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 debt crisis and the war in Libya continued their push and pull on the oil price this week with the outlook currently weakening over fears of a Eurozone recession. Despite this Brent continues to trade at over $100/barrel – around double the price at which any previous economic recovery has occurred.
The rising cost of energy is playing out in a number of ways. At one level it is stifling economic growth; at the same time however it is driving new behaviours and culture change — an interesting example of this is changes in travel habits. In Britain, the percentage of 17- to 20-year-olds with driving licences fell from 48% in the early 1990s to 35% last year, and car manufacturers are having respond to a market in which car ownership appears to be a declining aspiration.
At the same time however rising prices and the decline in “easy to access” resources is bringing with it new and difficult choices as previously uneconomic resources and technologies become financially rewarding. Nowhere is this illustrated more clearly than in the UK following Cuadrilla’s discovery of what they claim to be 200 trillion cubic feet of shale gas. While many independent reports anticipate that the discovery will be smaller than the company’s estimate, and only 20% would be recoverable, there is considerable excitement at the prospect of new jobs and a new domestic energy source. On the other hand, it is clear from the US experience that there are risks involved in fracking for gas, including the possibility of water contamination, which is resulting in a growing lobby against the process.
That being so, you would hope that the UK government could learn from the US experience and ensure that a ‘safety first’ regulatory framework was in place. According to documents revealed by The Guardian however there appears to be a frighteningly laissez-faire approach and lack of clarity over the oversight of the new industry — so much so that even Cuadrilla is looking for tighter regulation! Add to this the threat of 800 wells in Lancashire alone — with further projects already being considered in Wiltshire and Wales —and concerns that shale gas could pull investment away from clean technologies, and the government appears to be asleep at the wheel on this one. Chris Huhne told the Liberal Party Conference that he will need to avoid a dash for gas in order to meet UK emissions goals — a French-style fracking moratorium would be a good start.
Oil
Oil Gains in New York; Set for Biggest Quarterly Drop Since 2008
Oil rose in New York, paring the steepest quarterly drop since 2008, as investors speculated U.S. fuel demand will increase on signs the economy of the world’s biggest crude user is expanding faster than estimated.
Futures climbed for a second day after reports showed U.S. gross domestic product last quarter and jobless claims last week beat forecasts. West Texas Intermediate’s discount to European Brent oil narrowed for a sixth day, the longest streak since March 2010…
North Sea oil slump will cost UK Treasury millions in lost taxes
Britain’s oil production from the North Sea has fallen by 16pc since last year in a drastic drop that will cost the Treasury millions of pounds in lost taxes.
Officials from the Department for Energy and Climate Change put the unexpectedly large fall down to “maintenance and other production issues” on top of the long-term trend of declining output…
In North Dakota, Flames of Wasted Natural Gas Light the Prairie
They are not wildfires caused by lightning strikes or other acts of nature, but the deliberate burning ofnatural gas by oil companies rushing to extract oil from the Bakken shale field and take advantage of the high price of crude. The gas bubbles up alongside the far more valuable oil, and with less economic incentive to capture it, the drillers treat the gas as waste and simply burn it.
Every day, more than 100 million cubic feet of natural gas is flared this way — enough energy to heat half a million homes for a day…
Pipeline’s Backers, Critics Face Off
The battle over a proposed $7 billion, 1,700-mile pipeline aimed at boosting Canadian crude-oil imports by the U.S. moved out of Washington and into the heartland, as the State Department this week kicked off a series of public hearings along the line’s proposed route.
On Tuesday, proponents and critics squared off in Lincoln, Neb., which has emerged as a particularly heated battleground for the project. The public hearings include other stops—from Texas and Oklahoma to Montana and South Dakota—before culminating back in Washington late next week…
BP and Transocean argue over fresh Gulf of Mexico oil ‘leaks’
The US Coast Guard has warned that more oil may have leaked from the Deepwater Horizon rig, causing a new round of finger-pointing between BP and Transocean.
There have been several sightings of oil near the site of last year’s Gulf of Mexico accident in recent months. On Wednesday, the Coast Guard issued a warning to Transocean, the owner of the rig, saying it “may be financially accountable for debris removal costs and damages” if the rig or riser pipeline are found to be the cause. There was no evidence oil came from the well itself…
Turkey Rattles Saber Over Oil Drilling
Turkey said it was ready to send warships to escort research vessels that would explore for oil and gas off the coast of Northern Cyprus, responding to what it said was a provocation by the island’s Greek Cypriot south.
Monday’s saber-rattling came as Texas-based Noble Engineering Inc. began exploratory drilling farther south between Cyprus and Israel late Sunday, despite Turkish warnings to halt the project, the semiofficial Cyprus News Agency reported. Noble was operating under license from the Republic of Cyprus, the island’s internationally recognized government in the Greek Cypriot south…
OPEC Says Producers Will Cut Back Once Libya Output Recovers
Gulf members of OPEC will cut their output of oil onceLibya’s production is back on track, Abdullah al-Badri, secretary general of OPEC, said this week.
