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.
Markets plunged again on Thursday as warnings of a double dip recession grow louder. Morgan Stanley described the eurozone and the US as “dangerously close to a recession“. Yet oil prices have softened only slightly, and Brent crude remains above $105/barrel.
The impact of persistently high oil prices on the economy, while largely squeezed out of headlines by the debt crisis, is acknowledged by analysts. Merrill Lynch for example warned earlier in the month that “…the last two times that energy as a share of global GDP neared 9%, basically the current level, the world economy experienced severe crises: the double dip recession of the 1980s and the Great Recession of 2008.”
To read the latest issue of Foreign Policy Journal, you would be excused for thinking that all of this is yesterday’s news, and that the all-conquering-all-American oil and gas industry is about to ride over the hill and save the day. But the article is shot through with important omissions: it fails to mention the inconvenient fact that global decline rates are so steep that much of this new oil will only replace lost production; and it avoids discussing the cost of wringing oil out of rock or from under miles of ocean as compared to the onshore oil fields on which the oil age was built.
The environmental cost of off-shore drilling was in the news again this week as a leak at Shell’s Gannet oil field caused the worst North Sea spill this decade. The leak comes on the heels of Shell’s admission of liability this month for Niger Delta oil spills, and a year after the UK Health and Safety Executive warned of a marked rise in the type of incidents which could be “potential precursors to a major incident” (see Sharp increase reported in UK oil leaks). An increasingly desperate search for hydrocarbons against the backdrop of economic decline bodes ill for the environment, which is – lest we forget – where we live.
Oil
Crude Oil Heads for Fourth Weekly Drop as Brent Premium Widens to Record
Oil fell in New York, heading for a fourth weekly drop, as investors bet fuel demand will falter amid signs of weaker growth in the world’s biggest crude consumers. Brent traded at a record premium to U.S. prices.
Futures slipped as much as 2.4 percent today, leading a decline in global commodity prices, after slumping 5.9 percent yesterday. Supply disruptions in the North Sea and Africa have boosted Brent to $25.95 a barrel above New York crude, which has tumbled 30 percent from its peak this year. U.S. oil supplies are 4 percent higher than the five-year average after unexpectedly rising last week…
The Americas, Not the Middle East, Will Be the World Capital of Energy
For half a century, the global energy supply’s center of gravity has been the Middle East. This fact has had self-evidently enormous implications for the world we live in — and it’s about to change.
By the 2020s, the capital of energy will likely have shifted back to the Western Hemisphere, where it was prior to the ascendancy of Middle Eastern megasuppliers such as Saudi Arabia and Kuwait in the 1960s. The reasons for this shift are partly technological and partly political. Geologists have long known that the Americas are home to plentiful hydrocarbons trapped in hard-to-reach offshore deposits, on-land shale rock, oil sands, and heavy oil formations. The U.S. endowment of unconventional oil is more than 2 trillion barrels, with another 2.4 trillion in Canada and 2 trillion-plus in South America — compared with conventional Middle Eastern and North African oil resources of 1.2 trillion. The problem was always how to unlock them economically…
Saudi oil exports rise in June to highest level since 2008
Saudi Arabia produced 9.813 million barrels a day (bpd) of crude in June, up about 918,000 bpd from May, while exports rose to their highest level since the financial crisis hit demand in 2008, official Joint Data Initiative (JODI) figures show.
Saudi Arabia’s Oil Minister Ali al-Naimi has said the kingdom would unilaterally produce all the oil needed after OPEC talks over a coordinated increase in production collapsed on June 8…
Shell says lots of oil still in leaking pipeline
Oil major Royal Dutch Shell said a large volume of oil remained in its leaking pipeline, raising the possibility that Britain’s worse oil spill for a decade could worsen, but said the extra amount would only seep out in a worse case scenario.
Oil leaked into the sea off the coast of Scotland for a seventh day on Wednesday as Shell said it was planning extensive activity including the deployment of divers to completely stop the flow of oil…
China pushes ConocoPhillips to contain oil spill by end of Aug
China’s marine authorities expressed growing frustration at the failure of a unit of ConocoPhillips to contain a two-month oil spill that has spread across the northeast coast and again urged it to halt the leak by the end of August.
