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 reached its highest level in 2009 this week at over $74/barrel before falling back on news of rising US stocks and possible curbs on overcapacity in Chinese heavy industry. Economic optimism is higher than at any point this year, but as yet oil demand remains suppressed.
ODAC has long criticised the International Energy Agency’s position on peak oil, so imagine our surprise when the IEA’s chief economist, Fatih Birol appeared to have shifted position and declared peak oil would come in ten years time – at least, according to an interview in the Independent three weeks ago. Dr Birol’s apparent conversion provoked a predictable outburst from Michael Lynch in the New York Times and a splenetic attack on the Huffington Post website. But ODAC was always sceptical about the story, and as trustee David Strahan reports in guest commentary, the IEA says the article was confusing and its position remains unchanged.
As countries increasingly recognise the need to move away from fossil fuel energy, there were a number of interesting developments this week in the renewables sector. A Chinese firm has produced the world’s most efficient commercial photo voltaic panels, at a time when China’s solar industry is beginning to eclipse that of Germany, the previous frontrunner. In the UK the government is aiming to hasten the adoption of wind power by speeding up grid connections for new installations, and considering the idea of a ‘conservation bank’ to reduce local resistance to new onshore windfarms. Hans Werner Sin of Germany’s Ifo Institute for Economic Research argues however that all of these efforts will be in vain unless governments rig the economics of energy supply by making it economically advantageous to leave fossil fuels in the ground.
Oil
Oil Falls a Third Day After Unexpected Increase in U.S. Supply
Crude oil declined for a third day after a report showed that inventories unexpectedly rose last week in the U.S., the world’s largest energy user.
Oil traded below $72 a barrel after the Energy Department said yesterday that crude stockpiles rose 128,000 barrels last week, compared with forecasts for a 1.15 million-barrel reduction. The increase in supplies was still lower than that reported the previous day by the American Petroleum Institute…
Don’t Be Crude
“Energy independence” has become a byword on the American political scene, and invoking it is now as essential as baby-kissing. All the recent U.S. presidential candidates employed it, and to this day, the White House Web site lists as a guiding principle the need to “curb our dependence on fossil fuels and make America energy independent.” Expect a whole new round of such rhetoric when the global economic recovery begins, and with it, higher oil prices return…
‘Peak Oil’ Is a Waste of Energy
REMEMBER “peak oil”? It’s the theory that geological scarcity will at some point make it impossible for global petroleum production to avoid falling, heralding the end of the oil age and, potentially, economic catastrophe. Well, just when we thought that the collapse in oil prices since last summer had put an end to such talk, along comes Fatih Birol, the top economist at the International Energy Agency, to insist that we’ll reach the peak moment in 10 years, a decade sooner than most previous predictions (although a few ardent pessimists believe the moment of no return has already come and gone)…
Michael Lynch, the former director for Asian energy and security at the Center for International Studies at the Massachusetts Institute of Technology, is an energy consultant.
An article in the Independent caused a stir recently by claiming that the International Energy Agency’s chief economist Fatih Birol had predicted peak oil in ‘about ten years’ – a radical departure from the IEA’s position to date.
Under the headline Warning: oil supplies are running out fast, the Independent’s science editor Steve Connor wrote: “In an interview with The Independent, Dr Birol said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated.”
If true, this would be a significant shift for the IEA. Although the Agency has for some time been forecasting a “supply crunch” around the middle of the next decade, it has always stressed that it sees this as the result of underinvestment rather than geological limits. And in its most recent long term forecast, published in the World Energy Outlook 2008, the IEA predicted output would rise to 106 million barrels per day in 2030, up from around 84 mb/d today.
Since Independent’s story was not backed up by a direct quote from Dr Birol, I asked the IEA press office for confirmation. A spokesman emailed:
“Fatih Birol feels that the article was confusing. Concerning peak oil, his position is clear and has not changed since WEO 2008. WEO 2008 said in chapter 11 (highlights page 249) that global conventional oil production will peak around 2020. The article incorrectly made it sound that the total oil production (including unconventional oil etc.) is going to peak at that time. Taking into consideration gains from unconventional oil, oil peak will be later than 2020, more around 2030. Also, oil peak can be delayed by improving energy efficiency, therefore consuming less oil and consequently producing less oil.”
Steve Connor defended his story by email, noting that his quotes were taken directly from a taped interview and claiming “It was clear my article was about conventional oil supplies”. But that distinction was evidently lost on many readers; Dr Birol was subsequently attacked in the New York Times and the Huffington Post for his apparent conversion to the early-peak-oil view.
So the IEA does not appear to have changed its position, and is not forecasting peak oil in ten years. It has, however, and for the first time as far as I am aware, named the date, if only tentatively: ‘around 2030′.
