Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
Energy news was dominated this week by the growing controversy over shale gas in Europe and the UK.
In the UK there is a very visible and growing rift in the government between those looking to focus on renewables, and an increasingly loud lobby pressuring for a change of emphasis towards gas. The gas agenda, supported by George Osborne at the Treasury, is using the potential of domestic shale gas as the premise for a new dash for gas. The recent appointment of the pro gas Owen Patterson as Environment Secretary last week also looks to have strengthened their hand.
Energy and Climate Change Secretary Ed Davey sought to strengthen his position in holding out for a low carbon energy policy as he spoke this week at the CBI. In his speech he commented that he wanted to knock down the myth that a global glut of cheap gas is about to come to the rescue. He also added that "unconventional gas can make a difference, although perhaps not as big a difference as some sections of the press would have me believe". This was followed later in the week by a strongly worded letter to DECC by the new Chairman of the Climate Change Committee (CCC) Lord Deben, which said that "extensive use of unabated gas-fired capacity (i.e. without carbon capture and storage technology (CCS)) in 2030 and beyond would be incompatible with meeting legislated carbon budgets". The draft energy bill currently leaves open the door to new unabated gas — see ODAC newsletter June 1 2012.
In a separate development this week the EU released a report on gas fracking, identifying issues "presenting a high risk for people and the environment", and inadequacies in the current legislative framework around fracking. The UK position to date has been that current regulatory systems are sufficient. This new report will add to the growing controversy about this position. The industry cause was not helped any this week as Cuadrilla, the company drilling in Lancashire, were found to have broken the conditions of their planning permission.
In oil news this week OPEC and Saudi Arabia assured the world that markets are well supplied despite high prices. Prices rose again Thursday as the US announced a new fiscal stimulus plan.
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Oil
Brent crude rises above $117 on Fed stimulus
Brent crude rose for the seventh straight session on Friday, climbing above $117 a barrel on hopes for stronger global demand for oil after the U.S. Federal Reserve launched an aggressive programme to stimulate the economy.
Brent climbed to a four-month peak of $117.72 a barrel in earlier trade and by 0900 GMT was up $1.53 at $117.41. The global North Sea benchmark is on track to end the week up more than 2 percent…
Brent-WTI Oil Gap Sliding as North Sea Output Rebounds
The difference between the world’s two most-traded grades of oil is narrowing as North Sea production rebounds from the lowest level in five years.
Brent crude on the ICE Futures Europe exchange in London cost $18.95 a barrel more than West Texas Intermediate on the New York Mercantile Exchange. That’s down from $21.92 on Aug. 15, the most in almost 10 months. Daily exports of the four crude grades comprising the Dated Brent benchmark will rise 24 percent in October, the biggest monthly increase in two years, as offshore maintenance work ends, according to data compiled by Bloomberg…
U.S. sees tighter oil market; OPEC disagrees
The U.S. government and OPEC offered differing outlooks for global oil markets on Tuesday, with Washington ratcheting up price forecasts for oil on stronger demand while OPEC highlighted rising output from the exporter group.
In separate monthly reports, both emphasized the possibility that a worsening European crisis could still drag down oil prices, warnings that may complicate deliberations over whether to tap into strategic oil reserves again…
Sea ice halts Shell oil drilling in Alaskan Arctic
Royal Dutch Shell has halted drilling in Arctic waters off Alaska just one day into the controversial project, after a giant block of sea ice was blown towards its drilling ship.
Shell has spent six years and $4.5bn (£2.8bn) in preparation for its Arctic exploration campaign, which has drawn fierce opposition from environmental campaigners…
High oil price worries Saudi, pledges to meet demand
Saudi Arabia will continue to meet any additional oil demand and help moderate prices, but the recent surge in crude prices is not due to any supply shortfall, Saudi Oil Minister Ali al-Naimi said on Monday.
"Saudi Arabia is concerned about rising oil prices in the international oil market. The current high price of oil is simply not supported by market fundamentals," Naimi in a statement sent to the media…
Shell criticised for limited testing of Alaska drilling containment equipment
Shell has been accused of "stock-car racing recklessness" after apparently undertaking only the most limited testing of a key piece of equipment aimed at preventing a Gulf of Mexico-style blowout during its controversial drilling in the Arctic.
