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 Obama administration announced this week that it has reversed its decision to open up new leases in areas of the Eastern Gulf of Mexico and the Atlantic coast. The intention to lift the moratorium which had been in place since 2006 was made weeks before the Deepwater Horizon oil disaster. See the recent UKITPOES paper for more on the likely impact of the Gulf of Mexico disaster on oil production. Energy Secretary Ken Salazar also announced – though it received less attention – that the Cook Inlet, and the Chukchi and Beaufort Seas in the Arctic will still be considered for leasing before 2017. So, the Arctic may be opened to drilling despite the even greater environmental risks inherent involved in handling a spill there.
Safety concerns around shale gas drilling led to a 6 month moratorium on drilling permits being approved this week by the New York State Assembly. The Environmental Protection Agency (EPA) is undertaking a study of the issues, but is not due to release its findings till late 2012. Meanwhile, Mr Salazar is considering compelling companies to reveal details of the chemicals used in the drilling process known as ‘fracking’ — something that the industry has resisted. The safety issues around fracking should be of considerable interest on this side of the Atlantic as companies look to repeat the successes of the US industry in Britain, where drilling has already started in Lancashire, and Europe.
In the UK this week gas use soared as outside temperatures plummeted and thermostats were turned up. Though the country’s largest gas storage facility, Rough off the coast of Yorkshire, is reported to already be a fifth depleted at this early stage in the winter, the National Grid is currently confident that supplies, including increased capacity for liquefied natural gas (LNG) imports, will be sufficient.
And lastly, ODAC wishes to pay tribute to Dr. David Fleming who died unexpectedly this week. David was an inspiration to many working on the issues of resource depletion and climate change. He was a founder member of the Green Party in the 1970s and more recently devised the concept of Tradable Energy Quotas (TEQs). ODAC trustee David Strahan attributes the idea for his book The Last Oil Shock to a letter which David Fleming wrote to The Times in 2000. For an eloquent and personal tribute to David see Rob Hopkin’s blog post.
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Oil
Obama backtracks on plan to open more Gulf waters to offshore drilling
The United States Interior Department on Wednesday backtracked on a plan to open up the eastern Gulf of Mexico and parts of the Atlantic seaboard to new offshore drilling leases — a decision sparked by the Gulf oil spill this summer and the failure to strike a political deal with Republicans on global-warming legislation.
The decision, which bans oil exploration in these areas until at least 2017, could have an impact on short-term energy independence while also laying a more permanent framework for the development of alternative energy sources…
Arctic waters open for “cautious” leasing after 2012
Interior Secretary Ken Salazar’s announcement about a “cautious” approach to offshore oil development opens the door to leasing new waters in the Arctic after 2012 and clears the way for full review of a proposed new exploratory well in the Beaufort Sea as early as next summer.
The proposal has been greeted with cheers by many in Alaska who’ve been waiting to move into the new offshore frontier of the Far North, but conservationists warned that more studies should have been done before including the Arctic in the administration’s 2012-17 Outer Continental Shelf leasing plan…
Brazil’s Congress Makes Petrobras Sole Pre-Salt Operator in Revised Laws
Brazil’s lower house of Congress approved new oil regulations that will increase government control over the energy industry and reduce competition against Petroleo Brasileiro SA, the state-controlled producer.
The regulations approved yesterday allow Petrobras, as the company is known, to be sole operator of oil fields where licenses haven’t yet been auctioned. The oil producer will be able to explore every field in areas it designates as “strategic.” The bill needs the president’s signature…
Oil Heads for Biggest Weekly Increase in a Month on U.S. Economy
Oil headed for its biggest weekly gain in a month on speculation that U.S. fuel demand will increase as the economic recovery gathers pace in the world’s biggest oil consumer.
Futures trimmed yesterday’s 1.4 percent rally as traders sought to profit after the highest close in two years. Crude has climbed 4.7 percent this week, the most since the period ending Nov. 5, as data showed U.S. home sales increased and manufacturing expanded. A Labor Department report today may indicate the U.S. hired more workers for a second month…
Shell and Gazprom sign ‘global co-operation’ pact
Almost four years after Shell was forced to cede control of a $20bn (£12.8bn) gas project to its Russian rival Gazprom, the two companies have signed a new agreement on “global co-operation”.
