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.
In a year when chaos is beginning to feel like the norm, Greek Prime Minister George Papandreou’s out of the blue announcement calling a referendum on the latest Euro bailout plan caught even the most jaded observers by surprise. Although it looks as if the idea has now been abandoned, the likelihood of a still more serious financial crisis has surely moved a step closer.
The political drama did little to soften the oil price, however, supplies remain tight with the market in backwardation (oil for immediate delivery today is more expensive than for future months). OPEC has little incentive to increase supply even if it could, as members are increasingly lining up behind an ideal price of $100/barrel to support their budget commitments. Add to this worrying reports that the US or Israel may be planning missile strikes on Iranian nuclear facilities, and the news looks grim indeed.
In the UK this week hopes of a shale gas bonanza were dealt a blow as Cuadrilla Resources reported that it was “highly probable” that earthquakes in Blackpool were caused by their fracking activities. Desperation for an energy silver bullet has led to a lot of excitable press about shale gas, and the government has so far taken a rather laissez-faire approach to its development. Given the serious water pollution issues in the US, which have led to a number of regional moratoria and an Environmental Protection Agency investigation, we hope DECC would want to avoid making the same mistakes.
The UK today represents a microcosm of the current energy dilemma. Oil and gas production are in decline, energy costs are rising, and the race to avoid the worst impacts of climate change requires drastic cuts in emissions. Shale gas, along with tar sands and shale oil, offer an illusion that business might be able to continue as usual, but these are lower quality resources in terms of the energy they require to produce, pollution, and emissions. They are not the cheap energy sources on which our economy depends, and betting on them risks slowing the transition to a more resilient energy future.
So what of the UK government’s plans to stimulate renewable energy? The government was accused this week of gutting the emerging solar industry with its proposal to cut the feed-in-tariff from 43.3p/kWh to 21p from December 12th. While there is certainly an argument that the cost of solar installation has come down since the launch of the FiTs, the proposed reduction is drastic and likely to result in the cancellation of projects. New requirements for energy conservation measures on buildings before qualification for the FiT have also been added — these were missing from the original legislation and make sense.
The government has succeeded in kick starting the solar industry with the initial FiT, but now looks like bringing it to an abrupt halt. The criticism that the scheme benefitted wealthier home owners at the expense of poorer households is fair, but the community and local authority projects which take longer to plan and would bring benefits to a broader section of the population are the ones most likely to get the axe.
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Oil
Oil Rises to Three-Month High as Greece Backs Down on Referendum
Oil rose a third day to trade near the highest in three months in New York as signs that Europe will reach an agreement with Greece on a rescue plan reduced concern economic growth will falter and damp fuel demand.
Futures climbed as much as 0.4 percent and are poised for a fifth weekly gain, the longest rising streak since April 2009. Greece won’t hold a public vote on a bailout package, Finance Minister Evangelos Venizelos told lawmakers in Athens yesterday. Oil is approaching its 200-day moving average, which is at $94.84 a barrel today, according to data compiled by Bloomberg…
Oil Inventories Slip, Slide Away
The tide is turning in oil markets.
A glut of crude, particularly at an important U.S. hub, that had oil companies and traders fixated for much of this year is giving way to worries about a decline in supplies…
Is this group think, or is the U.S. about to be energy-independent?
One becomes nervous when a consensus begins to form around a Big New Idea — it starts to sound like group think. So what are we to make of the cottage industry developing around the notion that the U.S. not only isn’t facing an impending oil shortage — it is on the cusp of being nearly energy independent, short of a margin of barrels that will be imported from friendly Canada and Mexico?
As discussed over the weekend, Clifford Krauss of the New York Times and oil consultant Daniel Yergin, writing at the Washington Post, have published long pieces marveling at the emerging picture of a hydrocarbon bonanza in the United States and right on its borders. Today, the Financial Times’ Ed Crooks adds a third lengthy analysis to this growing train, suggesting that by 2035, the U.S. and Canada together could be producing a whopping 22 million barrels of oil a day — more than twice the current volume – and thus requiring almost no other crude from anywhere. Add up oil shale from North Dakota (pictured above, North Dakotan oil camp), Texas and elsewhere; Gulf of Mexico crude; natural gas liquids from shale gas; plus Canadian oil sands, and you get the picture. In combination, the analyses leave one with whiplash…
Obama to make decision on controversial oil pipeline
President Obama said Tuesday that he will decide whether to approve or deny a permit for acontroversial 1,700-mile Canadian oil pipeline, rather than delegating the decision to the State Department.
The proposal by the firm TransCanada to ship crude extracted from a region in Alberta called the “oil sands” to Gulf Coast refineries has become a charged political issue for the White House. Labor unions and business groups argue that it would create thousands of jobs in the midst of an economic downturn. Environmentalists — who plan to ring the White House in a protest on Sunday — say the extraction of the oil will accelerate global warming and the pipeline itself could spill, polluting waterways and causing severe environmental harm…
Military thinktank urges US to cut oil use
An influential military thinktank is urging America to cut its oil use by 30% over the next decade, as a national security imperative.
