Welcome back to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
The summer holidays brought no relief on oil prices with Brent climbing back to $115/barrel. Sanctions on Iran and hurricane Isaac are having an effect, but recent reports from Barclays Capital and Citigroup point to more fundamental issues.
Barclays sees the oil supply tightening, with strong US production growth offset by falling output elsewhere in non-OPEC, pushing prices to an average $125 per barrel next year and possibly $180 by 2020. Barclays also dismisses any notion of US energy independence — recently revived by Republican presidential candidate Mitt Romney in a sadly predictable and lame ‘white paper’. Barclays forecasts US imports of more than 5 mb/d will persist beyond 2020 “even assuming the maintenance of high prices in what we would consider an already highly supply-optimistic and demand-pessimistic scenario”.
Part of the tightening oil picture is increased domestic oil demand in producing countries, leading to a reduction in exports. Citigroup released a report this week raising a red flag that Saudi Arabia could become a net oil importer in the next 20 years. While much of Saudi consumption is for electricity generation and the kingdom is taking action to find substitutes, the trend is still towards less oil being available to the global market.
US geologist and exploration manager Jeffrey Brown, who blogs as westexas, has shown global net exports fell by 3mb/d between 2005 and 2010, while imports by China and India rose by 2.5 mb/d, reducing the oil exports available to the rest of the world by 5.5 mb/d altogether. If these trends were to continue, he says, ‘available net exports’ would fall to zero by 2030.
So how will the UK government respond to these challenges? Following this week’s reshuffle, it looks as if policy is tilting ever more towards a dead-end scramble for the remaining hydrocarbons rather than secure and low-carbon renewable energy. The prime minister appointed Owen Patterson to DEFRA and John Hayes to DECC, both of whom have spoken against wind energy in the past. They might want to look at the latest report from the Institute for Public Policy Research, which concludes that wind is an effective alternative. Ed Davey remains as Energy and Climate Change Secretary, but his job just got even more difficult.
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Oil
Report kicks up debate on how high oil will go
A prediction that the price of oil could rise 50 percent this decade as global demand exceeds supply left no shortage of opinions from people with professional interest in the matter.
A Barclays research report issued last week asserted that oil produced from shale and other formations won’t be sufficient to meet growing global demand as production from older fields declines…
Saudi Arabia May Become Oil Importer by 2030, Citigroup Says
Saudi Arabia, the world’s biggest crude exporter, risks becoming an oil importer in the next 20 years, according to Citigroup Inc.
Oil and its derivatives are used for about half of the kingdom’s electricity production, which at peak rates is growing at about 8 percent a year, the bank said today in a an e-mailed report. A quarter of the country’s fuel production is used domestically, more per capita than other industrialized nations, as the cost is subsidized, according to the note…
Oil Trades Near One-Week High on Outlook for Stimulus, Economy
Oil traded near the highest closing price in almost a week amid signs the U.S. recovery is improving and steps by China to stimulate its economy, indicating fuel demand may rise in the world’s biggest crude users.
Futures were little changed after earlier dropping as much as 1 percent. China approved plans for infrastructure projects including roads, ports and waterways, according to statements on the website of the National Development and Reform Commission yesterday. U.S. jobless claims declined last week and companies added more workers than forecast in August, reports showed before government data due today. Oil is still headed for its first weekly decline in six weeks…
Study throws cold water on Arctic oil, gas dreams
The Arctic, often presented as the promised land by oil companies, is likely to play only a marginal role in providing for the planet’s future energy needs, a Norwegian study claimed Tuesday.
The share of Arctic oil and gas in global energy production is expected to decline by 2050 because of prohibitively high production costs, according to a study conducted by the Centre for International Climate and Environmental Research in Oslo and national statistics agency Statistics Norway…
Total insists Shtokman Russian Arctic gas project not delayed ‘indefinitely’
Energy giant Total sparked confusion over plans for Russia’s giant Shtokman Arctic gas field, denying the flagship project, in which the French company has a stake, had been delayed indefinitely.
A senior official at Russian state-controlled Gazprom, the project’s 51pc owner, had said that the partners in the project agreed it was too expensive to proceed for the time being, suggesting it would not be before 2014 earliest…
Statoil delays start of Chukchi drilling until at least 2015
Shell Oil Co. already has scaled back its Arctic oil drilling program this summer amid major setbacks, and now Statoil is following suit.
The Norwegian company is delaying its own plans to search for black gold in icy U.S. waters north of Alaska by at least one year, to 2015 at the earliest…
Russian oil production hits post-Soviet record
Russian leaders have hailed their powerful energy industry as the country posted a post-Soviet record high rate of oil production that should boost coffers in uncertain global economic times.
The energy ministry’s data reporting unit said Russia produced 10.38m barrels per day in August – a fractional increase on July that put it above any mark seen in the past two decades…
Shell to Test Capturing of Carbon in Canada
The announcement of the Quest project after years of study comes just months before Washington will reconsider whether to approve the Keystone XL pipeline to increase imports of heavy oil from the oil sands. Environmentalists have fought the project, arguing that refining and burning oil from the oil sands emit far more carbon than conventional oil.
The project, which is scheduled to begin operations by 2015, is intended to capture and permanently store underground more than a million tons of carbon dioxide a year, which Shell estimated was equivalent to taking 175,000 cars off the road. Carbon capture projects have lost favor in recent years because of concerns about their heavy costs, which have typically been subsidized by governments…
BP sued ‘for hiding truth over safety’ in Gulf oil disaster
BP is being sued for tens of millions of dollars in the US by institutional investors who allege the oil major misled them over its safety policies and the scale of the spill in the Gulf of Mexico.