But just because the Agency’s position is now clear doesn’t mean it’s right. As I have argued before, the IEA’s WEO 2008 forecast depends on heroic assumptions about rising production from OPEC, Iraq, and non-conventionals such as the Canadian oil sands. The danger is the Agency’s “supply crunch” in 2015 turns out to be the real thing.
David Strahan is the author of The Last Oil Shock:The Imminent Extinction of Petroleum Man
Iran announces largest oil find for five years
Iran’s oil minister Gholamhossein Nozari said over 8.8 billion barrels of crude oil has been discovered in four new layers at the Sousangerd oilfield, the largest in five years, the IRNA news agency reported on Monday.
“Drilling all layers of this field was successfully finished in the depth of 5,026 metres and as expected the amount of in-place oil reserve is about 8.83 billions of barrel,” Nozari was quoted as saying…
A Solar-Powered Oil Field?
BrightSource Energy has broken ground on a 29-megawatt solar steam plant at a Chevron oil field in Coalinga, Calif.
The 100-acre project’s 7,000 mirrors will focus sunlight on a water-filled boiler that sits atop a 323-foot tower to produce hot, high-pressure steam.
In a conventional solar power plant, the steam drives a turbine to generate electricity. In this case, the steam will be injected into oil wells to enhance production by heating thick petroleum so it flows more freely. Oil companies typically rely on steam generated by natural gas or other fossil fuels to maximize oil recovery in places like the oil patch in California’s Fresno and Kern counties, where the petroleum is heavy and gooey…
Nigeria Rebels Suspend Peace Talks, May Resume Attacks in Delta
The Movement for the Emancipation of the Niger Delta, the main armed group in Nigeria’s oil region, said it suspended peace talks with the government and may resume attacks on oil infrastructure.
The group, also known as MEND, is opting out of an amnesty program because the government “expects disarmament without the real issues being addressed,” spokesman Jomo Gbomo said in an e-mailed statement today. “MEND will be compelled to resume with ferocious attacks on the oil industry at the end of our cease-fire on Sept. 15.”…
Saudi raises oil output to benefit from prices
Saudi Arabia boosted its oil production by 144,000 barrels per day (bpd) in June apparently to net higher revenue after crude prices climbed by more than $10 a barrel, official figures showed yesterday.
Kuwait increased its production by 30,000 bpd, while Iran cut supplies by 30,000 bpd and the UAE gave no figures for its June output. Qatar pumped about 2,000 bpd below its May output…
Iraq’s Second Oil Bidding Round Needs Higher Fees to Succeed
Iraq, which awarded only one oil field contract in June because of disagreements over fees, needs to pay more to attract foreign bidders in the second round of licensing, according to former state officials and analysts.
International companies vying for the untapped deposits, including Majnoon, Iraq’s largest undeveloped field, want higher returns for working in a country lacking security and an oil law. Contracts to be awarded in November may be delayed until after a January election and revised if the government changes…
US regulator have right to check London oil market
American regulators will for the first time be able to make on-site visits to exchanges in London under new rules agreed between Britain and the United States yesterday.
The Financial Services Authority (FSA) and the US Commodities Futures Trading Commission announced a series of measures designed to tighten cross-border regulation of the oil market. The announcement, which follows mounting political pressure blaming speculators for driving up oil prices, will include greater information sharing, improved access to trade execution and audit data as well as a new framework between regulators for taking emergency action…
Timid oil giants hand back their cash
The world’s top six oil companies have showered investors with $130 billion (£79 billion) in dividends and share buybacks over the past year and a half, according to new research.
The payouts have coincided with a global buying spree by government-controlled rivals from China, India and the Middle East, prompting some to wonder if the companies that once dominated the world oil industry have given in to the increasingly powerful state-backed groups…
Gas
Foreign energy groups buy into US natural gas
A growing number of foreign energy companies eager to tap into America’s vast natural gas reserves is looking to invest in independent companies, while estimates of US supplies continue to increase.
BP and BG Group of the UK; StatoilHydro, the Norwegian energy company; and Eni, the Italian oil company, have all bought into the US gas industry in the past year to gain access to the US industry while tapping into the independent groups’ experience and technical expertise…
China secures gas from Burmese waters in $5.6bn deal
China is to boost its economic ties to the Burmese military Government with a $5.6 billion (£3.4 billion) gas project in the Bay of Bengal, to be built by a South Korean and Indian consortium.
The Shwe gas project, led by Daewoo International, the South Korean conglomerate, will supply China National Petroleum Corporation (CNPC) with gas for 30 years, a deal that underscores the importance of China to the economy of Burma, the impoverished and isolated state on its southwestern border…
Gorgon go-ahead rallies energy groups
Australia’s decision on Wednesday to grant the Gorgon gas project environmental approval may turn out to be one of the most significant events of the year for three of the world’s biggest energy groups.
