Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
Fears of a new phase in the European debt crisis, a decline in oil imports to China in April, and the prospect of a new round of international talks on Iran’s nuclear programme have seen oil prices drop back from recent highs in the past two weeks. Despite all this however, and reports from OPEC that it bolstered supply by 320,000 barrels in April, Brent oil still stands around $112/barrel.
A new paper from the IMF ‘The Future of Oil: Geology versus Technology’ released this week provides some interesting reading on oil price forecasting. The paper, which is intended to provoke discussion rather than reflect an IMF view, compares the success of different oil forecasting methods. The geological method represents the typical peak oil model — for example Colin Campbell’s forecast, while the economic/technological model reflects that of the EIA. The report found that a combination of the two approaches created the most accurate model of recent trends. A forecast to 2020 using this composite model sees oil supply growth contracting from 2005 levels, and “requires a large increase in the real price of oil, which would have to nearly double over the coming decade to maintain an output expansion that is modest in historical terms.” For a useful summary see commentary by Gail Tverberg.
In the UK this week the Queen’s speech set out the government’s legislative programme for the coming year. From an energy perspective the big and much awaited announcement was the reform of the electricity market. The passing of the bill will be a test of the government’s resolve on investment in clean energy and meeting emission reduction targets. There have already been noticeable cracks between DECC and the Treasury on the cost of green measures, and the debate and lobbying accompanying this bill will heighten these tensions as Tory back benchers take on renewables, and Liberals fight the not very well hidden nuclear subsidy. In the meantime expect considerable pressure from the shale gas lobby looking to sell a story of cheaper clean energy ahead — though, even with the many other risks aside, the carbon capture and storage required from this is still a pipe dream.
The political pressure to pursue the shale gas dream became more apparent this week as chairman of the Environment Agency, Lord Smith of Finsbury declared his qualified support. As to the question of the environmental impact of shale gas, Lord Smith commented that “The answer is complex, and is something like ‘up to a point’,” “But, with careful use of the drilling technology, with rigorous monitoring and inspection, and with the development of a major programme of carbon capture and storage for gas-fired power generation, then shale gas could be a truly useful part of our energy mix.”—so hardly a ringing endorsement.
And finally, some interesting news from Wales. A White Paper released this week on Active Travel is looking to achieve a “cultural change similar to that of smoking” with regard to travel by enabling people to get out of their cars and travel in healthier more sustainable ways. Measures are to include compulsory provision of safe and integrated routes for walking and cycling. Maybe one for the next Queen’s Speech?
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Oil
Oil Rises for First Time in Seven Days on Jobless Claims
Oil rose for the first time in seven days as U.S. claims for initial jobless benefits fell last week to a one-month low, adding to optimism that demand in the world’s biggest crude consumer will grow.
Futures increased as much as 0.9 percent after the Labor Department reported jobless claims dropped by 1,000 to 367,000 in the period ended May 5, the lowest since the end of March. The number of people on unemployment benefit rolls was the smallest since July 2008…
IMF releases new research paper concerning oil and the global economy
The International Monetary Fund (IMF) has issued a paper dubbed “The Future of Oil: Geology versus Technology.” The research paper is meant to provoke debate concerning the issue of oil and sustainability. Because of its two-fold approach to the issue, the IMF notes that the paper does not necessarily represent the views of the organization. The paper takes into consideration two points of view: The economic and technological approach used by the Energy Information Administration, and the geological approach, which concerns peak oil forecasts.
Both approaches have been shrouded in controversy for some time. The research paper notes that while both approaches are subject to problems, geological forecasts have recently proven to be more accurate than forecasts made through the economic/technological approach. The economic/technological approach, however, accounts for the financial factors that are inseparable from the world of oil. Both approaches are marred by inaccuracies. As such, the research paper aims to introduce a new forecast model than combines the two methods…
Insight: Canada’s oil sand battle with Europe
There’s a science to using science.
On May 9, the government of Alberta released a study into the extra carbon emitted by crude produced using oil sands instead of more conventional sources. The study, by a unit of California-based Jacobs Engineering Group, found that emissions from oil-sand crude are just 12 percent higher than from regular crude…
Libya’s vast oil potential is still in the grip of flux
Oil is the great success story of the Libyan uprising but post-war achievements are being overshadowed by disputes over security and unpaid wages.
Restoration of production to pre-war levels just four months after Col Muammar Gaddafi was killed in the desert has been hailed by the Western backers of the new government…
BP may get second chance in Arctic through Rosneft tie-up with TNK-BP
BP could be handed a second shot at exploring for oil offshore in the Arctic with Russia’s Rosneft, in a possible tie-up through its joint venture TNK-BP.
The British company attempted a deal with the state-controlled Rosneft in 2011 but bypassed its joint venture — leading to the deal collapsing in legal wrangling when BP’s Russian oligarch partners in TNK-BP objected…
Gas
Chesapeake’s deepest well – Wall Street
Far from the drilling rigs of Oklahoma, America’s second-largest natural gas producer is having to dig ever deeper into the well that really fuelled its growth: Wall Street.
