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.
The oil price firmed to around $117 this week as evidence emerged of the impact of the Libyan crisis on global oil supply. Bloomberg reported that OPEC oil output dropped in March as Saudi Arabia failed to make up the loss in production from Libya. Reuters reported that Saudi has unexpectedly called on oil companies to expand its drill count by 30%. It is not clear whether this is in an attempt to add further spare capacity, or whether the kingdom is struggling to raise production. Either way it looks as if Goldman Sachs’ suggestion three weeks ago that global spare capacity has shrunk to 2mb/d was on the money, with clear implications for the future oil price.
With no early resolution of the Libyan civil war in sight, it was disappointing that President Obama’s much heralded speech on energy focussed more on cutting US oil imports rather than cutting its consumption. The short term thrust was for increased domestic oil production and a shift to domestic natural gas in transport (the Pickens’ Plan), rather than immediate moves to reduce oil dependency altogether. Although Obama ridiculed the Republicans’ ‘drill-baby-drill’ credo, in the short term his message is not much different. The industry welcomed his “new commitment to fossil fuels”.
The nuclear debate heated up again this week as conditions at the Fukishima reactor in Japan continued to deteriorate. In Germany Angela Merkel’s party took a huge hit in local elections, partly because of voters’ dismay at the government’s decision to extend the life of Germany’s nuclear fleet, which an 11th hour moratorium failed to assuage.
In the UK, Deputy Prime Minister Nick Clegg entered the fray by suggesting that planned new nuclear stations may now not go ahead because costs would rise following the disaster. Meanwhile in the pro nuclear corner former chief scientist Sir David King argued that nuclear is a vital low carbon energy source with a safe record. King went on to point out that so far no one has been killed due to the Fukishima leak, while coal mining has claimed 30 lives this week alone. While that judgement may be premature, especially since the effects of a nuclear accident play out over a longer period, it is certainly true that the political landscape has just become far more hostile to nuclear, and this may encourage a greater push towards renewables.
The Pew Environment Group released a report this week looking at the state of private investment in clean energy (which includes energy efficiency and CCS as well as renewable) in the G20 countries. The good news was that investment in the sector reached record levels in of $243 billion in 2010. For the UK however there was the sobering news that it experienced the largest decline among the G-20 nations, falling from fifth to 13th. This performance was put down to the uncertainty surrounding clean energy policies which can only have been exacerbated by last week’s announcement of cuts to the feed in tariffs.
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Oil
Oil Rises to 30-Month High on Concern Libya Conflict to Prolong Supply Cut
Oil rose to the highest in 30 months in New York on concern the conflict in Libya, Africa’s third- largest exporter, will prolong production cuts and spread to Middle East producers.
Futures advanced as much as 0.9 percent, extending the biggest quarterly rally since 2009, as troops loyal to Libyan leader Muammar Qaddafi retook control of the oil port of Ras Lanuf and shelled Brega, another energy hub. Libyan oil output fell 72 percent to a 49-year low and OPEC production slid 1.2 percent in March, a Bloomberg News survey showed…
Saudi Arabia calls for 28% increase in oil rigs in kingdom
Top oil exporter Saudi Arabia has unexpectedly called on oilfield service firms to expand the kingdom’s oil rig count by nearly 30 percent, according to Simmons & Co, to ensure spare production capacity remains ample as supply uncertainty grows.
Saudi state-run oil giant Saudi Aramco met with leading oil service companies including Halliburton over the weekend, unveiling plans to boost the country’s rig count this year and next to 118, from around 92 now, Simmons & Co analyst Bill Herbert said on Monday…
In the dark over oil reserves
There is a perverse circular logic to George Osborne using tax revenues from the oil companies to subsidise our national car habit. It may worsen long-term energy security, obstruct the shift to a low-carbon economy and leave us vulnerable to uncontrollable global events, but it makes short-term political sense to the government.
Just how big a gamble Osborne is making becomes clear when you look at how the oil companies themselves see the future…
Obama sets out energy future for less dependency on oil
President Barack Obama has vowed to reduce US oil imports by one-third in little more than a decade.
He said in a speech in Washington that America had to “get serious” about a secure and affordable energy future…
Europe moves to ban imports of tar sands oil from Canada
An attempt to classify tar sands oil as more environmentally-damaging than conventional oil would effectively ban its sale within European Member States
The European Union is moving to prevent tar sands oil from entering the European market due to the greenhouse gas emissions (GHG) associated with its production…
BP’s Russian deal with Rosneft blocked by court
BP’s controversial alliance with the Kremlin-controlled oil company Rosneft is in tatters after a tribunal backed the company’s Russian partners in blocking the deal.
