Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
The International Energy Agency released a new report this week in which it took a detailed look at the prospects for the Iraqi oil and gas industry out to 2035. The conclusion is that oil production in Iraq could increase significantly by 2020 – doubling or even trebling IF, and it is a big if, there is huge investment (around $25bn/year up from $9bn last year), the political will to overcome legal, logistical and geopolitical obstacles, and relative stability with regard to security. Even with all this the IEA offers up three scenarios — none of which comes close to achieving the projected 15mb/d which current in place contracts could theoretically produce by 2020. The most aggressive scenario misses this by almost 6mb/d.
The Central Scenario, also called the main product, forecasts a near doubling of production by 2020 to 6mb/d increasing to 8.5mb/d by 2035. These are big numbers and would make a huge difference to the economy of Iraq, but would they significantly change the global oil supply picture? Unlikely. A significant increase in Iraqi production is already built into future projections and anticipated by markets, indeed, in the report, the IEA still forecasts a price of $120/barrel by 2020 to support the increase, a price high enough to threaten economic growth in most of the world. Given the IEA’s regular warnings on the effect of the oil price on economic growth this assumption appears to contain a significant contradiction.
In the UK this week it has been the turn of the Conservatives to dominate the headlines via their party conference. The messages coming from Birmingham during the week have only served to underline the growing cracks in the consensus around government energy and climate policy. There were still positive statements about renewables — notably from David Cameron boasting that the UK is “number one on the world for renewables”. Chancellor George Osborne spoke of the need to invest in renewables, while also promoting shale gas — for shale gas he shared the news that a “generous new tax regime” is being negotiated. Owen Patterson, the Environment Secretary, spoke of protecting rural areas from inappropriate use of renewables, while assuring that he would make regulations for fracking “as simple as possible”.
The push for gas may be popular with a strong lobby of old style Conservatives, it could however put the party at odds even with their traditional allies. On Monday a group of more than 50 businesses including many multinational corporations, put their names to a letter asking the Chancellor for a target to cut emissions from the power sector by 2030, a move which he opposes. In their view a dash for gas undermines the Climate Change Act, and the potential economic benefits of an energy transformation.
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Oil
Iraq could become world’s second biggest oil exporter
Iraq could become the world’s second-largest oil exporter within two decades and double its output by 2020, a major study has found.
The International Energy Agency said Iraq can overtake Russia for exports and be responsible for nearly half of all anticipated growth in global output…
Will Iraq’s energy boom postpone peak oil yet again?
Well, here is a shocker for the peak oil camp.
Iraq’s oil output will more than double from 2.6 million to 6 million barrels a day (b/d) by the end of the decade. This is 45pc of world oil supply growth over these years…
Oil Heads for First Weekly Gain in Month on Economy, Middle East
Oil headed for its first weekly gain in a month in New York after claims for U.S. jobless benefits dropped to the lowest level in four years and increasing Middle East tensions prompted concern crude supplies may be disrupted.
Futures were little changed after rising 0.9 percent yesterday. First-time unemployment claims fell to 339,000 last week, the lowest since February 2008, according to Labor Department data. Brent oil traded near the highest premium in a year to West Texas Intermediate grade after Turkey said a Syrian plane that it grounded contained munitions, while Italian Foreign Minister Giulio Terzi said Europe is prepared to tighten sanctions on Iran…
Saudi oil: Down (just a bit) with the price
CRANES loom over the landscape in Dammam, a sprawling port city on Saudi Arabia’s Gulf coast. Shiny shopping malls are rising. Flashy cars stream across the causeway towards Bahrain and its nightlife. Young Saudis are making the most of their kingdom’s latest oil boom.
In a compound up the road in Dhahran sits Saudi Aramco, the world’s largest exporter of crude oil and the source of the country’s flourishing finances. Oil prices have averaged about $110 a barrel this year and for months Aramco has been pumping around 10m barrels a day (b/d), one of its highest rates. The Energy Information Administration, the American energy department’s statistical arm, says Saudi Arabia’s net oil income in 2011 was $311 billion. Prices were lower then; this year the country will earn even more…
Total warns about ‘inaccurate’ oil prices
With the fires from the Libor scandal still burning, the temperature is rising in the oil markets amid mounting concerns that this could be the next of the City’s dark corners to blaze into life.
