Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
Oil prices fell dramatically this week to $107/barrel for Brent, on worsening economic news from China and Europe, and assurances from Saudi Arabia that it is ready to pump more oil to keep prices down. The speed of the fall on Monday however is something of a mystery and has led to an investigation by the Commodity Futures Trading Commission and the FSA. Some of the longer term issues driving prices up were also evident with Shell’s false start on Arctic drilling, and news that Saudi Arabia burnt record amounts of oil in June and July for electricity generation. A UK parliamentary select committee this week recommended a halt to Arctic drilling until environmental concerns are addressed; it also came out in favour of unlimited financial liability for operations in the region.
The UK debate over shale gas drilling moved to the Financial Times this week where an editorial by Cuadrilla Director Lord Browne drew a response from Climate Change and Energy Secretary Ed Davey. Lord Browne unsurprisingly used the editorial to advocate for shale gas saying that policy around fossil fuel should be “a sensibly managed decline, not unthinking abandonment.” Davey objected to this “regrettably partial” description of current policy adding that “until we have more certainty about the potential scale and costs of shale gas production in the UK it is unwise to assume it will be some kind of silver bullet”. The European parliament meanwhile saw potentially conflicting resolutions backed this week. Shortly after the assembly’s energy committee agreed that the question of whether to exploit shale gas should be a matter for each country to decide on, MEPs on the environment panel voted strongly in favour of tougher regulation on shale gas and oil extraction activities.
In renewables news this week, DECC will shortly begin a review of onshore wind energy costs, a move which could lead to further subsidy reductions. The review was presaged at the time of the budget when DECC succeeded in holding cuts to 10% in the face of calls for much deeper cuts from the Treasury. Lord Browne catches the mood of the Treasury and possibly also Owen Patterson the new Environment Secretary when he writes in his editorial “we must continue to develop renewables but with an eye on rising opposition to costly and seemingly unending subsidies”. But this, as Davey points out in his response, is a red herring. The subsidies have added only 3% to the average bill and it is continued fossil fuel dependency which will lead to a costly future.
View our Reports and Resources page
Oil
Crude Oil Rebounds to Trim Biggest Weekly Decline Since June
Oil advanced in New York as investors speculated that the biggest weekly decline in more than three months was exaggerated.
November futures rose as much as 1.2 percent after front- month prices slid 7.2 percent in the four days through yesterday, when the October contract expired. New York crude has technical support after settling below the lower Bollinger Band at $92.55 a barrel the past two days. The last time it closed below the band on June 21, oil gained 12 percent over the next eight trading sessions. Prices may fall next week on concern economic growth will slow, a Bloomberg News survey showed…
Slumping trade growth — and more oil Jedi mind tricks?
Is Saudi Arabia having to again resort to Jedi mind tricks? Does the central bank of oil still have such a big problem with its policy transmission mechanism that it can’t weaken prices by production alone — and what effect is this having on world trade?…
MPs demand moratorium on Arctic oil drilling
British MPs are calling on Shell and others to halt “reckless” oil and gas drilling in the Arctic until stronger safety measures are put in place.
Politicians also want to impose “unlimited” financial liability on operators and the creation of a “no-drill zone” in a new environmental sanctuary….
Shell cleared to drill in Alaska’s Beaufort Sea
The US Department of Interior’s Bureau of Safety and Environmental Enforcement granted Shell a permit to drill to shallow depths at the Beaufort well, which follows approval three weeks ago for similar preliminary drilling in the Chukchi, Reuters reports.
Environmentalists criticized the decision, even though the Beaufort permit will not allow Shell to penetrate any oil- or gas-bearing zones…
Oil reserves at heart of Japan-China island dispute
It all comes down to black gold. Anti-Japan protests erupted in at least 100 Chinese cities on Tuesday, as anger over a struggle for control of oil and gas in the East China Sea turned violent, and increased the tension between the countries.
The focal point is a dispute over a remote island chain known as Senkaku in Japan and Diaoyu in China, lying east of China and south-west of Japan (see map). The US handed them to Japan after the second world war, but China says that it has a prior claim. Japan recently purchased several of the islands back from a private Japanese owner, and their nationalisation has ratcheted up anger in China…
Saudi crude burn hits new records in June, July
Saudi Arabia burned record monthly volumes of oil in June and July, official government figures show, contrary to the top crude producer’s plan to temper its summer oil burning spree this year with more gas.
The world’s leading oil exporter burned an average of 743,500 barrels per day (bpd) of crude in June and July, up 82,000 bpd from the same months last year, mainly to make electricity to keep the population cool, data issued under the Joint Oil Data Initiative (JODI) showed on Wednesday. The kingdom had hoped that more supply from Saudi gas fields being made available for power generation would save millions of barrels of valuable crude for export this summer…
Norway investigates ‘substantial’ oil and gas leak on BP platform
Norwegian authorities said Tuesday they have opened an investigation into a “substantial” oil and gas leak on a production platform operated by BP off the coast of Norway.
