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.
Saudi oil minister Ali al-Naimi hinted this week that OPEC might move to increase oil production to satisfy rising demand. Both OPEC and the IEA are anticipating demand growth this year, and with Brent crude close to $100/barrel the pressure on OPEC is growing. The weak, heavily indebted western economies are struggling to absorb the additional costs, while developing economies risk serious civil unrest as fuel and food prices rise. Many of the OPEC nations face serious threats of their own as they struggle to generate jobs for their growing populations. No doubt the house of Saud and other OPEC leaders will be casting a wary eye at the recent uprising in Tunisia and the riots in Egypt.
President Obama delivered the State of the Union address on Wednesday and invited Americans to work together to meet a goal of producing 80% of electricity from “clean sources” (the President has a broad definition of clean) by 2035. The President presented the challenge in terms of energy security rather than resource depletion or climate change; it was a patriotic rallying cry to reduce reliance on foreign oil and create American jobs. This could play well at home, but the question of how to achieve it could produce deadlock in Congress, with Democrats generally more in favour of renewable generation and Republicans closely tied to the fossil lobby. The President called once again for the removal of subsidies to the oil and gas industry.
In Britain this week the House of Commons Energy and Climate Change Committee warned that reforms to the Planning Act via the Localism bill, risked creating an uncertain investment environment which is likely to result in a new “dash for gas” at the cost of “the cleanest forms of energy”. The coalition government abolished the Infrastructure Planning Commission (IPC), a quango set up by the Labour government to fast track national infrastructure decisions, in favour of a system in which final planning decisions rest with ministers, who are more likely to be swayed by local opposition to wind farms and the like.
The energy story getting the most headlines is not about future sources of supply but about current record high petrol prices. Pressure grew on the government this week, not only from hauliers and motoring organizations, but also from Mayor of London Boris Johnson. The signs are that the fuel duty rise planned for April may be axed as the government moves to avoid industrial action. This will be popular, but without serious steps to cut our dependency on oil in transport, it can only be a short-term stop gap.
As ODAC went to press BP’s fortunes were lurching once again, as the Russian oligarchs who are BP’s partners is TNK-BP started court action to block the company’s new alliance with Rosneft.
Oil
OPEC could increase production in 2011: Saudi Arabia
OPEC members could increase their production to meet 2011 demand which could rise by two percent, while oil prices are expected to maintain last year’s levels, Saudi’s oil minister said on Monday.
As non-OPEC oil producers are expected to increase their production, OPEC countries too will have the opportunity “to boost their supplies to the global market to meet the rising global demand,” said Petroleum and Mineral Resources Minister Ali al-Naimi…
OPEC, IEA differ on demand outlook due to assumptions, IEF says
The International Energy Agency and OPEC differ in their oil demand forecasts mainly because of assumptions on energy and environmental policies, the Riyadh based International Energy Forum (IEF) said.
These factors are “one of the key drivers for the energy outlook,” the IEF said in a statement on its website on Saturday. “They are at the same time one of the most uncertain areas for the outlooks.” The IEF is a group of nations that account for more than 90 percent of global oil and gas supply and demand, and was established to discuss international energy security…
German Government Rejects Report ‘Peak Oil’ Occurred in 2010
Chancellor Angela Merkel’s government rejected a report by Germany’s armed forces that global crude-oil production reached its maximum last year, parliament’s HIB newsletter said.
Crude output “can be increased through 2035 under today’s conditions, assuming an optimal development and exploitation of reserves,” HIB said today, citing the government’s response to a query by the opposition Green party. The government’s outlook is based on International Energy Agency estimates, it said…
The Exorbitant Dream of Arctic Oil
International oil companies are racing to develop new oilfields in the Arctic. But developing the vast reserves could be far more expensive than first thought, according to new calculations by US geologists obtained by SPIEGEL ONLINE.
Two complete failures and one aborted test drill — a miserable outcome. When Scottish company Cairn Energy published the preliminary results of its search for oil off the coast of Greenland last October, the firm’s share price plunged 7 percent in one day. Its findings revealed not a trace of black gold. On the contrary: the company said it would have to write off costs totalling €180 million ($246 million)…
TNK-BP Shareholders File to Halt BP Deal With Rosneft
Russian billionaire shareholders in TNK-BP asked a London court to halt the share swap and Arctic exploration deal between BP Plc and OAO Rosneft, according to a copy of the filing read by Bloomberg News.
