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.
High oil prices ensured that profits at the major oil companies rose again in 2011 — Shell’s full year profits leapt 54% to $28.6 billion while Exxon’s increased 35% to $41.1 billion. With this kind of money at stake it is no surprise it is almost impossible to get a sensible debate about our energy future. Yet despite the growing self-congratulation and bombast surrounding unconventional oil and gas the oil companies are struggling to maintain production levels, let alone increase them. Exxon’s oil equivalent increased 1% year on year, while Shell returned to its almost uninterrupted decline of the last decade.
One takeaway from the annual statements is the growing focus of the majors on natural gas as crude oil becomes harder to replace. Rising gas production along with a warm winter in the US has led to near record low gas prices. The race is now on to develop shale gas in Europe and China, though initial forays by Exxon in Poland expected to be one of Europe’s major producers, have not yet lived up to expectation. The industry’s other priority is to open up a more global market for gas — for example moving surplus US production to Europe.
There are however several obstacles to these plans over and above whether the gas can be commercially produced: moving gas long distances means liquefying it requiring additional infrastructure and expense; there are as yet many unanswered questions regarding water safety and pollution which could yet slow down shale production or add costs; and though gas has lower emissions than coal – the jury is still out on whether this also applies to shale gas – increased use of unabated gas will blow emissions targets.
Another interesting aspect of oil company statements is the yawning disconnect between their views and those of the authorities on alternative transport fuels. On electric vehicles, BP & Exxon expect around 4% penetration by 2030, while the British government targets 60%. On biofuels, the EU will issue a report in the next few weeks about worries that they may increase rather than cut emissions, and yet biofuels were the only alternative mentioned Shell CEO Peter Voser’s presentation to shareholders. Clearly the radical changes required to secure our energy future will not be delivered by the big incumbents.
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Oil
Exxon profit tops $41-billion, despite shaky production
Exxon Mobil Corp (XOM-N83.37-0.60-0.71%). posted an eye-popping profit of $41.1-billion (U.S.) last year, but had trouble maintaining production, despite a massive capital spending program.
The world’s largest publicly traded oil company spent a record $36.8-billion on exploration and capital development last year, even as it allocated $29-billion to dividends and share buybacks to benefit shareholders directly…
Shell plans production expansion as profits rise
Royal Dutch Shell has said it will launch a major investment drive in an effort to boost falling production.
The oil giant said it would spend $30bn (£19.4bn) on new oil and gas projects this year, compared with $24bn in 2011…
Insight: Oil Industry Sees No Threat From Electric Car
The biggest oil companies in the world have calculated that few, if any, of today’s drivers will see electric cars outnumber gasoline and diesel models in their lifetimes.
While politicians and green lobby groups insist the future of transport is electric, in the past two months BP and Exxon have released data which points to electric cars making up only 4-5 percent of all cars globally in 20-30 years…
World lacks enough food, fuel as population soars-UN
The world is running out of time to make sure there is enough food, water and energy to meet the needs of a rapidly growing population and to avoid sending up to 3 billion people into poverty, a U.N. report warned on Monday.
As the world’s population looks set to grow to nearly 9 billion by 2040 from 7 billion now, and the number of middle-class consumers increases by 3 billion over the next 20 years, the demand for resources will rise exponentially…
Davos grapples with surging demand for fuel, food
Petrol is already beyond the price range of many Africans while surging population levels should force governments in Asia to limit car use, political and business leaders said Wednesday.
While economic gloom in the eurozone is the most immediate concern of delegates gathered here for the annual Davos forum, the challenge of feeding and powering an ever expanding planet is the main long-term headache…
Will fossil-fuel giants be bailed out like the banks?
As political and societal will gathers to massively cut carbon emissions over the next years, the value of carbon-intensive oil and gas firms is likely to plummet, potentially leaving taxpayers with the burden for bailing them out, argues Matthew Ulterino.