In a Times Square office building, a team tapped by Chesapeake Energy Corp deployed more than 40 bankers, lawyers and other experts to plot another chapter in that strategy…
Czechs eye moratorium on shale gas exploration
The Czech Environment Ministry is planning to put up to a two-year moratorium on granting licences for shale gas exploration until new legislation is put in place, the ministry said.
During the moratorium, the ministry would look at preparing geological and mining legislation that is clear for potential exploration companies…
Obama Warms to Energy Industry by Supporting Natural Gas
Huddled around the West Wing table were an unlikely group of co-conspirators with the administration of U.S. President Barack Obama.
One participant had been fighting Obama’s proposal to raise taxes by $24 billion on oil companies; another had complained that a federal labor board is hampering hiring; a third pushed Congress to repeal Obama’s provision to clean up pollution from boilers. On the one issue they were called to discuss on that April day, however, they could rally around the Democratic administration: its recent embrace of natural gas…
Renewables
Largest onshore windfarm in England and Wales gets go-ahead
The government has approved plans for the largest onshore windfarm in England and Wales. With 76 turbines, the Pen Y Cymoedd development is expected to produce 299 megawatts (MW) of energy by 2016, enough to power 206,000 homes a year.
The energy minister Charles Hendry said the project would have a positive economic impact on the community while moving the country away from fossil fuels…
Industry: Solar most installed energy source in Europe last year
The European solar market continued to grow at a breakneck pace last year, according to new figures from the European Photovoltaic Industry Association (EPIA), which show that solar was the most installed energy source in Europe, overtaking new wind and gas-capacity combined.
The latest report, entitled Global Market Outlook for Photovoltaics Until 2016, found that installations of PV panels rose 63 per cent to 21.9GW, far exceeding the 9.5GW each of new wind farms and gas power plants added last year…
UK
The Queen’s Speech: Electricity market overhaul bids to bridge energy gap
An overhaul of the electricity market set out in the Queen’s Speech aims to drive massive investment in low carbon power and bridge the looming energy gap.
Keeping the lights on as old coal and nuclear power plants are shut down in the next decade will require pouring £110 billion into energy supplies and the grid – more than double the current rate of investment – the Government has warned…
The Energy Bill is coming
So the rumour mill was wrong. The Energy Bill and its promised electricity market reforms made it into the Queen’s Speech, and right near the top, alongside the commitment to introduce a Green Investment Bank, to boot.
Those sources who suggested to the BBC that the bill was likely to be delayed to make way for Lords Reform look to have been mischief-making and the biggest shake-up of the UK’s energy market for over two decades should now be completed within the next 12 months…
Greater use of fracking is backed by UK’s environment watchdog
Fracking, the controversial technique for extracting the new energy source of shale gas, should be allowed to go ahead, Britain’s top environmental regulator has said.
The hydraulic fracturing of shale rock, which has been blamed for causing earthquakes and polluting ground water and has generated fierce opposition from environmentalists, should proceed as long as it is monitored carefully and is accompanied by measures to minimise carbon emissions, said the chairman of the Environment Agency, Lord Smith of Finsbury…
Shale Gas Explorer Says U.K. Production May Start in 2014
Cuadrilla Resources Ltd., a U.K. shale-gas explorer that suspended drilling in northwest England after causing minor earthquakes, expects to resume work this year and said gas production may start in 2014.
“By the first quarter of 2013, we will be far enough along in the exploration program to say this makes sense to go ahead and apply for a full field development permit,” Cuadrilla Chief Executive Officer Mark Miller said in an interview. “Production could be under way as early as 2014.”…
British Gas owner Centrica warns of higher energy bills
Centrica, the owner of British Gas, has said that despite its recent cut in electricity prices, rising wholesale gas costs will make supplying energy to UK households more expensive this year.
It said gas costs would be 15% higher next winter, while other costs would add another £50 to the cost of supplying energy to the average home…
Climate
Norway opens major facility to test carbon capture
Norway on Monday launched the world’s largest facility of its kind to develop carbon capture and storage (CCS), the so-far commercially unproven technology that would allow greenhouse gases from power plants to be buried safely underground.
A 5.8 million Norwegian crown ($1.00 billion) government-funded centre will test two post-combustion carbon capture technologies that could be extended to industrial-scale use if shown to be cost-effective and safe…
Transport
Wales gets tough over green travel
Wales is set to become the first country in the world to make it compulsory for local authorities to provide safe and integrated routes for walking and cycling as part of an ambitious plan to boost green travel and end the hegemony of the car.
A white paper launched on Wednesday morning by the Labour-led government in Cardiff will oblige Welsh councils and other authorities to identify, plan and implement walking and cycling routes, and how they can be integrated. The hope is that creating a network of safe routes will tempt people out of their vehicles…
Electric cars in China: Not yet
THE main road at the headquarters of BYD, a Chinese car and battery firm in Shenzhen, seems to go on for ever. It winds from gleaming offices past enormous factories and dormitories to a renewable-energy plant and test track. Visitors can take the E6, the firm’s new electric car, for a drive—but try to accelerate and the engineers get nervous. Like the firm, the car is sluggish.
BYD was once ballyhooed; Warren Buffett bought some of its stock. But sales are anaemic. BYD’s first-quarter profits plunged by 90% from a year ago, to 27m yuan ($4.3m)…
