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 New Year failed to ring in the customary changes this time round. The great economic hangover moves into its fourth year with many predicting that things will take a turn for the worse during 2012. Geopolitically, the standoff between the West and Iran escalated over the holiday, hoisting oil prices over $113/barrel once again. The US and EU are pushing for further sanctions against Iran for its alleged nuclear weapons programme, while Iran is threatening to retaliate by closing the Strait of Hormuz and treating US aircraft carriers as hostile. With Iranian parliamentary elections due in March, and the US Presidential election in November, expect much political posturing to add to the tension.
It is already clear energy will be a significant issue in the US elections, and the oil and gas industry is shaping up to make sure of it. With conventional oil in decline or held by resource nationalists, oil companies are betting on deepwater and unconventional hydrocarbons (John Busby’s piece on Trends of 5 Oil Majors shows in more detail how companies are struggling to maintain oil reserves). Expect to see a lot of press this year claiming the power of unconventional oil and gas to provide jobs and energy security, a message which still plays better politically than the idea of energy conservation. Environmental issues, especially climate change, will struggle in the face of short-term economic interests, yet the recent delay of the decision on the Keystone XL pipeline has given protesters heart, and earthquakes in Ohio, which are being linked to gas fracking, have added to a building unease about the safety of the industry.
In the UK, where shale gas exploration is currently suspended following the earth tremors caused by drilling in Lancashire, energy policy also remains controversial. The allure of a new supply of cheap domestic gas (however realistic this is) is likely to complicate the already fraught politics around energy security, climate change, nimbyism and economics. The issue of resource depletion has yet to penetrate the mainstream here either, although there are signs of progress: the Royal Institute of Town Planners issued a discussion paper on peak oil this week.
The idea that the economic crisis is actually being driven by wasteful use of declining resources was put forward recently by EU commissioner for the environment Janez Potočnik, who argued resources must become a mainstream issue in economics. “We have simply no choice. We have to use what we have more efficiently, or we will fail to compete. Resource efficiency is a real competitiveness issue for European companies.” With luck the sentiment will not be entirely buried by the euro crisis.
Happy New Year!
View our Reports and Resources page
Oil
Oil Little Changed as U.S. Supplies, Europe’s Economy Counter Iran Threat
Oil was little changed in New York as rising U.S. stockpiles and signs that Europe’s economy is worsening put a limit on a weekly advance driven by speculation that sanctions would curb the supply of crude from Iran.
Futures vacillated between gains and losses after the Energy Department said U.S. crude stockpiles (DOESCRUD) climbed 2.2 million barrels last week. A median decline of 1 million barrels was forecast in a Bloomberg News survey of analysts. Reports today may show that European consumer confidence slumped to the lowest level in two years and factory orders fell, according to economists. Oil has gained 2.9 percent this week on concern sanctions against Iran will limit supplies…
Trends of 5 Oil Majors
Preamble
Economists and energy analysts are divided as to whether the passing of a peak in global oil production is a present reality or is so far ahead that its occurrence can be discounted.
We are also being persuaded that our near energy requirements can be met by the successful development of shale gas, the reserves of which it is argued are universally spread over the world. The technology of “fracturing” or “fracking” is under rapid deployment in the US, where it has largely replaced the import of LNG…
EU agrees ‘in principle’ on Iran oil embargo
European governments have agreed in principle to ban imports of Iranian oil, dealing a potentially heavy blow to Tehran that intensifies the bite of Western economic sanctions just months before an Iranian election.
The prospective embargo, announced by European Union diplomats on Wednesday, along with tough US financial measures signed into law by President Barack Obama on New Year’s Eve, form a concerted Western campaign to impose sanctions over Iran’s nuclear programme…
Russian Crude Oil Production Rose to Post-Soviet High in 2011
Russian oil production rose 1.25 percent in 2011 to a record level for the post-Soviet era, as companies in the world’s largest crude-producing nation took advantage of higher prices and boosted output at new projects.
Production grew to an average of 10.27 million barrels a day, according to preliminary data from the Energy Ministry’s CDU-TEK unit. Output in December slipped to 10.32 million barrels a day from 10.35 million in November, the data showed…
‘Searing anger’ as Nigerians protest fuel price increase
Car tires were set on fire and gas stations blockaded as hundreds of Nigerians took to the streets to protest the removal of fuel subsidies that saw the price of petrol more than double virtually overnight.
