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.
This week saw the oil price drop back from recent highs to around $122 per barrel. A price that looked unimaginable last year suddenly seeming like a respite. The decrease reflects some demand destruction especially from the US where inventories gained more than expected. Global demand however is unlikely to drop significantly. Despite moves by some Asian nations like Malaysia and Indonesia to cut fuel subsidies and raise prices significantly, growth is mainly from China where subsidies remain, India where this week’s 10% increase in diesel and petrol prices is unlikely to dent demand, and the Middle East where subsidies can be financed by increased revenues from the higher prices.
If you wanted to stick your head in the sand this week and believe that business as usual was an option, then you would have been delighted to see a number of reports heralding a new North Sea oil boom and also to hear of the huge Bakken reserves sitting under the US (see this week’s Guest Commentary). The kind of desperation which restates known resources as a reason for optimism is perhaps understandable, but it doesn’t alter the facts. The North Sea will remain in decline, and every day we consume more oil than we discover.
The opportunity for using micro generation as one way of producing some non-fossil fuelled power was highlighted in a government backed report this week. It remains to be seen whether there is the political and popular will to make real changes to our power infrastructure. Some progress was made this week in regard to increasing renewable energy as the sites for 11 new off-shore wind farms were announced. Government targets to generate 30 Gw of power by 2020 however look extremely optimistic according to a report by the Renewable Energy Foundation. Based on current installations the target would require the building of two to three 3Mw turbines per day.
Staying in business is a challenge for many of the worlds airlines. Both United and Continental announced this week that they were grounding large numbers of their fleet as well as shedding jobs. The industry as a whole is predicting losses of anywhere between $2.3bn and $6bn in 2008.
One man who is apparently not expecting business as usual is Rick Wagoner, CEO of General Motors. He announced this week that GM may be about to sell the iconic gas guzzling Hummer brand due to what he sees as a permanent change in consumer behaviour. It looks like America’s love affair with the SUV could be going the way of many Hollywood marriages.
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Oil
Oil Falls as U.S. Fuel-Stockpile Increase Signals Lower Demand
Timid fuel price rises fail to temper demand
North Sea may be set for second oil boom
Oil reserves ‘will last decades’
Dakota Oil Fields of Saudi-Sized Reserves Make Farmers Drillers
Guest Commentary: Dr. Michael R. Smith – www.energyfiles.com
The Bakken is an over 50 year old play which has been revitalized by horizontal drilling and a higher oil price. The USGS has announced huge reserves but has not discussed the potential production profile these reserves could ultimately provide. There is new money to be made in the Bakken (with the high oil price) and production is being increased substantially, however this will make little difference to the USA’s import requirements due to the nature of the Bakken reservoir. The challenge for recovery from the Bakken is the hard dolomite and shale lithologies with low (5%) porosity (a good sandstone reservoir would be 20% to 30%) and low permeabilities. Horizontal fractures contain most of the producible oil. Horizontal wells can tap these fractures but high rates of production are likely to be short-lived and overall recoveries will be low with the bulk of the oil remaining trapped in the rock matrix. It is certainly possible that the USGS has overrated the recoverable part of the resource. Nevertheless both North Dakota and Montana are set to see expanding output of indigenous oil, perhaps reaching 250,000 bbls per day in time.
Nigeria to hand abandoned Shell fields to rival operator
Oil prices to be probed by US regulator CFTC
Petrol tax fuels ‘cooking oil wars’
Renewables
Microgeneration could rival nuclear power, report shows
Sites named for new offshore wind farms
Solar energy shares soar as Bosch buys Ersol for €1.1bn
Food
Amid calls for unity, politics divide UN food conference
Business
TNK-BP Russian shareholders scupper meeting
‘Globalisation in reverse gear as oil prices soar’
Transport
Hummer on rocky road as GM cuts production
United Airlines lays up a fifth of its fleet as jet fuel costs soar
World’s airlines say they face $2.3bn loss this year as oil price stays high
