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 remained steady this week as the closure of the Keystone pipeline in the US to address possible safety issues balanced bearish news on the Chinese economy. Beijing reported that Q3 saw growth slow to 7.4%, compared to the same period last year. The IEA now anticipates an easing of pressure on oil prices due to sluggish economic demand and rising supply in Iraq and the US – perhaps another way of saying that the oil price is putting a lid on economic growth? Goldman Sachs also revised its forecast, while commenting that a bottom price of $90/barrel is likely to hold due to the price of production.
It is the pursuit of cheap energy which is currently dominating political debate on energy policy. In the US President Obama and Mitt Romney clashed over this in the latest Presidential debate on Monday. The debate became a fight about who would drill more and where, based on the assumption that lots of drilling will mean energy independence and, ergo, low prices. Alternative energy and energy conservation were reduced to a footnote. It seems that at the same time as high energy prices keep a lid on economic growth, they also dumb down the debate which is needed in order to address the real issues.
In the UK this week the picture was not dissimilar. Much of the week was taken up with media furore about David Cameron’s on the hoof policy announcement to compel energy companies to offer customers the lowest tariff. Ofgem stepped in on Friday with a set of proposals on the issue. The incident did however add to the impression of uncertainty over current energy policy which is increasingly concerning investors. Ed Davey was emphatic that the Energy Bill will be ready in November, though key battles — whether to have a target for decarbonisation of the power sector, detail on subsidies/contracts for difference — remain in the balance.
In an interesting side note a group made up of the Co-operative, the National Trust, the Church of England and the Women’s Institute called on the government this week to recognise the potential of locally owned community energy schemes with more supportive legislation. The group claims that there is a potential for four power stations worth of these schemes by 2020. Could an initiative like this with the right support be useful in moving the debate from one of short term political expedience, to the need for a long-term solution to real issues of resource depletion and environmental degradation?
Oil
Oil Heads for Weekly Gain as TransCanada Shuts Keystone Pipeline
Oil headed for a second weekly gain in New York after TransCanada (TRP) Corp. shut its Keystone pipeline for repairs, disrupting crude supplies to the U.S. Midwest.
Futures were little changed, extending the longest run in more than a decade of daily price moves of less than 25 cents. Oil pared a decline of as much as 1.6 percent yesterday after TransCanada shut the 590,000 barrel-a-day line for three days, saying it found a "small anomaly" in a section running from Missouri to Illinois. Government data this week showed improving U.S. crude demand is being met by increased supplies…
Oil prices to ease on slow economy, higher output
The world could see a gradual easing of oil prices over the next five years due to sluggish economic growth and rising energy efficiency and as production increases steeply in Iraq and North America, the West’s energy watchdog said on Friday.
The International Energy Agency, which advises industrialised nations on energy policy, cut its global oil demand growth projection for 2011-2016 by 500,000 barrels per day (bpd) compared to its previous report in December 2011…
Oil bull Goldman sees end to rising prices
Wall Street giant Goldman Sachs , one of the biggest banks in commodity trading, has called an end to the oil price super-cycle, reversing years of bullish recommendations, citing a rise in unconventional oil supplies in the United States and Canada.
Goldman has been highest predictor among major oil price forecasters but said on Thursday "long-dated" or five-year forward Brent crude may be anchored at about $90 a barrel…
BP on verge of historic Rosneft deal as Bob Dudley and Igor Sechin meet for London talks
BP is on the verge of clinching an historic deal with Rosneft that would see the Russian state-controlled group take control of TNK-BP and hand the UK company a major stake in what would be the world’s largest listed oil producer.
Rosneft chief executive Igor Sechin flew to London on Wednesday to discuss acquiring BP’s 50pc stake in Russian joint-venture TNK-BP and on Thursday morning is expected to make a cash and shares offer worth up to $28bn (£17.3bn)…
Aramco Draws on Export Finance as Bank Loans Wither: Arab Credit
Middle Eastern and North African companies planning $740 billion in energy projects will need to tap foreign export credit agencies and local banks as commercial lending to the industry slumps to a nine-year low.