The majority of those involved subscribe to a strict code of omertà that any Mafia don would be proud of. Except that it has recently come to light that French oil giant Total has broken the code by telling regulators that prices can be incorrect, with the clear implication that they could be subject to manipulation…
Azerbaijan threatens BP with ‘serious measures’ over oil revenue shortfall
BP faces a major new threat after the president of Azerbaijan accused it of making “false promises” about production volumes and warned it to expect “serious measures”.
The oil major made “grave mistakes” that had resulted in an $8.1bn (£5bn) shortfall in the government’s revenues, President Ilham Aliyev said in a dramatic televised attack…
Nigeria oil spills: Shell rejects liability claim
The Anglo-Dutch oil giant Shell has rejected claims by four Nigerian farmers that it should pay compensation for damage to their land.
The farmers are suing the company in a civil court in The Hague, claiming oil spills ruined their livelihoods…
Europe rejects ban on Arctic oil drilling
The European parliament’s industry committee has rejected attempts to introduce a moratorium on offshore oil and gas drilling in the Arctic, overruling a contrary vote by its environment committee last month.
The key vote in the industry committee yesterday (9 October) instead proposed a new directive to ensure that companies have “adequate financial security” to cover the liabilities that could be incurred by any accidents…
Disputed Islands With 45 Years of Oil Split China, Japan
China and Japan sat down for talks and agreed to jointly develop a natural gas field under the East China Sea, defusing a dispute between Asia’s biggest economies over who owns the reserves. That was in 2008.
The accord, hailed as a model for cooperation at the time, has yet to be carried out and the countries now face a new territorial dispute, also in the East China Sea. The quarrel over who owns the uninhabited islands called Diaoyu by China and Senkaku by Japan is again linked to a prize beneath the ocean that may hold enough oil to keep China running for 45 years…
Norway to double carbon tax on oil industry
Norway is to double carbon tax on its North Sea oil industry and set up a £1bn fund to help combat the damaging impacts of climate change in the developing world.
In one of the most radical climate programmes yet by an oil-producing nation, the Norwegian government has proposed increasing its carbon tax on offshore oil companies by £21 to £45 (Nkr140) per tonne of CO2 and a £5.50 (Nkr50) per tonne CO2 tax on its fishing industry…
Gas
Can George Osborne give shale gas a boost with a ‘generous’ tax regime?
Shale gas is the great hope of George Osborne and his fellow Conservatives who detest what they see in the renewable energy sector: subsidy junkies and woolly minded greens. But in a brief section of his speech to his party conference on Monday, he managed to give comfort to both. “An enterprise strategy means investing in renewable energy,” he said, a far warmer phrase than in previous speeches and presumably wrung out of him by the Lib Dems. But then he completed the sentence: “… and opening up the newly discovered shale gas reserves beneath our land.”
“We are today consulting on a generous new tax regime for shale so that Britain is not left behind as gas prices tumble on the other side of the Atlantic,” said Osborne. It’s certainly true that the shale gas industry in the UK needs all the help it can get, having drilled only a handful of wells, far short of the hundreds or thousands needed to really know how much gas could be released by fracking. Furthermore, the CBI and Deutsche Bank among others have said there can be no repetition of the US gas miracle, given differences in mineral rights, population density and environmental regulations…
Gas power ‘is undermining energy sector’
Businesses have urged the Government to set a target of slashing carbon emissions from the power sector by 2030 to stimulate investment that will drive growth.
Companies and investors have joined trade unions, environmental groups and industry bodies in warning George Osborne that support for gas power into the 2030s is undermining investment in Britain’s electricity infrastructure…
Chancellor told to back biogas over shale
George Osborne has been urged to ramp up support for sustainable biogas rather than focusing on securing tax breaks for shale gas.
The Chancellor this week announced the government would consult on “a generous new tax regime for shale”, angering campaigners who argue the controversial process used to extract the gas, known as fracking, can set off earthquakes and pollute ground water, while expanding natural gas use is likely to blow the UK’s mandatory carbon budgets…
‘Fracking’ to preserve US gas glut
In 2008, at the height of the commodity price boom, Devon Energy was running 40 rigs drilling into the Barnett Shale beneath the rolling green countryside of north Texas. Today it has just 10…
British Gas raises gas and electricity prices
British Gas has announced increases to the gas and electricity prices it charges customers.
