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.
Oil prices fell below $70/barrel this week before recovering slightly. The drop reflected market nervousness about the gravity of the Euro crisis and its potential impact on the global economy, coupled with continued high US crude oil stocks.
In the meantime all eyes continue to be focused on the Gulf of Mexico where challenges to BP’s estimate of the size of the oil spill is further damaging the credibility of the company. A BP spokesman on Thursday commented that the tube put in place on Monday is siphoning off around 5,000 barrels/day, but oil continues to spill and is now hitting the Louisiana shoreline. Some estimate the actual amount to be at least ten times the working BP estimate of “a little more” than 5000/barrels per day, and point to the huge plume of oil which can be seen on a live video feed which BP released under pressure from Congress on Thursday.
The political consequences of the disaster gathered paced this week as Interior Secretary Ken Salazar announced the creation of three new bodies to replace the now discredited Minerals Management Service, which was in charge of regulation leading up to the accident. The moratorium on off-shore drilling remains in place as the investigation into the causes of the accident continues. BP also faces the possible closure of its Atlantis platform following a submission by US lawmakers questioning its safety.
While off-shore drilling grabbed the headlines, there was also considerable interest this week in another environmentally costly oil frontier — the tar sands. China increased its interest in the region early in the week, through a deal between China Investment Corporation (CIC) and Penn West Energy Trust. Meanwhile, both Shell and Statoil defeated shareholder resolutions challenging their investment in the tar sands at their annual meetings; although a report released this week by investment advisors RiskMetrics Group and Ceres lent weight to the position of the rebel shareholders, that the tar sands represent risky investments due to their high carbon, remediation and energy costs.
In another new report released this week IHS CERA presented a bullish narrative of the growing role of the tar sands in US oil imports, which it says became the largest single source of its imports this year. The report’s writers see the tar sands as critical for US energy supply and deal with the environmental impacts by pointing to the role of innovation in reducing their severity. The timing of the report serves as a warning of how the Gulf of Mexico catastrophe could make the on-shore oil production of the tar sands look less threatening. However, even CERA’s report states that “GHG emissions from oil sands are approximately 5 to 15 percent greater than the average crude oil consumed in the United States”. Their economic analysis naturally excludes the long-term environmental impact beyond immediate remediation. The link between GHG emissions and rising ocean temperatures and acidity may not be as photogenic as a ruptured pipeline, but their eventual impacts are likely to be even more severe.
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Oil
Oil Is Set for Third Weekly Drop on Europe, U.S. Growth Concern
Crude oil was poised for a third weekly decline as European leaders struggled to contain the region’s debt crisis and reports cast doubts on the strength of the economic recovery in the U.S., the largest energy consumer.
Oil fell yesterday for the seventh time in eight days as equity markets plunged. European Union finance ministers plan to meet today in Brussels to discuss sovereign-debt issues. An index of U.S. leading economic indicators fell last month and more Americans applied for weekly unemployment benefits…
BP has fallen short in providing oil leak data, says US
BP has “fallen short” in providing data about the Gulf of Mexico oil spill, the US government has said, in its latest critical letter to the firm.
The Obama administration said the British energy giant should act in a “transparent manner” and “promptly” make all information public…
The Peak Oil Crisis: The Deepwater Horizon
It has been nearly a month since the tragic events aboard BP’s drilling rig, Deepwater Horizon, which suffered a blowout, caught fire, and sank in the Gulf of Mexico releasing prodigious amounts of oil into the sea. So far there has been little damage to the coastline; however, this could change quickly as oil is still pouring from the damaged well pipe and it could be months before the blowout is brought under control.
The possible damage to the environment ranges anywhere from minor, which is doubtful, to wiping out the seafood and tourist industries along the Gulf coast for many years…
Don’t worry, besieged BP chief tells staff
The chief executive of BP moved to reassure staff that their jobs, pensions and future were still safe yesterday as a new threat loomed over the company — the possible shutdown of another field in the Gulf of Mexico.
