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.
Improved job creation data in the US along with strong Asian demand led to a run on oil prices this week taking the price of a barrel beyond $87 and out of the ‘goldilocks’ $70-$80 territory of recent months. Forecasts for the rest of the year are all over the board, with some analysts predicting a $100+ barrel, while others point to the lack of support for even the current price with economic activity in the developed world still sluggish.
Reuters published an article this week stating that the global recession has changed Colin Campbell‘s opinion on how peak oil will play out in terms of oil price. Rather than the relentless upward price curve he had previously anticipated, he now sees that a price point is reached which triggers a demand peak and a subsequent price collapse. In Campbell’s view the maximum price possible at the present time is $100/barrel, at which point demand (and consequently the price) would fall again. Since such a sudden demand drop is only achieved by economic contraction we effectively already have a situation where the oil price is acting as a limit to growth on global economies.
While oil prices are back on the rise natural gas prices have remained low. This is as a result of slumping demand due to the recession, and growing supplies from new non-conventional tight gas production in the US and increased LNG capacity in the Middle East. With oil increasingly challenging and expensive to produce, there is currently a global ‘dash for gas’ as energy companies look to secure reserves. In Europe the new frontier for unconventional gas is Poland which is thought to have enormous potential reserves and a willing government.
Some observers however argue that the actual production potential of the huge reserves of tight gas is being over estimated — that decline rates are very high, and that US output is being over reported. It was therefore interesting to note this week that the EIA announced that it will be changing its reporting methodology to correct a problem it has discovered in the way that output data is gathered. Gary Long, who led the review, has stated that the change will lead to a “significant” downward revision in some areas. Whether the adjustment will be sufficiently alarming to dampen bullish predictions of growth in gas production remains to be seen.
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Disclaimers
Oil
Crude Oil Falls After U.S. Supplies Increase More Than Forecast
Crude oil fell for the first time in seven days after a government report showed a bigger-than- forecast increase in U.S. inventories as imports surged.
Supplies rose 1.98 million barrels to 356.2 million last week, the Energy Department said today. Stockpiles were forecast to climb by 1.35 million barrels, according to a Bloomberg News survey of analysts. Imports gained 5.5 percent to 9.56 million barrels a day, the most since September. Refineries operated at the highest rate since October…
Peak oil man shifts focus to peak price, demand
The economic shock of global recession has led a prime exponent of the theory conventional oil output has peaked to shift his view of the consequences, but he still thinks the world has to go green.
Retired petroleum geologist Colin Campbell, who worked for major oil companies as well as smaller firms, has long been associated with the belief the world’s oil supplies are dwindling.
He does not waver from that and dismisses the argument of the so-called optimists that technology will manage to keep eking out more and more oil to keep pace with rising demand…
EIA changes monthly report oil stocks methodology
The Energy Information Administration’s monthly petroleum supply report due out on Thursday will reflect a more detailed methodology for gathering U.S. crude inventory data that may lead to revisions to 2009 data later this year.
Instead of broadly gathering information from companies on oil stocks on a state by state basis, the agency’s revamped surveys ask for data about inventories at the individual terminals where petroleum products are stored before going to retailers, said Michael Conner, a survey statistician for the EIA, said on Wednesday…
Shareholders at loggerheads over vote on BP’s tar sands development
Large shareholders will be pitted against each other this week in a row over oil giant BP’s involvement with tar sands in a battle that is set to dominate this year’s round of company annual meetings.
A special resolution has been filed by 143 shareholders for BP’s annual meeting on 15 April, demanding the company provide a full report by next year about the risks of its planned tar sands development in Canada…
Female minister directs Nigeria oil overhaul
Nigeria’s first female oil minister has been in her post barely 24 hours, but already the demands on her allegiances are many and conflicting.
Diezani Allison-Madueke was the surprise choice to take the helm in sub-Saharan Africa’s biggest oil and gas exporter when Goodluck Jonathan, acting president, unveiled his cabinet on Tuesday…
Kazakh threat to expel expat oil workers
Kazakhstan on Tuesday turned up the heat on a foreign consortium led by UK’s BG Group and Italy’s Eni that is developing one of the country’s biggest oil fields, threatening to deport expatriate workers for allegedly breaching immigration laws…
Hard task to offload North Sea assets
Billions of dollars of North Sea oil and gas fields have been left unsold as multinationals struggle to offload assets to cash-strapped independent explorers…
Gas
Dash for Poland’s gas could end Russian stranglehold
American technology to produce shale gas is unleashing a scramble for drilling rights in Poland, where experts believe vast reserves of unconventional gas exist that could help to weaken Russia’s grip on Europe’s energy supplies.
ConocoPhillips is poised to launch Poland’s first shale gas drilling programme next month near Gdansk on the Baltic coast…
Natural-Gas Data Overstated
The Energy Department is preparing to make sweeping revisions to its U.S. natural-gas production data after finding it has been overstating output, raising new questions about the government’s collection of energy information.