Officials of the State Oceanic Administration (SOA) met ConocoPhillips officials again on Tuesday and urged the company to seal off oil leaks in northern China’s Bohai Bay and clean up polluted areas before an August 31 deadline…
As Oil Spiked, Many Traded
The world of oil investors reached far beyond Wall Street in recent years as foreign pension funds, corporate icons and even an Ivy League endowment placed big wagers on oil prices, according to a list compiled by U.S. regulators.
The U.S. Commodity Futures Trading Commission list shows that just before crude prices reached record highs in 2008, investments tied to millions of barrels of oil were held by a diverse group of at least 219 investors…
Judge Strikes Down U.S. Drilling Policy
A federal judge has struck down an Obama administration policy concerning drilling on public lands, raising the possibility that more permits will be issued for oil and gas companies.
But it wasn’t clear Monday how the Interior Department, which processes the permits, would respond. The ruling, issued Friday by the U.S. District Court in Wyoming, rejected a policy that had required more extensive environmental review of some drilling permits…
BP says it cannot find skilled workers
The regional boss said the FTSE 100 company was planning to recruit between 150 and 300 jobs a year to help fuel an expected growth in production, but said one of the company’s biggest problems was finding the right people with the right skills to fill vacant positions.
Last month, the company announced it would pump £3bn into its North Sea operations in a plan to redevelop two oilfields. The investment will see production expand at Schiehallion and Loyal oilfields, to the west of the Shetland Islands, in a move that would create hundreds of new jobs…
Gas
New York Subpoenas Energy Firms
New York State’s attorney general has sent subpoenas to three large energy companies as part of a broad investigation into whether they have accurately described to investors the prospects for their natural gas wells, according to several sources familiar with the inquiry.
The subpoenas focus on how the companies took advantage of federal rules, adopted in late 2008, that govern the way they report their oil and gas reserves to investors…
Energy Companies Cope With Decline in Natural-Gas Imports
The next shipment of natural gas to arrive at Dominion Resources Inc.’s import terminal in Maryland will be used to cool down pipes and storage tanks at the terminal that aren’t being used as often as they should.
The Cove Point facility, which imports liquefied natural gas, is suffering from a steep decline in imports in the wake of a boom in U.S. gas production. With the equipment not getting used on a regular basis, Dominion is having to take the special step of importing LNG just to keep the terminal operating…
Iraq, Shell Eye Gas Windfall
Iraq’s gas deal with Royal Dutch Shell PLC to capture and exploit associated gas from its giant southern oil fields is expected to produce two billion cubic feet a day, according to an official agreement summary obtained Tuesday.
The Iraqi oil ministry signed in July a final draft deal with Shell and Japan’s Mitsubishi Corp. to develop gas production in southern Iraq. However, in order to become valid the deal still needs approval from the Baghdad government…
Coal
Coal Hits a Tough Vein as Costs Rise
U.S. coal companies, whose stocks are down 30% over the past three weeks, are fighting not only the latest market swoon but inroads from natural gas, heightened environmental regulations and higher costs.
This summer’s heat wave should have made the commodity hot in the East, but it didn’t. Utilities drew down coal stockpiles but also favored lower priced and cleaner natural gas in some regions, sending prices of thermal coal used by utilities lower in the East. Meanwhile, small coal-fired power plants along rivers in Ohio and elsewhere are slated to close, due to tougher emission standards…
Nuclear
The explosive truth behind Fukushima’s meltdown
It is one of the mysteries of Japan’s ongoing nuclear crisis: How much damage did the 11 March earthquake inflict on the Fukushima Daiichi reactors before the tsunami hit?
The stakes are high: if the earthquake structurally compromised the plant and the safety of its nuclear fuel, then every similar reactor in Japan may have to be shut down. With almost all of Japan’s 54 reactors either offline (in the case of 35) or scheduled for shutdown by next April, the issue of structural safety looms over any discussion about restarting them…
Japan reopens first nuclear reactor since tsunami
A nuclear power plant in northern Japan has become the first reactor in the country to resume full operations since the March 11 earthquake and tsunami.