Tony Hayward sought to raise staff morale shortly before the BP board met in London for the first time since the deadly explosion on the Deepwater Horizon rig on April 20…
Oil is sinking amid ‘oceans of public debt’
As 5,000 barrels of oil gush into the Gulf of Mexico from BP’s leaking Macondo well each day, you might expect the price of crude to be rising on concerns about higher costs and tighter regulation for the energy majors.
There is no doubt that there will be enormous financial repercussions for BP and its rivals from the environmental disaster that has killed 11 men and drawn vitriolic criticism of Big Oil’s safety practices from the US press and government…
Financial Hazards Seen in Oil Sands
An article in Wednesday’s paper weighs the risks and benefits of a leading source of oil for the United States, the oil sands of Canada, whose growth will probably accelerate if deepwater drilling is restricted in response to the Deepwater Horizon accident.
But a new report this week from RiskMetrics Group and Ceres, an investment adviser that incorporates sustainability issues into its recommendations, urges caution in buying into oil sands…
Alberta oilsands become largest U.S. supplier of crude in 2010: Report
If the oilsands were a country, they would be the largest source of crude oil to the United States, according to a new report by a leading American energy think-tank.
Canada has long been a top oil supplier to its southern neighbour, but 2010 will mark the first time oilsands production will account for the lion’s share of U.S. imports of petroleum and refined products, according to the report prepared by Massachusetts based Cambridge Energy Research Associates. Oilsands could eventually account for 20 to 36 per cent of U.S. supply by 2030, the report notes…
Statoil Defeats Shareholder Revolt Against Oil Sands
Statoil ASA and its biggest shareholder, the Norwegian state, fought off an investor revolt against its Canadian oil-sands project for the second year in a row at its annual general meeting.
A majority of shareholders at Norway’s biggest energy company voted against forcing it to pull out of Canadian oil sands at Statoil’s meeting today. Statoil, 67 percent owned by the state, in 2007 bought North American Oil Sands Corp. for about $2 billion to tap an area estimated to hold the largest oil reserves outside Saudi Arabia…
Investors reject Royal Dutch Shell oil sands review
Shareholders in Royal Dutch Shell overwhelmingly rejected a resolution challenging the oil group’s investments in Canadian oil sands yesterday. Executives were also repeatedly criticised at a stormy annual meeting over the group’s operations in Nigeria.
About 11 per cent of shareholders either supported or abstained on the special resolution, which requested that Shell provide more information on its oil sands activities, including the financial, social and environmental impacts…
China moves into Canada’s oilsands
China has extended an $8 billion lunge into to Canada’s oilsands – the rich, hugely controversial tar deposits that are second only to Saudi Arabia in proven oil reserves and lie at the centre of a bitter legal dispute over 1,600 dead ducks.
The rights acquisition deal, led by China’s sovereign wealth fund, comes as rising resource prices, BP’s catastrophic oil spill in the Gulf of Mexico and a new Beijing-led era of “great game” oil diplomacy has brought Canada’s bitumen deposits into sharp global focus…
Gas
Russia covets Ukraine gas as ties improve
Russia’s president called for closer integration with Ukraine yesterday as he began a two-day visit to Kiev that is being closely watched in Brussels and Washington to gauge how fast and far Moscow will succeed in restoring ties with its estranged southern neighbour…
Electricity
SSE and E.ON delay gas plants on low demand
Two new gas power plants due to be built by E.ON and Scottish & Southern Energy have been put on hold as industrial power demand has not returned after the recession.
SSE’s proposed gas plant at Baglan Bay, Wales, will be put off for two years until 2015 and E.ON’s Drakelow gas plant in Staffordshire will now not open in 2013 as planned…
National Grid in £3.2bn rights issue
National Grid has announced plans to raise £3.2bn from shareholders to spend on adapting the UK’s power networks for renewable sources of energy.
The operator of the UK’s electricity and gas networks plans to invest £22bn in the UK over the next five years…
Nuclear
Nuclear industry presses sceptical Huhne over backing new reactors
Leaders of the nuclear industry have sought urgent meetings with the new energy secretary, Chris Huhne, amid concern that he will not provide the support needed for their £30bn investment programme in a new generation of reactors.
