Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
Oil prices were once again oscillating between the price depressing effects of economic uncertainty and the price enhancing effects of Middle East political uncertainties this week. Concerns for the Eurozone increased as Spain moves closer to needing a further bailout, while conflict and tensions in Syria, Libya and Iran threaten further instability. Saudi Arabia has promised to keep oil markets supplied in the event of shortfalls elsewhere, but Deutsche Bank, and others question whether the kingdom is really in a position to make good on the promise. The IEA now estimates Saudi spare capacity at just under 2 million barrels/day.
Oil supply would of course be tighter were it not for the recent increase in US oil production. Boosted by shale oil, production was reported at 6.5 million barrels/day last week, the highest rate since 1997. While a gung ho energy industry and desperate politicians go on to extrapolate that this turn around will lead to energy independence, questions about the longevity of the boom, as well as safety concerns continue to abound. Read Rune Likvern at The Oil Drum for detailed analysis on the Bakken play. According to Likvern “based upon present observed trends…it is challenging to find support for the idea that total production of shale oil from the Bakken formation will move much above present levels of 0.6 – 0.7 Mb/d on an annual basis.”
In the UK this week a new report by consultants, the Energy Contract Company, on shale gas found that “Shale [in the UK] will not be a ‘cheap’ source of gas and there is unlikely to be a repeat of the US experience”, thus underlining the risk of a new dash for gas. CBI director-general John Cridland warned against reliance on gas on Tuesday, saying “even if you forgot about carbon momentarily, look at European gas price projections. They all disagree on the number, but they all agree on the direction — up”. The potential environmental cost of fracking was highlighted again this week as the U.S. Geological Survey reported finding contaminated drinking water in Wyoming near a fracking site, thereby confirming previous Environmental Protection Agency results. A report by NGO Earthworks meanwhile claimed that inspection of drilling in the US is understaffed leaving regulations unenforced.
In renewables news DECC reported that UK renewable generation in Q2 was up 6.5 per cent on the previous year. Offshore wind generation for the same quarter increased by 46.7 per cent, while renewables share of electricity generation overall is now 9.6% up from 9%. Progress on energy conservation is however not impressive with total primary energy consumption up by 6.3% compared to the same quarter last year.
The political battle over support for renewables and the green economy continued as the party conference season began with the Lib Dems in Brighton. In a pre-conference interview in The Observer, Lib Dem Energy Secretary Ed Davey spoke of the risk to green investment from a ‘Tea-party tendency’ in the Conservative party. He was joined by party and coalition colleague, Treasury Secretary Danny Alexander, who spoke of the pressure from “some of the luddites [in the Conservative Party] that continue to deny climate change and who think this is all a myth”. Neither of them mentioned George Osborne, but the gauntlet is thrown down.
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Oil
Doubts on Saudi Capacity May Keep Oil Volatile
Oil prices are likely to remain volatile over the next year, analysts say, amid worries that Saudi Arabia has become less able to pump the global market out of any extraordinary disruptions to supply.
Saudi Arabia and some smaller Gulf oil producers have stepped in to cover recent shortfalls, but analysts are increasingly skeptical about whether these countries have the capacity to shield Western consumers against a new oil shock…
Libyan violence threatens oil recovery
The assassination of the U.S. ambassador to Libya and the dangers posed by rival militias that refuse to bow to the North African country’s post-Gadhafi government are undermining efforts to restore, and expand, Libya’s all-important oil and gas industry.
The violence that has flared in Libya between its fractious militias and tribal groupings in the aftermath of the 2011 war that ended the rule of dictator Moammar Gadhafi has already slowed the recovery of that industry…
Total warns against drilling for oil in Arctic
Chief executive Christophe de Margerie said his company would not be joining the stampede north as an oil leak “would do too much damage to the company”.
The stance puts Mr de Margerie at odds with his competitors who are busy carving out oil exploration programmes in the area. Royal Dutch Shell, ExxonMobil and Norway’s Statoil have all recently signed deals to explore the area. BP is trying to develop its exposure to the area through its Russian partnerships…
U.S. Pumps Most Oil Since 1997 as Energy Independence Grows
U.S. oil production surged last week to the highest level since January 1997, reducing the country’s dependence on imported fuels as new technology unlocks crude trapped in shale formations.