“No people were injured and no damage caused to the installation beyond the equipment directly involved. But the [Norwegian Petroleum Safety Authority] PSA considers the incident to have had a substantial potential,” the PSA said in a statement…
Gas
Lord Browne versus Ed Davey — fracking row hots up
The debate over shale fracking is warming up ahead of the government giving an expected go-ahead to the industry later this year.
Into the fray this morning came Lord Browne, former chief executive of BP, who — according to the Lords register of interests — is also a director of Cuadrilla, the only company currently fracking in Britain…
UK overseas gas imports to surge to $11 billion by 2015
Britain’s natural gas imports from outside the North Sea will surpass domestic production by 2015 and add more than $11 billion to import costs as domestic supplies dwindle and Norway increasingly struggles to fill the gap, Reuters research shows.
Estimates show that Britain’s own gas supplies will fall from around 43 billion cubic metres (bcm) per year today to around 16 bcm in 2030 if they continue their average annual 5 percent decline since peaking in 2000, while demand is set to hold steady between 85 and 95 bcm…
UK shale gas could create 4,200 jobs a year, say engineers
Developing the UK’s shale gas reserves could create thousands of skilled jobs, but is not a “silver bullet” to solve the country’s energy problems, the Institution of Mechanical Engineers (IMechE) said yesterday.
A position paper (PDF) circulated to parliamentarians outlined its support for the controversial energy source, alongside a mixed portfolio of generation technologies…
MEPs divided on whether EU should regulate shale gas
Lawmakers on the European Parliament’s environment committee backed new “robust regulatory regimes” on shale gas and oil mining yesterday (19 September), just after their colleagues in the energy committee insisted on each country’s right to decide for itself.
MEPs on the environment panel voted overwhelmingly for a resolution outlining the need for tougher regulation on shale gas and shale oil extraction activities…
Nuclear
Japan cabinet approves plan to exit nuclear energy
Japan’s cabinet has approved a new energy plan to cut the country’s reliance on nuclear power in the wake of last year’s Fukushima disaster, but dropped a reference to meet a nuclear- free target by the 2030s, ministers said on Wednesday.
Since the plan was announced on Friday, Japan’s powerful industry lobbies have urged the government rethink the nuclear-free commitment, arguing it could damage the economy and would mean spending more on pricey fuel imports…
UK
Ed Davey set to launch onshore wind costs review
Businesses will be invited to contribute to a new government reviews of onshore wind energy costs and potential new community benefit schemes that could lead to further cuts to the subsidies available for the renewable energy technology.
Energy and Climate Change Secretary Ed Davey agreed to launch a review of costs in early September after winning a battle with the Treasury over the depth of cuts to onshore wind subsidies under the Renewables Obligation (RO) scheme earlier in the year…
Wind farms are inefficient says new Environment Secretary, as DECC prepares to launch review
Wind farms are “inefficient” according to the new Environment Secretary as the Government plans to look again at subsidies to the industry.
Owen Paterson, the new Secretary of State at the Department for the Environment Food and Rural Affairs, sought to distance himself from suggestions he is a climate change sceptic…
Windfarms could provide windfall for local communities
Communities with windfarms in their area could get money off their electricity bills or grants for facilities such as playgrounds, the government has suggested.
The Department of Energy and Climate Change has launched a consultation into how communities could benefit from having windfarms sited near them, for example by receiving discounts on bills or investment in local infrastructure. It will also look at how local businesses could become involved in the supply chain and how developers can best consult local people…
DECC predicts latest solar subsidy cuts could open door for gas
The government has admitted its planned cuts to solar subsidies could cause construction of large scale solar plants to grind to a halt and instead inspire an increase in gas-fired generation.
The admission was made in its own impact assessment into the proposals to reduce support under the Renewables Obligation (RO) scheme for solar installations larger than 5 MW of capacity by 25 per cent from next year…
Europe
Hollande deals setback to nuclear, shale gas industries
French President François Hollande has vowed to shut down the country’s oldest nuclear power station by 2016, and in a wide-ranging speech on the environment, says his government would reject development of shale gas using a controversial extraction method known as ‘fracking’.
Hollande, who took office in May, announced on Friday (14 September) he would shut the Fessenheim nuclear station in Alsace, near the German border, by the end of 2016, sticking to his election pledge to halt its operations by the end of his mandate in 2017…
Transport
Fuel use in new cars could halve by 2030: IEA
Fuel consumption in new vehicles could be slashed by half in the next 20 years, helping the world curb its dependency on oil, provided governments set up bold policies to boost the use of available technologies, the International Energy Agency said on Wednesday.
The transport sector, which consumes around one fifth of global primary energy, will account for nearly all the future growth in oil use, said the Paris-based agency, which advises industrial nations on energy policy…
