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 Arabia announced this week that it is halting its $100bn oil expansion programme, claiming that the requirement for the kingdom to increase production has “substantially reduced” in the face of emerging new oil and gas supplies. There is likely to be much speculation as to the reasons behind the Saudi announcement – has the Kingdom already reached peak production capacity as it struggles to replace depleting supplies? Is this a case of budgetary priorities shifting as Saudi moves spending to social programmes to avoid contagion of unrest from neighbouring countries? Or might this reflect a decision to invest in other power generation options to meet rising domestic energy demand?
Much has indeed changed since Saudi began its capacity expansion programme in the early 2000s. The IEA predicts a large increase in Iraq’s oil production of more than 5mb/d by 2035, Brazil is set to become a major deep water oil producer, and in North America exploitation of oil shales (such as the Bakken) has allowed the US to buck the downward trend of its oil production curve. What has also changed however in the last decade is the cost of oil – the first 3 years of the last decade saw prices between $30-40/barrel. 2011 is shaping up for a record average price of $110/barrel. This is the highest annual oil price since 1864, during the American Civil War. Depleting oil production is being replaced for now, but at a huge cost to the global economy and at an increasing environmental risk.
The good news is that as the cost of fossil fuels rises, renewable energy ought to become more cost competitive. According to a report released by the IEA this week this is indeed the case. The report says that 20% of world power generation now comes from renewables, it pointed to decreasing cost of technologies such as wind and solar, and also defended the use of subsidies to support the growth of the renewables sector.
A warning about risks associated with renewable power was sounded this week in a report from the CRO (Chief Risk Officers) Forum of the insurance industry. ‘Power Blackout Risks‘ named intermittent power, and power surges from renewables without the support of sufficient infrastructure, as one of its risk factors for major blackouts. Another key concern was the role of market liberalisation and privatisation in weakening the reliability of investment in the maintenance of infrastructure.
In the UK the political battle over energy policy continued this week with the release of government figures on the estimated impacts on energy costs of current climate change policies. The release coincided with DECCs launch of the Green Deal, aimed at kick starting a major energy efficiency upgrade of UK building stock. The government argues that the combination of measures will by 2020 leave households £94/year better off than they would have been with no policy interventions. This however assumes that households can be sufficiently convinced to take up the schemes. The improvements are long overdue, but politically this is going to be a bumpy ride.
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Oil
Saudi Sees Threat Of Shale Oil Revolution
Saudi Arabia’s state energy company said on Monday that its dominant role in world oil supply had been altered by large new reserves in North America, sapping the urgency to develop the kingdom’s own reserves.
The speech by Saudi Aramco’s chief executive was the first from the globe’s top oil exporter to acknowledge that unconventional oil was set to shift the energy balance of power and cut U.S. dependence on Middle East crude…
Don’t bet on big fall in oil — even as crisis looms
With debt crises either side of the Atlantic, Europe flirting with recession and Libyan oilfields returning to production, it is tempting to be bearish on oil.
Despite all the financial and economic gloom, 2011 has been a record year for oil with Brent crude at its highest-ever average above $110 per barrel, and few analysts forecast a big drop in price, even those who expect an economic slowdown…
Oil price could strangle economic recovery hopes: IEA
The high oil price could “strangle” efforts to get the global economy back on its feet and may also hamper Asia’s ability to help the West exit its crisis, the International Energy Agency’s chief economist said on Thursday.
The IEA’s Fatih Birol said the world economy was in a more fragile state now than during the crisis of 2008-2009, when oil prices were lower…
Chevron Banned From Brazil Drilling on Leak Probe
Chevron Corp., the U.S. oil producer operating the $3.6 billion Frade oilfield off the coast of Brazil, was blocked from drilling in the South American country while the government probes a recent spill.
The company needs to pay more attention to safety after its “negligence” contributed to the accident, Brazil’s oil regulator, the Agencia Nacional do Petroleo, said yesterday. The ban will remain in place until the regulator identifies the causes and considers it safe to resume drilling, ANP said…
Analysis – Chevron spill may complicate Brazil oil dreams
Chevron’s oil spill off the Brazilian coast exposes the major environmental risks of tapping the country’s new oil wealth and could further delay development by fuelling nationalistic oil politics.
The accident, for which the U.S. oil company has taken responsibility, has quickly become politicized at a time when Rio de Janeiro and a handful of other “producer” states are campaigning bitterly against a proposal in Congress to spread the oil wealth more widely…
Oil Heads for Second Weekly Loss on European Crisis; Mirae Sees Iran Risk
Oil headed for a second weekly decline in New York as speculation that Europe’s debt crisis threatens the global economy countered concern that violence in Saudi Arabia may destabilize the world’s biggest crude exporter.
