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.
As the leaking Macondo well in the Gulf of Mexico continues to defy BP’s efforts, the crisis now looks existential for the company. This week the share price collapsed further, and commentary went far beyond the usual concerns over the fate of the chief executive and the dividend. One Clinton era official even suggested taking BP’s US assets into temporary administration. “It’s got the real smell of death” said Dougie Youngson, an oil analyst at Arbuthnot, “This could break BP“. Takeover talk swirls the market but that course would be fraught for any bidder. It could only go through if the disaster liabilities were utterly ring-fenced, which would be political dynamite in a country baying for retribution.
President Obama appears to be taking advantage of the moment to push for a transition away from fossil fuels. In a speech in Pittsburgh on Wednesday he pointed out that the inherent risks will increase the harder oil extraction becomes. He pledged to roll back oil industry tax breaks and prioritise climate change legislation. Such talk may be popular now, but if this translates into increased prices at the pump, the cheers will quickly turn to jeers.
The broader meaning of the crisis is clear. The easy oil is gone, and impending peak oil pushes the industry to ever more extreme limits. The moratorium of deepwater drilling in the Gulf will probably hasten and worsen the oil supply crunch widely forecast for the middle of this decade.
In the UK this week Energy & Climate Change Secretary Chris Huhne described his department as “not so much the department of energy and climate change, as the department of nuclear legacy and bits of other things,” as he pointed out a pending £4bn “black hole” in his budget due to nuclear decommissioning costs. “What we are effectively paying for here is decades of cheap nuclear electricity for which we have suddenly got a massive post-dated bill”, he said.
His remarks coincided with a story in the Guardian revealed intensive lobbying by EDF of the previous administration over its proposals for nuclear waste management. The new government’s policy against any industry-specific support for nuclear looks ever more sensible.
Oil
As well spews in Gulf, Obama makes climate bill a priority
Signaling that the Gulf of Mexico oil disaster has propelled climate change legislation toward the top of his priority list, President Obama called on Congress yesterday to roll back billions of dollars in tax breaks for oil companies and help the nation end its dependence on fossil fuels.
Obama predicted he would find the political support for legislation that could dramatically alter the way Americans fuel their homes and cars, including by placing a price on carbon pollution. A bill crafted by Senator John F. Kerry to do just that remains mired in the Senate…
Gulf of Mexico oil spill: Barack Obama to rescind billions of dollars in ‘Big Oil’ tax breaks
President Barack Obama has already called for criminal charges to be brought against BP and imposed a year-long ban on new offshore deepwater drilling.
He vowed to rescind “billions of dollars in tax breaks” for energy companies by the end of the year in a move that could equally hit Royal Dutch Shell…
Gulf oil spill: BP could face ban as US launches criminal investigation
Last night’s announcement that the US is launching a criminal investigation into the Gulf of Mexico disaster capped off BP’s worst day in a torrid six weeks since the Deepwater Horizon rig exploded and sank on 20 April, killing 11 workers.
The firm’s shares plummeted by 13% today, wiping £12bn off the company’s value, as financial markets reacted to the news that oil is likely to continue spewing into the Gulf of Mexico for at least two more months. It was the worst one-day fall for 18 years for what was once Britain’s most valuable company…
BP Places Cap Over Leaking Gulf Oil Well, U.S. Says
BP Plc has lowered a cap over a damaged Gulf of Mexico oil well, the U.S. Coast Guard said, in the latest attempt to control the worst oil spill in the country’s history.
“The placement of the containment cap is another positive development in BP’s most recent attempt to contain the leak,” Coast Guard Admiral Thad Allen said in a statement last night. “However, it will be some time before we can confirm that this method will work and to what extent it will mitigate the release of oil into the environment.”…
Why America should thank BP
Hollywood loves its villains to have an English accent. After the Deepwater Horizon disaster it was inevitable American commentators would deride BP as British Petroleum and its CEO as Tony Wayward. But even as Gulf Coast residents despair and BP fumbles from one seat-of-the-pants engineering ‘solution’ to another, Americans should realise the company may have done them a huge favour.