The London tribunal, called to settle the dispute between BP and its Russian oligarch partners AAR over the proposed deal, ruled that the temporary high court injunction preventing it from being consummated should remain in place. The deal involved BP and Rosneft swapping $16bn (£10bn) of shares and forming a joint venture to explore the Arctic for oil…
Statoil halts North Sea oil development over windfall tax
George Osborne is preparing to fend off a rebellion by the North Sea oil industry over his plan to impose a £2bn tax on the sector.
The chancellor told the Treasury select committee that officials would contact Norwegian oil company Statoil, which has suspended development work on the new Mariner and Bressay fields to the south-east of Shetland while it studies the implications of the chancellor’s tax on the profitability of its operations…
BP managers could face manslaughter charges over Gulf oil spill
US authorities are considering charging BP managers with manslaughter after decisions they made before the Deepwater Horizon oil well explosion last year killed 11 workers and caused the biggest offshore spill in US history.
Sources close to the process told Bloomberg that investigators were also examining whether BP’s executives, including former chief executive Tony Hayward, made statements that were at odds with what they knew during congressional hearings last year…
Nuclear
Japan may have to nationalise nuclear provider
The company responsible for Japan’s stricken nuclear reactors has admitted it may have to be nationalised or bailed out by the state to stave off collapse, sending its share price plunging 17pc.
Tokyo Electric Power (TEPCO) has managed to get an extra $24bn (£15bn) in bank loans, but it warned that this would not be enough to pay for the soaring cost of trying to mitigate the nuclear disaster, pay for the clean-up and hand out compensation…
Japan nuclear crisis: sea radiation levels reach new high
The level of radioactive iodine in the sea off Japan’s disaster-hit Fukushima nuclear plant has soared to its highest reading yet, reaching 4,385 times the legal limit.
The level of iodine-131, reported a few hundred yards south of its southern water outlet has risen in a series of tests since last week, carried out by plant operator the Tokyo Electric Power Company (TEPCO)…
EDF warned to improve reactor maintenance
France’s nuclear safety authority has warned EDF, the country’s monopoly operator of atomic power plants, that it needs to improve the maintenance of its reactors…
China to Focus on Solar Farms, Cut 2020 Nuclear Goal After Japan’s Crisis
China, the world’s biggest energy consumer, will cut its 2020 target for nuclear power capacity and build more solar farms following Japan’s atomic crisis, said an official at the National Development and Reform Commission.
The country will reduce its nuclear capacity goal of 80 gigawatts, Ren Dongmin, the head of the economic planner’s renewable energy development, said at a Beijing conference today, without giving a new target. The goal for solar-power capacity will increase from the current target of 20 gigawatts, he said…
EDF ‘committed’ to nuclear despite Nick Clegg’s cost fears
EDF has dismissed claims by Deputy Prime Minister Nick Clegg that nuclear power may be too expensive for Britain in the wake of Japan’s atomic disaster.
Mr Clegg warned this week that nuclear operators may not be able to afford to build new plants because of possible extra safety requirements…
Nick Clegg: Britain’s proposed nuclear plants may not be built
The Deputy Prime Minister cast doubt on the future for nuclear power by predicting that a review into existing plants — ordered after the explosion at the Fukushima power station — would recommend higher and more costly safety standards.
The Liberal Democrat leader insisted that no extra government money would be found to meet additional costs and suggested that energy firms would struggle to raise investment from the private sector as a result of the Japanese near-meltdown…
The Fukushima effect, globally, will be colossal
The former British chief scientific adviser says the UK should press on even faster with new nuclear power stations; the German voters say Germany should dump them altogether — and it looks as though the Berlin government will agree.
It is not quite as stark as that, but it is hard to underestimate the significance of what is happening in Germany over nuclear power. We may or may not build a few new stations, most probably only on the sites of existing ones. Sir David King’s argument is that if we build the plants quickly we can use the spent fuel from existing plants to power them. But whatever you think of that argument, what the UK does or does not do will not materially affect the future of nuclear power in the rest of the developed world, let alone the emerging countries. What Germany does, however, will. It is a much larger industry and the country’s reputation in nuclear power generation is less chequered than our own…
Nuclear is the safest form of power, says top UK scientist
Stepping on to a transatlantic flight will expose a person to more radiation than walking around the Fukushima nuclear power station in Japan — even in its current state of near-meltdown — according to the UK government’s former chief scientist.
Sir David King mounted a robust defence of nuclear power on Wednesday as renewed fears over its dangers buffeted the industry. He said it was the safest form of electricity generation, and that the recovery of most of Japan’s nuclear fleet after the worst earthquake in living memory showed that safety systems were working…
Chris Huhne faces legal challenge over nuclear link to cancer in children
The government has ordered an expansion of the UK’s nuclear programme without properly factoring in evidence that nuclear power stations cause an increase in cancer cases in children living nearby, according to a legal challenge in the high court.
