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.
Both the IEA and OPEC cut their oil demand forecasts this week for 2011 and 2012 on the worsening economic outlook. Oil prices however gained as the IEA’s monthly report warned of falling stocks (see last week’s newsletter), reduced supply due to outages, and a larger call on OPEC supplies in Q4. Geopolitical tension will also continue to be a factor in the price. This week saw the US and Saudi Arabia ratchet up pressure on Iran following an alleged Iranian backed plot to kill the Saudi ambassador in Washington. Saudi is also blaming Iran for inciting Shiite anti-government protests in Bahrain.
In the UK this week North Sea oil was back on the agenda as the government gave BP the go ahead to a develop a new £4.5bn oil project west of the Shetland Islands. The Prime Minister focused on the jobs which the project would create, and also on energy security saying that “We live in a very dangerous and difficult world, we do not want to be over reliant on energy supplies from difficult parts of the world, from unstable parts of the world.”
Meanwhile details of the risks associated with being reliant on energy supplies from ever more difficult to produce resources at ever greater depths in the North Sea surfaced this week as The Independent revealed details of BP contingency plans for its North Uist exploratory well, planned for next year. Documents show that the well, which is described by the company as “stepping out, in terms of depth”, will be nearly three times as deep as any current operation in the region. In a worst case scenario BP estimates a leak of 10.5 million barrels of oil — more than double that of Deepwater Horizon. The plan is yet to be approved by Chris Huhne.
This week Huhne’s mind was on nuclear. Tuesday saw the release of the final Weightman report on the UK nuclear industry — a review instituted following the Fukushima disaster in Japan. The report found no “fundamental safety weaknesses”, though it did raise areas of concern to be addressed. The report effectively gives the green light for new nuclear in the UK and Chris Huhne vowed to learn from what he described as the “most expensive failure of postwar British policy-making“. The policy however remains controversial not least within his own party which sees the recently introduced carbon floor price as providing an effective subsidy to nuclear.
Oil
IEA Forecasts Less Oil Demand
The International Energy Agency Wednesday once again trimmed its forecast for oil demand due to the worsening economy, but said production will likely fall by a similar amount, leaving the supply balanced largely unchanged.
The IEA also highlighted data that are potentially bullish for oil prices, including an unusual reduction in oil held in storage in August and a larger forecast for the amount of oil that world markets will need from the Organization of Petroleum Exporting Countries in the fourth quarter…
Oil Heads for Second Weekly Gain on Outlook
Oil rose in New York, heading for the second week of gains, on speculation Europe may contain its debt crisis and the U.S. economy will recover, bolstering demand for raw materials.
Prices gained as much as 0.8 percent, reversing earlier declines, before Commerce Department data forecast to say U.S. retail sales last month climbed at the fastest pace in six months, according to a Bloomberg survey of economists. Oil and equity futures rallied before Group of 20 finance ministers meet to discuss Europe’s debt crisis. Technical indicators showed New York crude was oversold…
Saudi oil price hike shows Asia demand strength
The increasing disconnect between oil markets in Asia and the West was highlighted again by Saudi Arabia, which boosted export prices for a region that is the world’s last hope for growth while cutting those for Europe and the United States.
And it wasn’t just a minor tweak the Saudis gave Asia for crude cargoes for November lifting: they raised the premium for the main Arab Light grade to a record high over the regional benchmark Oman/Dubai price…
A White-Hot Future for Oil and Gas
Opportunities in oil and natural gas have rarely been so bountiful. New finds and technological advances and fresh access to some countries are pushing exploration and production into areas once considered peripheral.
Some of the most promising new fields are in deep water off the coast of Brazil. Experts say they could yield as much oil as the North Sea. There have been significant strikes off the coast of French Guiana, north of Brazil, and off Ghana in West Africa…
Views Differ on Restoring Libyan Oil Output
Representatives of OPEC and Libya gave different outlooks Tuesday about how long it might take Libya to restore its oilproduction to prewar levels.
Abdalla Salem el-Badri, secretary general of the Organization of the Petroleum Exporting Countries, said Libya could reach prewar levels by the end of next year. But Shokri Ghanem, the former chairman of Libya’s state-run oil company, said a return to full production could take until the end of 2013…
BP, Contractors Face Deepwater Fines
U.S. offshore-drilling officials issued their first citations related to the Deepwater Horizon oil spill Wednesday, accusing BP PLC and two of its contractors of breaking several rules.
