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 surged as the OPEC meeting broke in acrimony with no agreement to raise production quotas. The Saudi oil minister said it was the worst meeting ever, and some analysts claimed the cartel, which controls around 40% of global oil supplies, is on the point of collapse.
Traditional price hawks Iran and Venezuela ganged up with Libya, Algeria, Angola, Ecuador, Venezuela and Iraq to defeat the increase, proposed by Saudi Arabia, the UAE, Kuwait and Qatar, with voting largely determined by the distribution of spare capacity. Saudi, with three quarters of OPEC’s estimated 4 mb/d spare capacity, and its allies, wanted to raise output to soften prices and protect demand. The rest had nothing to gain, at least in the short term; with no spare capacity to speak of, they would have suffered lower oil prices and not been able to raise output to compensate.
The row illustrates OPEC’s increasing irrelevance. Most members are running flat out and incapable of raising output even if they wanted to, and the power to influence the oil market is increasingly concentrated in Saudi Arabia, although many doubt they have as much meaningful spare capacity as claimed. With seasonal demand due to surge some 2 mb/d by the end of the year, Saudi is now likely to raise output in any case, but this will reduce its spare capacity in the event of any further geopolitical spasms. Buckle up.
2010 saw global energy use increase at its fastest rate since 1973, according to the latest BP statistical energy review released on Wednesday. Oil consumption rose to a record 87.4 million barrels/day, (2008 was 86 mb/d), while coal consumption increased by 10%, driving a near 6% increase in greenhouse gas emissions. But it is natural gas that is shaping up to be the next big thing, according to a new report, “Are we Entering a Golden Age of Gas?”, from the IEA. According to the Agency, gas consumption could rise by 50% by 2035, requiring global production to grow by three times the current output of Russia.
The IEA’s new scenario depends on a number of big and questionable assumptions, including that plentiful shale gas will keep prices low. But the watchdog makes clear the report’s rosy-tinted title applies only to the industry, not the planet. The scenario cuts greenhouse gas emissions only fractionally compared to their central forecast, because gas backs out not only coal but also nuclear and renewables, and lower prices stimulate demand. Despite the industry’s attempts to position natural gas a as ‘clean’, this high-gas scenario still ties us to a railroad track heading for a catastrophic 3.5C rise in global temperatures.
In the UK this week there was dismay in the solar industry at the release of revised feed in tariffs that substantially reduce the payback rates for medium to large scale solar installations, to protect money for domestic installations. At this point it is difficult to deduce whether the policy is aimed at increasing the take up of solar power, or sweetening voters.
Finally, you may be interested to take a look at the various documents of the Call For Evidence: Prospects for Crude Oil Supply and Demand — including a submission by ODAC— published on the DECC website this week. Taken with the department’s recent agreement to work with the UK Industry Task Force on Peak Oil and Energy Security to produce an oil-shock response plan, things may – finally – be inching in the right direction.
Oil
Breakdown points to power shift in cartel
The “old” politics of Opec, which split the cartel and marred its influence in the oil market of the 1990s, have made an unexpected return after a decade-long absence.
The acrimony that derailed Wednesday’s meeting has wider implications than the short-term failure to agree a production rise wanted by Saudi Arabia but opposed by price hawks Iran and Venezuela. It signals that Riyadh’s moderate views on what should be the prevailing oil price carry less weight in a group now more influenced by Tehran and Caracas…
Global Energy Use Advances at Fastest Pace Since 1973 on Coal, BP Says
Energy consumption worldwide advanced at the fastest pace since 1973, driving greenhouse-gas emissions to a record and increasing the threat of climate change, BP Plc (BP/) said in an annual report.
Use of energy rose 5.6 percent in 2010, rebounding from the recession’s drag on demand, according to the BP Statistical Review of World Energy report for 2011, released today. Increases in fossil-fuel consumption, which included a 10 percent jump in use of coal by China to a record 1.7 billion metric tons of oil equivalent, pushed emissions growth to its biggest jump since 1969, BP said…
DECC accepts warning of rising peak oil risks
Experts have urged the government to shield the UK against rising oil prices and market shocks as part of a major consultation which revealed a widespread concerns that global oil production will peak before 2030.
The Department of Energy and Climate Change (DECC) yesterday published the results of a call from chief scientific advisor David Mackay for evidence to help predict the uncertain future supply and demand of crude oil…
Oil Futures Rise to One-Week High as OPEC Fails to Agree on Output Quotas
Crude oil increased to a one-week high after OPEC’s failure to reach an accord on output targets for the first time in at least 20 years.
