Chris Nelder, and more on gas prospects from David Strahan.

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ODAC Newsletter - Jan 27

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.

President Obama exuberantly embraced America's new oil and gas frontier this week in his State of the Union address. Clearly aiming to steal some Republican election thunder, he pledged to open 75% of potential oil and gas resources, and repeated claims that the US is sitting on enough natural gas to last for 100 years (see insightful commentary on the numbers behind this from Chris Nelder, and more on gas prospects from David Strahan).

The president also played to his environmentalist supporters by promising state aid for clean energy, mandatory disclosure of fracking chemicals, and that oil and gas resources would be exploited safely. These are easy assurances to make, and would be more persuasive if they had not been accompanied — yet again — by the broken-record promise to cut oil company subsidies.

The bullish view of oil and gas supplies trumpeted in Obama's speech, and in BP's forecast published last week, was echoed to some degree in the latest EIA Annual Energy Outlook — though with considerably more caution. The agency sees US oil production rising 21% to 6.7 mb/d by 2020 before dropping back towards 6.1mb/d by 2035. Natural gas production rises as a result of a 23% rise in shale gas offsetting the decline in conventional supplies to make the US a net exporter.

On natural gas, the agency followed the lead of the US Geological Survey and reduced its estimate of recoverable gas for the Marcellus shale, although not by quite as much. The EIA cuts its estimate by two thirds, from 410 trillion cubic feet to 141 trillion, whereas the USGS had cut by four fifths.

Yet the EIA forecasts shale gas production will still rise 23%, offsetting the decline in conventional production, to make the US a net exporter. However, this doesn't look likely to happen any time soon, based on the current economics. Chesapeake Energy became the latest producer to announce output cuts because of the plunging price of gas. The company will idle half of its drilling rigs and concentrate on shale oil production.

Not everyone buys the gas-and-oil-galore story though. Sir David King, former chief scientific advisor to the British government, and James Murray published an article in Nature entitled 'Oil's tipping point has passed'. The report warns that despite new finds and technologies we have reached a point of inelastic supply due to depletion of existing wells. It goes on to warn that more urgency is required in moving away from fossil fuels to protect the economy. In a similar vein, James Hamilton's new report 'Oil Prices, Exhaustible Resources, and Economic Growth' looks at history to question the premise that new production technology (like fracking) can be sufficient to make up for the lack of genuine major new discoveries. Is anyone listening?

View our Reports and Resources page


Oil production is booming — but for how long?

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Has Petroleum Production Peaked, Ending the Era of Easy Oil?

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IEA Sees 2035 Crude at $247 Barrel, Almost Twice OPEC's Forecast

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Iran Set to Turn Off Oil Supply to Europe

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Oil Gains a Second Day After Federal Reserve Commits to Low Interest Rates

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Fossil fuels are sub-prime assets, Bank of England governor warned

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U.S. Cuts Estimate for Marcellus Shale Gas Reserves by 66%

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Chesapeake to Cut Number of Gas Rigs

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North America

Obama's speech and some sober talk about the oil patch

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Breaking Down the EIA 2012 Annual Energy Outlook

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State of the Union: Obama Opens Public Land and Waters to Energy Industry

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New York tidal project ready to go with flow

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Energy in India: The future is black

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DOE report projects greater coal production drop

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Energy storage economically viable within five years

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Toyota Finds Way To Avoid Using Rare Earth: Report

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Plans for Sellafield plutonium reactor rejected

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Legal challenge threatens UK's new nuclear plans

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Obstacles to Danish Wind Power

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Solar energy: Flower power

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'Carbon floor price' plans dealt a blow by MPs

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Solar subsidies cuts: UK government loses court appeal

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Cornwall Council pioneers community solar power push

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Bristol energy firm aims to give lower bills, new jobs, new investment

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Government cuts see Liverpool Council cut 4,000 homes solar power building plan

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Ecotricity aims to make a splash with new marine energy business

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First UK marine energy park to be built in south west

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Turkey warns Iraqi PM over sectarian conflict

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China hits back at US wind turbine import investigation

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What do you think? Leave a comment below.

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