Crude output rose by 3.7 percent to 6.509 million barrels a day in the week ended Sept. 21, the Energy Department reported today. America met 83 percent of its energy needs in the first six months of the year, department data show. If the trend continues through 2012, it will be the highest level of self- sufficiency since 1991. Imports have declined 3.2 percent from the same period a year earlier…
Oil Recovers From Eight-Week Low After U.S. Inventories Dropped
Oil rebounded from the lowest close in almost two months after U.S. crude inventories declined and as investors speculated that recent losses were excessive.
Futures rose as much as 0.6 percent in New York after falling close to technical-support levels. Prices slid 1.5 percent yesterday, the seventh decline in eight days, over worries that the European debt crisis will worsen and derail the global economy. Spaniards held protests and Greek police fired tear gas when a general strike turned violent. U.S. crude inventories slid 2.45 million barrels to 365.2 million last week, the Energy Department said. Analysts polled by Bloomberg had forecast a gain of 1.9 million barrels…
Gas
Diesel in Water Near Fracking Confirm EPA Tests Wyoming Disputes
A retest of water in Pavillion, Wyoming, found evidence of many of the same gases and compounds the Environmental Protection Agency used to link contamination there to hydraulic fracturing, the first finding of that kind.
A U.S. Geological Survey report on its water testing of one monitoring well near the rural Wyoming town — where some residents complain that gas drilling and hydraulic fracturing contaminated their drinking supplies — identified levels of methane, ethane, diesel compounds and phenol, which the EPA had also identified in its report last year…
Fracking Regulations In States Leave Wells Without Inspection, Environmental Group Says
Hundreds of thousands of active oil and gas wells go without government inspection in any given year, and fines for regulatory violations are too small to change drilling company behavior, according to an energy watchdog group’s review of regulation and enforcement activities in six states.
The 124-page report, released Tuesday by the Oil & Gas Accountability Project at Earthworks, an environmental and public health advocacy group based in Washington, examined well inspection data, violations, enforcement actions and penalties in Colorado, New Mexico, New York, Ohio, Pennsylvania and Texas…
Clock ticking on French fracking veto
President Francois Hollande’s move to leave French shale gas untapped to protect a frayed alliance with the Greens may come back to haunt him as the economy grinds to a halt and job cuts pile in.
Possibly the biggest shale gas reserves in Western Europe, cooling ardor for nuclear, rumblings of dissent from his industry minister and pro-shale pleas from bosses and unions alike, keen for more jobs, will combine to erode his resolve…
Coal
Coal exports make U.S. cleaner, EU more polluted
Shale gas has jolted traditional roles in the planet’s climate drama, giving cleaner fuel to the United States, whose displaced coal has headed to Europe to pollute the old continent.
It is an ironic twist for the European Union, whose energy policy is largely based on promoting renewables and a target to cut emissions b y 20 percent by 2020. The U.S. did not ratify the Kyoto Protocol to combat global emissions and its national goals are far less ambitious than Europe’s…
House approves GOP bill to revoke environmental standards
Green groups have decried a bill approved by the House of Representatives on Friday to remove swathes of regulation on the coal industry as putting “all Americans at risk from dangerous air pollution”.
In its last piece of business before breaking ahead of the November Presidential election, the GOP-sponsored Stop the War on Coal Act was approved in a 233-175 vote, even attracting support from 19 Democrats…
Nuclear
Nuclear energy capacity growth slowing after Fukushima – IAEA
The U.N. atomic agency cut its forecast for nuclear energy growth for a second year as the industry continued to feel the effect of the Fukushima disaster in Japan and said most of the expansion would be in Asia.
The International Atomic Energy Agency (IAEA) said its projection for global nuclear generating capacity by 2030 was down between one and nine percent compared with last year…
Renewables
Europe generating enough solar electricity to power Austria
Reports of the demise of the European solar industry have been greatly exaggerated.
That is the central conclusion of a new status report from the European Commission’s Joint Research Centre, which reveals that despite subsidy cuts in a host of key markets two-thirds of the world’s new solar PV panels were installed in Europe last year…
It’s a myth that wind turbines don’t reduce carbon emissions
The assertion that wind turbines don’t reduce carbon emissions is a myth, according to conclusive statistical data obtained from National Grid and analysed here in the Guardian for the first time. With a new wind generation record of 4,131 megawatts set on 14 September, the question of how far the UK’s wind generation fleet can help in meeting our climate targets is increasingly controversial. Now it can be shown that the sceptics who lobby against wind simply have their facts wrong.