In its report, the Military Advisory Board said the US should aim to drastically reduce its energy imports over the next decade — or else risk exposing the economy to devastating oil price shocks…
Saudi opposition to Iran fades on $100 oil goal
Saudi Arabia’s biggest cut in oil output in three years is a sign OPEC’s largest producer is finding common cause with its long-time rival Iran.
The kingdom reduced supply by 400,000 barrels a day, or about 4 percent, last month, Oil Minister Ali al-Naimi said Oct 8, reversing increases that it started in April, when declining Libyan exports sent North Sea Brent to a 2 1/2-year high. Crude prices have fallen 14 percent since then as the North African nation revived production and the International Energy Agency lowered its forecast for global demand…
Gas
UK firm says shale fracking caused tremors
UK shale gas firm Cuadrilla Resources on Wednesday said exploration work triggered small tremors at its drill site near Blackpool in northwest England earlier this year, as activists scaled a rig protesting against its gas recovery methods.
“It is highly probable that the hydraulic fracturing of Cuadrilla’s Preese Hall-1 well did trigger a number of minor seismic events,” a report commissioned by the company said…
Shale gas is no game-changer in the UK
Fracking for shale gas can cause minor earthquakes in Lancashire, we learned on Wednesday. But the bigger question is whether it can cause a major upheaval in the UK and European gas market?
Shale gas supporters envisage plentiful, cheap and secure gas powering the UK for decades, while green campaigners attack its potential to harm local environments and, once burned, the global climate…
US to require details of fracking on federal land
The U.S. Interior Department plans to issue a proposal soon forcing companies to reveal the chemicals they use in the so-called fracking drilling process on federal lands, as the Obama administration responds to public safety concerns over the shale exploration boom.
David Hayes, deputy secretary at the Interior Department, told a federal shale gas advisory panel on Monday that the department hopes to issue disclosure rules for hydraulic fracturing on federal lands in “a couple of months.” It plans to finalize the guidelines about 12 months after that…
Electricity
Japan Winter Power Enough Despite Nuclear Lack: Government
Japanese utilities will largely avoid power shortages this winter despite prolonged reactor shutdowns amid public concerns over nuclear safety, but hurdles remain for next summer, the government said on Tuesday.
It also unveiled ways to bridge the gap next summer, when peak-hour demand is expected to exceed supply by 16,560 megawatts, compared with the biggest gap this winter of 2,530 MW in one area, if no reactors restart by then…
Nuclear
UK nuclear power plant moves step closer
French group EDF Energy formally submitted its 30,000-page application to the Infrastructure Planning Commission to build a £10bn nuclear power plant at Hinkley Point, Somerset – the third on the site.
The start and completion of work on the 3,260 megawatt (Mw) station remains uncertain because EDF will not make its final investment decision until the completion of the planning inquiry at the end of next year and is still waiting for safety clearance on the nuclear technology…
Village goes to high court over radioactive waste
The residents of a picturesque village in the south of England will on Wednesday go to the high court in a last ditch attempt to prevent thousands of tonnes of radioactive waste being dumped into a nearby landfill site.
The case is being brought in the name of Louise Bowen-West on behalf of the King’s Cliffe community near Peterborough against secretary of state for communities and local government, Eric Pickles…
Fukushima fears played down by Tepco
The Japanese power company Tepco has played down the detection of xenon at the melted-down Fukushima No 2 reactor, saying there is no evidence the nuclear reaction has started again.
Tepco said on Wednesday it had detected xenon, a fission byproduct, and as a precaution had poured into the reactor a mixture of water and boric acid, which helps prevent nuclear reactions…
Belgium Agrees On Conditional Nuclear Exit Plans
Belgium’s political parties have reached a conditional agreement to shut down the country’s two remaining nuclear power stations, owned by GDF Suez unit Electrabel, a government spokeswoman said Monday.
The plan for a shutdown of the three oldest reactors by 2015 and a complete exit by 2025 is conditional on finding enough energy from alternative sources to prevent any shortages…
Nuclear Phase-Out Faces Billion-Euro Lawsuit
Swedish energy company Vattenfall reportedly plans to sue the German government, seeking massive damages related to Germany’s phase-out of nuclear power. Vattenfall successfully took on the German government once before.
When Chancellor Angela Merkel decided to rapidly phase out nuclear energy in Germany this spring in the wake of the Fukushima nuclear disaster in Japan, many predicted the policy would ultimately end up in court. Now, according to a report in the Wednesday edition of the business daily Handelsblatt, Vatenfall plans to file a billion-euro lawsuit against the German government. The suit is to be filed by Christmas with the International Center for Settlement of Investment Disputes (ICSID) in Washington D.C., the paper reported…
Renewables
Solar subsidies to be cut by half
Solar power subsides will be cut by half, the government said on Monday, as reported by the Guardian last Friday. Climate change minister Greg Barker, launching a consultation on feed-in tariff rates for solar photovoltaic panels, said he wanted to avoid the industry falling victim to “boom and bust”.