Even for Chevron and ExxonMobil of the US, and Anglo-Dutch Royal Dutch Shell, with their combined market capitalisation of more than $600bn, Gorgon is a project that can make a material difference…
Coal
Coal price surges on Chinese demand
Coal prices have jumped to their highest in a year as a drop in Chinese domestic output forces the country to import.
The shift has particularly benefited the price of coking coal, used for steelmaking and much scarcer than thermal coal, which fires power plants…
Renewables
China powers ahead as it seizes the green energy crown from Europe
Suntech Power in Wuxi has just broken the world record for capturing photovoltaic solar energy, achieving a 15.6pc conversion rate with a commercial-grade module.
Trina Solar is neck-and-neck with America’s First Solar, the low-cost star that has already broken the cost barrier of $1 (61p) per watt with thin film based on cadmium telluride…
The Big Question: Should Africa be generating much of Europe’s power?
Why are we asking this now?
Two hugely ambitious power-generating schemes have been launched in recent weeks, one offering to create the world’s largest solar farm and the other to create the biggest hydroelectric dam on the planet. In both cases the location for the mega-projects is Africa: the solar-power scheme envisages harnessing the sun in the Moroccan and/or Algerian Sahara; while the hydroelectric plan centres on damming the mighty Congo River. What the two projects have in common is that they seek to export the majority of the power they intend to generate from impoverished countries to more developed economies. In the case of the Sahara to Southern Europe and in the case of Congo to South Africa, foreign mining interests inside the Democratic Republic of Congo and again, Europe. Even in the best-case scenario neither project will be up and running for 15 years…
Vow to speed up wind farm grid connection
Moves aimed at making it easier to connect renewable energy to the National Grid were announced yesterday.
The Energy and Climate Change Secretary, Ed Miliband, said the shake-up would help new projects waiting for a date to feed electricity into the grid to get out of the “queue” and would particularly help renewable energy such as wind farms…
Objectors to wind farms to be bought off
Ministers are considering whether to establish a “conservation bank” to help overcome planning objections to wind farms and other renewable-energy projects.
Planning problems have held back British onshore wind farms. Vestas blamed nimby (not in my back yard) objections for its recent decision to shut Britain’s only wind-turbine plant, on the Isle of Wight…
UK
Fake trees, algae tubes and white roofs among UK engineers’ climate solutions
Artificial trees and tubes of algae on the sides of buildings could absorb most of the UK’s annual carbon dioxide emissions, according to a report from engineers that will be circulated at party conferences in the autumn.
In research examining the role that geo-engineering could play in tackling climate change, a 12-month study by the Institute of Mechanical Engineers (IME) also found that painting city roofs white could also prove to be a simple but effective way to curb excessive global warming…
Home owners failing green targets to pay more Council Tax
Home owners who fail to introduce green measures could be forced to pay more Council Tax.
Under the new proposals, the Government would increase Council Tax and Stamp Duty for millions of homes that are not energy efficient.
It could also mean families are unable to sell their home unless they spend tens of thousands of pounds on getting their properties insulated and double-glazed…
Climate
Climate policy picks the wrong target
The chief goal of European environmental policy is to curb fossil energy consumption. Governments are busily promoting alternative energy, improved building insulation and more efficient cars. These programmes cost billions – and probably achieve the exact opposite of what policymakers intend: the global extraction of coal, gas and oil shoots up instead of sinking…
The writer teaches at the University of Munich and is president of Germany’s Ifo Institute for Economic Research
Climate protesters target the ‘dirty dozen’
Climate change campaigners are to target the offices of a dozen companies and government departments across central London in a week of raucous direct action, starting today with the opening of the 2009 Climate Camp.
The actions, which will be sudden and unannounced and will range from noisy protests to the blocking of entrances to attempted occupation, will all be planned from the camp, to be set up this afternoon at a London location which has hitherto been kept secret…
Asia hits back on climate change
China and India have closed ranks on climate change, blaming developed countries for the lack of progress towards a deal.
“They have talked much, but not done much,” said Xie Zhenhua, China’s minister in charge of climate change, adding that the conflict between developed and developing nations was driven by commercial and political interest…
BP and Shell warned to halt campaign against US climate change bill
BP and Shell are being told to tear up their membership of the American Petroleum Institute (API) in protest at the organisation’s attempts to incite a public backlash against Barack Obama’s energy and climate change bill.
The two oil companies are also being asked to bring a halt to their own political lobbying in Washington in letters sent to their chief executives from Greenpeace and the Platform environmental group…