“BP issued its Energy Outlook for 2030 last week. The coverage and commentary it generated suggests it’s an authoritative voice on medium term energy trends, and as such will have some influence on policy and investment decisions. Leaving aside that one of the world’s major fossil fuel incumbents cannot realistically be an impartial arbiter, there was something to like whether your view leans toward the inevitability of renewable energy or necessity of fossil fuels…
Oil Near Six-Week Low Before Jobs Report; Brent Premium Widens
Oil traded near a six-week low before a report forecast to show the U.S. added fewer jobs last month than in December. Brent crude’s premium to the New York price is set for the largest weekly gain in a month.
Futures were little changed in New York after dropping a fifth day yesterday, the longest losing streak since August. The U.S. added 140,000 jobs last month after gaining 200,000 in December, according to a Bloomberg News survey of economists before a Labor Department report today. London-traded Brent’s premium to West Texas Intermediate crude, the U.S. benchmark, widened 32 percent this week to the most since Nov. 12…
North Sea oil leak halts 15pc of BP’s UK production
BP expects its Foinaven oilfield off northern Scotland, which accounts for 15pc of its UK production, to remain shut for weeks while it investigates a “small” oil leak.
The company stopped production at the 43,000 barrels per day (bpd) field, 120 miles west of Shetland, on Sunday after finding an oil and water mixture leaking from a fitting on a seabed pipe…
Gas
The shale gas reality check out of Europe
Natural gas is roiling global geopolitics, but the latest news — a bad result in Europe — is that the tsunami is still very much solely U.S.-based.
The U.S. shale gas boom has shaken up geopolitical presumptions by challenging Russia’s gas-led hold on Europe, and threatening to crush far-dirtier rival fuels such as coal around the world. The thinking has been that Europe — specifically Poland — might be next in unleashing big, new shale gas supplies, an event that would make life even more difficult for Russia’s petro-ruler, Vladimir Putin…
Fracking does not need more regulation, report says
European commission report concludes fracking for shale gas is covered by existing national regulations on water and drilling.
There is no need for more environmental legislation in the case of shale gas exploration, at least until it reaches commercial scale, says a new study published by the European commission…
Gazprom struggles to meet peak gas demand in Europe
Russian gas export monopoly Gazprom is struggling to meet extra demand from European customers shivering through a severe cold snap, even after ramping up investment and borrowing to boost output.
“Some requests are higher than we can put in the pipe,” a company source told Reuters. “Requests for gas have been higher for more than a week.”…
Nuclear
Japan emissions rising after atomic crisis: report
Japanese manufacturer’s greenhouse gas emissions are rising after the Fukushima nuclear power plant disaster, hurting the country’s carbon reduction goals, a report said Sunday.
The trend will deal a blow to Japan’s target of reducing emissions by six percent from 1990 levels between 2008 and 2012 under the Kyoto Protocol, the Nikkei business daily reported…
Nuclear disaster prompts rise in renewable deals
The value of deals involving renewable energy companies soared by 40 per cent to a record $53.5bn (£34bn) worldwide last year, as the Fukishima disaster prompted a move away from nuclear power.
The rise was driven by the solar power industry, where the value of transactions jumped by 56 per cent to $15.8bn, to account for almost one third of takeovers, according to the accountancy firm PricewaterhouseCoopers. Wind and hydropower were also big deal drivers…
Mining and Minerals
Rare minerals dearth threatens global renewables industry
China’s near-exclusive access to terbium and yttrium sent prices soaring in 2011, potentially hobbling clean energy industry
Shortages of a handful of rare minerals could slow the future growth of the burgeoning renewable energy industries, and affect countries’ chances of limiting greenhouse gas emissions, business leaders were told at the World Economic Forum in Davos this week…
Malaysian opposition says would scrap rare earths plant
Malaysia’s political opposition has vowed to scrap a controversial $200 million rare-earths processing plant being built by Australia’s Lynas Corp if it wins national elections expected to be called within months.