The pact will make it easier for Shell to access Russia’s vast oil and gas reserves in Siberia and the far east. In return, state controlled Gazprom will become a partner on as yet unspecified Shell projects outside Russia…
OPEC November Oil Output Fell 0.3%, Led by African Producers, Survey Shows
The Organization of Petroleum Exporting Countries’ crude-oil output fell in November, led by declines in Nigeria and Angola, a Bloomberg News survey showed.
Production slipped 80,000 barrels, or 0.3 percent, to an average 29.05 million barrels a day, according to the survey of oil companies, producers and analysts. October output was revised higher by 120,000 barrels. Production by members with quotas, all except Iraq, dropped 80,000 barrels to 26.7 million, 1.83 million above their target…
BP pushes ahead with Canadian oil sands project
BP has risked further anger from environmental groups by committing to the development of its Canadian oil sands project, calling it ‘a significant milestone’ for the company.
BP, which owns 50pc of the Sunrise oil sands project in northern Alberta but will spend the first $2.5bn on the scheme, said it was “a significant milestone” for the company. It added that the development represented a “40-year secure and stable source of production for North America”…
Gas
Moratorium on gas drilling passes New York legislature
The New York State Assembly on Monday gave final approval to a six-month moratorium on a controversial method of natural gas extraction while state and federal agencies review its possible health impacts.
The moratorium — which calls for no drilling permits to be issued until at least May 15, 2011 — was approved by the state Senate in August…
Natural gas drillers feeling pressure
The Obama administration is considering forcing energy companies to reveal more details about the chemicals they use to help extract natural gas from public lands, Interior Secretary Ken Salazar said Tuesday.
The federal government is weighing the new disclosure requirements for natural gas wells on public lands that are stimulated using a technique called hydraulic fracturing, amid mounting fears that the practice can contaminate nearby drinking water supplies…
Europe’s scramble for gas sees controversial hydraulic fracturing cross the Atlantic
In the US, gas-extraction in the Marcellus Shale has been linked to pollution and social conflict. Now Halliburton, Chevron and Exxon, among others, want to bring the so-called ‘fracking’ process to Europe, reports Luke Starr
Despite growing evidence from the US of a raft of negative environmental and social consequences of drilling for natural gas using the controversial hydraulic fracturing process, European energy companies are scrambling to secure licenses to roll out extraction projects this side of the Atlantic…
Russia and Ukraine settle dispute over gas
Russia and Ukraine have reached a settlement over a dispute involving billions of dollars’ worth of natural gas, bringing a controversial gas trader back into the centre of the supply chain to Ukraine and possibly other European markets…
Saudi Arabia, Kuwait Seek Gas to Supplant Use of Oil for Power
Saudi Arabia, the world’s largest oil exporter, and neighbor Kuwait seek to add natural gas supply to avoid burning crude and refined products to generate power, officials from the two nations’ state oil companies said.
“We are picking up gas exploration,” Ahmad Al-Sa’adi, vice president of gas operations at Saudi Aramco, said today at a conference in Doha, Qatar. “Any liquid fuel we are burning comes at the expense of our exports.”…
Nuclear
Special Report – Nuclear’s lost generation
On a flat, low-lying island nestled in crisp waters off the west coast of Finland, the first nuclear power plant ordered in Western Europe since 1986 is inching towards start-up.
Over 4,000 builders and engineers are at work on the sprawling Olkiluoto 3 project, whose turbine hall is so cavernous it could house two Boeing 747 jets stacked on top of each other. When it is dark, which in winter is most of the day, enormous spotlights throw into focus scores of scaffolding towers and the red hauling equipment that encircle the grey, unfinished reactor building. The heavy reactor vessel, made to withstand temperatures over 350 degrees Celsius, has been gingerly lifted into place by two cranes. Inside the building, a dozen workers carrying a single pipe across their shoulders create a human caterpillar that carefully wends its way through tarpaulin-covered tunnels lit by lamps and chinks of daylight…
China’s reactor plans power up uranium
It may be the hottest commodity around. The onetime darling of hedge fund managers, uranium had looked like missing the powerful rally in commodities markets. Not so…
UK
Fears over record gas bills in cold weather
Households face the possibility of further rises in their energy bills, after the cold weather that has struck the country caused gas prices to rise to the highest level for 18 months.
