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ODAC Newsletter Dec 21

Welcome to the last ODAC Newsletter, the final news roundup from the Oil Depletion Analysis Centre.

2012 saw US oil production grow to its highest level in 15 years, largely because of surging tight oil production by fracking, and many pundits such as Ed Morse of Citi are claiming "peak oil is dead". So has ODAC been worrying its silly little head entirely unnecessarily for the last five years, and could all our energy troubles soon be over? We continue to think not.

While non-conventional production in the US has indeed risen, global crude oil — or 'easy oil' — has definitively peaked, and this has played a significant part in the worst economic dislocation for a century. We have previously highlighted analysis by Steven Kopits of consultants Douglas Westwood, which shows Chinese demand for oil is squeezing out consumption in the west — high oil prices and recessions are the mechanism by which this reallocation happens in a resource constrained world. We have also reported analysis by economists at the IMF showing how the increasing geological difficulty of producing oil implies $180/barrel by 2020, so the waterboarding of western economies looks set to continue. Economic peak oil, it seems clear, has arrived with a vengeance.

And geological peak oil may be far from dead, merely briefly deferred. We have previously highlighted the findings of Bernstein research who forecast that US tight oil production will peak before 2020. In a forthcoming report due for release in February 2013, geologist David Hughes of the Post Carbon Institute will present the conclusions of his detailed study of shale gas and tight oil formations in the United States. Some preview charts from Hughes report, available in a blog-post by Professor James Hamilton, demonstrate that the shale boom looks likely to bust rather sooner than IEA predictions would lead us to believe. The reasons are extremely high decline rates — production in a typical Bakken well falls to just a fifth of peak output within 2 years - and the commercial imperative to extract the best resources first. This means that an ever greater number of wells will need to be drilled just to offset decline. Based on current drilling rates of 1500 wells per year, and EIA data on available well locations, that means Bakken production should peak in 2017 followed by a very sharp decline.

In the UK, fracking for gas faces even greater obstacles since the country is far more densely populated than the US, and the state, rather than individual landowners, controls the mineral rights. Yet fracking-fever is in full swing, stoked up by chancellor George Osborne and ex-chancellor Nigel Lawson. Tim Yeo, Chair of the Climate Committee, described some of his colleagues this week of having been "seduced" by shale gas - "A golden calf that can meet all of our energy needs cheaply and even revive lost manufacturing industries". We explained last week why any UK fracking boom is very unlikely cut gas prices and rather more likely to make a few developers rich. Meanwhile we still face a Hydra of our combined energy, financial and climate crises and time is running out.

Sadly, time has run out for the ODAC Newsletter too. Since April 2012, when ODAC ceased to exist as an independent charity we have been able to continue due to the generosity of nef (new economics foundation), but now our funds are exhausted, so this is likely to be our last edition.

However, nef has expressed an interest in reviving the newsletter if the necessary funds can be raised. So if any of our readers know of any potential source of funding please do get in touch at info@odac-info.org.

Thanks for following us over the years, many of you since our first edition in this format in February 2008.

Happy Holidays, and all the very best for 2013.

Oil

American Oil Growing Most Since First Well Signals Independence

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Future production from U.S. shale or tight oil

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Oil Declines Most in Two Weeks as U.S. House Delays Budget Vote

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Gas

Yeo takes on Chancellor with renewed push for decarbonisation target

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Fracking splits coalition over future for British energy

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Fracking lobbyists prepare case against Matt Damon's Promised Land

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Putin tells Ukraine to compromise on gas pipelines

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Coal

Coal to equal oil as world's top energy source within 10 years

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Will US colleges kick coal out of their endowments?

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UK

Thousands more households could be in fuel poverty by Christmas

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Government strikes solar support compromise

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Government sets five-year plan to spur solar, biomass energy

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Europe

Three EU states condemn UK's energy savings 'accounting trick'

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German cabinet agrees to expand power grid faster

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Wind power hits peak to cover half of all electricity production

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German firms invest in generating energy themselves

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