Deep ocean energy resources - a critical analysis / Saudi Arabia tests potential for unlocking heavy-oil reserves / Interview with Jeff Goodell, author of "Big Coal"

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Other energy - July 15

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Statistical Review of World Energy 2006

British Petroleum

Group chief executive's introduction

2005 was a third consecutive year of rising energy prices. These increases, along with growing public concern about energy security and climate change, kept our industry in the headlines throughout the year.

This Review - the 55th in the series - presents the facts behind those headlines. Although real oil prices remained below the peak of the early 1980s, 2005 saw the annual average price measured in nominal terms for a barrel of Brent crude oil exceed $50 a barrel for the first time, with an increase of more than 40% over the 2004 figure. Natural gas prices also rose around the world, with nominal average prices in the USA and UK exceeding $6 per million Btu for the first time.

Although energy prices have increased, there has been no physical shortage of either oil or gas. The market has worked effectively in maintaining supplies, even after the dramatic and disruptive effects of the hurricanes that hit the US Gulf Coast in the summer - albeit at higher prices.

Concern about energy security nonetheless is widespread. Capacity in most segments of the energy industry remains constrained and perceptions of geopolitical risk have increased. Non-OPEC crude oil production stagnated last year as a result of slower Russian production growth, production declines in mature provinces and hurricane-related losses. Carbon emissions continued to increase, along with energy consumption.

There have been positive developments in energy markets during the past year. So far, the international economy has proved surprisingly resilient to higher energy prices and continued to grow. While access to energy resources is an area of continuing uncertainty, global proved reserves of oil and gas have continued to increase. The European Union's Emissions Trading Scheme has provided carbon prices via an organized international market for the first time.

In this challenging environment, good information is essential. This Review provides timely and unbiased data on which the necessary decisions facing policy-makers and businesses around the world can be taken...

The Lord Browne of Madingley
Group Chief Executive
(June 2006 )


ODAC on BP's Statistical Review of World Energy 2006

ODAC
Every year BP publishes its Statistical Review of World Energy, described by BP as "telling the story - and history - of world energy through the numbers behind the energy market headlines." The Statistical Review of World Energy 2006 was released in June, with sections covering oil, gas and coal. The release of the Review was well reported in the media, with MSN Money making the valid point that World oil reserves grow, but only just: "This led the Chief Executive of France's Total, the fourth-biggest western oil major by market capitalization, to predict last week that at current trends of demand growth, production could peak in 2020." This was the first time that the CEO of a major oil company put a date on Peak Oil.

In his excellent discussion of the Review for the Telegraph, We are cutting energy use - but it is dirtier, the Economics Correspondent at Channel 4 News Liam Halligan makes what is perhaps the most interesting point from a Peak Oil point of view - global oil reserves growth as indicated by the Review are heading towards zero, and also feels obliged to emphasize the comments from Total's CEO:

Shortly after the BP Statistical Review was published, Dr Mamdouh Salameh, Oil Expert and World Bank Consultant, told ODAC: "Immediately after Lord Browne pronouncement on the oil prices, BBC World Service interviewed me requesting my comments on Lord Browne’s projections on the oil prices. My answer was that Lord Browne as well as his BP Statistical Review of World Energy and the IEA have always tried to talk down the oil prices by giving unrealistic but optimistic projections on oil reserve additions and increased supplies but to no avail. The global oil market has already discounted their claims.

I told the BBC that the oil prices are on an upward trend because there is a serious imbalance between global supplies and demand and this imbalance can only get worse in coming years. High oil prices might not simply be a cyclical phenomenon brought about by peak demand in this four-year global economics recovery. Instead, they might be an early indication of a supply-demand imbalance that can’t be reconciled by still higher prices. The current oil price rises may be the preamble to what may be the final energy crisis."...
(13 July 2006)
Go to the original for links and a spreadsheet compiled by Chris Skrebowski, Editor of Petroleum Review and ODAC Board Trustee, that summarizes World oil and liquids production 1999 - 2005.

The article is listed in the "What's New" section. Also on the site are the archives of ODAC's helpful newsletter (under "News Archive"). -BA


CNN Special: Fueling America

CNN.com
Many online articles and resources in the following categories
Energy: Getting at at the source

Fossil fuels continue to be the main source of energy consumption in the United States, which uses a quarter of the world's oil and a fifth of all the coal consumed each year. Globally, total energy use is projected to increase more than 50 percent by 2025, with the fastest growth expected in emerging economies such as China and India.

Environment: Impact on Earth:

Fossil fuels continue to be the main source of energy consumption in the United States, which uses a quarter of the world's oil and a fifth of all the coal consumed each year. Globally, total energy use is projected to increase more than 50 percent by 2025, with the fastest growth expected in emerging economies such as China and India.

