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.
Good and bad news from the Gulf of Mexico. Operation ‘top kill’ appears to be holding the hydrocarbons down, as ODAC News goes to press, but officials estimate the leak was much bigger than BP claimed and now ranks as the worst in US history. The impact on drilling around the US offshore is expanding, yet President Obama seems to want to exploit the disaster to steer energy policy in a more progressive direction.
Earlier this week the pressure on both BP and the Obama administration intensified as they struggled to deal with the disaster and to determine its causes. Briefing Congress on Tuesday, BP blamed the accident on a number of failures, including pressure tests and concrete seals. On Thursday CEO Tony Hayward admitted “We let people down”, but denied the accident was caused by cost cutting.
The same day President Obama was forced do defend his handling of the crisis at a special press conference. He also extended the moratorium on new deepwater drilling to cover planned exploration off the Atlantic Coast and Alaska pending the Presidential commission into the spill. But in a speech at a solar plant in California he appeared to put the disaster to good use. The increased risks and increased costs of deepwater drilling “gives you a sense of where we’re going”, he said, “we’re not going to be able to sustain this kind of fossil fuel use”. If America can see beyond the BP-Transocean-Halliburton blame game, there may be an opportunity here to build political momentum towards an escape from fossil fuels.
In the UK this week the new government set out its programme for the coming parliament. An energy bill was promised which will “improve energy efficiency in homes and businesses, to promote low carbon energy production and to secure energy supplies.” If a recent report by The Offshore Valuation Group, a coalition of government and industry groups, is to be believed, then the UK should prosper in the new energy environment.
The group was convened to answer the question ‘What is the value of our offshore renewable energy resource?’ and its report likens the potential of UK off-shore renewables to the North Sea oil boom of the 1970’s. Harnessing just 29% of the available resource with existing technologies could produce the equivalent of 1 billion barrels of oil/year, they say, and make the UK an electricity exporter by 2050. The report acknowledges that making the technologies cost competitive will require government support. Energy Secretary Chris Huhne is reportedly an enthusiastic supporter of wind power, so the timing of this report is good as he negotiates with his Tory coalition partners.
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Oil
President Obama: Fed Gov’t in Charge of Efforts to Contain Oil Spill, Not BP
In his most extensive remarks about the Gulf oil spill , President Obama pushed back today against critics who say his administration has been less than fully engaged in efforts to contain the damage and stressed that the federal government is in charge.
“Those who think that we were either slow on our response or lacked urgency don’t know the facts,” Obama told a news conference at the White House. “This has been our highest priority since this crisis occurred.”…
BP Begins ‘Top Kill’ Effort to Plug Leaking Oil Well in Gulf
BP Plc began its most ambitious attempt to plug a more than monthlong leak from an oil well in the Gulf of Mexico.
BP is aiming to tamp down the gusher of oil and natural gas with mud-like drilling fluid, then seal the well with cement. Success would bring to an end a leak that has poured millions of gallons of oil into the Gulf and soiled at least 70 miles (113 kilometers) of coastline…
BP Cites Crucial ‘Mistake’
Oil giant BP PLC told congressional investigators that a decision to continue work on an oil well in the Gulf of Mexico after a test warned that something was wrong may have been a “fundamental mistake,” according to a memo released by two lawmakers Tuesday.
The document describes a wide array of mistakes in the fateful final hours aboard the Deepwater Horizon—but the main revelation is that BP now says there was a clear warning sign of a “very large abnormality” in the well, but work proceeded anyway…
Despite Moratorium, Drilling Projects Move Ahead
In the days since President Obama announced a moratorium on permits for drilling new offshore oil wells and a halt to a controversial type of environmental waiver that was given to the Deepwater Horizon rig, at least seven new permits for various types of drilling and five environmental waivers have been granted, according to records.
The records also indicate that since the April 20 explosion on the rig, federal regulators have granted at least 19 environmental waivers for gulf drilling projects and at least 17 drilling permits, most of which were for types of work like that on the Deepwater Horizon shortly before it exploded, pouring a ceaseless current of oil into the Gulf of Mexico…
Lloyd’s syndicates launch legal action over BP insurance claim
BP’s attempts to limit the financial damage from the catastrophic oil spill in the Gulf of Mexico suffered a blow yesterday when almost half the syndicates in the Lloyd’s of London insurance market launched a legal action against the company.
