Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
The US as the new Saudi Arabia, energy insecurity for most of the rest of the world, and climate chaos for everyone — such were the headline points of the latest World Energy Outlook from the International Energy Agency. Consider these assertions:
- Crude oil production peaked in 2008 at 70 mb/d, and will never return to that level;
- US production of tight oil (shale oil) will peak at 3.2 mb/d by 2025, with a minor contribution from the rest of the world;
- Production of natural gas liquids (primarily the gases ethane, propane and butane, always counted as liquids) will rise from 12 mb/d today to 18 mb/d by 2035;
- Remaining recoverable resources are now 5900 billion barrels, including tight oil and oil retorted from shale by heating;
- North America will be a net oil exporter by 2030, with the US producing 11.1 million b/d in 2020 and 10.2 mb/d in 2030. Note that current US demand is 18.8 mb/d
So conventional oil production has peaked, some 4-5 million b/d of tight oil may be possible adding some 5% to global oil production, most of the rise in production isn’t exactly liquid, huge amounts of unconventional carbon can now be technically extracted and burned, and the US is expected to export oil by, we presume, slashing its consumption. News headlines rang out with the great news of US energy independence, and The Guardian, amongst others, declared that the peak oil theory had gone up in flames.
So what to believe? It is fair to say that peak oil commentators have been slow to recognise the considerable impact (however temporary it may be) of shale oil. With other sources of oil in decline and prices high enough to support extensive drilling, fracking has turned around the oil production trajectory in the US, seemingly making a mockery of the old decline bell curve. US production of 11.1 million barrels per day in 2020 (this is for liquids not just crude oil) would top Saudi Arabian production (which by this calculation appears to have stagnated). This is quite a staggering increase from today and is called into question in a post by Gail Tverberg at The Oil Drum. She claims that the IEA is failing to take into account the diminishing returns of shale production — that the most productive areas are being drilled first and that decline rates are rapid. Certainly the cost of tight oil will lock in high prices.
But let’s assume that the picture is broadly plausible. What does this mean for the coming years? In essence the picture is still the same. The global picture points to a future of volatile energy prices and economic instability as long as economies depend on oil, a point made clearly in a new report from the New Economics Foundation (nef) with ODAC The economics of oil dependence: A glass ceiling to recovery. The emergence of shale oil is a step along the path of exploitation of resources with diminishing returns. As the easy to access oil and gas declines, the industry is finding clever ways to exploit resources which were previously uneconomic — these are however more costly and take more energy to extract, and come with higher environmental risks. What our new report points out is that the higher cost required comes with a drag effect on economic growth. Yes oil demand may be in decline in the OECD and poorer countries around the world, but so far this is not primarily because of energy efficiency policy (which the IEA laments as an "epic failure") but due to demand destruction from high prices leading to economic contraction.
It is interesting, though perhaps not surprising that some environmental commentators — George Monbiot, and Damian Carrington at The Guardian for example – have condemned the peak oil idea almost as if it has betrayed them personally. ODAC’s position has always been that those working to mitigate climate change need to take peak oil into account not because oil production would fall off a cliff and thus prevent the need for any proactive emissions reductions, but rather because the effects of peak oil — volatile oil prices, economic crisis, exploitation of resources with even higher carbon emissions like tar sands – would make climate policy changes all the more difficult. You have to look no further than the latest political rows in the UK over fuel duty and energy policy to see how true this is.
View our Reports and Resources page
Oil
US can become world’s biggest oil producer in a decade, says IEA
The US will shed its long-standing dependence on Saudi Arabian oil within the next decade, redrawing the world’s political systems, heralding a new era of geopolitics — and potentially leading to runaway global warming.
In a report released on Monday, the world’s foremost energy watchdog, the International Energy Agency (IEA), said the US will benefit from so-called unconventional sources of oil and gas, including shale gas and shale oil, derived from blasting dense rocks apart to release the fossil fuels trapped within…
U.S. the New Saudi Arabia? Peak Oilers Scoff
The U.S. is set to increase oil production so much that it will overtake Saudi Arabia and become the world’s biggest producer by around 2017, the International Energy Agency said today.