The billionaire shareholders, represented by a group called AAR, are demanding BP present the deal to TNK-BP because the 50- 50 venture’s shareholder agreement gives Russia’s third-largest oil producer an exclusive right to pursue new opportunities in Russia on behalf of the London-based company…
Industry warns over delays in Gulf permits
Delays in issuing drilling permits in the Gulf of Mexico threaten to postpone development in the deep water area to the extent that an estimated one-third of production could become uneconomic, according to a new industry-sponsored study…
BG Group to invest $10bn in Brazilian deepwater oil fields
BG Group is to invest $10bn (£6.26bn) in Brazil over the next decade as it seeks to accelerate the development of the country’s deepwater oil fields.
The company is aiming for an output of 400,000 barrels of oil a day by 2020, which would make it Brazil’s second biggest oil producer after the state-run energy giant Petrobras…
Gas
Shareholders challenge gas companies on fracking
A group of US investors have filed shareholder resolutions with nine oil and gas companies, pressing them to disclose plans for managing risks associated with the technology being used to extract gas from shale rock.
With the US Environmental Protection Agency investigating the risks; a New York State moratorium on use of the technology; and cases like the one being built against Range Resources in Texas, the resolutions are no surprise…
Exxon Mobil looks for shale gas in Germany
Exxon Mobil Corp., the largest U.S. oil company, is looking for unconventional natural gas pockets in western Germany, where giant volumes are believed to be locked underground.
Over the next five years, Exxon Mobil will spend several hundred million dollars and up to more than $1 billion on exploring shale gas in North Rhine-Westphalia, Gernot Kalkoffen, head of Exxon Mobil Central Europe, told German business daily Handelsblatt…
Climate Benefits of Natural Gas May Be Overstated
The United States is poised to bet its energy future on natural gas as a clean, plentiful fuel that can supplant coal and oil. But new research by the Environmental Protection Agency—and a growing understanding of the pollution associated with the full “life cycle” of gas production—is casting doubt on the assumption that gas offers a quick and easy solution to climate change.
Advocates for natural gas routinely assert that it produces 50 percent less greenhouse gases than coal and is a significant step toward a greener energy future. But those assumptions are based on emissions from the tailpipe or smokestack and don’t account for the methane and other pollution emitted when gas is extracted and piped to power plants and other customers…
European pipelines in final push
At times the European Gas Conference in Vienna felt more like a television dating gameshow than a humdrum industry get-together.
It is make-or-break-time for Europe’s ambition to open up the so-called “Southern Corridor” — the bid to access alternative gas supplies in the Caspian region (which holds one quarter of the world’s reserves) and thereby break the continent’s dependency on Russian gas…
Gas Profit at 7-Year Low Reduces Storage Growth: Energy Markets
The returns for buying natural gas this spring and selling it for use next winter have dropped to the lowest level in seven years, discouraging companies from building new storage sites in the U.S. and threatening to put excess supplies on the market.
Buying gas for April delivery and selling more expensive November futures yielded 35.7 cents per million British thermal units yesterday on the New York Mercantile Exchange, the lowest premium for the day since 2004. The gap was 72 cents a year ago. Increased storage is needed to accommodate additional gas supplies as production from shale formations increases…
North America
Obama sets 2035 clean electricity target
U.S. President Barack Obama set a target for power plants to produce mostly clean electricity by 2035 — including power from sources like clean coal and natural gas — in his State of the Union address on Tuesday.
Obama also called for investment in clean technologies and urged Congress to eliminate billions of dollars in subsidies for oil companies…
Electricity
Backing for Brussels on energy market
Europe’s energy groups have signalled a shift in favour of giving Brussels more authority over energy policy, warning that conflicting national regulations are creating an “unsustainable” market…
Saudi Arabia requires alternative power resources to meet demand
Saudi Arabia needs to develop alternative energy resources as power consumption for industrial growth and transportation increases in the world’s largest oil supplier, a senior energy official said.
Energy demand in the kingdom will increase to more than 8 million barrels of oil equivalent a day by 2028, Hashim Yamani, president of King Abdullah City for Atomic and Renewable Energy, said at a conference in Riyadh today. That compared with 3.4 million barrels of oil equivalent a day last year, he said…
Nuclear
Former critic warms to nuclear option
Chris Huhne rose at 5am and drove for more than three hours to pay his first visit to one of the nuclear power stations he once vociferously opposed.