Saudi Arabia and other Gulf producers raised output this summer to make up for the stall in Libyan exports that resulted from the uprising against Col. Muammar el-Qaddafi and the international sanctions imposed against his regime…
Damage, Poor Security Slow Libya Oil Flow
Libyan oil workers and officials say damage to ports and oil terminals is so severe and security so poor that the large-scale resumption of exports to Western markets could be delayed longer than some officials had predicted.
The Ras Lanuf oil terminal in eastern Libya was attacked by Gadhafi loyalists on Sept. 12, leaving 15 people dead. At Brega, also in eastern Libya, extensive damage and the presence of unexploded missiles have blocked the start of operations. The Zawiya refinery in western Libya and the massive Es-Sider terminal in central Libya are also damaged…
TransCanada pipeline lobbyist works all the angles with former colleagues
In lobbying for a presidential permit to construct a massive oil pipeline stretching from Canada to the Gulf Coast, TransCanada’s Paul Elliott has tried nearly every angle.
Elliott — who served as Secretary of State Hillary Rodham Clinton’s national deputy campaign manager in 2008 — sought to broker multiple meetings between senior State Department officials and TransCanada executives. He offered to enlist Trans Canada officials’ aid in helping State officials forge an international climate agreement. And he deluged administration officials with letters testifying to the virtues of the Keystone XL expansion project, which would ship crude oil from Canada’s oil sands region to American refiners…
Total Optimistic on Oil, Gas Output
French oil giant Total SA Monday raised its oil-and-gas output guidance and offered a bullish long-term view for petroleum demand, even as it acknowledged that current economic anxiety has caused it to alter the way it does business with banks.
Total executives downplayed the impact of recent economic weakness on oil markets, which remain tight in light of growth in emerging markets. “Today some people speak about a potential recession, but I don’t see any impact in the physical market,” said Chief Financial Officer Patrick de la Chevardiere in an interview. “A drop in global economic activity won’t call into question the fundamentals of our industry.”…
Gas
Fracking industry will be minimally regulated in UK, letters reveal
Companies hoping to exploit a reportedly massive underground shale gas field under Lancashire will face minimal regulation, despite using controversial extraction methods, an exchange of letters with government agencies has revealed.
A lack of government regulation has been widely blamed for explosions and pollution in the US, where hydraulic fracturing or “fracking” is taking place in some areas on the scale envisaged for Britain by Cuadrilla Resources. The company this week announced they had discovered 200tr cu ft of shale gas below Lancashire, and the possibility of drilling thousands of gas wells…
Deep under Lancashire, a huge gas find that could lead to 800 ‘fracking’ wells
The discovery of huge underground deposits of natural gas in Lancashire could lead to a massive expansion in the controversial process of “fracking” (fracturing rock), resulting in hundreds of new wells being sunk across the countryside.
Up to 200 trillion cubic feet of gas has been located by Cuadrilla Resources, which holds the licence to exploit the Bowland Shale area outside Blackpool, and claims 1,700 new jobs may now be created as a result of the discovery…
Doubts raised about giant shale gas find in England
Experts have cast doubt on claims of a giant shale gas find in northwest England, leaving opponents to accuse the company behind it of painting an excessively rosy picture to win political support for the controversial project.
Cuadrilla Resources is owned by Australian drilling company AJ Lucas and private equity firm Riverstone, and has former BP Chief Executive John Browne on its board, said on Wednesday it had found 200 trillion cubic feet of gas in place at its licenses in Lancashire…
Will Cuadrilla’s shale gas discovery change UK energy forever?
The claimed scale of shale gas found in Lancashire this week is huge but the idea that it is a game-changer rests on shaky foundations.
On 27 May, a small earthquake shook Blackpool. On 21 September, a much larger ‘shock’ hit the Lancashire town: the apparent discovery of a globally significant shale gas field, thanks to drilling that may have caused the first tremor…
Shale boom in Bath could pollute water supplies, warn council leaders
The growing controversy over shale gas in Britain has engulfed what Jane Austen once described as the “fine and striking environs” of Bath, home to the world famous hot springs.
Council leaders and MPs have hit out at plans to drill gas wells in the nearby Mendip Hills, which they fear will lead to highly toxic chemicals pumped into the ground in a threat to local water supplies. Two Australian-owned companies, Eden Energy and UK Methane, have obtained licences to explore for shale and are applying to Mendip district council for planning permission to test-drill…
Drillers Face Methane Concern
Sherry Vargson has cooked with water from a five-gallon jug for the past year. It’s inconvenient, but preferable to using tap water containing enough methane gas that she can light a match and see an orange flame flare out of the faucet.
Many water supplies in northern Pennsylvania have long contained detectable levels of methane, because of poorly constructed water wells and the unusual geologic features here. But the contamination in Ms. Vargson’s existing well is among the first cases that state regulators have attributed to natural-gas drilling, prompting a normally competitive group of drilling companies to work together to fix the problem…
Renewables
UK renewable electricity output reaches all-time high
Renewable electricity contributed an all time high of 9.6 per cent of the UK’s grid mix in the second quarter of this year, statistics released today by the Department of Energy and Climate Change have revealed.