Alternatives: Reclaiming the Planet

Environmentalists, politicians and industry leaders are calling for the development of newer, more efficient energy technology and the reduction of our dependence on fossil fuels. What is the future of energy?
(July 2006)
The coverage is nice, but I found no mention of peak oil during a quick browse of the site. Also, no coverage of the EROEI (energy return on energy invested) concept, so the discussion of alternatives seems superficial. Mainstream media in Australia just showed what what mainstream media can do, with the recent Four Corners documentary on peak oil. -BA


Deep Ocean Energy Resources -- A Critical Analysis

Dave, The Oil Drum
On June 29th, the House of Representatives passed the Deep Ocean Energy Resources (DOER) act. This bill may be taken up by the Senate soon. The legislation is now in the news and the mudslinging has begun. Conservative organizations and media like the Washington Times are pushing the main agenda, which is to open up areas of the US Outer Continental Shelf (OCS) to oil & natural gas E&P (exploration and production).

... Here, we'll take a realistic view of what's going on and investigate the question of whether opening up the OCS to drilling will save us.

...As you can see in Figure 4, the "energy independence" situation is dire now and future consumption at current levels will make it much, much worse. How long would it take, again discounting financial considerations, to put the MMS undiscovered resources (assuming they are actually there) on-stream? I will also remind you that these projects will require deepwater or even ultra deepwater drilling. Even for "easy" E&P, which is rapidly disappearing all over the world, the ramp-up time is measured in some number of years in the likely range 4 to 8. As ExxonMobil is fond of telling us, the oil & gas business has "long lead times". Recall from the lead-in quote that they are spending more money on buying back their own stock than on E&P. Will the DOER bill change that? The DOER act passed by the House isn't even law yet. Assuming this happens, lease blocks would have to mapped out, auctioned off to oil & natural gas companies, initial testing would have to be done, etc. If a real "play" was discovered, it would then take some number of years to put it in production.

Concerning the mean estimates for the publicly quoted numbers, those 19 billion barrels of oil and 86 trillion cubic feet of natural gas, we note that non-existent reserves -- proved, probable or possible -- are being discussed as inferred from seismic data and extrapolations from the Gulf of Mexico where similar studies have been carried out. Considering the current US R/P ratio, I can only recommend this wisdom: "deal with reality or it will deal with you".

In conclusion, here in the United States we continue to fiddle as Rome burns.
(13 July 2006)


Saudi Arabia tests potential for unlocking heavy-oil reserves

Bhushan Bahree and Russell Gold, Wall Street Journal via Pittsburgh Post-Gazette
With global energy demand soaring, Saudi Arabia, whose abundant reserves of light oil have supplied the world for decades, is looking to unlock its huge, hard-to-tap and largely unexploited reservoirs of heavy crude.

If it succeeds in overcoming the technical hurdles, the effort could significantly increase Saudi Arabia's oil reserves over the next several years, potentially adding some slack to tight energy markets. It would also be a blow to so-called peak-oil theorists who have forecast that world oil production is on the brink of peaking.

Crude-oil prices have more than tripled since 2002 as increases in global demand have outstripped production capacity. On Wednesday, crude-oil futures on the New York Mercantile Exchange reached a new high, settling at $75.19 a barrel before slipping back to finish the week at $74.09.

While there is still plenty of oil left in the ground, most of the supplies that are easy to reach already have been developed, forcing the global petroleum industry to turn to oil deposits that are trickier to recover. Heavy oils, which can be the consistency of molasses, or even denser, are costlier to bring to the surface than light oils. They also typically contain more contaminants like metals and sulfur.

Because refineries need special equipment to remove these impurities, heavy oil is priced lower than light oil. But a growing number of refineries around the world can handle heavy oil, turning it into such products as gasoline, diesel, jet fuel and heating oil, and Saudi Arabia recently announced plans to build more of them.
(10 July 2006)


Interview with Jeff Goodell, author of "Big Coal"

David Roberts, Grist
In 2001, around the time Dick Cheney's secret-recipe energy plan made its debut, Jeff Goodell was in West Virginia reporting on coal's rising fortunes. He'd been sent to do a story for The New York Times Magazine, but the material spilled over into a new book, Big Coal: The Dirty Secret Behind America's Energy Future. It's a journey from the mines of Wyoming, across the plains by rail car, into the belly of the turbines in the east, and all the way to China, following the tale of the black rock that still, after all these years, afflicts and enables us.

As the fossil fuel that isn't running out, coal's been rebranded as a means to achieve energy independence. With the assistance of a friendly administration in the U.S. and burgeoning demand from China and India, the industry looks set to build hundreds of coal-fired power plants in coming years. And despite the gasification/sequestration PR, the momentum is strongly behind old-school plants that laden the air with particulates and the atmosphere with greenhouse gases.

Goodell recently visited Grist HQ for a leisurely chat about coal's past, present, and unsettling future. Here follows a full transcript; for the abridged version, go here.
(14 July 2006)

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