Loans for facilities such as refineries and power plants may dwindle to $13 billion this year, down from a record $44 billion in 2010, as European banks curtail exposure to the region, said Arab Petroleum Investments Corp., a multilateral investment bank. Companies in 18 nations from Morocco to Oman have paid an average of 190 basis points above the London Interbank Offered Rate for loans this year, up from an average of 157 basis points from 2007 through 2011, data compiled by Bloomberg show…
Congress applies pressure to BP over Gulf oil sheen
Lawmakers in Washington are applying more pressure to BP and its chief executive to give them answers about last month’s discovery of an oil slick in the Gulf of Mexico that has been traced to oil from the company’s blown-out Macondo well.
Rep. Ed Markey of Massachusetts and Rep. Henry Waxman of California, both of whom led investigations of the British oil giant following the 2010 Deepwater Horizon disaster off Louisiana, sent a letter to CEO Robert Dudley on Tuesday seeking a briefing by Oct. 30 on the company’s investigation…
Obama and Romney take up gas prices and energy policy during second debate
Barack Obama and Mitt Romney broke the campaign’s long silence on energy policy on Tuesday night in a combative exchange with each claiming to be the stronger supporter of American oil and coal.
Environmental campaigners have been pressing debate moderators to include questions on energy and climate change — hoping to put Obama on the spot to defend his clean energy agenda…
Azerbaijan threatens BP with ‘serious measures’ over oil revenue shortfall
BP faces a major new threat after the president of Azerbaijan accused it of making "false promises" about production volumes and warned it to expect "serious measures".
The oil major made "grave mistakes" that had resulted in an $8.1bn (£5bn) shortfall in the government’s revenues, President Ilham Aliyev said in a dramatic televised attack…
Gas
Germany Balks on Natural Gas Bonanza
The fuel of civilization is usually found in unattractive places. Geologists discovered the biggest oil and natural gas reserves in the deserts of the Middle East and beneath the permafrost of Siberia. Countries in temperate Central Europe, on the other hand, have only modest reserves. One of them lies some 5,000 meters (16,000 feet) beneath the surface in Rotenburg/Wümme, an administrative district in the northwestern German state of Lower Saxony.
The most recent well that was drilled into the natural gas field there is called "Bötersen Z11." The site, located next to a federal highway near the port city of Bremen, occupies about a hectare (2.5 acres) of asphalt-covered land surrounded by a green wire fence. A pipe about as thick as a tree trunk is protruding from the middle of the site, but nothing is coming out of it…
Shale gas not at odds with climate targets-report
Britain can exploit its shale gas reserves without worrying about meeting its targets to cut carbon emissions, provided the government continues to support green energy, consultancy Poyry said.
Environmentalists have voiced concerns that a boom in shale gas production in Britain could have a damaging impact on the country’s plan to cut carbon emissions by 80 percent by 2050…
Nuclear
Fukushima operator admits downplaying tsunami risk
The operator of Japan’s crippled Fukushima nuclear plant on Friday admitted it had played down the risks to the facility of a tsunami for fear of the political, financial and reputational cost.
The admission is one of the starkest yet by Tokyo Electric Power Company (TEPCO), which has been criticised for trying to shirk responsibility for the worst nuclear disaster in a generation…
Renewables
Greenwire £6bn plan to import Irish wind power
The UK government is considering plans to import wind power from Ireland to the National Grid via cables under the Irish Sea to north and west Wales.
Element Power said the Irish-based giant wind farms in its Greenwire plan could power three million UK homes…
Germany eyes cap for support for wind power, biomass
– Germany’s environment minister outlined plans on Thursday to limit support for wind energy and biomass generation following a similar cap imposed on the photovoltaic sector, as part of a proposed reform of renewable energy policy.
Peter Altmaier also raised Germany’s green targets, saying he wanted renewables to account for 40 percent of total power production in Germany by 2020, up from 25 percent now and an original target of 35 percent…
Biofuels
Biofuels industry does not deserve to be demonised
Given all the hysteria over biofuels you’d be forgiven for believing that wiping out the biofuels industry will solve world hunger. It won’t. Firstly, agriculture is not a zero-sum game. As well as offering genuine greenhouse gas savings today and even better prospects in future, biofuels have already led to big investments in sustainable farming practices which can improve agricultural productivity in the round.
