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ODAC Newsletter - Feb 26

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 world is heading for a renewed oil crunch as soon as 2013 due to shrinking production capacity and growing demand in the emerging markets, according to reports from two investment banks. Both BofA Merril Lynch and Barclays Capital conclude non OPEC production is close to peak, meaning a shift back to reliance on OPEC for new capacity. They predict volatile oil prices with peaks in the same range as the highs of 2008 – and we all know what that did to the economy.

The annual survey from UK Oil and Gas, the industry association, illustrated the law of diminishing returns of post peak oil production. While ‘probable’ and ‘possible’ reserves are up by 60% on 2008, the volume of reserves in production or being developed is falling, as companies find new ventures uneconomic – despite an oil price of $75-$80 per barrel. UKOAG claims – in our view optimistically - that the region could still produce 1.5 million barrels of oil and gas equivalent or 50% of UK demand by 2020, and calls for further government support and tax relief in order to maximise recovery of the remaining reserves. However, since £25bn is required simply to upgrade North Sea infrastructure in the next five years, and since output has fallen 7.5% per year for most of this century, it’s hard to see their target being achieved. For excellent background commentary on the UK North Sea peak oil story from ODAC trustee Chris Skrebowski see p14 of the The Oil Crunch – Securing the UKs energy future.

The government’s plans to green the UK economy had mixed fortunes this week. On the upside, Mitsubishi and the Spanish company Gamesa are to set up wind turbine research and manufacturing facilities in Britain. On the downside, the Renewable Energy Association criticised the government’s incentives for energy derived from organic waste, claiming that they would make many projects commercially unviable. Worse, Drax announced it is cancelling plans to switch one of its plants from coal to biomass, claiming it would be cheaper to buy permits and keep burning coal. This demonstrates once again the urgent need for a carbon tax or least a floor under the carbon price.

Finally, spare a thought for the latest casualty of the peak oil age - the Hummer, the 4x4-on-steroids whose sales have been hammered by the oil price in recent years. Production is set to wind down after a deal to flog the brand to the Chinese – who says the Americans don’t do irony? – fell through. In the words of Klaus Paur, North Asia director for market research company TNS "The brand proposition of Hummer itself goes against the strategic outline of the Chinese government, which is mainly that they want to produce energy-efficient vehicles". SUV RIP.

View our Reports and Resources page

Oil

Barclays and Bank of America see looming oil crunch

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Non-Opec output decline restricts spare capacity

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Companies 'can't afford' to drill for North Sea oil and gas

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BP, Shell Cost Cuts May Falter on Drilling Inflation

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Oil Set for Biggest Monthly Rise Since October on OPEC, Dollar

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Escalating Falklands oil dispute goes to UN

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Refinery protests are just delaying the inevitable

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Gas

Pressure grows on energy suppliers to pass on price cuts

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British Gas profits surge on low gas prices

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Electricity

Putin threatens energy-sector oligarchs

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Bloom Energy unveils 'power plant in a box'

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Renewables

Mitsubishi to invest £100 million in UK wind turbine centre

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Turbine company in talks to open UK factory

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Turbine design breathes new life into hopes for UK's renewable targets

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U.S. wind capacity has more than tripled: report

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Biofuels

Drax suspends plan to replace coal with greener fuel

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Biofuel power plant plan refused

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Waste not... Britain is lagging behind other countries in renewable sources

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UK

Electric car prices will be reduced by grants worth thousands

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MPs say £37bn 'smart' power grid unlikely without state aid

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Transport

Hummer's demise a sign of the times

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Case for third runway at Heathrow is deeply flawed, say opponents

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World’s fastest container ships mothballed

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