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 annual CERAWeek conference is usually a relentlessly upbeat affair, but speeches and comments from Houston this week underlined the depth of the oil industry’s dilemma – caught between the urgent need to invest in new projects to offset depletion and the huge fall in revenues due to the plummeting oil price. At current levels production economics are challenging even for relatively low cost producers such as Statoil – average cost $40/barrel- let alone the more expensive pre-salt or tar sands projects.
Financial pressure is also being felt in the UK oil & gas industry, where an estimated 50,000 jobs are at risk. The government’s optimistic decline scenario of only 4-6%/year relies on continued investment, so cuts here could see the UK’s production decline accelerate.
The IEA this week revised its 2009 global oil demand forecast down yet again, and it now predicts a drop of nearly 1 million bpd the most since 1982. With one UK government minister predicting the worst recession in 100 years (in which case it must surely be a depression), and with great uncertainty about whether major stimulus packages will work in the major economies of the US and China, it seems unlikely that this will be the last downward revision of the IEA’s forecast.
Despite falling prices, energy continues to move the tectonic plates of international relations, as shown by a strengthening relationship between China and Saudi Arabia, and the reaffirmation of Russian influence in the former Soviet territories, most recently Kirghizstan. In the words of BP chief executive Tony Hayward this week ‘the future is not cancelled’, but what it will look like is quite another matter. For the companies and countries of the old world order, it could prove to be even more challenging than the current financial meltdown.
Trouble Comes to the Oil Patch
Shell Chief Bets Big Despite Downturn
World oil demand to fall by 980,000 bpd in 2009 – IEA
50,000 offshore workers’ jobs in jeopardy
Credit crunch will exacerbate the commodity super-cycle
Saudi Arabia and China sign landmark agreements
Oil steadies above $36, demand worries nag; eyes US data
Managing the ‘curse’ of natural resources: charter offers guide for politicians
Three new gas power stations get approval
Gazprom to curb spending and delay development
Gas output target to be reached by 2012 – Qatar oil min
First ‘clean coal’ power station gets go-ahead
Congress reaches deal on stimulus
EU to hold emergency anti-crisis summits
China inflation falls to 30-month low
‘This is the worst recession for over 100 years’
Huge trains order brings jobs boost
Energy prices ‘will be cut soon’
Hundreds march at new power stations over foreign labour
UK airport passenger numbers drop 6.3%
Quarter of UK homes to be offered a green makeover