It has raised its charges for both types of fuel by about 6%, adding £80 a year to the average dual fuel bill…
Electricity
UK energy minister wants to fund two CCS projects
Britain’s energy minister wants to financially support two pilot carbon capture and storage (CCS) projects, a technology the UK is banking on to reduce climate-warming emissions and to develop as a new export product.
Britain sees CCS as a key technology for reducing carbon emissions in the energy sector, and the government has launched a 1 billion pound ($1.60 billion) competition to fund one or more projects…
Carbon capture: 130 plants needed ‘to avoid dangerous climate change’
More than a hundred carbon capture and storage projects (CCS) must be built to avoid dangerous global warming, an international CCS group said this week, as fears were raised over whether UK projects would benefit from an EU fund for 12 demonstration plants.
The Global CCS Institute said in a report published on Wednesday that governments needed to offer policies that show stronger commitment to CCS. It revealed that only one new large-scale CCS plant was built in the past year, taking the total number to 75, while eight projects were cancelled…
Blackouts possible as coal power stations go offline early, warns Ofgem
Britain faces the possibility of power blackouts and even higher electricity prices within three years as a result of coal-fired and other polluting power stations being phased out more quickly than expected.
The warning, in a report by the energy regulator, Ofgem, could embolden the government to trigger an early “dash for gas” which critics fear would mean higher carbon pollution for decades to come…
Nuclear
Government mulls underwriting risk of new nuclear plants
The Government is considering ways of underwriting risk in the construction of new UK nuclear plants, the energy minister John Hayes has said.
In an interview with the Sunday Telegraph, Mr Hayes played down fears over the state of the UK’s nuclear ambitions, and suggested that Chinese investors may yet have a role – despite two Chinese corporations failing to bid as expected for the Horizon nuclear venture…
Russia eyes stake in UK nuclear plants
Russia is seeking a stake in the UK’s nuclear new-build programme, in a boost for the Government’s energy plans.
Alexey Kalinin, of Russian state nuclear corporation Rosatom, will today say that it is willing to invest in the UK’s reactor programme…
Renewables
Paterson challenges ‘inappropriate’ rural renewables
Environment secretary Owen Paterson has today taken a swipe at onshore wind energy and promised to make it “easy” for shale gas developers to get permits.
Addressing the Conservative Party conference this morning, Paterson failed to make any mention of climate change, further fuelling fears his stance on green issues is less than sympathetic…
Cameron hails UK as ‘number one in the world’ for offshore wind
David Cameron has today highlighted the success of the UK’s offshore wind and tidal energy industry, hailing them as “number one in the world” and an example of British enterprise and dynamism.
In his annual address to the Conservative Party conference, the Prime Minister made no mention of climate change and only passing reference to the green economy…
Clean energy investment down 20 percent in third-quarter: report
Global investment in clean energy fell to $56.6 billion in the third quarter of this year, down 20 percent year-on-year and signalling 2012 will see the first annual decline in eight years, a report by analysts Bloomberg New Energy Finance said on Tuesday.
“Today’s figures… suggest that the full-year 2012 figure for investment in clean energy is likely to fall short of last year’s record $280 billion. If so, 2012 would be the first down-year for world investment in the sector for at least eight years,” a statement accompanying the report said…
Political storms threaten Europe’s offshore wind goals
Political wavering in Britain, the world’s biggest offshore wind market, is casting doubt on European ambitions to build a fleet of gigantic turbines out at sea, desperately needed to meet legally binding climate change targets.
The increasing scale of offshore wind means it is the one green energy source able to make up for the phase-out of nuclear generation – especially in the EU’s largest economy Germany – and for the closure of ageing and polluting coal plants in other countries such as Britain and France…
U.S. sets steep final duties on Chinese solar panels
The United States on Wednesday slapped steep final duties on billions of dollars of solar energy products from China, but turned down a request from lawmakers and U.S. manufacturers to expand the scope of its order.
China’s government and its solar manufacturers criticized the decision, adding more heat to the U.S.-China trade relationship following a congressional panel report on Monday urging American companies not to do business with two Chinese telecommunications companies because of security concerns…
Alex Salmond launches £103m renewable energy fund
First Minister Alex Salmond has launched a £103m fund for Scottish renewable energy projects.
The Renewable Energy Investment Fund (REIF) aims to attract more private investment to the sector…