The case alleges that the energy and climate secretary, Chris Huhne, did not properly review the evidence on cancer when giving the go-ahead for the expansion last year. Lawyers claim the action could delay, or even stop, the programme of new reactors…
Renewables
Investors are not just scaremongering on renewable subsidy changes
As Italy becomes the latest European government to consider changing its solar subsidies, ministers should pay attention to today’s report into green investment from the Pew Environment Group.
The report looked like good news for European governments. Private investment into renewables in the European region totalled $94.4bn, about $20bn more than in 2009, and more than any other world region…
Private investment in clean energy plunges
Private investment in renewable energy in the UK fell sharply last year, relegating the country from third place to 13th in a table of Group of 20 economies.
The UK attracted $3.3bn in 2010 against $11bn in 2009, falling below every other European nation in the group, China, the US and Canada, according to a report by the Pew Environment Group…
Spain’s financial crisis claims another victim: the solar power industry
Spain had one of the world’s most ambitious — and generous — plans to boost the amount of electricity it generates from the sun. That dream, for the solar industry at least, has turned sour. Just days before Christmas, the government slashed the level of subsidies that all new and existing photovoltaic (pv) solar projects will receive. But even the powerful utility companies, who opposed the solar industry, are now warning that the fallout could be long-lasting and reach far beyond the energy sector.
The row has pitted the renewable lobby against Spain’s three biggest utilities — Iberdrola, Endesa and Gas Natural — which have been urging the government to take action to stem the wave of subsidised renewable projects being built, particularly solar ones…
Climate
U.S. Senate delays vote on EPA climate regulation
Voting has been temporarily postponed in the U.S. Senate on proposals to stop, delay or pare back the Environmental Protection Agency’s regulation of greenhouse gases linked to climate change problems.
Republican and some Democratic lawmakers are jockeying to kill or alter EPA regulatory authority that began taking effect in January on controlling carbon dioxide pollution blamed for global warming…
China industry ordered to cut CO2 intensity by 18 percent by ’15
China’s industrial firms will be forced to cut their carbon and energy intensity levels by as much as 18 percent over the next five years, according to mandatory targets announced on Monday.
The target was higher than first planned, with industries originally expected to cut CO2 and energy intensity — the amount per unit of industrial added value — by 16 percent over 2011-2015, the official Xinhua news agency said, citing the Ministry of Industry and Information Technology…
Transport
EasyJet could axe some routes, warns Carolyn McCall
The head of the low-cost airline easyJet has warned of an industry “shake-out” with routes likely to be axed and fares set to rise, as oil remains well above $100 per barrel and carriers grapple with high fuel prices.
Speaking as easyJet launched its longest-ever scheduled route, a five-hour journey from London to the Jordanian capital of Amman, chief executive Carolyn McCall said it was inevitable that airlines, including her own, would examine route networks as profit margins narrow…
Geopolitics
Libyan Forces Gain on Rebels as Qaddafi’s Foreign Minister Defects to U.K.
Troops loyal to Muammar Qaddafi forced Libyan rebels to retreat as the U.S. and U.K. said they would consider arming opposition forces and Libya’s foreign minister resigned and flew to London.
Libyan Foreign Minister Moussa Koussa quit Qaddafi’s government, according to a statement from the U.K. foreign office. “He traveled here under his own free will. He has told us that he is resigning his post,” the statement said…
Libyan foreign minister Moussa Koussa defects
Moussa Koussa, the Libyan foreign minister, last night defected from Col Muammar Gaddafi’s government after flying to Britain, telling officials he was “no longer willing” to serve the regime.
Mr Koussa flew from Tunisia, where he had been on a diplomatic mission, and landed at Farnborough airport before being shuttled to London for immediate talks with high-ranking Foreign Office officials…
Syria president dismisses protests as ‘foreign conspiracy’
Bashar al-Assad’s defiance, broadcast in his first television appearance since anti-government unrest began a fortnight ago, stunned his critics, who had been widely led to expect that the president was going to announce major reforms, including the abolition of Syria’s much hated emergency laws.
Instead, they found their leader at his most obdurate as he delivered a speech all but shorn of conciliatory gestures and carrying within it a strong hint of threat…
Saleh Rules Out More Concessions, Says Yemen Is ‘Time Bomb’ Near Civil War
Yemen’s President Ali Abdullah Saleh said he would offer no more concessions to his opponents and warned that his nation faces chaos, as a senior military official and former ally of the embattled leader called for him to step down.
“Yemen is a time bomb,” Saleh said in an interview with Al Arabiya television, according to a transcript published yesterday by the state-run Saba news agency. “Everyone will side with his tribe, and we will then end up with a destructive civil war.”…