The reaction from "peak oil" theorists? Not a chance. They continue to argue that the surge in U.S. production coming from shale oil and shale gas is a flash in the pan. Before long, they say, U.S. output will start falling again—as will global output. The price of oil will skyrocket and the industrial economy will be brought to its knees, they argue…
Shale Oil Will Boost U.S. Production, But It Won’t Bring Energy Independence
The United States could see a surge in oil production that could make it the world’s leading oil producer within a decade, according to a new report from the International Energy Agency. But that lead will likely be temporary, and it still won’t allow the United States to stop importing oil. Barring technological breakthroughs in oil production and major reductions in consumption, the United States will need to rely on oil from outside its borders for the foreseeable future.
This week’s IEA report predicts that a relatively new technology for extracting oil from shale rock could make the United States the world’s leading oil producer within a decade, beating the current leader, Saudi Arabia…
US won’t eclipse Saudi without free crude trade
So the United States is going to become a bigger oil producer than Saudi Arabia, according to the International Energy Agency.
At first glance, this is vindication, both for America’s hyper-entrepreneurial energy sector, and, paradoxically, for its infamously incoherent energy policies…
Our reign as oil king likely to be very short
I want my Hummer back.
That might be the reaction to a report Monday from the International Energy Agency that predicts in eight years the U.S. will surpass Saudi Arabia as the world’s largest oil producer.
The prediction is a stunning testament to energy companies’ success in extracting oil that was previously unrecoverable, but it’s the one bright spot in a report that otherwise requires highly selective reading to be called good news…
Energy Independence in the United States? Don’t Pop the Cork Yet
EVER since the Arab oil embargoes in the 1960s and 1970s, American presidents have pledged to end the country’s dependence on foreign oil by drilling more at home and increasing energy efficiency. But "energy independence" was little more than a dreamy campaign slogan.
Now, suddenly, the dream looks to be in reach. The International Energy Agency reported this week that the United States was poised to become the world’s biggest oil producer thanks to new drilling technologies in shale fields across the country. With oil production going up each month, not only are imports from the Organization of the Petroleum Exporting Countries going to drop, the energy agency predicted, but the United States will also become a net oil exporter by 2030…
IEA slams ‘epic failure’ of global energy efficiency policy
Energy efficiency could halve predicted growth in global energy demand, securing extra time for governments to forge an effective international climate change deal, according to a major new report from the International Energy Agency (IEA) that today warns climate change is again slipping down the political agenda.
The Paris-based organisation’s World Energy Outlook (WEO) report highlights successful policies to cut energy consumption in the US, EU and Japan, but cautions even with these and other new regulations in place two-thirds of the economically viable energy efficiency improvements will remain unrealised through to 2035…
US to overtake Saudi Arabia in oil as China’s water runs dry
It is official. The US will overtake Saudi Arabia to become the world’s top oil producer by 2017.
The International Energy Agency (IEA) said in its world outlook for 2012 this morning that the US will be a net exporter of gas by 2020, with all the vast implications of abundant cheap gas for its chemical, plastics, glass, and steel industries…
How cheap energy from shale will reshape America’s role in the world
After the fall of the Berlin Wall, the rise of China and the Arab spring, American energy independence looks likely to trigger the next great geopolitical shift in the modern world.
US reliance on the Gulf for its oil — and its consequent need to maintain a dominant presence in the Middle East to keep the oil flowing — has been one of the constants of the post-1945 status quo. That could be turned on its head…
IEA report reminds us peak oil idea has gone up in flames
Given the bubbling cauldron of violence that the middle East so frequently and regrettably is, the prospect of the US outstripping Saudi Arabia as the world’s biggest oil producer in the next decade is deeply striking. The redrawing of the geopolitical map may cool some tensions and perhaps spark others.
