggest oil producer in the UK North Sea. Its net UK production of both oil and gas is 114,000 barrels of oil equivalent per day (boepd)…
Shell May Trim 2012 Alaska Drilling For Inspections, Ice
Royal Dutch Shell Plc (RDSA) may have to scale back its Arctic oil-exploration this year after unrelenting ice and trouble passing U.S. Coast Guard inspections delayed the planned July start of drilling.
The company’s fleet remains in Dutch Harbor, Alaska, days away from the Chukchi and Beaufort seas off the state’s north coast, waiting for ice to break up and the U.S. to issue final permits for drilling five test wells. Arctic conditions require Shell to quit work by late October, before ice reforms…
Is peak oil dead?
One might think so, judging by a slew of optimistic new forecasts for oil production. Even George Monbiot, notable for his thoughtful previous coverage of peak oil in The Guardian, threw in the towel with his July 2 mea culpa, “We were wrong about peak oil. There’s enough to fry us all.”
Monbiot reversed his position after reading a new report by Leonardo Maugeri, an executive with the Italian oil company ENI and a senior fellow at a BP-funded center at Harvard University…
Gas
EPA finds remaining water safe in famous fracking town
The U.S. Environmental Protection Agency is discontinuing water deliveries to four homes in a rural Pennsylvania town that attracted national attention after residents complained that natural gas drilling polluted wells.
Further testing showed no reason for further action, the EPA said on Wednesday…
Frackers Fund University Research That Proves Their Case
Pennsylvania remains the largest U.S. state without a tax on natural gas production, thanks in part to a study released under the banner of the Pennsylvania State University.
The 2009 report predicted drillers would shun Pennsylvania if new taxes were imposed, and lawmakers cited it the following year when they rejected a 5 percent tax proposed by then- Governor Ed Rendell…
Biofuels
Drax aims to go coal-free after biomass subsidy review
Drax Group has confirmed plans to convert its North Yorkshire power station to run mainly on biomass, after the government yesterday announced it would limit the subsidy available to plants powered by a mix of renewable and fossil fuels.
Under changes to the government’s Renewable Obligation Certificate (ROC) banding review announced yesterday, co-fired plants will be subsidised on a unit-by-unit basis, instead of as a whole plant…
Oil group sues over law on scarce biofuel
For the second time in five months, the U.S. government is being sued to overturn a law that forces oil refiners to use a scarce biofuel.
Under the federal Renewable Fuel Standard, refineries were required by the Environmental Protection Agency to use 6.6 million gallons of cellulosic biofuels – a fuel made from non-grain sources such as wood chips – in 2011…
UK
U.K. Boosts Gas While Cutting Support For Wind, Biomass
The U.K. government granted tax relief for natural gas drillers and cut subsidies for renewable energy, signaling more reductions in the months ahead as it balances demand for cheaper power against a goal to lower pollution from fossil fuels.
The Department of Energy and Climate Change cut subsidies for onshore wind 10 percent, offered less financial support than expected for biomass and said it may cut solar further. Drax Group Plc (DRX), owner of the U.K.’s largest power station and biomass consumer, fell by a record. Gas drillers get a tax credit worth 500 million pounds ($776 million)…
Davey hails ‘strong future’ for renewables and gas
Energy and Climate Change Secretary Ed Davey has today hailed the introduction of a “strong package of support for clean energy”, predicting the move would drive billions of pounds of investment in renewables, create hundreds of thousands of jobs, and represent a “good deal” for consumers and businesses.
Speaking to reporters following the announcement this morning of new subsidy levels of renewable energy projects that come online between April next year and 2017, Davey said the changes would ensure renewables remain “an absolutely vital component of our energy future and a central part of a diverse energy mix”…
Government energy plan ‘unworkable’, MPs warn
MPs warn consumers face bigger increases in fuel bills because policy differences inside Government have made energy reform unworkable.
Treasury intervention, unnecessary increases in costs and the risk to badly needed investment are cited by the Energy and Climate Change Select Committee as the result of a catalogue of blunders made in the draft Energy Bill…
National Grid faces ‘conflict of interest’ in energy reforms, MPs warn
National Grid should be stripped of its proposed role advising on new power plant subsidies because of “considerable conflicts of interest”, MPs have warned.
The FTSE 100 company has been selected by ministers to advise on prices for contracts to subsidise wind farms and other new power plants, and to administer the contracts…
DECC launches £8m community renewable heating funding competition
The government has today announced it is to make £8m available to community energy projects focused on installing renewable heat technologies, such as solar heating systems, heat pumps, biomass boilers and heating networks.
The Department of Energy and Climate Change (DECC) confirmed the funding would be made available under the Renewable Heat Premium Payment scheme, adding that applications for funding were being invited from today…
Consumer groups accuse British Gas of profiteering
News of rising profits has sparked fury as British Gas is accused of ripping off customers.
British Gas has been urged to cut prices and pass on growing profits to customers amid accusations of profiteering…
Climate
Brussels bids to rescue carbon-trading scheme
The European Commission moved to fix the EU’s sickly Emissions Trading Scheme on Wednesday, a centre-piece of EU climate policy now in trouble, as certificates fail to find buyers in times of recession.
“Is it wise to continue to flood an already oversupplied market? Clearly not,” said Europe’s energy commissioner Connie Hedegaard on Twitter. “That’s why (we) propose to change the auction time profile.”…