Documents obtained under a Freedom of Information Act request suggest field-testing of a containment dome took place over two hours on 25 and 26 June. The dome, known as a "capping stack", would be dropped over any stricken wellhead…
China Fuel Prices Rise Second Time in Month as Oil Gains
China, the world’s second-biggest oil consumer, increased gasoline and diesel prices for the second time in about a month as rising crude costs threaten to curb profits at the nation’s largest oil refiners.
The maximum at which gasoline can be sold to motorists rose by 550 yuan ($87) a metric ton and diesel by 540 yuan today, the National Development and Reform Commission said in a statement on its website yesterday. The pump price of 90-RON, China III gasoline in Beijing will increase 5.8 percent to 10,040 yuan a ton, or $4.53 a U.S. gallon, according to Bloomberg calculations from NDRC data. The China III specification is similar to the Euro III fuel standard…
Gas
Davey takes aim at shale gas lobby with defence of Energy Bill
Energy and climate change secretary Ed Davey has challenged a series of "myths" attached to the government’s Energy Bill, arguing the controversial reforms are not a disguised nuclear subsidy and have not been made unnecessary by the discovery of European shale gas deposits.
Speaking at a CBI event yesterday evening, Davey tackled a series of criticisms that have been levelled at the Energy Bill, and, in comments that will be interpreted as a direct challenge to some of his Conservative colleagues in the coalition, he rejected suggestions the UK should water down the proposed reforms and instead focus on boosting gas capacity…
EOG Says U.S. Fracking Rule to Cost $1.5 Billion a Year
The Obama administration’s plan to tighten regulation of hydraulic fracturing for natural gas on public land may cost more than 20 times U.S. estimates, energy companies and local governments said.
EOG Resources Inc. (EOG), the top oil producer in a Texas shale formation, and officials from Wyoming and Utah cite a study by John Dunham and Associates that said it will cost $253,839 per well to meet the proposal for disclosing chemicals being used and certifying the well is isolated to avoid leaks. The Bureau of Land Management estimated costs at $11,833 per well…
EU study sparks regulation debate over ‘high-risk’ shale gas
Tough new regulations could be slapped on the shale gas industry if the EU acts upon legislative and environmental failings identified in its most comprehensive analysis yet of the sector, due to be released today [7 September]…
Shale gas drilling poses a ‘high risk’ to human health and the environment that is worse than that posed by other fossil fuels, according to a 300-page report prepared by the EU’s environment directorate. It is also currently unregulated…
Cuadrilla breached fracking conditions, court told
The company exploring for shale gas in Lancashire broke the conditions of their planning permission by drilling beyond an agreed time limit and beyond a cut-off date put in place to protect wintering birds, it emerged on Monday.
The revelation of the breaches by Cuadrilla — which came to light during evidence given by Lancashire county council’s head of planning in a trial of anti-fracking protesters — come as concern over the regulation of gas fracking led three of the UK’s biggest environmental groups to write a warning letter to the climate and energy secretary, Ed Davey…
UK dash for gas would be illegal, says climate committee
The independent Climate Change Committee (CCC) has today warned unequivocally that the government would breach the Climate Change Act if it pursues Chancellor George Osborne’s plans for a surge in new gas investment.
In what will be seen as an explosive intervention in the simmering row between the Lib Dems and the Chancellor over whether to include a target to decarbonise the electricity sector by 2030 in the upcoming Energy Bill, the CCC today stated categorically that "extensive use of unabated gas-fired capacity (i.e. without carbon capture and storage technology (CCS)) in 2030 and beyond would be incompatible with meeting legislated carbon budgets"…
Electricity
France aims at tiered energy pricing to encourage savings
France’s new Socialist government unveiled plans this past week to introduce a tiered energy pricing system to encourage people to reduce their use of electricity, gas and heat.