Futures are down 1.3 percent this week, after sliding 1.6 percent in the prior seven days. Portugal and Hungary’s sovereign debt ratings were cut to junk, while Germany again ruled out joint euro-area borrowing and an expanded role for the European Central Bank in fighting the crisis. Four people died in clashes this week between Shiite Muslims and Saudi security forces in the oil-rich Eastern Province. Oil prices may jump this winter, according to Mirae Asset Securities Ltd…
Saudi Fuel for Power Plants to Rise 53% by 2017 as Demand Grows
Saudi Arabia, the world’s biggest crude exporter, will need 53 percent more fuel to fire its power and desalination plants by 2017 as demand jumps, the head of Water & Electricity Co. said.
The kingdom will use 2.3 million barrels a day of oil equivalent by 2017 for power, compared with 1.5 million barrels last year, Omar al-Ghamdi, chief executive officer of the state- run utility, said in a presentation in Riyadh this week. Power production will increase to 74,529 megawatts, from 55,265 megawatts while daily desalinated water consumption will rise 32 percent to 7.4 million cubic meters, according to Ghamdi…
EPA delays carbon limits on oil refineries
The U.S. Environmental Protection Agency, struggling with an ambitious agenda on clean air regulations, said it will delay proposing the country’s first-ever greenhouse gas limits on oil refineries.
The delay is the latest setback for the agency’s new raft of clean air rules on everything from smog to mercury pollution that are heavily opposed by industry…
How big is Exxon’s gamble in Kurdistan? (Answer: BIG)
Has ExxonMobil — the annoyingly prissy schoolboy who always obeys the teacher — risked weakening one of its distinguishing pillars in order to break into a single oil patch? And if so, could that shake up the global oil market along with geopolitics?
We are referring to the news, indiscreetly disclosed by a Kurdistan official last week, that the northern Iraqi region has signed an oil exploration agreement with Exxon. The reason this is a problem is that Kurdistan has been in a long-standing turf war with the folks in Baghdad over how to divide the spoils from its hydrocarbon riches. Until it’s settled, Baghdad has forbidden foreign oil companies with which it does business — which include Exxon, Shell, Italy’s Eni, France’s Total, the China National Oil Corp., Russia’s Lukoil and virtually every substantial name in the industry — to sign any deals with the Kurds without its okay. In September, for example, the U.S. company Hess was barred from a new round of Iraqi leases explicitly because of deals it executed with the Kurds three months earlier…
Gas
Shale threat to carbon target
Widespread exploitation of the huge reserves of shale gas under Lancashire could force the Government to scrap its targets for reducing carbon emissions, a report suggests today.
Even if 20 per cent of the amount located this year in the Blackpool area — 11,000 bcm, or billion cubic metres — were to be extracted and burnt, this would result in emissions of over 2bn tonnes of carbon dioxide, representing around 15 per cent of the Government’s greenhouse gas emissions budget through to 2050, according to the report, written by the Tyndall Centre for Climate Change at the University of Manchester, and sponsored by The Co-operative…
EPA Accepts Environmental Petition on Fracking Chemicals
The Environmental Protection Agency said it will weigh rules requiring disclosure of the chemicals used in hydraulic-fracturing fluids.
Companies such as Halliburton Co. (HAL) and Schlumberger Ltd. (SLB), which supply oil and natural-gas producers, should be required to reveal substances used in the mining technology known as fracking, according to a petition filed with the EPA by the environmental group Earthjustice. In a response posted on its website today, the EPA said it will begin gathering that data…
Propane substitutes for water in shale fracking
Many controversies surround hydraulic fracturing of underground shale deposits in the quest for oil and gas, but a small Canadian oilfield services company has pioneered a way around one of them: the use of prodigious amounts of water in the process.
“Fracking” generally involves blasting millions of gallons of water down a shale well to free up oil and natural gas, and then the water needs to be disposed of because it may contain toxic drilling byproducts like heavy metals…
Renewables
Renewable energy becoming cost competitive, IEA says
Renewable energy technology is becoming increasingly cost competitive and growth rates are in line to meet levels required of a sustainable energy future, the International Energy Agency (IEA) said in a report on Wednesday.
The report also said subsidies in green energy technologies that were not yet competitive are justified in order to give an incentive to investing into technologies with clear environmental and energy security benefits…
Commons vote to save solar incentives defeated
The Commons debate attempting to block the government’s controversial decision to slash incentives for solar installations was comfortably defeated last night, after a mooted rebellion from Lib Dem backbenchers failed to materialise.