The syndicates are attempting to block efforts by the oil giant to claim on cover held by the rig operator Transocean…
BP could freeze shareholder payout for three years, say City experts
The soaring cost of the oil spill in the Gulf of Mexico could force BP to freeze its payout to shareholders for up to three years, City experts said.
Britain’s second biggest company said that the bill to control the leak had increased by more than 20 per cent in the past week to $760 million (£526 million), up from $625 million on May 18…
Oil Jumps More Than $2 as China Reaffirms Support for Europe
Crude oil surged more than $2 a barrel as equities and the euro rallied after China affirmed its commitment to investing in Europe.
Oil climbed as much as 4.2 percent as China denied as “groundless” a report that it’s reviewing its euro holdings and the nation’s sovereign-wealth fund said it’s maintaining European assets. The euro gained 1.6 percent, boosting the appeal of commodities as an alternative to the dollar.
“If China were really looking to offload euro-denominated debt, that would put downward pressure on the euro, and the euro-dollar rate has been one of the key factors in oil prices,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington…
Debt crisis will cut global oil demand
Europe’s sovereign debt crisis is likely to translate into a slowdown in global demand for oil this year – and lower prices, says Francisco Blanch, head of commodities research at Bank of America-Merrill Lynch…
EIA: World Energy Use Up 49% By 2035, Led By Emerging Nations
Global energy consumption will rise 49% between 2007 and 2035, led by economic growth in developing nations, the US Energy Information Administration said Tuesday.
While use of renewable fuels will grow rapidly in the period, “fossil fuels are still set to meet more than three-fourths of total energy needs in 2035, assuming current policies are unchanged,” Richard Newell, EIA administrator said…
Rising Drilling Costs Mean $90 Crude in 2018: Energy Markets
The rising costs of extracting oil are propping up New York futures for the years ahead, even as prices sink for crude that will be delivered over the rest of this year.
The futures contract closest to delivery on the New York Mercantile Exchange tumbled 10 percent in the past three months to below $70 a barrel as investors fled riskier assets and the December 2015 contract lost 4 percent. At the same time December 2018 futures remain above $90 a barrel, suggesting analysts are less pessimistic about the long term. The U.S. Labor Department’s index for oil- and gas-field machinery costs rose in April for the first time in six months…
Gas
Shale gas more of a hit in U.S. than Europe
Shale gas, viewed as a game changer in the U.S. natural gas market, is likely to have less of an impact in overcrowded Europe, companies attending the Reuters Global Energy Summit said.
The fuel — natural gas trapped in layered rock rather than porous reservoirs — accounts for a rising part of U.S. gas output and companies are stepping up a search for deposits in Europe that could reduce dependence on imported supplies…
Natural gas takes breeze from wind energy’s sails
The good news for your energy bill may be bad news for Iowa’s wind energy.
Thanks to a drilling boom in new fields extending from Texas to New York, natural gas has become as an environmentally friendly competitor to wind. Big new discoveries in shale deposits have brought down the price of natural gas by 60 percent from two years ago…
Shale Gas Costing 2/3 Less Than OPEC Oil Incites Water Concern
When Victoria Switzer awoke on a cold night in March, her dog was staring out the window at the flame roaring from a natural-gas-drilling rig 2,000 feet behind her house. She remembers trees silhouetted in a demonic dance as the plume burned off gas that had been building up under her land.
She discovered later that such flaring can occur when Cabot Oil & Gas Corp. and dozens more companies drill for gas trapped in shale rock. The deposits, stretching from Texas to New York, and as far away as Australia and China, represent what may be the biggest energy bonanza in decades — one that Switzer, 57, recalls thinking the Earth isn’t surrendering without a fight, Bloomberg Markets reports in its July issue…
Nuclear
Spiraling Costs Threaten International Fusion Reactor Project
The planned ITER fusion reactor in France is supposed to replicate conditions inside the Sun to produce limitless clean energy. But skyrocketing costs are putting the international project at risk. Now Germany’s research minister has said Berlin will not write a blank check for the technology.