While citations against BP were widely expected, the government’s decision to pursue the contractors Transocean Ltd. and Halliburton Co. for infractions jolted the contracting industry, which traditionally avoids liability in such accidents…
Uganda: Parliament Votes to Halt New Oil Ventures
Parliament voted in an emergency session on Tuesday to halt development of Uganda’s nascent oil sector. The session was called on Monday to debate the potentially lucrative industry, in which foreign contracts have been kept secret and allegations of corruption are rampant…
Documents from Russian BP office raid cannot be used in TNK-BP lawsuit, rules court
Documents seized from BP’s offices during a series of raids by masked bailiffs cannot be used as evidence, a Russian court has decided.
The ruling is a rare victory for BP in Russia, after a tumultuous year that has seen the collapse of its £10bn deal with state oil company Rosneft…
China to Extend Oil, Gas Resource Tax Nationwide Next Month
China will extend a value-based tax on sales of oil and natural gas nationwide starting next month to help save energy in the world’s fastest-growing major economy and boost local government revenues to develop inland provinces.
The oil and gas tax, ranging from 5 to 10 percent of sales, will be levied on both domestic producers and joint ventures with overseas companies, the Ministry of Finance said in a statement today. China will apply a value-based tax on other commodities when the time is right, the ministry said…
Keystone XL pipeline becomes a political headache for White House
The question of how best to handle the federal permit for the TransCanada Keystone XL pipeline extension — which will transport crude oil 1,700 miles from Alberta to Texas — has evolved from a backwater process at the State Department to a high-profile political headache for the Obama administration.
Until recently, it appeared that TransCanada, arguing the pipeline will provide thousands of jobs as well as a safe and secure oil supply to the United States, was likely to obtain a federal construction and operating permit. Nearly a year ago, Secretary of State Hillary Rodham Clinton said she was “inclined” to approve the pipeline…
Gas
Tymoshenko Prison Sentence Strengthens Russia’s Hand in Ukraine Gas Talks
Former Ukrainian Prime Minister Yulia Tymoshenko’s prison sentence may have squashed President Viktor Yanukovych’s drive for closer ties with the European Union, putting him at Russia’s mercy before gas-price talks.
Tymoshenko, 50, was sent to prison on Oct. 11 for abuse of power when signing a 10-year gas supply and transit agreements with Russia in 2009. The verdict may have “profound implications” for Ukraine’s relations with the EU, Maja Kocijancic, a spokeswoman for the bloc’s executive, said. The U.S. also condemned the sentencing…
China eyes shale gas and uranium firms
China’s growing attempts to seize global natural resources has reached Britain with a link to the recent shale discoveries near Blackpool and a bid for a London-listed uranium company.
Close ties have emerged between China National Offshore Oil Corporation (CNOOC) and a backer of Cuadrilla Resources, the exploration group that claimed last month there were trillions of cubic metres of shale gas under Lancashire…
Oil Executive Promotes Shale Gas to Europeans
A senior executive from Exxon Mobil warned Wednesday that Europe could miss a chance to reduce its dependence on imported energy by making it too difficult to develop shale gas and so-called unconventional resources.
The executive, Andrew P. Swiger, a senior vice president at Exxon, said that the conventional gas fields currently supplying Europe were expected to decline, raising dependence on imports delivered through pipelines and as liquefiednatural gas…
Russian PM begins China visit, $1 trillion gas deal on agenda
Russia’s Prime Minister Vladimir Putin arrived in Beijing Tuesday, kicking off a two-day visit to China, his first state visit since announcing his intention to contest the Russian presidency next March.
Aside from meeting his counterpart Chinese premier Wen Jiabao in the 16th Regular Meeting between the two Prime Ministers, Putin will also meet with Chinese President Hu Jintao and other Chinese leaders…
Nuclear
China Marches on With Nuclear Energy, in Spite of Fukushima
Meltdowns of three reactors at the Fukushima Daiichi nuclear power plant in Japan last March have put a chill on much of the world’s nuclear power industry — but not in China.