Futures gained 1.2 percent following what Saudi Oil Minister Ali al-Naimi said “was one of the worst meetings we’ve ever had.” Ministers from the 12-nation Organization of Petroleum Exporting Countries were unable to come to an accord in five hours of talks in Vienna yesterday. Prices also rose as the U.S. trade deficit narrowed in April…
BP boss on defensive after Rosneft fiasco
Defiant BP boss Bob Dudley said on Wednesday that the company’s global strategy was still on course despite the humiliating collapse of a “historic” deal in Russia.
In a sharp change of direction, the chief executive said the Arctic drilling programme and £9.8bn share tie-up with Rosneft was only “one of dozens” of opportunities available in the far north…
Exxon Makes Big Find in Gulf of Mexico
With a trio of big oil and gas finds, Exxon Mobil Corp. is making its first major splash in the U.S. Gulf of Mexico in decades.
For years, the world’s largest publicly traded oil company was a minor presence in the Gulf, compared with fellow giants such as BP PLC and Chevron Corp. But the company on Wednesday unveiled three discoveries that are likely to turn it into one of the biggest producers of oil and gas in the region…
Oil Sands Project in Canada Will Go On if Pipeline Is Blocked
One way or another — by rail or ship or a network of pipelines — Canada will export oil from its vast northern oil sandsprojects to the United States and other markets.
So the regulatory battle over the proposed Keystone XL pipeline, which would link the oil sands to the Gulf Coast of the United States, may be little more than a symbolic clash of ideology, industry experts say. Even if the Obama administration rejects the Keystone plan, the pace of oil sands development in northern Alberta is unlikely to slow…
Gas
Natural Gas Entering ‘Golden Age’
The increasing abundance of cheap natural gas, coupled with rising demand for the fuel from China and the fall-out from the Fukushima nuclear disaster in Japan, may have set the stage for a “golden age of gas,” the International Energy Agency said Monday.
Under a scenario set out by the IEA, global consumption of natural gas could rise by more than 50% over the next 25 years, with it accounting for more than a quarter of global energy demand by 2035, up from 21% now…
LNG demand rises as nuclear power is shunned
Nuclear power has become a hard sell in many parts of the world since the disaster at the Fukushima in Japan — with gas continuing to benefit.
Last week, Bank of America Merrill Lynch said that it thought the global gas glut was set to disappear quickly as liquefied natural gas (LNG) consumption soared. In fact, it saw demand rising so fast it expects the market to start tightening in the second half of next year…
MPs call for inquiry into shale gas drilling after earthquakes
Ministers were facing growing pressure last night to investigate the safety and environmental impacts of drilling for shale gas after fears that it could have triggered two small earthquakes in Lancashire.
Critics say the released gas can contaminate local water supplies and that seismic activity could be linked with the technique. They also argue that prospecting for shale gas — which is banned in France, as well as New York and Pennsylvania states — leaves a far worse carbon footprint than conventional gas drilling…
Nuclear
Fukushima nuclear plant may have suffered ‘melt-through’, Japan admits
Molten nuclear fuel in three reactors at the Fukushima Daiichi power plant is likely to have burned through pressure vessels, not just the cores, Japan has said in a report in which it also acknowledges it was unprepared for an accident of the severity of Fukushima.
It is the first time Japanese authorities have admitted the possibility that the fuel suffered “melt-through” — a more serious scenario than a core meltdown…
IAEA Draws Fire Over Japan Crisis
Officials in three Western countries are attempting to sideline the head of the International Atomic Energy Agency from international nuclear safety discussions amid their growing concerns about the U.N. nuclear agency’s handling of Japan’s atomic crisis, say officials familiar with the matter.
Senior nuclear-affairs officials from the three nations in recent weeks have quietly criticized the IAEA for failing to provide quick and accurate analysis of the danger posed by the accident at the tsunami-stricken Fukushima Daiichi plant…
Berlin accelerates nuclear shutdowns
The German government has brought forward the planned closure of some of the country’s nuclear power stations in the hope of winning legislative support from states and opposition parties for an atomic switch-off.
After last week agreeing the outlines of a phase-out of all 17 nuclear plants by 2022, the German cabinet on Monday agreed draft legislation that will bring an unexpectedly abrupt end to three of these sites…
Renewables
US solar power nears competing on price
US solar power will compete on price with conventional generation within three years without subsidy thanks to plummeting costs, industry leaders say.
In a breakthrough for renewable generation that will lessen the dependence on fossil fuels, the cost of solar power in California is near that of gas-fired plants at times of peak demand…
A Hybrid Power Plant Takes Shape in Turkey
A hybrid electric plant designed by General Electric. Mirrors focus sunlight on power towers, top right, that make steam that is injected through pipes into a turbine,center, to make electricity. Wind turbines, rear, make electricity to either help run the plant or to feed the grid.