Here in the UK, our home-produced biofuels provide as much high-protein animal feed as low-carbon liquid fuel — essential for our hard-pressed livestock industry. This feed in turn displaces imported soy, which is often associated with high carbon emissions…
EU Commission weakens biofuel rule changes: draft
The European Commission has watered down proposals to reduce the indirect climate impact of biofuels, but is sticking to a strict new limit on the amount of food crops that can be used to make fuel, draft legislation showed.
The late changes mean that fuel suppliers will not, as originally planned, be held accountable for the indirect emissions biofuels cause by displacing food production into new areas, resulting in forest clearance and peatland draining known in EU jargon as ILUC…
UK
Energy bills: Ofgem sets out plan for simpler tariffs
Energy regulator Ofgem has unveiled proposals to force suppliers to tell customers about the cheapest gas and electricity tariffs they have on offer.
Ofgem said the proposals would make the market "simpler, clearer and fairer"…
David Cameron’s energy team unable to explain price pledge
Confusion over David Cameron’s commitment to forcing energy companies to place customers on their lowest tariffs deepened on Thursday, with neither the energy secretary nor the energy minister able to explain its meaning.
Instead, the climate and energy secretary, Ed Davey, pointed to a voluntary agreement brokered with energy companies in April to inform customers about cheaper tariffs. Asked whether the prime minister’s pledge meant energy companies would only be able to offer one tariff — the cheapest — he said: "[Ensuring] consumers face the lowest bills possible is a priority for me. We have been in discussions across government. Ofgem has been talking about fewer tariffs and simpler bills and that is the direction of travel."…
Energy Bill confirmed for next month, but key questions remain
Ed Davey has today confirmed that the government’s long-awaited Energy Bill will be published next month as planned, easing fears that political rows over the precise content of the bill could lead to further delays.
Speaking at a CBI event this morning, the Energy and Climate Change Secretary refused to be drawn on the critical issue of whether or not a decarbonisation target for the power sector will be included in the bill. But he did provide fresh details on how the bill will improve investor certainty for clean energy projects, while reiterating that the "coalition is united behind these energy market reforms"…
Energy policy negotiated as coalition leaders meet to discuss green agenda
Senior coalition figures meet on Wednesday for crisis talks about the UK’s stalling energy investment program amid growing political concern about the rising cost of customer bills and threats by power station companies to pull out of the UK because of delays.
The meeting of what has been dubbed the ‘green quad’ is expected to set the Conservative-run Treasury against the Liberal Democrat-run energy department, which have been rowing over the issue for months…
Britain risks falling behind in the race for clean energy
As the coalition prepares to introduce its energy bill into Parliament in the next few weeks, it must demonstrate political leadership and ensure that its policy is based on robust economic analysis, recognising and addressing failures of the market.
The most obvious market failure is created by the fact that, without policy, the price of products and services that involve emissions of greenhouse gases does not reflect the costs of damage caused by climate change…
Four power stations’ worth of locally-owned renewable schemes could be installed by 2020
Four power stations’ worth of locally-owned renewable schemes could be installed by 2020 if the Government supports community energy, it was claimed today.
A coalition of organisations including the Co-operative, the National Trust, the Church of England and the Women’s Institute are calling for measures to boost the community renewable power and energy efficiency schemes…
Innovation could halve cost of UK wave power
Wave energy farms installed on the outskirts of the UK Continental shelf could generate energy at half the cost of nearshore sites currently being developed, according to new research.
The Carbon Trust yesterday published a report claiming to include the most detailed analysis to date of where wave power farms could best be developed in the UK…
George Osborne’s ‘Environmental Taliban’ stage fightback
More than 200 people from low carbon businesses and campaign groups have protested outside Downing Street over the government’s perceived failure to take green growth seriously, just a day after it emerged the Chancellor has started privately reffering to environmental lobbyists and green-minded MPs as the "Environmental Taliban".
Deborah Meaden, of TV show Dragon’s Den, today joined around 250 representatives from renewable energy companies, trade associations, environment and development charities, the National Federation of Women’s Institutes (NFWI), and faith groups, to protest in Whitehall…
Fracking to get green light within weeks
The Government is preparing to give the green light for "fracking" for shale gas in the UK to resume within weeks.
Cuadrilla, which used the controversial technique near Blackpool, suspended its activities last year after causing two minor earthquakes.
Despite independent reports recommending resuming fracking – which sees liquids pumped into rocks to force gas out — ministers have yet to give the go-ahead…
