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‘Green’ America may slash oil demand
Dina O’Meara, Calgary Herald
Forget the myth of Chinese demand driving world oil consumption and pay closer attention to “green”policies in the U. S., the biggest oil consumer in the world, energy policy expert Amy Myers Jaffe said.
Major oil producer Saudi Arabia certainly is, said the director of the James A.Baker III Institute for Public Policy at Rice University.
China’s 26 million cars represents only 10 per cent of all the vehicles hitting the roads in the United States, Jaffe said in Calgary Wednesday.
And new energy-saving policies being considered by President Barack Obama could shave 20 per cent off U. S. oil demand, she pointed out.
“The chances of there being some turnaround that will somehow reverse itself into an increase in U. S. oil demand is pretty unlikely,” Jaffe said at the CFA Investing in Energy Conference.
The same goes for Japan, Germany, Brazil and other major and evolving economies, which led her to question whether 100 million barrels per day of production represented the plateau of international oil supply, also called peak oil, or the plateau of international demand.
(2 April 2009)
Changing of the Guard in the Queensland Government
Rachel Nolan, Australian MP
Stuart McCarthy of ASPO-Australia writes:
The bad news: ASPO-Australia patron Andrew McNamara lost his seat in the Queensland election last weekend. Andrew has been at the forefront of the peak oil debate in Australia since 2005. He led the Queensland Government Oil Vulnerability Taskforce, which reported to Cabinet in 2007 via the ‘McNamara Report’, and as the Minister for Sustainability, Climate Change and Innovation initiated the development of the Oil Vulnerability Mitigation Strategy.
The good news: Andrew’s colleague on the Oil Vulnerability Taskforce, and co-author of the McNamara Report, Rachel Nolan, retained her seat and was appointed Minister for Transport on Thursday. Below is a speech she delivered in Parliament last year on the subject of peak oil.
“Peak Oil”, Speech in Queensland Parliament
On Monday night in Ipswich two local engineers, Steve Posselt and Stuart McCarthy, in conjunction with the Ipswich Chamber of Commerce and Industry and Ipswich Green—an organisation of which I am a cofounder—ran an Ipswich leaders forum to outline to the community the serious challenge of sustainability.
Their timing could not have been better. Today the price of a barrel of West Texas crude oil passed through the $US110 mark. This is the highest price oil has ever reached, either in current or inflation adjusted terms.
The price surge is a result of a culmination of rising demand, flat production and falling inventories, but there is a simpler way of describing what is happening. It is called peak oil. Peak oil advocates have always argued that we would only recognise the peak of world oil supply when it was passed—that is, we would only see it for sure in the rear-vision mirror.
Well, the view in the rear-vision mirror is becoming increasingly clear. In November 2006 the world produced 85.5 million barrels or crude per day. No month since has surpassed that total. During 2007 world oil production declined to 84.6 million barrels per day. Around the world, nation by nation, oil production has peaked and declined.
The USA peaked at 9.6 million barrels per day in 1970 and now produces 5.1 million barrels per day. Venezuela peaked in 1970, the UK peaked in 1999, and Norway and Australia both peaked in 2000.
The Energy Watch Group in Germany recently analysed world data and suggest that we are past the world’s peak. They calculate that world supply will now decline by seven per cent per year, falling to 58 million barrels per day by 2020. There is no way known that production of biofuels such as ethanol can plug such an enormous and growing gap. Even putting aside the record grain prices we are already seeing as arable land is transferred from food to fuel production the simple fact is that there is not enough land on the planet to grow the liquid fuel volume which we require today.
Aldous Huxley once said that ‘human beings have an almost limitless capacity to take things for granted’. When it comes to oil and our use of it, that is certainly true. Lester Brown in his Plan B 3.0 set out the challenge thus—
The challenge for our generation is to build a new economy, one that is powered largely by renewable sources of energy, that has a highly diversified transport system and that reuses and recycles everything. And to do it with unprecedented speed.
The Ipswich leaders’ forum set out that challenge for our community. It is a serious challenge and one that we must all seriously pursue.
(13 March 2009)
Tupi Oil Imperiled as Price Drop Unravels Energy Plan
Jeb Blount and Adriana Brasileiro, Bloomberg
…Tupi is just one of several “elephant” finds of more than a billion barrels each. If they pan out, they may make Brazil the world’s fourth-largest oil producer after Saudi Arabia, Russia and the U.S. It’s now 13th, according to London- based BP Plc, which ranks countries by production.
In the wake of the discovery, there was euphoria in Brazil. Citizens literally danced in the streets of Rio de Janeiro at 2008’s Carnival parades to celebrate the find, with one float named “The Black Gold That Comes From the Sea.” President Luiz Inacio Lula da Silva said the flood of oil money would allow the government to attack poverty among Brazil’s 191 million people, 24 percent of whom live on less than $3 a day.
Then the world economy hit a wall, and the price of oil sank to $32 on Dec. 12 from a peak of $147 on July 11. Even though prices have recovered somewhat — they stood at $48.4 on March 30 –investors are now wondering whether Tupi will be a bonanza or a case of misguided national celebration.
Petrobras shares fell 45.2 percent to 28.78 reais on March 30 from their peak in May 2008.
…Rio-based Petrobras leads the world in deep-water oil drilling; it operates dozens of fields in Brazil, Africa and the Gulf of Mexico. “At $140 a barrel, or even $70, you could make lots of money,” says John Ditierri, who manages $7 billion of developing nation stocks for Emerging Markets Management LLC in Arlington, Virginia. “At $20 or $30, it’s not worth anything.”
…Petrobras engineers and geologists are confident they can resolve the technical problems presented by pre-salt wells. “There are no insurmountable technical challenges facing us in Tupi — none,” says Antonio Carlos Pinto, the manager of pre- salt production engineering. “A lot of what people say is totally wrong.”
For Patzek, the technical challenges are less of an issue than the financial ones. “We already know what the problems are with high-temperature, high-pressure offshore environments,” he says. “It means a lot of expensive steel, safety measures and a lot of expensive equipment. If they can keep their costs down or at the current level, they will do fine.”
…With trillions of dollars at stake in Tupi and other pre- salt fields, Energy Minister Lobao has attracted widespread support for his plan to increase state control of the oil finds. In November 2007, all unleased exploration areas in the region were pulled from the Energy Policy Council’s lease auction.
…Investors are eager for Petrobras to get beyond the political posturing and start drilling. “This is a fantastic opportunity for them,” says Navaneel Ray, lead energy analyst and fund manager at TIAA-CREF Investment Management LLC in New York. “The world’s oil service and equipment companies have empty order books. Brazil is about the only good news for them. Petrobras has a lot of leverage to cut prices.”
…Petrobras says it will have full-scale production under way at Tupi and surrounding deep-water fields by 2013. By 2020, it expects output of 5.73 million barrels a day. The company also plans to build at least five new Brazilian refineries, expand its petrochemical operations and continue exploration and production abroad.
“It’s more important than ever, in this moment of international economic problems, to press forward,” CEO Gabrielli told shipyard workers at the launching in October of the company’s $1 billion P-51 floating oil platform, the first such vessel built entirely in Brazil.
(31 March 2009)