Angry Nigerians chanted anti-government slogans and brandished placards in a largely peaceful protest Tuesday against the removal of government subsidies…
BP Tries to Shift Costs From Spill
BP said in a court filing on Monday that all of its costs and damages from the 2010 Gulf of Mexico oil spill should be paid by Halliburton, its cement contractor for the Macondo well project.
BP paid more than $21 billion in cleanup costs and economic damages as of Dec. 1, the company said on its Web site…
World pays Ecuador not to extract oil from rainforest
An alliance of European local authorities, national governments, US film stars, Japanese shops, soft drink companies and Russian foundations have stepped in to prevent oil companies exploiting 900m barrels of crude oil from one of the world’s most biologically rich tracts of land.
According to the UN, the “crowdfunding” initiative had last night raised $116m (£75m), enough to temporarily halt the exploitation of the 722 square miles of “core” Amazonian rainforest known as Yasuní national park in Ecuador…
Oil Firms Face Services Hurdle
A lack of capacity in the oil-services sector is likely to hamper exploration and development of new sources of supply at a time of growing demand, and force greater collaboration between state-owned and multinational oil producers and the services sector, industry experts say.
Oil-services companies, which include giants such as Schlumberger Ltd. and Halliburton Co., provide the industry with technical and engineering expertise, as well as the equipment and tools needed for exploration and production…
BP to End Venture With Rosneft
BP PLC said it will end its 13-year alliance with Russian state-owned oil company OAO Rosneft to explore for oil and gas in Sakhalin, due in part to the economics of the Far East project.
The U.K.-based energy producer said that in recent meetings with the shareholders and board of ZAO Elvary Neftegaz it confirmed its intention to exit the joint venture. “There are many reasons for this decision, including the challenging economics of the discovered resource in the KV [Kaigansky-Vasuykansky] block,” BP said Friday…
North America
How the oil industry intends to attack Obama over the coming year
We recently remarked that a flurry of expert and news reports on the impending arrival of U.S. energy independence bore a striking resemblance to a lobbying campaign — at a time of unusual economic distress, you dress up your long-time drilling wish list as a jobs initiative, and a way to achieve the decades-old romantic goal of independence from Middle East oil, and you have a salable pitch. Now, the other shoe has dropped — the narrative has morphed into a full-throated presidential election-year campaign by Washington’s leading business and oil lobbying groups. The chief message: Do what we say, Barack Obama, or else, reports the Financial Times’ Ed Crooks.
Jack Gerard, chief Washington lobbyist for the oil industry as CEO of the American Petroleum Institute, unveiled the campaign yesterday. The spearhead is a push for Obama to approve the Keystone Pipeline, a proposed 1,600-mile line that would double the flow of Canadian oil sands to Houston-area refineries. If Obama fails to approve Keystone by a Feb. 21 deadline established in an unrelated deal with Congress, the institute and its friends will help to make sure that he suffers “huge political consequences,” Gerard warned, reports the Associated Press’ Matthew Daly…
Quakes halt Ohio ‘fracking’ waste water well
A series of small earthquakes has prompted Ohio to suspend operations at a well used to dispose of waste water from “fracking,” a controversial technology to extract oil and gas from shale, officials said Tuesday.
The suspension came amid suspicions, which have not been confirmed, that the disposal of waste water by reinjecting it into the ground, may have triggered the seismic activity…
Federal judge blocks California emissions rules
A judge blocked one of California’s signature attempts to lower greenhouse gas emissions, a victory for out-of-state ethanol producers and refiners that has California’s air quality board vowing to appeal.
U.S. District Judge Lawrence O’Neill in Fresno on Thursday issued a preliminary injunction against a regulation adopted by the California Air Resources Board in 2010…
Renewables
Vestas shares plunge to eight-year low after latest profit warning
Vestas shares plunged to an eight-year low this morning after the company issued its second profit warning since October.
The Danish wind manufacturer announced preliminary results for the financial year 2011 yesterday. It revealed that development costs are expected to be about €125m (£103m) higher than expected, mainly as a result of its new 3MW V112 and 2MW GridStreamer turbines…
Germany reports record 60 per cent surge in solar generation
Germany saw solar output rise a record 60 per cent last year to more than 18 billion kilowatt hours of electricity, according to new figures from the German Solar Industry Association (BSW-Solar).