The monthly gas-production data, known as the 914 report, is used by the industry and analysts as a guide for everything from making capital investments to predicting future natural-gas prices and stock recommendations…
BP fights to limit controls on shale gas drilling
BP is lobbying on Capitol Hill against a federal US environmental agency being given jurisdiction over the use of a controversial method of extracting gas from shale deposits, ahead of an important meeting this week.
The London-based oil company wants decisions on drilling techniques such as hydraulic fracturing – which uses high-pressure liquids to force fissures – to be taken at state level, rather than being left to the Environmental Protection Agency (EPA), whose specialist committee meets on Wednesday to discuss its concerns…
US EIA natgas report confuses energy traders
The U.S. Energy Information Administration stirred confusion among traders on Tuesday after it reversed course in its natural gas production outlook and called for domestic output to be up rather than down in 2010.
“The market has gyrated wildly so far this week in response to EIA data issues that still appear a bit confusing,” said Jim Ritterbusch, president of Ritterbusch & Associates in Illinois…
Renewables
Renewable energy coalition releases manifesto
Nine of Britain’s renewable energy associations have outlined detailed proposals for the delivery of renewable energy targets by 2020.
The proposals are designed to ensure that the UK sources 15% of its energy from renewable sources by 2020 and fulfills its obligations to the European Union. The groups also want to build a ‘green collar’ industry in the process…
Radar deal clears the sky for £7bn offshore wind farm expansion
Energy companies have agreed to pay for a new radar system to allay Ministry of Defence concerns about the threat to national security posed by wind farms.
The deal paves the way for a £7 billion investment in offshore wind turbines…
UK
UK household savings lowest in 40 years say ONS
People in the UK are saving less than at any time in the past 40 years, according to the Office for National Statistics (ONS).
The household saving ratio in the UK in 2008 was 1.7% of total resources, the lowest recorded since 1970, and well below the 7.6% average for that period…
Cost of driving has jumped 9% in six months
A sharp rise in insurance bills and soaring prices at the pumps have left drivers nursing a 9 per cent jump in motoring costs over the last six months, according to research.
The average annual cost of keeping a car on the road has increased to £2,539, Sainsbury’s Finance has found, up from £2,338 in October last year. The total includes car insurance, 10,000 miles worth of fuel and servicing…
Car sales up 26.6% in last month of scrappage
The final days of the Government’s scrappage scheme led to a 26.6 per cent rise in sales of new cars during March, although new registrations remain down on long-term comparisons.
March is traditionally the strongest trading month of the year because of the new registration plate, regularly accounting for nearly a fifth of all cars sold annually in the UK…
Britain poised to outpace European rivals on a rocky road to recovery
The British economy is forecast to grow faster than its leading eurozone rivals but a new survey of business activity suggests that the road to recovery will be uneven.
The Organisation for Economic Co-operation and Development said yesterday that the UK economy was set for a sharp rebound, expanding at an annualised rate of 2 per cent in the first quarter of this year, accelerating to 3.1 per cent in the second quarter…
Climate
South African coal-fired power station to be built after UK abstains on vote
One of the world’s biggest coal-fired power stations is to be built in South Africa after Britain declined to vote against a $3 billion (£1.96 billion) World Bank loan for the project.
The Medupi plant will be bigger than Drax, Britain’s largest power station, and will pump out 25 million tonnes of carbon dioxide a year into the atmosphere. But it will provide reliable electricity for millions of people and thousands of businesses plagued by regular power cuts…
Carbon trading survives key tests
A funny thing has happened to carbon dioxide prices in the past few days: they have failed to collapse.
Hours before most traders departed for their Easter break last week, the European Commission issued data showing the carbon market, under the European Union’s emissions trading scheme (EUETS) was oversupplied…
U.S. Carbon Emissions to Rise 2.1% in 2010, EIA Says
U.S. carbon dioxide emissions from energy use will climb 2.1 percent this year as the economy emerges from the recession, the Energy Information Administration forecast today.
Emissions from coal, oil and natural gas consumption should rise 1.1 percent in 2011 from 2010 levels, the EIA said in its April Short-Term Energy Outlook.
Last month, the EIA predicted a 1.5 percent increase in carbon dioxide emissions for 2010. It raised the forecast to 2.1 percent on predictions of “continued economic growth combined with increased use of coal in the electric power sector.”
The EIA’s new forecast for 2011 is lower than last month’s 1.2 percent.
Geopolitics
US Treasury delays China currency report
The US Treasury is delaying by several months a report on whether China manipulates its currency, the yuan.
Treasury Secretary Tim Geithner said he would delay the report, which was due out on 15 April, until after a series of high-level international meetings…
White House ‘troubled’ by President Karzai’s accusations of fraud
The White House has dropped any pretence of maintaining a cordial relationship with President Karzai of Afghanistan, rejecting his latest anti-Western outbursts as “simply untrue” and drawing attention to the sacrifices made by US soldiers for his regime.
For the third time in less than a week Mr Karzai accused the West yesterday of committing fraud in last year’s presidential election, seeking to turn the tables on a US Administration that has repeatedly accused his own Government of electoral fraud and failing to stamp out corruption…
