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ODAC Newsletter - May 4

Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.

The shale gas 'revolution' suffered another blow this week as the US Securities and Exchange Commission announced an investigation into dealings between industry leader Chesapeake Energy and its chief executive Aubrey McClendon. It emerged recently that McClendon had been taking a private stake in each well the company drills and, unbeknownst to shareholders, borrowed over $1 billion against them. Now the SEC has announced an informal probe and asked the company and McClendon to retain "certain documents". Chesapeake stock has fallen 25% since the end of March.

McClendon has suffered significant financial losses as the gas price slumped to $2.40/MMBtu, but sceptics may be forgiven for concluding this is merely the tip of the iceberg. Critics like Art Berman have long argued the boom in US shale gas production is not sustainable at current prices because the industry is bleeding red ink.

In the UK Lord Browne banged the drum for shale gas this week by assuring the public that drilling hundreds of wells would not result in the industrialisation of the rural landscape. In his words "It's not the whole countryside, it's little tiny bits of it". Browne is hardly independent, being both a director of Cuadrilla, the company trying to develop shale gas in Lancashire, and a partner at Riverstone LLC, the private equity firm which backs it, but his views will carry weight with government as it decides policy.

With luck that policy will also take into account two important publications this week. A report from the World Bank showed the US shale gas industry has led to the first increase in gas flaring since 2008; and another from peer-reviewed Ground Water journal concluded that - contrary to industry assurances - it would be possible for toxic chemicals to enter aquifers as a result of hydraulic fracturing.

The possibility of a new source of domestic gas has been putting further pressure on government clean energy policy. On the green side, battle was rejoined this week as former Energy Secretary Chris Huhne and Chairman of the Commons Energy Committee Tim Yeo pressed the government to stick to its plans. Huhne argued that the only sensible economic policy in a world of rising resource costs is one which prioritises "green growth" and reduces our reliance on fossil fuels.

This argument rather jars with Shell's announcement last week that it can't "make the numbers work" on offshore wind energy in the UK. Given the stupendous profits it is currently generating from oil at $120 per barrel it is difficult to see how renewables could ever "work" for a supermajor oil company — short of a meaningful carbon price. But with Germany and Japan shaping up to make radical energy shifts in the next decade it could be that Britain's legacy of a dominant domestic fossil fuels industry turns out to be a liability. And our newly discovered shale could be a millstone.

Oil

Gulf of Mexico oil spill: BP wins victory over US government as trial is postponed until 2013

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OPEC says pumping hard to bring oil price down

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Iran Embargo Impossible to Meet as Ships Need Its Oil

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Oil Trades Near Two-Week Low on U.S., Europe Economic Concern

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ConocoPhillips to pay $191 million more to China over oil spill

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Gas

Fracked: Why Chesapeake Energy's Aubrey McClendon is in Hot Water

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Fracking 'Health Challenges' to Be Examined by U.S. Advisers

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Drilling chemicals could move quickly to aquifers, study says

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Shale causes rise in waste gas pollution

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Lord Browne: fracking would only impact "tiny bits" of countryside

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Wyoming pushed EPA to delay study on fracking: report

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Electricity

Feed-in Tariffs as zombie-killers?

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US warns Bolivia that nationalisation of Red Electrica company will damage investment

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Nuclear

Japan facing uncertain nuclear future

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Japanese energy policy stands at a crossroads

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Renewables

Shell's stance on wind power reveals a profound truth of capitalism

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Japan targets 13 per cent rise in green energy in a year

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Wind farms affect local weather

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Biofuels

RHI could trigger biomass 'gold rush' in 2015, says report

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Biofuels in the balance as EU fails to conclude carbon impacts

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UK

UK must go green to stimulate growth, says Chris Huhne

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Tim Yeo calls for urgent action over wind farms

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Report: Government to delay electricity market reforms

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Wind industry dismisses "misplaced" fears of turbines coating the countryside

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Economy

Mileage Rules May Cut Gasoline Tax Income by $57 Billion

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