The energy and climate change secretary donned an orange helmet and a protective blue coat for a tour of the active nuclear installation at Hinkley Point “B”, before travelling in a Land Rover over the green fields that may soon be obliterated by the concrete foundations of two new reactors at site “C”…
‘Sellafield is where we house the toxic legacy of our failed nuclear industry’
There are many uncertainties about the renaissance of nuclear power in the UK, particularly surrounding the level of public subsidy, but one thing remains constant: the industry’s waste problem hasn’t gone away.
The clean-up of nuclear legacy waste at the Sellafield nuclear reprocessing plant — a site historically plagued with mismanagement and technical difficulties — is running behind schedule, according to the 2009-10 annual report from the Nuclear Decommissioning Authority (NDA), which was quietly released in December…
Biofuels
Two-thirds of biofuel fails green standard
Less than one-third of the biofuel used on UK roads meets government environmental standards intended to protect water supplies, soil quality and carbon stocks, according to new figures.
The Renewable Fuels Agency says that just 31% of the biofuel supplied under the government’s initiative to use fuel from plants to help tackle climate change met its green standard. For the remaining 69% of the biofuel, suppliers could not say where it came from, or could not prove it was produced in a sustainable way, the figures show…
Biofuel jatropha falls from wonder-crop pedestal
Jatropha, a biofuel-producing plant once touted as a wonder-crop, is turning out to be much less dependable than first thought, both environmentalists and industry players say.
Some biofuel producers found themselves agreeing with many of the criticisms detailed in a report launched by campaign group Friends of the Earth this week — “Jatropha: money doesn’t grow on trees.”…
U.S. gives $650 million loan aid for biofuels from waste
The U.S. government on Thursday gave four biofuel companies loan guarantees of nearly $650 million to help build plants that will make motor fuels from sources like animal fat, orange peels and trash.
The government is supporting the development of new feedstocks for ethanol to ease dependence on corn. Nearly 40 percent of the U.S. corn crop goes to making ethanol, which has spurred concerns from environmentalists and food groups that production of the fuel can raise food prices…
UK
MPs warn that UK rules could hamper renewables investment
Investment in renewable energy technology could suffer as a result of new government rules that favour gas-powered generation, MPs are warning.
Plans to speed up the planning process for major energy projects do not prioritise low-carbon generation over conventional capacity, according to a report from the House of Commons Energy and Climate Change Committee…
George Osborne considering axing planned fuel duty rise
Chancellor George Osborne has said he is considering cancelling the fuel duty increase due to take effect in April.
There has been growing pressure to have a rethink on the 1p rise at a time when petrol prices have soared after the increase in oil prices and VAT…
Boris Johnson demands fuel stabiliser
David Cameron should “seriously consider” introducing a fuel stabiliser, according to Boris Johnson, as he increased pressure on the Prime Minister to protect motorists from soaring oil prices.
Writing in The Daily Telegraph, the Mayor of London became the most senior Tory to date to demand a cut in motoring taxes.
“If I were the government, I would think seriously about that fuel duty stabiliser, because when it costs more to fill your tank than to fly to Rome, something is seriously wrong,” he wrote…
‘Soaring Fuel Prices Are Crippling Business’
Rising fuel prices are threatening wage freezes and job cuts, according to Britain’s small businesses.
Following recent VAT and fuel duty rises, the Federation of Small Businesses carried out a snap poll of 400 members…
Geopolitics
Arab Rulers Fear Spread of Democracy Fever
In the wake of Tunisia’s mostly peaceful revolution, Arab leaders are worried that their young, frustrated populations might follow suit. While the West sits back and watches, regimes stress stability over genuine democracy and hope to calm simmering discontent with cash.
Libyan leader Moammar Gadhafi and Israeli Vice Prime Minister Silvan Shalom don’t have all that much in common, but they do share one thing: Neither thinks much of the revolution in Tunisia…
Economy
Roubini: Oil, energy, food prices a risk to stability
Rapidly rising oil, energy and food prices pose a serious threat to global stability, leading U.S. economist Nouriel Roubini has warned.
Speaking at the World Economic Forum’s 2011 annual meeting in Davos, Switzerland, Roubini said the global economy was a “glass half-full and a glass half-empty”, with some signs of recovery…
IMF predicts faster global economic growth in 2011
The International Monetary Fund (IMF) has said that the global economy will grow faster this year than expected.
The IMF revised up its growth forecast from 4.2% to 4.4%, but warned of a two-speed recovery as advanced economies grow slower than emerging ones…