The National Grid has reported a significant increase in the demand for power as many parts of Britain have been experiencing unprecedented low temperatures for this time of year…
Carbon-price boost for green energy
Sweeping reforms of Britain’s energy markets are set to be unveiled over the next fortnight as the government launches the biggest upheaval in the sector since the electricity industry was privatised 20 years ago…
Green restrictions on power stations ‘could make bills unaffordable’
The energy select committee, chaired by Tim Yeo, is broadly in favour of the Government’s plans to introduce an Emissions Performance Standard (EPS), which would set a specific limit on carbon dioxide released from power stations.
However, it warned in a new report that little is known about the effect on bills if companies are forced to fit equipment that captures carbon dioxide from power plants and stores it underground…
Government redefines zero as it abandons green homes commitment
What does zero look like to you? Is it:
a. 0
or
b: 56%?
If the answer is a, you are an ordinary mortal. If the answer is b, you are a government minister, possessed of supernatural mathematical powers.
In July, housing minister Grant Shapps made what seemed to be a crystal clear commitment:
“This government are committed to ensuring that all new homes post-2016 can be zero-carbon.”…
UK economic recovery ‘poses threat to environment’
The hoped-for emergence of the UK from its economic crisis might erode a shift towards more sustainable lifestyles, according to an EU report published today.
A growing population, coupled with demand for more and larger homes, is threatening the UK’s security of water supplies and wildlife, said the European Environment Agency (EEA)…
Climate
Japan derails climate talks by refusing to renew Kyoto treaty
The world’s climate negotiations in Cancun were faced with deadlock at their outset yesterday after Japan insisted it would not agree to renewing the Kyoto Protocol, the current treaty under which rich countries are cutting their emissions of greenhouse gases.
Kyoto, signed in the Japanese city in 1997, runs out in its current form at the end of 2012, yet its renewal carries enormous symbolic significance for the developing countries — who see it as a sign of good faith by industrialised nations in the fight against global warming — and who are not legally bound by it, as the rich countries are…
Cancun climate change summit: scientists call for rationing in developed world
Global warming is now such a serious threat to mankind that climate change experts are calling for Second World War-style rationing in rich countries to bring down carbon emissions.
In a series of papers published by the Royal Society, physicists and chemists from some of world’s most respected scientific institutions, including Oxford University and the Met Office, agreed that current plans to tackle global warming are not enough…
Economy
US deficit panel calls for deep cuts and tax rises
A presidential panel set up to help trim the US budget deficit has called for steep spending cuts and tax rises.
The proposal would cut defence, social security and other spending, slashing a total of $4.1tn (£2.62tn) from the budget deficit by 2020…
Global financial markets rise amid bail-out rumours
World stock markets and the euro have surged amid reports that Washington may join Europe in further support for heavily indebted countries.
The US Treasury has sent an envoy to Europe to discuss the continuing financial crisis…
Don’t rely on oil profits for pensions
As the true financial impact of the Deepwater Horizon crisis on BP becomes clearer, including plans potentially to reduce the regular dividend from next year, an inconvenient truth about the exposure of our pension funds (and pensions) is emerging. Quite simply, the funds we hope to rely on when we retire are highly dependent on the dividends paid out by high-carbon sectors, especially oil and gas…
Transport
Lufthansa unveils plan to test biofuels on regular domestic flights
Germany’s national air carrier Lufthansa said on Monday it would start to test the use of biofuel to supplement kerosene on one of its major domestic flights.
The airline plans to use the dual fuel sources on its four-times-daily service between Hamburg and Frankfurt from April 2011, in a project aimed at reducing carbon dioxide emissions…
Events
The Energy Institute: Oil supply and energy security — getting on with the job
This year’s conference will give an update on developments over the last year with a strong emphasis placed on solutions which respond to global oil demand. We will also set several points for debate, inviting participation from speakers and the audience throughout the day.