On 14 September, wind turbines connected to the National Grid produced over 80 gigawatt-hours (GWh) of electricity, just over 10% of total UK generation. This was far from being a one-off: with more than 4,000 turbines both on and offshore now connected to the grid, wind produced 48 GWh of usable electricity per day on average during September, adding up to about 6% of overall daily national electricity requirement. On many days, wind is now the fourth-largest source of UK electricity, after coal, nuclear and gas. Indeed, this figure is a significant underestimate, because about two gigawatts of wind are connected directly to local networks and so not directly visible to National Grid…
Biofuels
Biggest English Polluter Spends $1 Billion to Burn Wood: Energy
More than two centuries after coal power helped forge the world’s first industrial economy, Britain is going back to burning wood.
Drax Group Plc (DRX) will spend $1 billion to turn the U.K.’s biggest coal-fired plant into western Europe’s largest clean- energy producer. The utility plans to convert one of the site’s six units to burn wood pellets by June, said Chief Executive Officer Dorothy Thompson. It intends to switch two more units to wood at a later date, investments that if completed will see it harvest a forest four times the size of Rhode Island each year…
EU non-food biofuels target needs new investment -Shell unit
Large new investment incentives will be needed to promote the development of alternative biofuels after the European Union’s move to curb the use of fuel derived from food crops, a unit of Royal Dutch Shell Plc said on Tuesday.
The executive European Commission announced a major shift in biofuel policy on Sept. 17, saying it plans to limit crop-based biofuels to 5 percent of transport fuel. Campaigners had argued that existing rules were taking food out of people’s mouths…
UK
UK will miss US-style shale gas transformation
Shale gas could bring £95bn of investment and account for a quarter of UK consumption in 20 years. However, it will not transform the economy as it has in the US, according to the first big survey of the country’s reserves…
CBI rejects calls for all-out ‘dash for gas’
The CBI has distanced itself from growing calls for a “dash for gas”, arguing that while the UK will need to increase gas power capacity in the coming years, large-scale deployment of new gas plants would jeopardise carbon targets.
Speaking at a fringe event at the Liberal Democrat conference this week, CBI director-general John Cridland said “some” new gas capacity would be required to close the looming energy supply gap the UK faces — but warned that the surge in new gas investment being advocated by some MPs and think tanks could not be justified…
Nuclear power subsidies ‘could add £70 to annual household energy bills’
Subsidies for new nuclear power could add £70 to annual household energy bills, Ian Marchant, the chief executive of SSE warns.
Ministers should refuse to subsidise EDF Energy’s plans for the first British nuclear reactors in a generation unless the French energy giant agrees to deliver them for a substantially lower price than is widely expected, Mr Marchant argues…
National Grid: UK could be free of energy imports by 2020s
The UK could shed its dependence on energy imports by the early 2020s if it meets its carbon and renewable energy targets as planned, according to National Grid’s scenario planning.
The network operator today released three different projections it will use to forecast future energy demand, demonstrating that the UK’s plans to shift towards low-carbon energy sources are both technically feasible and will deliver wide-ranging benefits…
UK renewables output soars as new figures fuel fears over ‘dash for coal’
The government has today released its latest quarterly energy statistics, confirming that the UK’s renewable energy sector is continuing to expand rapidly, while also fuelling concerns that high gas prices are forcing energy companies to switch to more polluting coal power.
The statistics from the Department of Energy and Climate Change (DECC) show renewable electricity output during the second quarter of 2012 rose 6.5 per cent year-on-year to 8.13TWh, while capacity soared 42.4 per cent to 14.2GW, largely as the result of the opening of a raft of new large-scale on- and offshore wind farms and the conversion of the Tilbury B power station to dedicated biomass…
Tory ‘Tea Party tendency’ putting green energy jobs at risk, warns Ed Davey
Tens of billions of pounds of investment in low-carbon, job-creating energy infrastructure projects that are “ready to go” could be lost to Britain because of an anti-green movement that is sweeping through the Tory party, the Liberal Democrat energy secretary warns today.
In an interview with the Observer, Ed Davey describes a “Tea Party tendency” among Conservative MPs who question climate change and green investment as “perverse”, and says it is creating deep uncertainty for an industry that could do much to help lift the country out of the economic doldrums…
Geopolitics
Benjamin Netanyahu to set ‘clear red line’ on Iran
Benjamin Netanyahu, the Israeli prime minister, will set a “clear red line” on Iran’s controversial nuclear programme in a speech to the UN General Assembly later today, an Israeli official said.
The Israeli leader’s address to the UN meeting was expected to focus largely on Tehran’s nuclear programme, which Israel and much of the international community fears masks a weapons drive…