From the air, the construction site looks like a sandbox for giants. The meticulously leveled area, which is located in the middle of lush pine forests near the southern French town of Saint-Paul-les-Durance, is waiting for the ground-breaking ceremony in July. Here, on yellowish-red Provencal soil, the international nuclear fusion reactor ITER is supposed to be built in what will be one of the largest research projects in the world…
Renewables
Offshore energy report could dash defeatist arguments against the rocks
Whenever you suggest that renewables could one day supply a large proportion of our electricity, scores of people jump up to denounce it as a pipedream, a fantasy, a dangerous delusion.
They insist that the energy resources don’t exist; that the technologies are inefficient; that they can’t be accommodated on the grid; that the variability of supply will cause constant blackouts…
Mixed messages on offshore wind’s future
Mixed reports have been published recently about the current state and future potential of the UK offshore wind industry…
European Dream of Desert Energy Takes Shape
Can the Sahara Desert really meet Europe’s voracious appetite for energy? The Desertec solar power project aims to do just that, but a host of obstacles remain. Overly optimistic expectations are now being scaled down as the project starts to take shape.
When the sun rises and it’s still hazy over Andalusia, the future is particularly visible. That’s when beams of light as thick as tree trunks and as sharp as lasers slice through the haze. They come together just below the tops of two towers, the taller of which rises 162 meters (531 feet) into the sky, taller than Cologne Cathedral. These light beams are not being emitted by some UFO, but are in fact the core of the most advanced solar power plant in the world…
Biofuels
EPA’s Renewable Fuel Standard in the Legal Crosshairs
Friends of the Earth today filed a lawsuit in the U.S. Court of Appeals seeking review of the U.S. Environmental Protection Agency’s Renewable Fuel Standard, RFS2.
Represented by the nonprofit Clean Air Task Force, Friends of the Earth filed a suit in U.S. District Court in Washington, DC that takes aim at EPA’s use of “outdated data and rosy projections about pollution from corn ethanol in federal biofuels mandate.”…
UK
Queen’s speech: Plans for a new energy bill announced
The new coalition government promised a raft of green initiatives in yesterday’s Queen’s speech that will see a radical overhaul of the country’s housing stock and loans to allow more households to invest in measures such as solar panels.
Promising a new energy bill in the next parliament, the new government, led by David Cameron, wants to create a green investment bank that would loan individual households the money to invest in carbon-reducing measures, including insulation…
‘Smart’ appliances to ensure a smooth power supply
An energy-saving trial that will shut down home appliances when peaks of demand threaten to overwhelm the network began this week.
About 300 homes in Sandwell in the West Midlands have received fridge-freezers that turn themselves off when the grid is overstretched. Altogether, 3,000 homes will take part in the two-year trial, run by npower…
Green services face axe in coalition savings plan
Green organisations were today assessing how hard they would be hit by the £250m of cuts imposed by the coalition government.
The Department for the Environment, Food and Rural Affairs (Defra) will lose £162m, or 5.5% of its budget, and the Department of Energy and Climate Change (Decc), a comparatively minor £85m, or 2.5%. But both departments said today they would not be able to deliver the savings solely by limiting recruitment and making in-house spending and would be forced to cut capital programmes…
Arbitration sought on North Sea pipe costs
A North Sea energy explorer has become the first company to ask the UK government to settle a dispute over access to the country’s ageing system of offshore pipes and platforms since laws were drawn up over 35 years ago…
Climate
EU stops short of recommending 30% cut in emissions by 2020
The European commission today reopened the debate on whether Europe should volunteer to cut its carbon emissions further, but stopped short of recommending such a move.
Connie Hedegaard, climate commissioner, said the recession would make it cheaper than expected for the continent to hit its target to reduce carbon pollution 20% by 2020. Raising the target to 30% by 2020 would also cost less than first calculated…
Transport
Electric cars ‘won’t cut global warming emissions’
Success depended on the availability of ”green” electricity and overcoming a number of major technical problems, said the Royal Academy of Engineering.
Professor Roger Kemp, from Lancaster University, who chaired the Academy’s Electric Vehicles working group, said: “Swapping gas guzzlers for electric vehicles will not solve our carbon emissions problem on its own.”…
Turning all cars electric in Britain needs boost in power supply
The Royal Academy of Engineering said that to convert the countries fleet of 30 million vehicles would increase current demand by 16 per cent or an extra 10 gigawatts of power.
With the 70 GW grid currently running at near full capacity that would mean building the equivalent of six large nuclear power stations or 2,000 wind turbines to meet demand…