How can the electric system take intermittent energy sources like wind and sun and integrate them with conventional fuels for electricity, like natural gas?…
UK
Government confirms deep solar incentive cuts
The Department of Energy and Climate Change (DECC) has today dashed hopes that it would reconsider proposed cuts to feed-in tariff (FIT) incentives for large solar installations, confirming that the new incentive regime will come into effect as planned from 1 August.
The solar industry has been lobbying the government to scale back its proposed cuts, arguing that reductions in feed-in tariffs of between 40 and 70 per cent will make virtually all solar installations with over 50kW capacity unviable…
Solar power battle looms as Government slashes subsidies
The Government on Thursday made a final decision to reduce the incentives, after announcing a review of subsidies to rid the solar industry of “hot money and speculators” earlier this year.
The subsidies, called feed-in tariffs, were intended as a way to pay householders above market rates to generate electricity from solar panels and small wind turbines on their roofs. However, large-scale “photovoltaic farms” are planned all over the countryside to take advantage of the generous offer. The Government was worried that they would soak up much of £360m pot of subsidies…
Millions of households face record high energy bills
Millions of households were warned last night that they face “unacceptable” rises in their energy bills after one of the biggest power firms announced average increases of nearly £200 a year.
Scottish Power became the first of the six major suppliers to disclose a new round of price rises. It told five million customers that gas and electricity bills would go up by 19 per cent and 10 per cent respectively…
Government to make Green Deal ambitions legally binding
The coalition will today table a handful of amendments to its Energy Bill as it enters its latest committee stage, including a measure that would place a legal requirement on successive governments to ensure the Green Deal energy efficiency scheme delivers emissions savings in line with those recommended through the UK’s carbon budgets.
Speaking to BusinessGreen, climate minister Greg Barker said the government had listened to calls from NGOS for clear goals to be introduced as part of the legislation to ensure the Green Deal loan scheme delivers promised cuts in greenhouse gas emissions…
St Andrews hopes on-site wind farm will cut crippling energy bills
It is famous for educating the inventor of the logarithm, uncovering record ice cap melt in Greenland, and providing the backdrop for Prince William’s courtship of his now wife.
Now the University of St Andrews has revealed plans to power its cutting-edge research teams with renewable energy by filing for permission to erect six on-site wind turbines…
EDF guarantees Morrisons £1m a year in energy savings
Energy companies are increasingly committed to providing efficiency services alongside the power they sell, but now one of the UK’s largest suppliers has gone a step further, offering supermarket Morrisons a guarantee that it will save it £1m a year on its energy bills.
EDF Energy and Morrisons yesterday announced they have signed an innovative new three-year contract, whereby the utility guarantees that energy-efficiency programmes will deliver energy savings worth £1m a year. The companies also said that the contract will incentivise EDF to go beyond the promised savings and deliver additional improvements in efficiency…
Transport
Airlines lose economy passengers as soaring fuel bills force up ticket prices
That back-of-the-cabin pilgrimage to Ibiza or Miami this summer will be a little less cramped than usual, according to the airline industry’s leading trade body, as economy class passengers balk at higher fares due to rising fuel costs and aviation taxes.
The International Air Transport Association said leisure travel fell 3.5% worldwide between last November and March this year, with Europe suffering the most as recession-hit passengers declined to accept ticket prices driven higher by the increasing cost of oil. IATA’s chief economist, Brian Pearce, said carriers have had no choice but to hike fares because the cost of jet fuel has risen by more than 50% over the past 12 months…
Airline emissions trading will spark trade wars, industry warns EU
Airlines have threatened the EU that “illegal” plans to bring the sector into its $120bn emissions trading scheme (EU ETS) will face a succession of challenges in the courts and could start a trade war with the US, China and Russia.
The annual general meeting of the International Air Transport Association (IATA) in Singapore this week saw industry representatives reiterate concerns over the EU’s plans to set an annual emissions cap for airlines from January next year, pulling them into the bloc’s cap-and-trade scheme…
Research finds fitting hybrid technology to diggers and cranes could boost fuel efficiency
Heavy duty machines such as diggers, cranes and combine harvesters could halve fuel consumption and cut emissions by embracing hybrid technologies pioneered by the automotive industry, according to new research from Finnish academics.
A team at Aalto University spent six years on a study to demonstrate that installing an electric power transmission system that captures and uses energy generated during operation significantly reduces the fuel consumption of construction and mining machines, agricultural machines, and material handling machines…