But the truly global implications of the International Energy Agency’s flagship report for 2012 lie elsewhere, in the quietly devastating statement that no more than one-third of already proven reserves of fossil fuels can be burned by 2050 if the world is to prevent global warming exceeding the danger point of 2C. This means nothing less than leaving most of the world’s coal, oil and gas in the ground or facing a destabilised climate, with its supercharged heatwaves, floods and storms…
Iranian oil output, exports rebound – IEA
Iranian oil output rose in October after seven months of decline due to Western sanctions and its exports rebounded strongly as China and South Korea bought more oil, the West’ energy watchdog said on Tuesday.
The International Energy Agency, adviser to industrialised nations on energy policy, said the rebound in Iranian output was adding to a bearish picture of growing oil supply while demand remained depressed due to a weak global economy…
Energy pricing: the market is manipulation
The Guardian’s investigation into the alleged "Libor-like" fixing of UK gas prices was doubly ironic for me. The first irony is that, as director of compliance and market supervision of the International Petroleum Exchange (now ICE Futures Europe) in the 1990s, I was heavily involved in the development and legal architecture of the gas-market contract that has now allegedly been manipulated.
The second painful irony is that in 2000 the Guardian published detailed allegations made by me on very similar micro-manipulation of the International Petroleum Exchange’s Brent futures contract-settlement prices. This systemic manipulation was so pervasive that traders referred to the on-exchange profits they made at the expense of the manipulators — who profited "off-exchange" — as "grab a grand"…
Oil Heads for Weekly Decline as Economy Counters Mideast Tension
Oil headed for the fourth weekly decline in five in New York as signs of a slowing economy in the U.S., the world’s biggest crude user, countered concern that tension in the Middle East may disrupt supplies.
West Texas Intermediate futures were little changed after falling 1 percent yesterday as a report showed U.S. unemployment claims climbed at the highest level since April 2011. Crude stockpiles climbed last week to the highest since July as output rose to an 18-year high, according to the Energy Department. Oil pared losses after Israel said it’s ready to escalate military operations against Gaza…
BP agrees record $4.5bn settlement over Gulf spill
BP has pleaded guilty to manslaughter over the deaths of 11 men in the Gulf of Mexico disaster and will pay $4.5bn (£2.8bn) in a record settlement with US authorities.
BP has pleaded guilty to manslaughter over the deaths of 11 men in the Gulf of Mexico disaster and will pay $4.5bn (£2.8bn) in a record settlement with US authorities…
Gas
Gas Prices Doomed to Stay Low as Producers Pump Faster
Gas producers in North America including Chesapeake Energy Corp. (CHK) are killing their commodity’s biggest rally in 10 months by opening more wells, putting the U.S. on track to have record gas supplies this year.
After a 44 percent price rise beginning Sept. 10, the fuel began a slide Oct. 30, falling 9.2 percent by Nov. 12 as stockpiles swelled to an all-time high this month, valued at about $15 billion using the current spot price. Gas production in 2013 is expected to match this year’s record level, the U.S. Energy Information Administration forecast this month…
Renewables
Wind industry could provide a fifth of global electricity by 2030
Wind energy could meet up to a fifth of global electricity demand by 2030, according to a major new report released yesterday by the Global Wind Energy Council (GWEC) and Greenpeace International.
The report, which looks at a number of different scenarios for the development of the industry and projected levels of electricity demand, predicts installed capacity could increase more than four-fold from 240GW at the end of last year to 1,100GW by 2020, supplying between 11.7 per cent and 12.6 per cent of global electricity, and saving nearly 1.7 billion tons of CO2 emissions…
Germany Has Built Clean Energy Economy U.S. Rejected in 80s
InsideClimateNews (Berlin) — The view from the Reichstag roof on a sun-drenched spring afternoon is spectacular. Looking out over Berlin from the seat of the German government, you can see the full sweep of the nation’s history: from Humboldt University, where Albert Einstein taught physics for two decades, to the site of the former Gestapo headquarters.
