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 fallout from the IEA’s recent decision to release 60 million barrels of oil reserves continued this week. OPEC members criticized the IEA for “breaching its own principles” and interfering with the market. Traders too seemed little impressed with the move as prices recovered last week’s losses, as Greece drew back from the brink. After all, 60 million barrels is less than a day’s global consumption.
Abdalla Salem El-Badri Secretary General of OPEC, claimed Saudi and Kuwait were not given long enough to increase production, but an IEA statement maintained the Agency had been in close contact with Saudi Arabia before the decision. So, as ever, the reality is opaque. We will have to wait until the second half of the year to see whether production can really be ramped up. If not, it will support the argument that the IEA’s move was not simply driven by American politics, but that the Agency is more worried than it lets on that Saudi – and therefore OPEC as a whole – cannot deliver.
More doubts were raised about the shale gas revolution in a series of articles in the New York Times. The paper revealed internal industry documents and e-mails claiming that reserves and production estimates are likely to be overstated, and comparing the shale gas boom to a Ponzi scheme. The overstatements were made possible by recent changes in Securities and Exchange Commission rules, which now allow companies to book reserves as proved in areas where they have not yet drilled, solely on the basis of modelling. The productivity of different plays varies significantly and it seems estimates are sometimes made using numbers from the most productive wells, giving an overly rosy picture. The shale gas industry has dismissed the criticism, but a press release from industry giant Chesapeake Energy fails to rebut the specific allegations.
In the UK this week the Committee on Climate Change warned that meeting the government’s fourth carbon budget will still require a “step change”. Despite the weak economy, emissions rose 3% last year instead of falling by that amount, as required by the government’s strategy. Unusually severe winter weather didn’t help, but even stripping that out, emissions were only flat. According to the report, insufficient progress is being made in domestic insulation retrofits, smart travel choices, and renewables investment. DECC figures show that in the first quarter of this year higher gas prices prompted a rise coal burning for power generation. Energy Secretary Chris Huhne keeps saying we need to get off fossil fuels, but the pressure on the government will continue to grow as fuel costs increase and the economy continues to flounder.
Oil
OPEC Acts to Avoid Oil Releases
OPEC’s top official said Wednesday he wants to mend fences with the International Energy Agency and avoid a repeat of a release of oil from stockpiles that has strained consumer-producer relations.
Abdalla Salem El-Badri, secretary general of the Organization of Petroleum Exporting Countries, said he hoped to set up a sit-down meeting with IEA Executive Director Nobuo Tanaka to discuss better coordination between consumers and producers. “We don’t want this to be repeated,” Mr. El-Badri said of the IEA’s controversial release…
Iran Accuses IEA of Breaching ‘Principles’
Amplifying criticism by oil producers of last week’s release of oil from emergency stockpiles, Iran’s Oil Minister Mohammad Aliabadi on Monday accused the International Energy Agency of violating “principles” that limit when energy-consuming countries can tap reserves.
Mr. Aliabadi’s comments, which preceded a formal energy dialogue between OPEC and the European Union later Monday, underscored how the IEA’s controversial emergency release is straining relations between producers and consumers. The remarks came amid new signs Monday that suggested OPEC member Saudi Arabia will continue to raise output and as the IEA disclosed new details about its emergency release of oil…
Peak oil is ‘getting closer’ but the world is not ready
The end of cheap oil has got governments panicking to control prices rather than planning for a post-oil era. The Ecologist reports
Was it a sign of desperation or show of strength?..
Crude Down In Profit Taking; But Eyes US Data
Oil futures prices were weaker Thursday as market participants took profits from the previous session’s highs that were spurred by a surprise decline in U.S. oil inventories and the Greek parliament’s vote to approve austerity measures.
Crude prices are expected to continue correcting lower initially, with market participants then turning to focus on the weekly U.S. jobless claim report due at 1430 GMT, analysts said. The report is key for dollar direction and moves in the greenback will in turn filter back through into oil prices…
BG Group doubles estimate of Brazil Santos Basin oil reserves
BG Group saw its share price shoot up by 4.5pc to £14.10 following the upgrade to its estimated resources. This follows a previous upgrade from 2.1bn barrels to 2.8bn barrels, which excited the market last November.