Reports had suggested up to 40 coalition MPs were angry with the government’s handling of the proposed reforms, which controversially will come into effect before the end of the official consultation period on 23 December…
Green energy could trigger ‘catastrophic’ blackouts
Solar panels and wind turbines are a “volatile” source of power with fluctuations in the electricity supply risking “grid instabilities” and triggering wide-scale blackouts.
Ageing infrastructure and increasingly cross-border electricity networks have heightened the likelihood of a devastating collapse of power supplies lasting months and covering several continents, according to the joint report by Allianz and the Chief Risk Officer Forum…
China Bends to U.S. Complaint on Solar Panels but Plans Retaliation
Chinese solar panel makers plan to shift some of their production to South Korea, Taiwan and the United States in hopes of defusing a trade case pending against them in Washington, according to industry executives.
But at the same time, the Chinese industry is considering retaliating by filing a trade case of its own with China’s Commerce Ministry.
Global giants back launch of WindMade label
A host of world-leading businesses, including Motorola, Deutsche Bank and Lego, have pledged to source at least 25 per cent of their operations’ power consumption from wind energy.
The companies are part of a 15-strong group, backed by WWF and the Global Wind Energy Council, which signed up to the WindMade consumer label at a launch event in New York at the end of last week…
UK
Chris Huhne unveils ‘green deal’ to insulate homes
Households will be offered a £150 cash incentive to insulate their homes from next year, under plans unveiled by the government on Wednesday.
Within two years, households taking up the offer should be saving money on their energy bills, as new government policies come into force, Chris Huhne pledged. By 2020, according to government estimates, the average household should pay £94 a year less for energy than they would without the policies…
U.K. Report Gives Clean-Energy Costs
Policies to increase efficiency and give incentives to clean energy technologies will begin saving U.K. households money by 2013, but will add significantly to the energy bills of businesses, the Department of Energy and Climate Change said in a report Wednesday.
The report, which comes as both household incomes and corporate earnings are being squeezed by high price inflation and a weak economy, acknowledged that supporting clean technologies and cutting carbon emissions will have a cost to energy consumers…
U.K. Energy Laws May Raise Company Bills 20% in 2020, Huhne Says
U.K. energy policies may raise power and gas bills for the heaviest corporate consumers by as much as 20 percent by 2020 as the government promotes measures to curb polluting emissions, Energy Secretary Chris Huhne said.
Efforts to boost renewable power and put a price on carbon will increase energy bills for the biggest users, Huhne told Parliament today. Depending on a company’s energy mix, annual charges are projected to rise to as much as 20.9 million pounds ($32.4 million) from 17.5 million pounds, according to a document from Huhne’s Department of Energy and Climate Change…
Commons vote to save solar incentives defeated
The Commons debate attempting to block the government’s controversial decision to slash incentives for solar installations was comfortably defeated last night, after a mooted rebellion from Lib Dem backbenchers failed to materialise.
Reports had suggested up to 40 coalition MPs were angry with the government’s handling of the proposed reforms, which controversially will come into effect before the end of the official consultation period on 23 December…
National road charging is inevitable, warns head of UK motoring group
A national system of charging people to drive on the roads is inevitable as part of a package of measures to cut congestion and pollution, the head of the UK’s leading motoring lobby group warned on Tuesday .
Professor Stephen Glaister, head of the RAC Foundation, was speaking at the launch of a report advocating “radical” measures to dramatically reduce carbon emissions blamed for climate change, including flattening roads that go up and down hills, replacing busy roundabouts and traffic lights with bridges, and even a system for booking slots on the roads just as people now book seats at the theatre or on trains…
How a leaky 1990s terraced home’s energy bills were cut by 69%
Tracey Hillyard and her three teenage children live in a small, 1990s terraced house whose leaky walls and roof were leaching heat out of the home. Concerned about escalating energy bill, Tracey approached her housing association, East Thames, about the problem.
As luck would have it, East Thames had been invited to participate in a nationwide government programme, Retrofit for the Future, trialling innovative energy saving technologies. So Tracey’s home was put forward as a case study…
UK reaching a ‘tipping point’ for biomass
UK biomass is at a “tipping point” and set to rival wind and solar power over the coming years if the trend of banks gradually loosening their purse strings continues.
Gerard Madden, chief executive of Irish developer Kedco, told BusinessGreen that banks are realising the opportunity biomass offers now that there is more certainty around government incentives for the technology…
Government unveils £5m offshore wind innovation scheme
The government has pledged £5m to support the development and demonstration of innovative new components for the offshore wind industry.
The Offshore Wind Component Technologies Development and Demonstration Scheme, which aims to cut the cost of offshore wind to increase its deployment over the next decade, opened yesterday with a call for proposals…