I’m not here to see this country’s freighted past, however. I’ve come to learn about what a majority of Germans believe is their future—and perhaps our own. There is no better place to begin this adventure than the Reichstag, rebuilt from near ruins in 1999 and now both a symbol and an example of the revolutionary movement known as the Energiewende. The word translates simply as, "energy change." But there’s nothing simple about the Energiewende. It calls for an end to the use of fossil fuels and nuclear power and embraces clean, renewable energy sources such as solar, wind and biomass. The government has set a target of 80 percent renewable power by 2050, but many Germans I spoke with in three weeks traveling across this country believe 100 percent renewable power is achievable by then…
UK
Fuel Duty: Government May Still Axe Increase
The Government has hinted that a planned fuel duty rise could be axed, despite ministers having seen off Labour calls for the 3p increase in January to be scrapped.
Treasury Economic Secretary Sajid Javid said the Government understood the pressures facing households and was determined to help with the cost of living…
The energy policy conflict at the heart of government
There is a conflict over energy policy at the very heart of this government, but it is not merely about the role of gas, it is about the fundamental approach to energy and climate change.
On the one hand, the Department of Energy and Climate Change (Decc) wants to explore what large-scale deployment of wind generation means for the gas market, such as how gas plants stay profitable…
• Pierre Noël is director of the energy policy forum, Judge Business School, University of Cambridge. This article is based on a talk given at a Policy Exchange fringe event at the 2012 Conservative party conference
Polling day shambles for coalition over climate change policy
The coalition’s green policy is in disarray after an undercover film revealed George Osborne’s father-in-law claiming that the chancellor is behind a Tory campaign to oppose commitments against climate change.
Lord Howell of Guildford, a former minister in Margaret Thatcher’s cabinet who stood down as a foreign office minister in September, said the chancellor was "putting pressure" on David Cameron over "absurd" climate change targets…
Business chiefs call for emissions targets in power sector
The heads of major UK companies joined calls on Monday for the government to bring in a target to slash emissions from the power sector by 2030.
In a letter to the prime minister, the companies criticised the split in the government over the future of energy supplies, including possible questions over the UK’s commitment to its targets to tackle climate change…
Whistleblower claims that energy market is rigged
Power companies are "regularly" manipulating Britain’s wholesale gas prices, a whistleblower has claimed.
Last night City watchdog the Financial Services Authority (FSA) and energy regulator Ofgem both said they had launched investigations into the claims…
Climate
World Energy Outlook is bad news as far as climate change is concerned
This year’s World Energy Outlook (WEO) may look exciting to economists, with a new oil and gas renaissance meaning the US is soon to overtake Saudi Arabia and reclaim its position as the world’s leading producer of hydrocarbons. But to anyone concerned about climate change, it is distinctly depressing.
Fatih Birol, the International Energy Agency’s chief economist, said yesterday "the world is going in the wrong direction in terms of climate change"…
Transport
Zut alors! Famous French cars may be banned from Paris
Some of the most famous cars in French motoring history would be banned from Paris under a law intended to hit gas-guzzlers, but which is being criticized as a blow to the poor and classic car fans.
The proposal to ban pre-1997 cars from the city centre is the brainchild of Paris mayor Bertrand Delanoe, who was behind the popular Velib’ bike-rental scheme but has been accused of turning the city of lights into a playground for the rich…
Auto industry dodges tougher EU emission rules: sources
New European Union emissions rules for vehicles have been put on hold or are being delayed, EU sources and campaigners said, citing pressure from the hard pressed auto industry.
The downgrading of green priorities is another example of policy falling victim to industry arguments against environmental regulation, a trend marked on Monday by concessions to airlines…
EU Commission freezes airline carbon emissions law
The European Union will freeze for a year its rule that all airlines must pay for their carbon emissions for flights into and out of EU airports, the EU executive said, following threats of international retaliation.
Flights within the European Union will still have to pay for their carbon emissions. The year-long exemption will apply to flights linking EU airports to countries outside the bloc, a move welcomed by U.S. and Asian officials…
