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.
Brent oil prices flirted with $125/barrel again this week before dropping back on news of weaker than anticipated European and Chinese industrial activity. The political and economic pressure of surging prices prompted Saudi oil minister Ali Al Naimi to claim the kingdom can raise production by 25% (2.5 mb/d) immediately if necessary. But that was in flat contradiction to his recent admission that 700mb/d of Saudi’s claimed 2.5 mb/d spare capacity could not be brought on stream in under 90 days — three times longer than the standard definition.
President Obama meanwhile embarked on an “energy blitz” tour, including a stop at Cushing, Oklahoma, to declare his support for the construction of the southern leg of the Keystone XL pipeline (the section which didn’t require his Presidential approval to proceed). The move angered his environmentalist supporters while doing little to assuage the oil and gas lobby and the Republican “drill baby drill” set. Obama made an attempt to add some realism to the petrol price debate saying that “even if we drilled every square inch of this country, we’d still only have 2 or 3 or 4 percent of the world’s known oil reserves”. But don’t expect realism to make much impression in the current climate.
Obama’s statement was underlined this week by none other than Peter Voser. In an interview the Shell CEO said “Longer term you will see [oil] demand rising and we will need all investments to cope with that demand. In the very long term we will see prices going up because of high demand and as it gets more expensive to get the resources out of the ground.” So basically that would be peak oil then. But with Brent at $125 this week, where does he get ‘long term’ and ‘very long term’?
One organisation lamenting the impact of rising oil prices is the European Central Bank. This week ECB economist Pavlos Karadeloglou admitted “For more than 10 years, we have been considerably underestimating the oil price”. But then economists have long struggled to understand oil, energy and the depletion of physical resources. Finally the bank is to revise its forecasting model. Not before time: the EU’s import bill for oil jumped from $280bn in 2010 to $402bn in 2011.
In the UK this week Chancellor George Osborne’s budget demonstrated equal cluelessness over our energy and climate crises. “Gas is cheap”, he claimed, “has much less carbon than coal and will be the largest single source of our electricity in the coming years.” Mr Osborne clearly hasn’t read last week’s newsletter, where we debunked the green pretensions of gas. If he had, he wouldn’t have gone on spuriously to blame the truly green technologies for rising energy bills. “Renewable energy will play a crucial part in Britain’s energy mix — but I will always be alert to the costs we are asking families and businesses to bear”, he said. That’s in spite of figures from his own government proving that soaring gas prices, not renewable subsidies, are responsible for rising utility bills.
The new dash for gas is only likely to be hastened following news that Professor Dieter Helm has been appointed to head a new Natural Capital Committee (NCC) tasked with valuing the UK’s natural resources. An argument about the wisdom of the monetarisation of the natural world is beyond the scope of this newsletter, however there is much to worry about in Helm’s appointment. Helm describes peak oil (or at least his interpretation of it) as nonsense. His view of renewables is that they are too expensive. For Helm the future is shale gas and the power of the market to come to the rescue. Energy policy, which showed signs of promise in the early days of the coalition, has taken another lurch in the wrong direction.
Oil
Saudi Arabia Can Raise Output 25% If Needed, Naimi Says
Saudi Arabia (OPCRSAUD) can increase crude production by as much as 25 percent immediately if needed, the country’s oil minister said, seeking to allay the concern over supplies that has driven prices to the highest in three years.
Brent crude has gained 15 percent in London this year to about $124 a barrel. Iran has threatened to shut the Strait of Hormuz at the entrance to the Persian Gulf, a transit point for a fifth of the world’s traded oil, in response to sanctions on its crude exports imposed over its nuclear program…
Saudi Arabia sends tankers to US with pledge to bring down oil price
Saudi Arabia has pledged to take action to lower the high price of oil, which has risen to around $125 a barrel, with laden supertankers set to arrive in the US in the coming weeks.
Saudi Arabia said yesterday it will work “individually” and with the other petrol-rich Gulf states to return prices to “fair” levels…
Obama angers both environmentalists and energy companies by supporting Keystone pipeline’s south leg
In supporting Calgary-based TransCanada’s decision to build the southern leg of the Keystone XL oil sands pipeline, President Barack Obama has managed a rare feat — angering both environmentalists and energy companies at the same time.
