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 recession has bought us two years, but an oil supply crisis is still on track for 2015. That’s the message of The Oil Crunch, the second report from the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES). The launch of the report, attended by Sir Richard Branson and even a senior civil servant from DECC, received widespread press, with articles everywhere from the British red-tops to Forbes and the Wall Street Journal. Hard on the heels of last year’s UKERC report and last week’s warnings on UK energy security from Ofgem, even mainstream commentators are now forced to treat peak oil with more than their customary brush off.
The ITPOES report refers to gas as the ‘wild card’ in future energy supply. This week Alexander Medvedev, Deputy Chairman of Gazprom, sought to assure Europe that gas was much more than that. Aligning himself with other energy company bosses, Medvedev recommended gas as the fuel with which to fight climate change – he went as far as to say that “We at Gazprom believe gas should be treated on an equal footing as renewables.” Well, as a famous English call-girl once said, they would say that, wouldn’t they? Russia is of course heavily reliant on gas for export earnings and geopolitical clout, and determined to beat off rising competition from LNG and ‘tight’ gas in the US. He may have a point about the important role of gas in climate mitigation in the short term, but to suggest it should be treated as a renewable is laughably self-serving. In the circumstances it might be wise to seek a second opinion.
The main focus of The Oil Crunch report is on the economic impact an oil shock would have on Britain. The timing of this message, just months before the general election, and the fact that the report – like ODAC – predicts a shock is likely to occur within the term of the next government, gives it added resonance.
The report also highlights the risks to Britain’s balance of payments of our growing reliance on fuel imports. As if to confirm the point, sterling took a tumble this week against the dollar, and even against the wobbly Euro, following an unexpected widening of the trade gap in January. As the buffer of fuel independence fades and public debt rises, the UK is haunted by the long forgotten economic ghosts of the 1970s. Time for urgent action!
Oil
Oil crunch ‘just five years away’
Business leaders, including Sir Richard Branson, have criticised ministers for not doing enough to avoid a potential oil crunch and are calling on the next government to take action.
“Governments need to urgently, urgently wake up,” insists Sir Richard in an interview with the BBC News website…
Society ignores the oil crunch at its peril
Warnings of a crash in oil production are no longer limited to a prescient few individuals – major British companies and oil CEOs are now sounding the alert
In the years approaching the credit crunch, whistleblowers were limited to a few insightful economists and financial journalists. Now whistles are blowing again about another grave threat to the global economy and the security of nations. They warn of an oil crunch: an unexpected crash in global production such that supply can no longer meet demand, even if China and India throttle back…
Oil exploration costs rocket as risks rise
Finding oil and gas to replace the world’s fast dwindling reserves is increasingly risky as rigs probe areas once seen as too difficult or too dangerous, and costs are rocketing, which could imperil future supply.
The cost of discovering each new barrel of oil and gas has risen three-fold over the last decade as technology has pushed the frontiers of exploration into ever more remote areas…
IEA boosts oil outlook
The International Energy Agency (IEA) gave the market some fresh optimism today by boosting its global oil demand forecast by 50,000 barrels per day for 2009 and by 170,000 bpd for this year, on the back of stronger economic projections by the International Monetary Fund (IMF).
Global oil demand is now estimated at 86.5 million bpd for 2010, up 1.8% year-on-year and a 170,000 barrel increase compared with agency’s last report…
OPEC Raises Forecast Demand for Its Oil on Lower NGL Outlook
OPEC expects the world will need more of its crude oil this year than previously forecast, as the organization lowered its outlook for production of natural gas liquids.
The Organization of Petroleum Exporting Countries, responsible for 40 percent of global supplies, predicted in a monthly report today that consumers worldwide will need 28.75 million barrels a day of OPEC crude in 2010. While that’s 150,000 barrels a day more than anticipated in last month’s report, the resulting “call on OPEC” in 2009 is unchanged from last year…
Oil Falls on Dollar’s Gain, Forecasts for U.S. Supply
Oil fell in New York for the first day in five as the dollar extended gains against the euro and analysts forecast an increase in U.S. crude stockpiles.
