Industry

ODAC Newsletter – Feb 18

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Brent crude surged to $104 this week as anti-government protests spread to Libya and Bahrain, prompting a violent reaction from the authorities in both countries. 24 protesters are reported killed in Libya, and in Bahrain 4 have been killed and hundreds injured. Unlike Libya, Bahrain is not a significant oil producer, but there are fears that instability there could spread to its neighbour Saudi Arabia…

Don’t count on natural gas to solve US energy problems

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We often hear statements suggesting that by ramping up shale gas production, the US can raise total natural gas production and solve many of its energy problems, including adding quite a number of natural gas vehicles, and replacing a large share of coal fired electricity generation. While there is the possibility that shale gas will allow US natural gas supplies to increase for a few years (or even 10 or 15 years), natural gas is only about one-fourth of US fossil fuel use, so it would be very difficult to ramp it up enough to meet all of these needs.

Brent-WTI spread

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Colin Barr at Fortune Magazine has some interesting discussion of the WTI-Brent spread (this is the difference in prices between the basic spot price of West Texas blend oil in Cushing Oklahoma, and the price of the Brent contract in Europe). “How do you get $4 gas when oil is just $85? The answer starts with some unprecedented behavior in global oil markets, where the benchmark European oil standard, known as Brent crude, is trading at a $20-a-barrel premium to the U.S. benchmark, the West Texas Intermediate futures contract that trades on Nymex. The two typically trade within a few dollars of one another.”

Bill McKibben: Climate change is our most urgent challenge

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Bill McKibben, author and founder of the international environmental organization 350.org, says that without a global campaign to curb climate change, the ecological devastation of our warming climate will make our planet uninhabitable. His appeal to citizens and policy-makers, the seventh video in the series “Peak Oil and a Changing Climate” from The Nation and On The Earth Productions, is a call to action as much as it is a sobering account of the damage we’re already doing to our environment.

Commentary: An oil shock in 2012?

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The price of oil is once again daily in the news. The Western Europe benchmark Brent crude has hovered near $100 / barrel for much of the last month, and the IEA is again warning of the burden of oil consumption. Is this a harbinger of things to come, or a mere statistical blip in a market that is “well supplied”? How will events play out in oil markets in the coming year or two?

The coming misery that Big Oil discusses behind closed doors

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When big-thinkers at companies with the most skin in the energy game are behind closed doors and they discuss how the world really looks going forward, do they say that there are bumps in the road but that things will be fine, just fine, as they suggest publicly? Three years ago, we got a glimpse into the room when Royal Dutch/Shell issued a scenario forecasting the world in 2020. Based on current economic and energy-use patterns around the world, Shell said that energy supplies will be so tight that they will tip the world into a full-blown crisis in which governments will force their populations to reduce driving, use less electricity, and pay an extremely steep increase for what they do consume. Today, Shell returned with an update. If the world does not change how it uses energy, its scenario will hold true.

The week of the game changer in oil, or was it?

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This past week was supposedly the week of the game changer in the world of oil. Leaked U.S. diplomatic cables from Saudi Arabia called into question the ability of the globe’s largest oil exporter to raise production to satisfy a world increasingly thirsty for petroleum. In the United States a technique called hydraulic fracturing–which has seemingly unlocked vast natural gas resources–will now be applied to oil trapped in shale deposits. Are these two developments really the so-called game changers they are claimed to be?

ODAC Newsletter – Feb 11

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Saudi Arabia’s recoverable oil reserves may have been overstated by 40%. That was the warning sent to Washington from its embassy in Riyadh in 2007, according to a cable released by Wikileaks this week. The source was Sadad al-Husseini, former head of E&P at Saudi Aramco, who allegedly told US diplomats in Riyadh that Saudi’s claimed reserves of some 700bn bbls were overinflated by 300 billion barrels of ‘speculative resources’, and that output would peak once the kingdom had produced half of its original proven reserves of 360bn barrels. With 116bn produced so far, the diplomats concluded that on this basis Saudi’s peak could come in the early 2020s.