Obama will deliver a major speech Thursday endorsing the expedited construction of TransCanada’s proposed pipeline from Cushing, Okla., to refineries on the Gulf Coast of Texas…
US exempts Japan and EU nations from Iran oil sanctions
The US government will not impose sanctions on Japan and 10 European Union nations that have reduced their oil imports from Iran.
Ordered by Congress in December, the sanctions aim to punish countries that continue to buy oil from Iran…
Oil Price Set for Long-Term Rise: Shell CEO
The chief executive of oil giant Shell predicted that the cost of oil will continue to rise long-term in an interview with CNBC Tuesday.
Volatility has returned to the oil price in recent months amid unrest in the Middle East…
Chevron staff charged over Brazil oil spill
Federal prosecutors in Brazil have filed criminal charges against 17 Chevron and Transocean company executives over an oil leak in the Atlantic Ocean in November 2011.
Prosecutors on Wednesday accused the executives of environmental crimes, of misleading Brazil’s oil regulator about their safety plans and not providing accurate information in the wake of the spill…
BP Whistle-Blower Seeks Shutdown of Atlantis Oil Platform
BP Plc’s (BP/) Atlantis platform, its second-largest oil producer in the Gulf of Mexico, should be shut down until it’s proven to comply with U.S. safety and environmental laws, a whistle-blower’s lawyer told a judge.
BP misled U.S. offshore regulators to win operating permits for the platform, located about 150 miles (240 kilometers) south of New Orleans, according to the whistle-blower. The facility produced an average of 60,000 barrels of oil daily last year and is capable of producing as much as 200,000 barrels a day, according to data on London-based BP’s website…
Gas
Fracking Wells’ Air Emissions Pose Health Risks, Study Finds
Chemicals released into the air when natural gas is produced by hydraulic fracturing may pose a health risk to those living nearby, the Colorado School of Public Health said.
Researchers found potentially toxic airborne chemicals near wells in Garfield County, Colorado, during three years of monitoring, the school said today in a statement. Drilling has expanded in the county, about 180 miles (290 kilometers) west of Denver…
Poland Says Shale Reserves May Be 85% Below U.S. Estimate
Poland’s recoverable shale gas reserves are probably as much as 768 billion cubic meters, or 85 percent less than a U.S. Energy Department estimate from last year, according to the Polish Geological Institute.
The deposits are enough to cover as many as 65 years of demand and are equal to as much as 200 years of the country’s production, Deputy Environment Minister Piotr Wozniak said today in Warsaw at a presentation of the institute’s data. “These estimates would make Poland Europe’s third-largest holder of gas reserves,” he said…
Renewables
Winds of change blow through China as spending on renewable energy soars
The remote, wind-blasted desert of northwestern Gansu could be the most unloved, environmentally abused corner of China. It is home to the country’s first oilfield and several of the coalmines and steel factories that have contributed to China’s notoriety as the planet’s biggest polluter and carbon dioxide emitter.
But in the past few years, the landscape has started to undergo a transformation as Gansu has moved to the frontline of government efforts to reinvent China’s economy with a massive investment in renewable energy…
U.S. Sets Duties as High as 4.73% on China Solar Equipment
President Barack Obama’s administration imposed preliminary duties of as much as 4.73 percent on solar-energy equipment imported from China, a rate that an analyst said may have little impact on the industry.
Suntech Power Holdings Co. (STP), the world’s largest solar-panel maker, was told to pay a 2.9 percent tariff and Trina Solar Ltd. (TSL) will pay 4.73 percent to make up for subsidies they received from China’s government, the Commerce Department said today in a statement. All other Chinese solar-equipment firms were told to pay 3.61 percent. The duties are retroactive for 90 days before the ruling…
UK
Budget 2012: North Sea oil tax reforms ‘to lead to £50bn investment’
Industry body Oil & Gas UK said the Chancellor’s promise of certainty on decommissioning tax relief and new tax breaks on small and deepwater fields would stimulate tens of billions of pounds of additional investment.