Oil slipped below $75 a barrel after the dollar strengthened on speculation the European Union will fail to take sufficient measures to help Greece cope with its fiscal deficit, damping the investment appeal of commodities. A weekly Energy Department report today may show crude and gasoline supplies increased last week, according to a Bloomberg News survey…
The oil industry : Beyond the black stuff
ON THE face of it the world’s big and publicly quoted oil companies should be celebrating some pleasing results this week. Royal Dutch Shell unveiled its results on Thursday February 4th, reporting that it had made $9.8 billion in 2009. Two days earlier BP boasted profits of $14 billion for the same year. Yet these billions are a disappointment compared with the bonanza of previous years (Shell, for example, raked in $31.4 billion in 2008 alone) when soaring oil prices pulled profits ever higher.
In the long term, however, the firms’ success depends on sustaining reserves. The big western oil companies are trying to expand through acquisitions and investment, but the opportunities do so are becoming scarcer. The firms are spending where they can. Exxon Mobil, the biggest listed oil company, says that exploration and capital spending hit $27.1 billion in 2009, 4% higher than in 2008. The company expects to spend $25 billion to $30 billion annually to the same end over the next five years. BP intends to spend some $20 billion this year on investment in new projects and drilling, roughly the same level as last year…
BP faces protest over oil sands development
BP has become the latest oil company to face a shareholder revolt over its investments in Canada’s controversial oil sands. A coalition of shareholders has tabled a resolution for the oil giant’s annual meeting on April 15 highlighting what they describe as the environmental and social risks of tar sands development.
The resolution, which follows a similar action taken by investors in Royal Dutch Shell, follows BP’s announcement last week that it is set to press ahead with a $10 billion investment in the industry…
Gas
Scrap UK’s wind farm plans, says Gazprom boss
Plans to build thousands of wind farms in the UK are irrational and should be scrapped in favour of more gas plants, according to the deputy chairman of the Russian energy firm Gazprom.
Alexander Medvedev said the UK and other countries should adopt a more “pragmatic” approach towards reducing greenhouse gas emissions following the impasse at the Copenhagen climate change summit. He argued it would be impossible to meet the UK’s target to generate a third of its electricity from renewables by 2020 without a big contribution from gas. He also claimed it would be three times cheaper to meet emission reduction targets by replacing dirty coal plants with new gas plants rather than wind farms…
Gazprom scorns shale gas as ‘danger to drinking water’
Russia’s Gazprom has attacked the idea that huge new US reserves of shale gas will harm its dominance as the world’s biggest producer, warning the energy source is environmentally unsound.
The state monopoly has already questioned whether shale gas is economically viable to extract and dismissed it as a threat to its conventional resources…
European gas pipelines get green light
The construction of Nord Stream and South Stream, two major natural gas pipelines from Russia to the European Union, will begin this year in spite of uncertainties surrounding the gas market key partners in the two ventures said on Tuesday…
Electricity
Chavez puts Venezuela under ‘electricity emergency’
Venezuelan President Hugo Chavez has signed a decree declaring an “electricity emergency” to help his government tackle power shortages.
Speaking on his new radio show President Chavez said Venezuela, which depends heavily on hydropower, was facing the worst drought in 100 years…
Nuclear
Iran to start work on 20% nuclear fuel
Iran’s president on Sunday ordered the country’s Atomic Energy Organisation to start enriching uranium at higher grade, in a provocative move which could bring more penalties for the Islamic regime…
Germany’s nuclear power debate refuses to go away
It is an old and passionate debate in Germany and it simply will not go away. Can the country afford to stick to its current legal obligation to phase out its nuclear reactors after 32 years of service without risking a serious blackout? Or should it extend, as others are doing, the operational life of its nuclear reactors that provide about a quarter of the country’s electricity? If so, the question is by how much longer?…
Renewables
Pay £25 for a ‘green’ tariff or £1.49 for an energy saving lightbulb?