The 7.86TWh (terawatt hours) contributed by green energy generators represented a 50 per cent rise on the same time last year…
Scotland-Norway interconnector application submitted to National Grid
The first steps towards an electricity link between the UK and Norway were taken today as a consortium including Vattenfall and Scottish and Southern Energy made an application to National Grid for a connection offer.
If built, the 1.4 gigawatt link would enable Scotland to export is growing wind resource and give Norway another market for its vast hydro power capacity. The arrangement would effectively see Norway acting as a battery for Scotland’s intermittant generation and improve the security of supply for both regions…
Supergrid needed to end UK’s electricity isolation, say MPs
More European integration? Not something the UK’s Conservative-led coalition would warm to, you might think. But sitting between ambitious targets for offshore wind power and rising home energy bills, they may have to.
“The UK is virtually an electricity island,” states a new report from MPs. They demand that the government ends its “laissez-faire approach to offshore transmission” by developing a coordinated power grid in the North Sea that could plug into a future European supergrid…
Thames Water turns to ‘poo power’ for renewable electricity generation
They look like instant coffee granules, but they are in fact sewage flakes — a highly combustible new renewable form of fuel that burns like woodchip and is being used for the first time to generate electricity for Britain’s largest water and sewerage company.
Thames Water has begun producing the flakes by drying sludge — the solids found in sewage — in a purpose-built machine at sewage works in Slough, Berkshire. In a not-so-green move, the company then takes the flakes by lorry to Crossness sewage works in Bexley, south-east London, where they are burnt off to generate electricity…
Scottish and Southern Energy abandons nuclear plans for wind
Scottish and Southern Energy (SSE) has confirmed it will withdraw from plans to develop nuclear power, deciding that wind farms provide a better investment.
The utility company will sell its 25pc stake in the NuGen consortium to its partners GDF Suez and Iberdrola. NuGen is only at the very preliminary stages of an investment in nuclear, having bought an option to purchase land near Sellafield for £19.5m two years ago. It would not have a fully completed power station for at least a decade…
Alex Salmond’s green energy revolution ‘threatens firms with bankruptcy’
The costs of Alex Salmond’s green energy revolution are “going through the roof” and threaten to bankrupt companies by doubling energy bills, business leaders have warned the First Minister.
The Scottish Chambers of Commerce (SCC) said electricity is currently about nine times more expensive to generate from wind farms than gas-powered plants…
Solar power boom put at risk by rigid caps on budget, says industry
The fledgling boom in solar power across the UK is in danger of being snuffed out, the renewable energy industry has warned, as ministers have determined to stick by spending plans that would severely limit future investment in the power source.
Almost all of next year’s budget for feed-in tariffs — a subsidy paid to generators of solar power and other forms of small-scale renewable energy — is already “spoken for”, because it will have to be allocated to existing solar installations, according to Dave Sowden, chief of the Micropower Council, the trade body for the sector. Once the renewable energy equipment has been installed, the owner is entitled to feed-in tariffs for as long as it generates electricity, unless the government changes the rules in future…
Wave and tidal power almost ready for mass consumption, says Alex Salmond
Wave and tidal power devices are close to producing electricity for mass consumption for the first time after a surge in investment, Alex Salmond has predicted.
The first minister said that the latest wave and tide machines being tested in Scottish waters were expected to become commercially viable by 2015 with several hundred megawatts of installed capacity, in a major breakthrough for the green energy industry…
Climate
Carbon capture progress has lost momentum, says energy agency
The financial crisis and fading government support for climate action have seriously eroded global plans to capture and store carbon, the International Energy Agency (IEA) warned on Thursday.
Sequestration — the depositing of greenhouse gases underground rather than into the atmosphere — was supposed to account for a fifth of the world’s emissions reductions under the agency’s roadmap for keeping global temperature rise within 2C (4F) by the end of the century…
Transport
The end of motoring
Liz Parle can’t drive. “I did try to learn,” says the 24-year-old, Birmingham-born cafe owner, “but I failed my test a few times.” Then she moved to London, where running a car can be a nightmare. Instead she cycles everywhere. “It’s cheap, keeps me fit, and is of course better for the environment.”
Parle is by no means atypical. In Britain, the percentage of 17- to 20-year-olds with driving licences fell from 48% in the early 1990s to 35% last year. The number of miles travelled by all forms of domestic transport, per capita per year, has flatlined for years. Meanwhile, road traffic figures for cars and taxis, having risen more or less every year since 1949, have continued to fall since 2007. Motoring groups put it down to oil prices and the economy. Others offer a more fundamental explanation: the golden age of motoring is over…
Report Says Vehicle Fuel Should Be the Priority, Not Electricity
Research on solar and wind power is all well and good, but a self-assessment by the Department of Energy has found that in the great scheme of energy needs, the government is not investing enough in transportation energy, an area in which those renewable power sources do not play a role.
“Reliance on oil is the greatest immediate threat to U.S. economic and national security, and also contributes to the long-term threat of climate change,” its analysis, released on Tuesday morning, states…