Sam Laidlaw, Centrica’s chief executive, and Paul Golby, head of E.ON UK, have scheduled talks in the coming days with Huhne, who has strongly indicated that his primary focus is renewable power…
Where next for nuclear as Labour’s ‘unaccountable quango’ faces axe?
Fresh doubts have surfaced over plans to build a fleet of nuclear power stations in Britain after the Government pledged to scrap a planning agency designed to accelerate construction of new reactors and other big energy projects.
Greg Clark, the new Communities Minister, confirmed to The Times that the Infrastructure Planning Commission, created by Labour only seven months ago to streamline Britain’s fragmented planning system, would be disbanded…
Renewables
Britain’s offshore renewable energy worth a billion barrels of oil and 145,000 new jobs
The offshore renewable energy industry could generate the same amount of electricity a year by 2050 as one billion barrels of oil, using less than a third of the available space, according to a new report.
The Offshore Valuation Group (OVG) published a full economic study of the UK’s offshore renewable resources for the first time yesterday; industry experts have labelled it “groundbreaking”…
Why China holds ‘rare’ cards in the race to go green
From electric cars to wind turbines, environmentally-friendly technology around the world needs rare earth metals. But China – where over 90% of these minerals are mined – is saying it now wants to keep more for its own industry.
The leafy banks of the Birmingham and Worcester canal may be an unlikely place to discuss a looming industrial crisis but it was here that Professor Rex Harris of Birmingham University took me on his hydrogen-powered electric barge…
The whey to greener electricity : Using dairy waste as an alternative source of power
IT MAY seem ridiculous, but in the hunt for sources of alternative energy researchers have come up with fuel cells which are powered by cheese—or at least whey, a by-product in cheese making. Usually fuel cells run on hydrogen, but the aim of the research is to allow factories to recover energy from waste products like whey by converting organic materials directly into electricity…
Climate
Man-made climate change blamed for ‘significant’ rise in ocean temperature
The world’s oceans are warming up and the rise is both significant and real, according to one of the most comprehensive studies into marine temperature data gathered over the past two decades.
Measuring the temperature of the oceans has not been easy, but the scientists behind the latest study believe there is now incontrovertible evidence to show that the top few hundred metres of the sea are warming — and that this temperature rise is consistent with man-made climate change…
New UN climate head demands ambition and transparency
The new head of the UN’s climate convention has called for ambition and transparency in UN climate talks.
Christiana Figueres also told the BBC that the process used to hammer out a deal at December’s Copenhagen summit was “not the most satisfactory”…
Geopolitics
US and partners react quickly to Iran’s uranium deal with new sanctions
Iran may not have expected a warm embrace after announcing its enrichment deal with Brazil and Turkey Monday but the speed of the new sanctions drafted by the US and presented to the UN will have left Tehran reeling.
It took the United States less than a day to respond to Monday’s announcement by Iran that it had agreed to a deal brokered by Brazil and Turkey which would see quantities of its enriched uranium turned into fuel rods for civilian energy use outside the country…
Iran agrees to send uranium to Turkey
Iran on Monday sought to derail the US drive for new economic sanctions by agreeing to export most of its low-enriched uranium to Turkey in exchange for nuclear fuel…
Economy
Chinese shares drop to one-year low on property curbs
Chinese shares have fallen to their lowest point in a year after plans to tighten up on property price inflation worried investors.
Chinese Premier Wen Jiabao was quoted by the official Xinhua news agency as saying the government would curb excessive rises in property prices…
Petrol expected to fuel inflation
Price pressures in Britain are intensifying with annual inflation expected to rise further above the 2pc target when the latest figures are published on Tuesday.
Economists predict that higher petrol prices helped to drive the consumer prices index (CPI) — the official measure of inflation — up to 3.5pc in April, from 3.4pc in March…
Euro under renewed attack ahead of EU crisis talks
Shocked European ministers are preparing for emergency talks to shore up the euro after markets fell in reaction to panic measures in Germany.
Angela Merkel stunned EU capitals by warning that the euro was in danger and triggered fears of a fresh financial meltdown by announcing a ban on risky trading practices by speculators. The German Chancellor’s actions opened up new cracks in the single currency, drawing sharp criticism from France and prompting Brussels to issue an appeal for unity…