“The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the Fits scheme,” said Barker. “Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”…
Government accused of ‘destroying 25,000 green jobs’
Ministers have been accused of destroying 25,000 jobs and “bankrupting a whole industry”, after the Government unveiled plans to slash subsidies for green energy.
Hundreds of solar companies are likely to go bust by Christmas after the Department for Energy and Climate Change confirmed it is looking to halve subsidies for new panels…
Nine in 10 homes will have to spend more to qualify for solar subsidies
Nearly nine in 10 households would have to spend more than £5,000 to make their homes more energy efficient before they could be eligible for solar panel subsidies under new rules announced this week.
Under changes announced on Monday, the solar feed-in tariff (Fit) will be tied to the government’s “green deal” loan scheme, that aims to make homes more energy efficient…
Is clean energy headed for a crisis?
Lately, Republicans have been on a tear against government funding for clean energy. The fact that yet another company backed by federal loan guarantees — Beacon Power, a flywheel storage company — just filed for bankruptcy won’t help matters. And, today, the Energy Department’s watchdog, Gregory Friedman, is telling Congress that the agency was ill-equipped to hand out the $35 billion gusher of stimulus money it received two years ago. Way back in 2005, there was a broad consensus in Congress that the government had a role to play in funding new alternative-energy sources. Now? Not so much…
Morocco to host first solar farm in €400bn renewables network
Morocco has been chosen as the first location for a German-led, €400bn project to build a vast network of solar and windfarms across North Africa and the Middle East to provide 15% of Europe’s electricity supply by 2050.
The Desertec Industrial Initiative (DII), a coalition of companies including E.ON, Siemens, Munich Re and Deutsche Bank, announced at its annual conference being held in Cairo on Wednesday that “all systems are go in Morocco”, with construction of the first phase of a 500MW solar farm scheduled to start next year. The precise location of the €2bn plant is yet to be finalised, but it is expected to be built near the desert city of Ouarzazate. It will use parabolic mirrors to generate heat for conventional steam turbines, as opposed to the photovoltaic cells used in the UK…
Lesotho to harness wind and water in huge green energy project
The tiny mountain kingdom of Lesotho is to harness the power of wind and water in a $15bn (£9bn) green energy project, the biggest of its kind in Africa.
The Lesotho highlands power project (LHPP) will generate 6,000 megawatts (MW) of wind power and 4,000MW of hydropower, equivalent to about 5% of neighbouring South Africa’s electricity needs…
Clean energy in California: On its own sunny path
JERRY BROWN started talking about solar power in the 1970s, when he was California’s governor for the first time. He was lampooned for it, but the vision gradually became attractive in a state that is naturally sunny and, especially along the coastline, cares about the environment. So in 2006, under a Republican governor, Arnold Schwarzenegger, California set a goal to reduce its greenhouse-gas emissions to 1990 levels by 2020. This year Mr Brown, governor once again, signed the last bits of that goal into law. And this month the state’s air-quality regulators unanimously voted to adopt its most controversial but crucial component: a cap-and-trade system…
Biofuels
Brazil Lacks Cane to Boost Fuel Exports, Senator Says
Brazilian sugar cane companies, which are preparing to boost ethanol exports to the U.S., don’t produce enough of the renewable fuel to do so, a lawmaker said.
Brazil won’t make enough ethanol to meet increasing foreign demand unless cane producers invest in new mills and plantations, Senator Katia Abreu said in an interview at Bloomberg’s headquarters in New York…
Climate
UN Body Urges Europe to Omit Foreign Airlines From CO2 Curbs
International airlines should be exempt from the European Union’s planned curbs on carbon-dioxide emissions, a United Nations aviation panel said in a declaration that draw together China, Russia, and the U.S.
The non-binding statement was adopted in Montreal by the governing council of the UN International Civil Aviation Organization at the urging of 26 countries, which also included Brazil, Japan and India. The EU responded late yesterday that it won’t back down from including flights to and from the region’s airports in its emission-trading system as of 2012…
Geopolitics
UK military steps up plans for Iran attack amid fresh nuclear fears
Britain’s armed forces are stepping up their contingency planning for potential military action against Iran amid mounting concern about Tehran’s nuclear enrichment programme, the Guardian has learned.
The Ministry of Defence believes the US may decide to fast-forward plans for targeted missile strikes at some key Iranian facilities. British officials say that if Washington presses ahead it will seek, and receive, UK military help for any mission, despite some deep reservations within the coalition government…
Israelis hold defense drill for missile attack
Israel staged a mass drill on Thursday, simulating a missile attack in the center of the country at a time of intense speculation that the Jewish state could launch strikes on Iran, although the military dismissed any link.
Civil defense drills happen several times a year in Israel and the military said this exercise, which caused air-raid sirens to ring out around the Tel Aviv area, had been planned months in advance…