The German Parliament voted this summer to close the country’s remaining nuclear power plants by 2022, while the Swiss Parliament voted this summer to phase nuclear power out by 2034. Economic stagnation in the United States and most other industrialized economies since 2008 has produced stagnant electricity demand, further sapping interest in nuclear power…
Divided Japan Starts Energy Policy Debate
Seven months after the nuclear disaster at the Fukushima Daiichi power plant, Japan on Friday finally began discussing in earnest its new energy policy, which will determine the fate of the nation’s nuclear-power industry.
The debate will continue well into next year and no final decisions will be made until next summer. The nuclear industry is hoping that by then palpable public hostility toward the nuclear industry will have softened as progress is made in stabilizing the Fukushima plant and decontaminating the areas around it. But the debate is likely to hinge on the evaluation of the costs of nuclear, renewable and other energy sources…
UK
BP unveils Shetland investment programme
BP has been given the go ahead to proceed with a new £4.5bn oil project west of the Shetland Islands.
The BP-operated scheme is an extension of the existing Clair oil field, and will also include investment by fellow oil firms Shell, ConocoPhillips and Chevron…
Exclusive: BP to risk worst ever oil spill in Shetlands drilling
BP is making contingency plans to fight the largest oil spill in history, as it prepares to drill more than 4,000 feet down in the Atlantic in wildlife-rich British waters off the Shetland Islands.
Internal company documents seen by The Independent show that the worst-case scenario for a spill from its North Uist exploratory well, to be sunk next year, would involve a leak of 75,000 barrels a day for 140 days — a total of 10.5 million barrels of oil, comfortably the world’s biggest pollution disaster…
‘No safety weaknesses’ in UK nuclear power station designs
Energy companies with plans to build £5bn nuclear stations breathed a sigh of relief after the regulator said there were “no fundamental safety weaknesses” in the design of UK reactors.
The Government had commissioned a review of nuclear safety in the UK, after Japan’s Fukushima accident. The incident in March caused several European countries, including Germany, to back out of nuclear…
UK nuclear safety review finds 38 cases for improvement
A review of nuclear safety in the UK has found 38 areas where safety could be improved, in lessons drawn from the Fukushima incident in Japan early this year.
The review, ordered by the government following the Japanese experience, pinpointed critical areas for concern, including risks associated with flooding, the layout of plants, and the state of preparedness for emergencies. Ministers and the relevant regulators will be asked to look at these as a matter of urgency…
Chris Huhne: UK’s nuclear policy is most expensive postwar failure
The climate change secretary, Chris Huhne, has described the UK’s nuclear policy as the “most expensive failure of postwar British policy-making” in a “crowded and highly-contested field”.
Huhne set out five tests for how power plants would be adopted in a cautious new regime, but is under pressure from his party to ensure any new-builds do not receive public subsidy — something the coalition has pledged it will not allow…
Solar heating ‘can provide over half of households’ hot water’
Solar heating systems can provide over half of households’ hot water needs, according to the largest ever field trial of the green energy devices.
But the year-long study, undertaken at 88 homes by the Energy Saving Trust, also reveals that the solar water heating systems will save most owners just £55 a year despite costing between £3,000-5,000, prompting calls from green campaigners for clarity on government subsidies for them…
Geopolitics
Obama steps up pressure on Iran over ‘plot’
Barack Obama, the US president, has said there is no doubt members of the Iranian government knew of an alleged plot to kill the Saudi ambassador to Washington and that they must be held accountable for the “reckless behaviour”.
Obama said on Thursday that one of the suspects was an individual of Iranian-American descent and had “direct links, was paid by, and was directed by individuals in the Iranian government”…
Economy
Global Economy-China trade surplus shrinks as global woes deepen
China’s trade surplus narrowed for a second straight month in September to $14.5 billion, with both imports and exports lower than expected, reflecting global economic weakness and domestic cooling that will deepen policy quandaries facing Beijing.
The trade data issued on Thursday laid bare trends at the heart of Beijing’s debate about how to handle U.S. pressure for a higher yuan while seeking to protect both export-driven jobs and tame inflationary pressures…
Transport
Virgin Atlantic unveils plan to use ‘green’ fuel
Sir Richard Branson aims to introduce a “green aviation fuel” on Virgin Atlantic aircraft within three years claiming “one of the most exciting developments of our lifetime and a major breakthrough in the war on carbon”..
His company hopes to help convert waste gases from industrial steel production into a jet propuslion that could ultimately account for nearly a fifth of the present annual global consumption of aviation fuel…