The company’s shares more than halved — wiping billions of pounds off the value of the group — in the wake of the April 2010 disaster, which killed 11 men and caused the worst offshore spill in US history…
Jordanians protest as petrol price rises again
Jordanians have taken to the streets to vent anger at the government’s second fuel price increase in three months.
The rise comes as Jordan seeks to fill a gap in its budget that widened after the government raised subsidies for basic goods last year…
Gas
Gazprom gears up to fight EU gas investigation
Russia’s Gazprom said on Wednesday it was ready to talk with the European Union after Brussels began a competition investigation into its gas sales, but stressed it was armed with legal and political reasons why the EU should back off.
The European Commission started the inquiry on Tuesday into suspicions that Gazprom, which is more than 50 percent owned by the Russian state, was hindering the free flow of gas across the EU and imposing unfair prices on its customers by linking the cost of gas to oil prices…
Coal
Australia scraps dirty power station closure plan
Australia on Wednesday abandoned plans to pay the country’s dirtiest power generators billions of dollars to shut down production after failing to agree a price, but the government said the move would not derail its carbon reduction policy.
Resources Minister Martin Ferguson said the government and generators could not agree on a price after more than a year of negotiations with five power companies to close down 2,000 megawatts of pollution-intensive power by 2020…
Critics say Canada softens coal-fired power rules
Canada’s government finalized much-anticipated regulations on Wednesday for phasing out the country’s old coal-fired power plants in a move critics condemned as a watering down of earlier proposals to cut carbon emissions.
Under rules to take effect on July 1, 2015, generating units commissioned before 1975 will reach the end of their operations after 50 years or by the end of 2019, whichever is earlier, federal Environment Minister Peter Kent said…
Nuclear
French Set For Power Gap In Three Years On Nuclear Shutdowns
France is heading for a shortage of generating capacity within three years because of the planned closing of outdated fossil-fuel plants and two nuclear reactors, grid operator Reseau de Transport d’Electricite said.
Power supply will be assured until 2015, when as much as 7.6 gigawatts of coal and heating fuel-fired power plants may be phased out, RTE said today in a report. The gap will reach 1.2 gigawatts in 2016 and 2.1 gigawatts in 2017 as two generators at the Fessenheim atomic plant are shut by President Francois Hollande, who has pledged to cut reliance on nuclear power…
China could take key role in UK nuclear infrastructure through Hinkley Point
EDF has been holding talks with China about sharing the soaring cost of building £10bn worth of new reactors at Hinkley Point, Somerset.
The move underlines growing pressure on the French company’s internal finances and has reignited a fractious debate about Communist state-run businesses playing a critical role in sensitive western energy infrastructure…
Biofuels
US and EU must change biofuel targets to avert food crisis, says Nestlé chief
Nestlé, the world’s largest food company, has added its weight to calls by the UN and development groups for the US and EU to change their biofuel targets because of looming food shortages and price rises.
“We say no food for fuel,” said Paul Bulcke, chief executive of Nestlé, at the end of the World Water Week conference in Sweden. “Agricultural food-based biofuel is an aberration. We say that the EU and US should put money behind the right biofuels.”…
UK
Cameron appoints oil and gas friendly decision-makers
Britain sent a clear signal of support to its oil and gas industry when it named an advocate of shale gas fracking as environment minister and a wind farm sceptic as energy minister.
The appointments in Prime Minister David Cameron’s ministerial reshuffle on Tuesday mark a departure from his pledge to run Britain’s greenest government, in favour of the fossil fuel sector that generates billions of pounds in tax revenue…
Ed Davey moves to shield renewables amid reshuffle
The Energy Secretary Ed Davey has moved to defend renewables after the appointment of two anti-wind ministers in the reshuffle.
The new Environment Secretary, Owen Paterson, and Energy Minister, John Hayes, both oppose wind farms…
The previous pro-renewables energy minister Charles Hendry was axed just as he prepared to help pilot the Energy Bill through the Commons.
UK wind power predictable enough to keep lights on, says think tank IPPR
Wind power in Britain is predictable enough that the grid can rely on it to help keep the lights on, despite spells of cold, calm weather, while it cuts carbon emissions significantly, the Institute for Public Policy Research (IPPR) said.
Critics have said wind power cannot be relied upon at times that demand is the greatest, cannot be stored and does not cut enough carbon to make large investments worthwhile…
Chancellor unveils tax break for older North Sea oil and gas fields
Chancellor George Osborne has announced a tax measure to support investment in older North Sea oil and gas fields.
The allowance for “brown field” areas will shield some income from the supplementary charge on their profits…
Chief scientist issues warning over DECC budget cuts
A new report by the government’s chief scientific adviser Sir John Beddington has warned that substantial budget cuts to the Department of Energy and Climate Change (DECC) could derail efforts to develop the new clean technologies required to decarbonise the energy sector.
The Government Office for Science published a report last week from a panel of independent experts led by Beddington examining DECC’s use of science and analysis throughout its operations…
Transport
A Chinese City Moves to Limit New Cars
It is as startling as if Detroit or Los Angeles restricted car ownership.
The municipal government of Guangzhou, a sprawling metropolis that is one of China’s biggest auto manufacturing centers, introduced license plate auctions and lotteries last week that will roughly halve the number of new cars on the streets…
POD Point launches pay-as-you-go car charging network
Plans to create a nationwide electric vehicle charging network have moved a step forward after POD Point launched the first pay-as-you-go (PAYG) system for drivers.
POD Point yesterday pushed the button on its new PAYG network, dubbed PP PAYG, which is designed for drivers who use public charge points occasionally or do not want to pay a monthly membership fee…