With EU nations trying to cut their greenhouse gas emissions by 20 percent by 2020, France unveiled a system that would see those who waste energy forced to pay higher prices, following in the steps of Japan and the US state of California…
Nuclear
Benefits of thorium as alternative nuclear fuel are ‘overstated’
The benefits of an alternative nuclear fuel that could offer a safer and more abundant alternative to the uranium that powers conventional reactors have been "overstated", according a new government report on the potential of thorium.
The report says the UK should continue to be engaged with the technology but downplays claims by thorium proponents who say that the radioactive chemical element makes it impossible to build a bomb from nuclear waste, leaves less hazardous waste than uranium reactors, and that it runs more efficiently…
Renewables
Wind energy could surpass global power demand — with huge hurdles
Wind energy could provide 20-100 times current global power demand, according to a study published this week in Nature Climate Change. Other studies have shown similar results, but they do not mean that wind power is all we will ever need, says Ken Caldeira of Stanford University’s Carnegie Institution, and co-author of the new study."We’re always going to need a variety of energy sources," Caldeira told the Guardian.
Nor does it mean installing enough wind turbines to power the world is practical or even feasible. There are significant technical and resource problems to overcome, not least of which is finding the money to construct millions of turbines, he acknowledged…
UK on brink of new wind energy record
The UK wind energy industry is poised to reach a major new milestone over the next few days, with National Grid predicting that a record 4.14GW of power will come onto the grid from wind farms later this evening.
On Tuesday, wind farms generated 3.36GW of electricity, equating to nine per cent of the energy mix, but falling just short of the current UK record of 3.8GW that was set three months ago…
Huff, puff, and wind power
Putting politics before the evidence when it comes to wind power is bad for energy users and the British economy. George Osborne’s overtures to his "NIMBY" backbenchers may end up winning him few friends.
In February a group of more than 100 backbench Conservative MPs sent a letter to the Prime Minister arguing for deep cuts in the support provided for onshore wind. Many of these MPs represent rural constituencies where wind farms may be built. This kicked off a major political spat over the summer with the Chancellor of the Exchequer, George Osborne, championing their cause and picking a fight with the Secretary of State for Energy and Climate Change, Ed Davey, about the support levels provided. Davey won but only after horse trading that saw the Chancellor advance several steps along his "dash for gas"…
Biofuels
France seeks biofuels pause in global food strategy
A French plan to fight food price volatility took further shape on Wednesday with a call to pause global development of biofuels, just a day after President Francois Hollande pushed for creation of strategic food stocks.
"(France) will push for a pause in the development of biofuels competing with food," a government spokeswoman said after a cabinet meeting on Wednesday…
EU proposal would limit use of crop-based biofuels
The European Union plans to impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, according to draft EU legislation.
The new rules, which will need the approval of EU governments and lawmakers, represent a major shift in Europe’s much-criticised biofuel policy and a tacit admission by policymakers that the EU’s 2020 biofuel target was flawed from the outset…
Climate
Global carbon trading system has ‘essentially collapsed’
The world’s only global system of carbon trading, designed to give poor countries access to new green technologies, has "essentially collapsed", jeopardising future flows of finance to the developing world.
Billions of dollars have been raised in the past seven years through the United Nations’ system to set up greenhouse gas-cutting projects, such as windfarms and solar panels, in poor nations. But the failure of governments to provide firm guarantees to continue with the system beyond this year has raised serious concerns over whether it can survive…
Can the UK fly more without breaking climate change targets?
Planes launched into the skies by catapults running on green energy, then cruising efficiently in self-organised flocks across oceans and continents. That is the kind of blue-skies thinking, outlined by Airbus on Thursday, that the aviation industry argues will allow an unrestrained increase in flying with no great increase in carbon emissions.
The realisation of these and other measures, such as biofuels and more efficient jet engines, is key in determining whether the UK could build new runways in the south-east and at Heathrow — a question in the spotlight after a cabinet reshuffle this week that seems to make it clear the government would like to — while keeping its commitment to tackling global warming. The other question is how much of the nation’s future emissions, which will need to be cut severely to meet legally binding climate targets, are allotted to flying…