It may seem grotesque to suggest an upside given the scale of this human tragedy and unfolding environmental disaster: the 11 dead and their grieving families; the wetlands and marine ecology devastated by crude and toxic dispersant; the lost livelihoods of Louisiana fishermen; and the $30 billion hit to BP shareholders – that’s anyone with a pension in this country. But benefits there may be…
Nigeria’s agony dwarfs the Gulf oil spill. The US and Europe ignore it
We reached the edge of the oil spill near the Nigerian village of Otuegwe after a long hike through cassava plantations. Ahead of us lay swamp. We waded into the warm tropical water and began swimming, cameras and notebooks held above our heads. We could smell the oil long before we saw it — the stench of garage forecourts and rotting vegetation hanging thickly in the air.
The farther we travelled, the more nauseous it became. Soon we were swimming in pools of light Nigerian crude, the best-quality oil in the world. One of the many hundreds of 40-year-old pipelines that crisscross the Niger delta had corroded and spewed oil for several months…
BP’s behaviour in the Gulf is appalling. But our thirst for oil is the real issue
As this piece is written, act one of the Gulf of Mexico tragedy continues, agonisingly, to unfold. We, the people of the region, keep hoping to leave behind the terrifying explosions and ghastly loss of human life, the dread invoked by black jets billowing endlessly from below and the floating oil spreading over an ever-growing area.
We want to move on to act two, which will feature many dirty shovels, corpses of birds and people crying over the loss of a landscape they love. Act three has yet to be written; it will employ an enormous cast of lawyers and last for decades, but in that time there will be some healing, we hope. That’s what we need to happen as soon as possible, but we can’t seem to get the damned thing plugged up…
78 months and counting …
We may be in the grip of the worst economic upheaval for half a century, but the UK is still at heart a forward-looking, modern economy, isn’t it? Smogs and satanic mills are things of the past and we have a model that is resource-light and service driven, don’t we?
Perhaps not. In the UK for the first quarter of this year, £1 in every £4 paid in dividends to shareholders came from a single industry: oil and gas. And, from that sector, just two companies — BP and Shell — accounted for the vast majority…
Barreling Toward Peak Oil
The amount of oil consumed in the world is unbelievable—85 million barrels a day. And we are not making more of it.
People throw around the term “peak oil,” but that doesn’t mean the system will run out of oil. It means the amount of oil you’re gaining by finding new oil fields—and bringing them onstream—is equal to the losses you’re taking as other fields run down. The U.S. was the first country to peak in 1970, but that was a seamless transition since the oil companies just brought in more oil on tankers. Now the U.S. is importing about 67 percent of its oil…
Oil Trades Near $74, Set for Second Weekly Gain, on U.S. Demand
Crude oil was little changed near $74 a barrel, poised for a second weekly increase, as a decline in U.S. stockpiles signaled a recovery in demand from the world’s biggest energy consumer.
Oil pared some of yesterday’s 2.4 percent gain on concern consumption in China may slow as policymakers trimmed economic stimulus after the $1.4 trillion lending binge that revived growth in 2009. U.S. crude oil stockpiles dropped for the first time in seven weeks and gasoline inventories fell to the lowest this year, according to a report from the Energy Information Administration yesterday…
Production Costs Climb for Canadian Oil Sands, Companies Say
The financial crisis and the global recession had limited effect on efforts to lower production costs for Canadian oil sands, companies including Statoil ASA and Canadian Oil Sands Trust said.
“Both operating expenditures and maintenance capital have been on a rising trend and when oil prices accelerate, that trend accelerates along with it and we got a very good taste of that in the last five years,” Marcel Coutu, chief executive officer of Canadian Oil Sands said today at an Oslo conference. “When oil prices crash, those operating costs unfortunately lag and it takes some time for them to come down.”…
Gas
China lifts natgas prices in long-awaited reform
China announced a 24.9 percent rise in natural gas prices on Monday in a reform to spur supply of the cleaner-burning fuel, use of which is growing fast as the country gives more weight to the environment.
China last raised both wellhead gas prices and wholesale prices to industrial users in November 2007 but exempted more sensitive consumers such as households and fertiliser firms…
Shell expands US shale gas reserves with $4.7bn purchase of East Resources
Shell is now the owner of three of the most attractive shale gas prospects in North America — in Texas, Canada and now the Marcellus shales in the northeast US.
US gas reserves have increased 10-fold since the discovery of shale gas over the last few years. Now oil majors are rushing to buy shale fields, where gas can be extracted from rock by fracturing the ground…
Struggle for Central Asian energy riches
A year ago, the Kremlin issued a stark warning: that growing competition for control of global energy resources could spark wars on Russia’s borders, including those in Central Asia.