BG owns stakes in five offshore blocks, with its share of the assets potentially up to 8bn barrels or 4bn at the lower end of forecasts…
Gas
S.E.C. Shift Leads to Worries of Overestimation of Reserves
In 2008, the stocks of many natural gas companies were sinking because of the financial meltdown, recession fears and falling gas prices.
But they began to rebound after a sweeping rule change by the Securities and Exchange Commission, intended to modernize how energy companies report their gas reserves…
Insiders Raise Alarm Amid a Rush for Natural Gas
Natural gas companies have been placing enormous bets on the wells they are drilling, saying they will deliver big profits and provide a vast new source of energy for the United States.
But the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells…
China enters shale gas era with tender offer
China’s search for natural gas passed a milestone this week as Beijing launched its first tender offer for four shale gas blocks in southern China to underline its determination to move forward with developing unconventional gas resources…
Norway launches carbon capture and storage scheme
Covering four square kilometres of coast, the facility processes so much North Sea oil that it is Europe’s second biggest crude terminal after Rotterdam. Yet it is here that Norway is developing technology that some experts believe could provide one of the most important contributions to tackling climate change. This year Norway plans to open the world’s biggest test facility for capturing greenhouse gas emissions, from the Mongstad refinery and its neighbouring gas fired power plant, before they enter the atmosphere…
Influential MEP calls for shale gas regulation
One of the most influential members of the European parliament is proposing a new directive that would penalise or even ban the exploitation of shale gas, the controversial new fossil fuel that is tipped as the major energy source of the future.
Jo Leinen told the Guardian he wanted a new “energy quality directive” that would mean fuels with adverse environmental impacts – such as shale gas and oil from tar sands – were stringently regulated within the EU…
Electricity
DECC warned it could ‘blow’ £11.3bn smart meter budget
The government will be urged today to revise plans for the imminent national rollout of 53 million smart meters, as the National Audit Office warns that the cost of the scheme could spiral beyond the original £11.3bn estimate.
The Department of Energy and Climate Change (DECC) is currently laying the groundwork to install smart electricity and gas meters in all homes and smaller non-domestic premises in the UK between 2014 and 2019…
Eon takes up Merkel move to go green
Eon, the German power group, has called Germany’s switch to renewable energy “a huge opportunity” only weeks after demanding billions in damages from the government for nuclear plant closures.
“Germany will become a laboratory for the accelerated switch to renewable energy,” Johannes Teyssen, chief executive, told the Financial Times…
Nuclear
Plans for UK’s ‘legacy’ of nuclear waste unveiled
The UK’s long term solution for dealing with nuclear waste became a little clearer yesterday as the government published a consultation on how to select potential storage sites and provided an update on its disposal programme.
The government said the UK has built up a “substantial legacy” of radioactive waste from both civil and defence-related nuclear programmes and faces a £4bn bill in decommissioning and clean-up costs. Some of the waste is already in storage, but most will only become waste over the coming decades as existing nuclear facilities are decommissioned…
Los Alamos nuclear lab: New Mexico fire forces closure
One of the top nuclear weapons research facilities in the US will remain closed until Thursday as fire fighters battle a wildfire raging at its boundary.
Only “essential-duties” staff at Los Alamos National Laboratory will be permitted on site on Wednesday…
A Long Road Ahead for a Flooded Reactor
Federal officials say that the Fort Calhoun nuclear plant, which is surrounded by floodwaters from the Missouri River, is safe for now, as I wrote in Tuesday’s Times. But it may be a very long way from reopening.
One reason is that its reactor was shut earlier this year for refueling and plant technicians have not finished the refueling process for safety reasons. What is more, workers have been busy building barriers and installing pumps to deal with the flooding. Engineers at the Omaha Public Power District decided that it would be safer to leave the plant in refueling mode for the time being…
Don’t believe the spin on thorium being a greener nuclear option
In a world increasingly aware of and affected by global warming, the news that 2010 was a record year for greenhouse gases levels was something of a blow.