Tomari nuclear power plant’s reactor number three, in Japan’s northernmost Hokkaido island, restarted full commercial operations after receiving the official go ahead from central government…
Biofuels
Barack Obama bets on next generation of biofuels industry
The evidence against ethanol is clear. Now the White House is betting on the next generation of biofuels.
Barack Obama used a campaign tour through the mid-west to announce he would spend up to $510m (£311m) to help build new refineries which could produce fuel from wood chips, grasses, or corn cobs. “Biofuels are an important part of reducing America’s dependence on foreign oil,” he said…
GM corn being developed for fuel instead of food
US farmers are growing the first corn plants genetically modified for the specific purpose of putting more ethanol in gas tanks rather than producing more food.
Aid organisations warn the new GM corn could worsen a global food crisis exposed by the famine in Somalia by diverting more corn into energy production…
UK
Electricity bills could rise by £13 a year to fund infrastructure expansion
Power transmission companies want to be able to charge households an extra £13 per year on their energy bills by 2021 to cover the cost of connecting wind farms and other new generation to the national grid.
Scottish Power, Scottish & Southern and National Grid collectively want to spend £21bn over the next eight years on improving their systems, mostly to prepare for new wind farms coming on to the grid…
Vestas: new wind turbine factory will create 2,000 UK jobs
Vestas, the world’s largest wind turbine manufacturer, has confirmed it could build a factory in the UK within a year as soon as it has secured sufficient orders for its new offshore wind turbine.
Speaking to BusinessGreen, chief executive Ditlev Engel said that having secured the option to develop a new factory at a 70-hectare site at Sheerness in Kent, the company was poised to green light the project as soon as sufficient orders are confirmed for its 7MW V164 turbine…
Smaller rivals turn up the heat on energy’s ‘Big Six’
It’s a struggle, there’s no doubt about it,” says Phil Levermore of Ebico, the UK’s oldest not-for-profit energy supplier.
“The system is set up to favour the big players. But we still manage to compete on price and customer service.”…
Economy
US and eurozone ‘dangerously close to a recession’
Morgan Stanley has slashed its global growth forecast for 2011 and 2012, saying the US and the eurozone were “dangerously close to a recession”.
The bank also attackd policymakers in Washington and Europe for not acting more decisively to contain the sovereign debt crisis…
Oil not Wall Street is top US threat
If history is any guide, another oil-induced recession may be just around the corner, at least for the United States and some of the other developed economies.
Every time that the cost of oil relative to global economic output has hit current levels – and that’s even after sharp falls in spot prices this month – it has heralded a slump…
How much of our economic woes are caused by oil?
The Labor Department released a rare bit of good news today: The number of new unemployment claims this week dropped to its lowest level in four months. Here’s a graph of weekly unemployment claims over the past decade:
Notice that in early 2011, unemployment claims were trending downward — suggesting that the jobs market was improving, however modestly — and then hit a bump about a quarter of the way through the year. What could’ve caused that?…
Transport
Historic canal reborn as low-carbon cargo route
Britain’s canal systems were once viewed as a throwback to a bygone age of freight transport, sidelined or abandoned in favor of faster road and rail links.
But as one major waterway undergoes a renaissance, shipping huge quantities of wine and other goods through two of the country’s major trading hubs, the network could be poised to reclaim its original role and at the same time help cut pollution levels…
The end of the road for motormania
Something unexpected is happening to our car-crazy culture. What are the forces driving us out of motoring?
IS THE west falling out of love with the car? For environmentalists it seems an impossible dream, but it is happening. While baby boomers and those with young families may stick with four wheels, a combination of our ageing societies and a new zeitgeist among the young seems to be breaking our 20th-century car addiction. Somewhere along the road, we reached “peak car” and are now cruising down the other side…
Solar Power For Trains Dawns In Rainy Belgium
Trains already have a reputation for being a very clean form of transport but Belgian commuters can now boast railways which are partially powered by solar energy.
A public-private consortium consisting of Belgian rail management company Infrabel and solar developer Enfinity has installed 16,000 solar panels on the roof of a 3.4 km (2.1 miles) long tunnel between Antwerp and the Dutch border, creating enough electricity to power 4,000 trains a year…