The trade body said the output was equivalent to the entire electricity consumption of the state of Thuringia and could theoretically provide clean power to 5.1 million households for an entire year…
World’s largest solar plant powers up
Spanish venture is as big as 210 football pitches and has 600,000 mirrors. But there’s a dark side
Just under a month ago, on an empty mountain plateau in Andalusia, the last of 600,000 parabolic mirrors were connected, and Andasol, the world’s largest solar power station, become operational. It is, as it glints in the Spanish sun, a shining example — literally — of what renewable energy offers…
Biofuels
Canal network could be used to transport biomass for power plants
Britain’s network of 18th century canals could once again play a major industrial role, in a revival driven by the demand for green energy.
There are hopes that inland waterways that are now the preserve of walkers, barge-owners and holidaymakers may finally undergo a rebirth as freight transport routes to meet the needs of power stations run on biomass plants, where electricity is produced from wood and waste byproducts…
Wood trading exchange stokes green energy row
Oil, gold and even pork bellies have been traded on commodity markets for many years, but traders are now able to buy and sell industrial wood pellets via an electronic market place for the first time.
The APX-ENDEX exchange in the Netherlands has launched green energy contracts at a critical moment, when demand for biomass is soaring, but critics argue that burning wood to generate electricity causes as many problems as it solves…
UK
The communities taking renewable energy into their own hands
A new report by Co-operatives UK and The Co-operative Group examines those investing time and money in installing solar panels, wind turbines or hydro-electric power for their local communities
Late last year we – Co-operatives UK and The Co-operative Group – published a new report which reveals the growing number of people who are choosing to start renewable energy co-operatives in their communities, against all the odds…
DECC lodges appeal against High Court solar feed-in tariff ruling
The government has this afternoon filed a request to appeal against a High Court ruling that branded its plans to rush through cuts to solar feed-in tariffs as unlawful, despite concerns the continuation of legal proceedings will prolong investor uncertainty.
A spokeswoman from the Department of Energy and Climate Change (DECC) told BusinessGreen that its legal team had met a 4pm deadline to request an appeal against last month’s ruling to the Court of Appeal.
She added that DECC hoped permission to appeal would be granted as soon as possible to provide clarity for consumers and industry on the future of feed-in tariffs and the recently closed consultation…
UK taxpayers face extra £250m bill for nuclear waste clean-up
The taxpayer will have to stump up almost £250m more to bail out the Nuclear Decommissioning Authority in the next financial year after falling asset sales and rising expenditure cut its income by 17.5%.
The shortfall is revealed in the NDA’s just-published draft business plan for 2012-15, which shows the impact of being unable to offload land to the private sector for new nuclear plants and the end of the contracts to supply Japan with mixed-oxide fuel…
UK switch to low-carbon energy ‘no dearer than doing nothing’
Every person in Britain will need to pay about £5,000 a year between now and 2050 on rebuilding and using the nation’s entire energy system, according to government figures. But the cost of developing clean and sustainable electricity, heating and transport will be very similar to replacing today’s ageing and polluting power stations, the analysis finds.
The forecasts come from a unique open-source analysis package, called the 2050 pathways calculator, which was created by Professor David MacKay, chief scientific adviser to the Department of Energy and Climate Change…
UK investment in green energy stagnates at £2.5bn
UK investment in green energy failed to pick up significantly in 2011, reflecting difficult economic circumstances and uncertainty over government policy. The government’s figure of £2.5bn is slightly higher than an estimate for the previous year and well down on total investment in the sector in 2009.
The Department of Energy and Climate Change said the investment, which represents the total financial commitments announced by a variety of companies between April and December to proposed renewable energy projects, had the potential to create 12,000 jobs across Britain…
Economy
EU warns wasting environmental resources could spark new recession
The overuse and waste of valuable natural resources is threatening to produce a fresh economic crisis, the European Union’s environment chief has warned.
Janez Potocnik, the EU commissioner for the environment, linked the current economic crisis gripping the eurozone with potential future crises driven by price spikes in key resources, including energy and raw materials…
Transport
In China, Power in Nascent Electric Car Industry
Three years ago, as part of its green-energy policy, the Chinese government set an ambitious goal: by the end of 2011, the nation would be able to produce at least 500,000 hybrid or all-electric cars and buses a year.
With only about a week to go, it is clear China will fall far short of that target. Despite dozens of electric-vehicle demonstration projects around the country, analysts put China’s actual annual production capacity at only several thousand hybrid and all-electric cars and buses…
Chinese airlines refuse to pay EU carbon tax
China’s four leading airlines have thrown down the gauntlet to the European Union by saying they will refuse to pay carbon charges levied under Europe’s emissions trading scheme.
The defiant message — which could lead to a ban from European airports — marks an escalation of resistance to the scheme, which came into effect this week and is also fiercely opposed by the United States… the economic crisis.