If you signed up to a “green” electricity tariff, would you assume that your energy was coming from low-carbon sources?
I was unimpressed to hear that no extra energy generated from wind or solar sources was contributing to the more expensive powering of my home than if I had a bog-standard deal. Ofgem’s new labelling system is meant to give consumers confidence in the claims of electricity companies that your “green” tariff will have “genuine environmental benefit”…
Palm oil deal ‘a threat to the rainforest’
Hundreds of millions of tonnes of palm oil look set to be pumped into Britain’s vehicles despite scientific evidence showing that chopping down rainforests to make way for plantations exacerbates climate change, according to a leaked report.
The European Commission is planning to increase the amount of palm oil used in cars and power stations under the Renewable Energy Directive (RED), which is intended to reduce greenhouse gases, suggests the document…
Areva targets solar power with US move
Areva is looking to the sun to fuel its ambitions beyond atomic energy after acquiring a US start-up that will take France’s nuclear engineering champion into the solar power market for the first time…
Biofuels
If biofuels go, should we mourn them?
It’s not been a great week for the “greener driver”. First, Toyota announced it was recalling all its Prius hybrids after detecting a potential fault with the braking system. And yesterday Morrisons, the largest supplier of biofuels in the UK, announced it is withdrawing one of its most popular blends from its forecourts. From 1 April, it says it will no longer be selling B30, a blend of 30% rapeseed and recycled vegetable oil and 70% ordinary mineral diesel…
Addressing the food versus fuel debate in Ghana
Concerns over energy supply security and oil-price volatility are generating greater interest in alternative energy sources in Ghana. Civil society groups want a comprehensive biofuel policy. Godwin NNANNA in Accra writes that so far the policy has been slow in coming
The lines between energy and agriculture are becoming more blurred. As science advances, the use of biofuels in most parts of the world has continued to increase. One thing that has gradually come to stay and is in recently times attracting significant foreign investment in Ghana is energy crops. The last four years has seen Norwegian, Brazilian, Dutch, Swedish, German and British firms all competing for farmland to grow energy crops in different parts of the country…
UK
Joined-up thinking on transport demanded
A disjointed approach to transport projects such as roads, ports and railways threatens to hold back economic recovery outside London and south-east England, a report warns on Monday…
Green light for show homes to sell eco-town project
One hundred “eco-show homes” are to be built to allow people to “test drive” green living as ministers try to convince the public that controversial eco-towns can work.
This week the Housing minister, John Healey, will announce the start of building work on the properties in towns near to the four sites earmarked for Britain’s first zero-carbon developments. Work will start next year on a further 10,000 eco-homes that will be for sale in the areas…
New laws given to environmental bodies
The Environment Agency and Natural England were awarded new powers today (February 4th).
New civil powers will permit “greater flexibility” when enforcing environmental law, according to the Department for Environment, Food and Rural Affairs (Defra)…
Economy
Markets target euro as doubt swirls over Greek rescue
The leaders of France and Germany agreed today to work together to tackle the Greek debt crisis but failed to reassure jittery European financial markets.
Both the euro and Greek government bonds enjoyed a moment of respite after reports that the new EU President, Herman Van Rompuy, had brokered a bailout deal in a meeting this morning with President Sarkozy, Chancellor Angela Merkel and Jean-Claude Trichet, head of the European Central Bank…
Britain’s trade deficit widens unexpectedly
Sterling tumbled again to near record lows against the dollar today and a three-week low against the euro as official figures showed Britain’s trade deficit had unexpectedly widened in December to its highest level in nearly a year.
Britain’s goods trade gap with the rest of the world widened from £6.8 billion in November to £7.28 billion in December, its highest level since January 2009 as imports — particularly of cars and aircraft — rose faster than exports. Economists had forecast the deficit would narrow to £6.63 billion…