“Problems that involve the use of military force cannot be excluded, that would destroy the balance of forces close to the borders of the Russian Federation and her allies,” said a key Kremlin strategy document assessing the main security threats of the coming decade…
Turkmenistan starts new gas pipeline to West
Turkmenistan on Monday started work on a $2 billion gas pipeline that aims to boost its export capacity and increase the reclusive nation’s economic and political clout in the global gas market.
President Gurbanguli Berdymukhamedov hailed the new 620-mile (1,000-kilometer) pipeline — dubbed East-West — stressing that Turkmen firms would build it on their own…
Coal
Plans for first coal power plant since 1970s
The plant, at Hunterston in Ayrshire, would use experimental carbon capture storage (CCS) technology, which removes carbon dioxide emissions and stores them underground.
The £3 billion proposal is the first of its kind in the UK but faces strong opposition from local people and environmental groups, who argue that it will damage local wildlife…
Nuclear
Chris Huhne warns of £4bn black hole in nuclear power budget
Britain is facing a £4bn black hole in unavoidable nuclear decommissioning and waste costs, Chris Huhne, the energy and climate change secretary disclosed tonight.
The decommissioning costs over the next four years revealed by officials to Huhne are so serious that he has already flagged the crisis up to the cabinet…
EDF ran secret lobbying campaign to reduce nuclear waste disposal levy
The nuclear industry is being offered what campaigners claim is a taxpayer subsidy on the disposal costs of waste from new reactors following a secret lobbying campaign, the Guardian has learned.
The revelation will put further scrutiny on the new government’s promise that there will be no subsidy for nuclear power. Liberal Democrat Chris Huhne, the new energy and climate change secretary of state, admitted to the Guardian this week that the government already faces a £4bn funding black hole over existing radioactive waste…
Nuclear giants stockpile fuel while price is cheap
Some of the world’s biggest energy companies are stockpiling the nuclear fuel used to power reactors as they try to capitalise on rock-bottom uranium prices.
An oversupply of nuclear fuel on international commodity markets has followed five successive years of rapid growth in uranium ore production in Kazakhstan, which has nearly quadrupled its output since 2004…
Renewables
Figuring land use into renewable-energy equation
Imagine if your country had an unlimited budget but a limited amount of land: what renewable energy has the most potential?
Rutgers University professor Clinton Andrews and colleagues ran the numbers on this thought experiment and came up with some surprises. They identified clear limits on some technologies, notably biofuels, but concluded that the bigger challenges to renewable energy and land relate to siting energy facilities, particularly transmission lines…
UK
Who pays for UK coalition’s ‘green economy’?
Building the UK’s green economy could be expensive, but the government is unlikely to fund it.
Renewable energy is the key to a low-carbon future With the failure of world leaders to reach agreement on tackling climate change last year and continuing economic difficulties, investment from the private sector has stalled…
Government review to examine threat of world resources shortage
Ministers have ordered a review of looming global shortages of resources, from fish and timber to water and precious metals, amid mounting concern that the problem could hit every sector of the economy.
The study has been commissioned following sharp rises in many commodity prices on the world markets and recent riots in some countries over food shortages…
Climate
EU plans green taxes to cut debt
Biofuels and wind or wave power would become less costly than energy produced from fossil fuels, under draft plans obtained by Reuters, the news agency.
The EU wants to overhaul Europe’s €240bn (£201bn) annual taxation of energy, which varies between countries and often creates paradoxical incentives that encourage the biggest polluters…
2010 on track to become warmest year ever
New data from some of the world’s leading climate researchers and institutions suggest that 2010 is shaping up to be one of the warmest years ever recorded.
Scientists at the US National Snow and Ice Centre Data Centre (NSIDC) report today that Arctic sea ice — frozen seawater that floats on the ocean surface — is now at its lowest physical extent ever recorded for the time of year, suggesting that it is on course to break the previous record low set in 2007…
Economy
Commodities’ Biggest Drop Since Lehman Bear Signal
The biggest slump in commodities since Lehman Brothers Holdings Inc. collapsed is undermining Wall Street forecasts for accelerating economic growth and higher prices for everything from copper to crude oil…