With the world’s population due to hit nine billion by 2050, it highlights the increasingly urgent need to find a clean, reliable and renewable source of energy…
Nicolas Sarkozy makes €1bn commitment to nuclear power
The French president, Nicolas Sarkozy, has bucked the anti-nuclear trend following Japan’s Fukushima disaster by pledging €1bn of investment in atomic power.
Despite growing worldwide concern about the safety of nuclear plants, Sarkozy said the moratorium on new nuclear reactors adopted by certain countries since the Japanese nuclear crisis in March “makes no sense”…
Dozens of countries queue up to go nuclear
IN THE wake of the nuclear meltdown at the Fukushima Daiichi power plant in Japan in March, several countries have announced plans to reject nuclear power. Japan will not build any more reactors. Germany plans to phase out its nuclear power plants, Switzerland will not replace its reactors, and last week Italy voted against starting a nuclear programme.
The International Atomic Energy Agency is running an emergency conference this week to identify the key lessons from Fukushima (see “Agency report praises Fukushima staff, slams TEPCO”). So does this mean a decade-long revival of interest in nuclear power is grinding to a halt?..
Biofuels
In Bioenergy Villages, Power to the People
On Friday nights, villagers here pile into the town’s only bar to play “Nail and Wood,” a beer-fueled quest to pound a nail into an upright log with the most speed and accuracy. Later, they return home to warm cottages, fully heated by a wood-chip plant they built in 2008.
“We don’t need fancy bar games, we’ve got wood,” says 51-year-old Hans-Jochen Henkel, a spokesman for the 850-person town in western Germany and a member of the committee that helped raise funding for the plant. “And we don’t need energy from large corporations. We’ve also got wood for that.”…
The Difference Engine: The beef about corn
In a surprise U-turn, members of the United States Senate voted 73-27 last week to abolish a 45-cents-a-gallon subsidy for ethanol from corn (ie, maize) that is used for blending with petrol. They also voted to kill the 54-cents-a-gallon import duty on ethanol from abroad. This is the first time in over three decades that the Senate has challenged the sacrosanct $6 billion-a-year tax break for American corn-growers and ethanol producers.
The federal government started subsidising corn-based ethanol back in the late 1970s—in a bid to wean the country off imported oil. As recently as last December, lawmakers voted to extend the ethanol subsidy for yet another year. Since then, two things have happened to make the politicians change their minds…
UK
UK emissions flat-lining, warns climate committee
Stalled efforts to cut carbon emissions have left the UK needing to insulate millions of buildings, reform the electricity markets, and rapidly ramp up renewable energy generation if it is to meet the government’s legally binding goal of halving emissions against 1990 levels by 2025.
That is the conclusion of the influential Committee on Climate Change (CCC), whose third annual progress report to parliament will today reiterate its call for a “significant acceleration” in the pace of emissions reductions expressed in previous reports…
Electricity companies switch from gas to coal
Britain’s electricity generators have been beefing up their use of coal and turning their back on more carbon-friendly gas, in moves that undermine government efforts to fight global warming.
Statistics from the Department of Energy and Climate Change (Decc) show power providers used 8% more coal for electricity production in the first quarter of this year and 21% less gas…
Switch flicked on UK’s “first solar business park”
A business park that counts the Environment Agency among its tenants claims to be the first to connect a large-scale, ground-mounted solar system to the grid – and it may also be one of the last given the drastic cuts to solar subsidies.
Around 3,000 photovoltaic panels have been installed at Howbery Business Park in Wallingford, Oxfordshire, generating over 682MWh of clean electricity per year for its 20 tenant organisations…
Transport
Spike in Metal Theft Imperils German Railways
Travelers and businesspeople pushing their way through the underground train station at Cologne Bonn Airport are intercepted at the escalators down to the tracks by security personnel from Deutsche Bahn, Germany’s national rail provider. No, these officers inform the passengers, no trains are running at the moment. And no, they don’t know when operations will start again. Frustration and annoyance spread palpably through the crowd.
This was Tuesday morning of last week and, in this case, the delay wasn’t caused by a broken-down high-speed ICE train. It wasn’t a faulty railroad switch, the private drama of a suicide on the tracks or a bomb threat. And yet, it was an attack of sorts…