The plant, in Malaysia’s east, aims to weaken China’s monopoly on the global supply of the metals, which are used in a range of products from flat screens to iPhones and energy-efficient light bulbs. It is also backed by Japanese investors keen to see the development of alternative supplies…
UK
Government must step in from the sidelines of shale gas debate
Fracking: it is a word that can seemingly cause an argument in an empty room. This technique for extracting shale gas from underground has become one of the most hotly disputed issues in the energy sector today.
Too often, debates around shale gas become too polarised for sensible discussion…
Tom Greatrex is the Member of Parliament for Rutherglen and Hamilton West, and Labour’s Shadow Energy Minister
Ministers ‘misled MPs over need for nuclear power stations’
Ministers misled parliament over the need to build a new fleet of nuclear power stations, distorting evidence and presenting to MPs a false summary of the analysis they had commissioned, a group of MPs and experts alleged in a report published on Tuesday.
If MPs had been presented with an accurate picture of the evidence for and against new reactors, the government’s plans might have been challenged, according to the report. Both the previous Labour government and the current coalition overstated the evidence that new nuclear power was needed, it also alleged…
Grassroots green projects ‘are way to low-carbon UK’
Community-owned green energy projects present the best chance of converting the UK to a low-carbon economy and should receive more government support, civil society groups representing 12 million people said on Wednesday.
Giving local people a stake in energy generation often overcomes planning objections to structures such as wind and solar farms, and dozens of communities across the UK have seized the opportunity to create their own power. But the move has not been fast enough, according to the coalition of community groups, which adds that many places are missing out on the chance to produce their own low-carbon and low-cost energy, supported by government subsidies…
Fuel poverty protesters occupy British Gas offices
Fuel poverty activists gained access to the headquarters of British Gas and occupied a room near the office of its managing director, Phil Bentley, for six hours to protest “profiteering” by energy suppliers.
Six protesters entered the offices in Staines just before 9am on Monday, apparently unchallenged, before barricading themselves in two meeting rooms. They left mid-afternoon of their own choice, a British Gas spokesman said…
Transport
EU climate chief calls for ‘much care’ on biofuels
The European Union’s climate commissioner, Connie Hedegaard, has warned about expanding the use of biofuels as the EU executive finalises an assessment of the potentially damaging effects they may have over the earth’s climate. She spoke to EurActiv as part of a wide-ranging exclusive interview on sustainability issues.
A draft Commission impact assessment, obtained by EurActiv last week, indicates that the greenhouse gas emissions from biofuels such as palm oil, soybean and rapeseed may exceed those of fossil fuels when wider factors are considered…
EU Biofuels Targets to Cost Consumers $166 Billion, Study Says
European Union policies to promote the use of biofuels for transportation will cost consumers as much as 126 billion euros ($166 billion) between now and 2020, two environmental groups said.
The fuels, gasoline substitutes derived from plants, probably won’t cut greenhouse gases because forests are chopped down to make way for biofuel plantations, Friends of the Earth and ActionAid said today in an e-mailed statement. The European Commission said that while biofuels cost more than fossil fuels, it’s “reasonable” for motorists to pay extra…
California fuels rule sparks controversy
Just as it pioneered curbs on greenhouse gas emissions from cars and light trucks a decade ago, California is championing standards that could transform the fuel that goes into their tanks.
But its new rule, which requires lowering the amount of carbon in fuel sold in the state, has become embroiled in a fierce public battle and has been barred from being enforced. In light of tight state budgets, litigation over California’s program and a strong lobbying campaign against them, the question is whether the ambitious climate policy will get off the ground…
EU takes next step in making airlines pay for carbon
The European Commission on Monday took another technical step to bring all airlines using EU airports into its carbon trading scheme, following on from last year’s court ruling that, despite loud international opposition, the EU plan was legal.
U.S. Secretary of State Hillary Clinton and China are among those to have stated fierce objections to the EU law forcing airlines landing or taking off from the European Union to pay for carbon emitted…