The Budget was a “turning point” for industry relations with the Treasury after outrage at the surprise tax rise in last year’s Budget, Oil & Gas UK said. The measure means more than 2bn barrels of the UK’s oil and gas reserves that would otherwise have been left in the ground will now eventually be recovered at no net cost to the Exchequer…
Budget 2012: chancellor fires starting gun on dash for gas
The chancellor fired the starting gun on a new “dash for gas” in a budget that was light on green pledges but contained boosts for fossil fuel companies.
Green groups reacted with dismay, arguing that the government had missed the chance to create green jobs and a low-carbon economy…
Green Budget 2012: Osborne signals UK is open for renewables business
Chancellor George Osborne has given the strongest indication yet that he wants to see increased investment in the UK’s renewable energy sector, although he stressed that new projects must be “fiscally sustainable”.
Speaking in his annual budget address, Osborne said he wants to see “investment in our world-leading energy sector, including renewables”, adding that the government’s National Infrastructure Plan set out clear priorities for investment in “roads, railways, clean energy and water, and broadband networks”…
Britain mulls replacing corporate CO2 scheme
The UK government will consider replacing a scheme to cut corporate energy use with an alternative environmental tax if it cannot reduce the scheme’s administrative costs, finance minister George Osborne said in his budget statement on Wednesday.
The so-called Carbon Reduction Commitment (CRC) was devised under the previous Labour government…
US consortium to build carbon capture and storage plant at Grangemouth
Plans for a new “clean coal” power plant close to Edinburgh have been unveiled by a US-led consortium that is hoping to capture nearly all its CO2 emissions when it begins operating.
The Seattle-based Summit Power Group has said it would build the new carbon capture and storage (CCS) power station near Grangemouth oil refinery but only if it wins substantial financial backing in the UK government’s next funding round for CCS proposals…
Scots aim to fill marine power funding gap with £100m fossil fuel levy
The Scottish government has attempted to resolve a dispute over the £3bn Green Investment Bank’s potential investment in emerging technologies, such as wave and tidal power, by announcing a £100m fund to boost the fledgling industry.
Scottish energy minister Fergus Ewing today unveiled the £103m Renewable Energy Investment Fund (REIF), which will be paid for by excess money generated by the fossil fuel levy imposed on Scottish electricity suppliers…
Wrexham hails completion of solar success story
Wrexham is on the cusp of completing one of Europe’s largest solar projects, after confirming this week that it will have completed the rollout of 3,000 installations by the end of the month.
A spokesman for Wrexham County Borough Council told BusinessGreen that the project to install 30,000 solar panels on social housing across the Welsh town was on track for completion before the end of the month, as originally planned…
Economy
ECB underestimated oil prices for next 10 years
The European Central Bank said Thursday it had underestimated future oil prices and inflation–which could lead to wrong monetary policy measures–and that it is now testing new models to improve its oil price forecasts.
“For more than 10 years, we have been considerably underestimating the oil price,” said Pavlos Karadeloglou, an economist at the External Developments Division of the ECB, at a Norges Bank conference on modeling and forecasting oil prices…
OPEC Recycles Dollars Into Debt 50% Faster Than Foreigner
OPEC nations are plowing cash into U.S. Treasuries at a more than 50 percent faster rate than all other foreign investors, an unintended benefit of oil prices above $100 a barrel.
Organization of Petroleum Exporting Country members boosted their net purchases of government debt by $43.3 billion, or 20 percent, in the 12 months ended Jan. 31, compared with a 13 percent increase for non-OPEC foreign holdings, Treasury Department data showed last week. With prices up $26 a barrel since Sept. 30, producers have an additional $780 million in profits every day, according to data compiled by Bloomberg…
Bank of England split on more quantitative easing as oil price worries increase
Bank of England officials showed increased concern about oil prices and future wage inflation when they left policy steady in March, the minutes of the latest Monetary Policy Committee meeting show.
The MPC voted 7-2 to keep the quantitative easing (QE) asset purchase target steady at £325bn, with Adam Posen and David Miles again urging another rise to £350bn…
